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Kingfisher School of Business and Finance, Inc. BME 12 Lecture Notes Version 1 Series of 2025 BME 12: Human Behavior in Organization “This handout is for academic purposes ONLY” Prepared by: Mark Jeffrey B. Aquino (BME 12 Instructor) BME 12: HUMAN BEHAVIOR IN ORGANIZATION Chapter 2: The Changing Environment of Organization (Narrative of Discussion) Book Reference: Organizational Behavior: Managing People and Organization Author: Ricky Griffin, Jean Phillips, Stanley Gully The changing environment of business presents both opportunities and challenges for managers today. Five important environmental forces are globalization, diversity, technology, ethics and corporate governance, and new employment relationships. I. DIVERSITY AND BUSINESS Diversity- refers to the variety of observable and unobservable similarities and differences among people. Some differences, such as gender, race, and age, are often the first diversity characteristics to come to mind. But diversity is much more than demographics and can reflect combinations of characteristics rather than a single attribute. Each individual also has a variety of characteristics, and combinations of them can result in diversity. Types of Diversity 1. Surface-level diversity refers to observable differences in people, including race, age, ethnicity, physical abilities, physical characteristics, and gender. 2. Deep-level diversity refers to individual differences that cannot be seen directly, including goals, values, personalities, decision-making styles, knowledge, skills, abilities, and attitudes. a. Separation diversity refers to differences in position or opinion among group members reflecting disagreement or opposition – (dissimilarity in an attitude or value, for example, especially with regard to group goals or processes.) b. Variety diversity refers to differences in a certain type or category, including group members’ expertise, knowledge, or functional background. c. Disparity diversity refers to differences in the concentration of valuable social assets or resources (dissimilarity in rank, pay, decision-making authority, or status.) Trends of Diversity Some short-term demographic trends are strong enough to suggest that the changing demographic mix in the workforce will continue to increase the importance of understanding and leveraging diversity.  The Census Bureau projects that by 2020 the U.S. workforce will consist of 62.3 percent White non-Hispanics, 18.6 percent Hispanics, 12 percent Blacks, and 5.7 percent Asians. Longer-term U.S. demographic projections further highlight the increasingly diverse character of the United States: The population is projected to become older.  By 2050, the total population is forecasted to increase 49%.  Non-Hispanic Whites are expected to decrease from 69.4% to 50.1% of the total population by 2050.  People of Hispanic origin is projected to increase 188% by 2050.  The Black population is projected to increase by 71% by 2050.  The Asian population is forecasted to grow 213% by 2050. In 2014, only 23 of the Fortune 500 CEOs were minorities, and White people held 87% of total seats on corporate boards of directors. Many countries and regions face talent shortages at all levels, and those gaps are expected to worsen. Talent shortages are forecast to rise globally Generational Differences Age-based diversity is a major issue facing many organizations today  May result in younger managers supervising older workers  Reverse mentoring: pairing a junior employee with a senior employee to transfer technical/computer skills from the junior employee to the senior one
Kingfisher School of Business and Finance, Inc. BME 12 Lecture Notes Version 1 Series of 2025 BME 12: Human Behavior in Organization “This handout is for academic purposes ONLY” Prepared by: Mark Jeffrey B. Aquino (BME 12 Instructor) The labor force in the United States is getting older. For example, as shown here, between 2006 and 2016 the number of U.S. workers between the ages of 65 and 74 grew by 83.4 percent, and the percentage of workers 75 and older grew by 84.3 percent. In contrast, the number of workers between the ages of 25 and 54 grew only by 2.4 percent. The U.S. Bureau of Labor Statistics projects a dramatic increase in workers age sixty-five and older during the next decade, while the percentage of younger workers is expected to decrease. Most experts characterize today’s workforce as comprising four generations. According to date of birth, they are:  seniors (1922–1943)  baby boomers (1943–1963)  Generation X (1964–1980)  Generation Y, also referred to as the Millennial Generation (1980–2000)/ (1997)  Generation Z (1997-2012) also known as Zoomers, a demographic cohort succeeding millennials  Generation Alpha (2012- present) and are expected to be immersed in technology since birth and other gadgets. Older workers may have better job performance but need mentoring to adopt new technology. Diversity Issues for Managers Why should we care about diversity? As managers, diversity awareness will enable us to hire, retain, and engage the best talent, which will help to maximize the organization’s performance. Diversity also fosters greater creativity and innovation. 1. The Business Case for Diversity One reason that organizations should promote diversity is performance. Recent research has found that firm performance increases when employees have more positive attitudes toward diversity. Diversity contributes to a firm’s competitive advantage when it enables all employees to contribute their full talents and motivation to the company. Diversity management is also important for legal reasons. The Civil Rights Act of 1991 allows monetary damages in cases of intentional employment discrimination. Obeying the law and promoting diversity is consistent with hiring the people best suited for the job and organization. 2. Barriers to Inclusion Given both the performance benefits and legal imperatives of diversity, then, what prevents companies from becoming inclusive and making the most of their diversity? A report of the U.S. Equal Employment Opportunity Commission identified several common diversity barriers that exist in many organizations. These barriers, summarized in Table 2.2, stem from a variety of decision-making and psychological factors as well as from employee unawareness. Understanding and proactively addressing the barriers can minimize their impact and enhance inclusion. a. The “Like Me” Bias Consciously or unconsciously, we tend to associate with others whom we perceive to be like ourselves. This bias is part of human nature. b. Stereotypes A stereotype is a belief about an individual or a group based on the idea that everyone in that particular group will behave the same way. Stereotypes are harmful because they result in judgments about an individual based solely on his or her being part of a particular group, regardless of his or her unique identity. Stereotypes are often negative and erroneous, and thus adversely affect the targeted individuals. c. Prejudice Even if an organization has a strong commitment to inclusion, it is possible that the beliefs and actions of individual employees or managers are inconsistent with the organization’s policies and values. d. Perceived Threat of Loss As voluntary efforts are made by companies to promote inclusion, members of groups who traditionally have been the predominant employees of a particular workforce or occupation may grow anxious or angry. If they perceive a direct threat to their own career opportunities, they may feel that they need to protect their own prospects by impeding the prospects of others. e. Ethnocentrism Ethnocentrism reflects the belief that one’s own language, native country, and cultural rules and norms are superior to all others. Ethnocentrism often has less to do with prejudice and more to do with inexperience or ignorance about other people and environments. f. Unequal Access to Organizational Networks
Kingfisher School of Business and Finance, Inc. BME 12 Lecture Notes Version 1 Series of 2025 BME 12: Human Behavior in Organization “This handout is for academic purposes ONLY” Prepared by: Mark Jeffrey B. Aquino (BME 12 Instructor) All organizations have formal and informal networks. These organizational networks influence knowledge sharing, resource accessibility, and work opportunities. Women and minorities are often excluded from informal organizational networks, which can be important to job performance, mentoring opportunities, and being seen as a candidate for promotion. 3. Managing Diversity The most important element in effectively leveraging the positive potential of diversity is top management support for diversity and for diversity initiatives.  Top management support for diversity and for diversity initiatives.  Reciprocal mentoring: matches senior employees with diverse junior employees to allow both individuals to learn more about a different group.  Older adults may benefit from self-paced learning environments and confidence-boosting interventions.  It is not realistic to claim or to pursue an “I’m totally unbiased” stance with regard to diversity. An inclusive environment is created when all employees’ cultural awareness and empathy are enhanced through diversity training and all employees are given equal access to mentors and other influential company employees. Creating fair company policies and practices that give all employees equal access to performance feedback, training and development, and advancement opportunities is also critical. Diversity initiatives are more successful when the company is able to keep employees thinking about diversity issues, even when they do not feel a direct, negative impact. Training and mentoring can also help. Diversity training and diversity education need to communicate that bias is a part of being human. It is not realistic to claim or to pursue an “I’m totally unbiased” stance with regard to diversity. II. GLOBALIZAITON AND BUSINESS Another environmental factor that affects OB is globalization or the internationalization of business activities and the shift toward an integrated global economy. From a business standpoint the widespread effects of globalization are relatively new, at least in the United States. A. Trends in Globalization Factors affecting Globalization  Advances in communication and transportation  Businesses have expanded internationally to increase their markets.  Control of labor, distribution and distribution costs  Increased international competition In 2014, the volume of international trade in current dollars was about 50 times greater than the amount in 1960. Four major factors account for much of the growth in international trade. First, communication and transportation have improved dramatically over the past several decades. It is simply easier to conduct international business today than was the case just a few years ago. Second, businesses have expanded internationally to increase their markets. Third, more and more firms are moving into international markets to control costs, especially to reduce labor costs. Finally, many organizations have become international in response to competition. If an organization starts gaining strength in international markets, its competitors often must follow suit to avoid falling too far behind in sales and profitability. B. Cultural Competence One of the worst, yet easiest, mistakes people can make is to assume that other people are just like them. People from different cultures see and do things in different ways. Culture- The set of shared values, often taken for granted that help people in a group, organization, or society understand which actions are considered acceptable and which are deemed unacceptable Cultural competence is the ability to interact effectively with people of different cultures. There are four components of cultural competence: 1. Awareness of our own cultural worldview, and of our reactions to people who are different. 2. Our attitude toward cultural differences. 3. Knowledge of different worldviews and cultural practices. 4. Cross-cultural skills. C. Cross-Cultural Differences and Similarities We now turn our attention to differences and similarities in behavior across cultures. 1. General Observations Cultural and national boundaries do not necessarily coincide. Given this basic assumption, one major review of the literature on international management reached five basic conclusions. a. behavior in organizational settings does indeed vary across cultures.
Kingfisher School of Business and Finance, Inc. BME 12 Lecture Notes Version 1 Series of 2025 BME 12: Human Behavior in Organization “This handout is for academic purposes ONLY” Prepared by: Mark Jeffrey B. Aquino (BME 12 Instructor) b. Culture itself is one major cause of this variation. Culture is the set of shared values, often taken for granted, that help people in a group, organization, or society understand which actions are considered acceptable and which are deemed unacceptable. c. Although the causes and consequences of behavior within organizational settings remain quite diverse across cultures, organizations and the ways they are structured appear to be growing increasingly similar. d. The same individual behaves differently in different cultural settings. e. Cultural diversity can be an important source of synergy in enhancing organizational effectiveness. 2. Specific Cultural Issues Geert Hofstede, a Dutch researcher, studied workers and managers in 60 countries and found that specific attitudes and behaviors differed significantly because of the values and beliefs that characterized those countries. The two primary dimensions that Hofstede found are the individualism/collectivism continuum and power distance. Individualism exists to the extent that people in a culture define themselves primarily as individuals rather than as part of one or more groups or organizations. Collectivism, on the other hand, is characterized by tight social frameworks in which people tend to base their identities on the group or organization to which they belong. Power distance, which might also be called orientation to authority, is the extent to which people accept as normal an unequal distribution of power. Hofstede also identified other dimensions of culture. Uncertainty avoidance, which might also be called preference for stability, is the extent to which people feel threatened by unknown situations and prefer to be in clear and unambiguous situations. Masculinity, which might be more accurately called assertiveness or materialism, is the extent to which the dominant values in a society emphasize aggressiveness and the acquisition of money and other possessions as opposed to concern for people, relationships among people, and overall quality of life. Hofstede’s framework has recently been expanded to include long-term versus short-term orientation. Long-term values include focusing on the future, working on projects that have a distant payoff, persistence, and thrift. Short-term values are more oriented toward the past and the present and include respect for traditions and social obligations. The important issue to remember is that people from diverse cultures value things differently from each other and that people need to take these differences into account as they work. D. Global Perspective A global perspective is distinguished by a willingness to be open to and learn from the alternative systems and meanings of other people and cultures, and a capacity to avoid assuming that people everywhere are the same. Given globalization trends and the multicultural nature of the U.S. workforce, managers increasingly need a global perspective and a supportive set of skills and knowledge to be most effective. III. TECHNOLOGY AND BUSINESS Technology refers to the methods used to create products, including both physical goods and intangible services. Reasons:(1) the shift toward a service-based economy, (2) the growing use of technology for competitive advantage, and (3) mushrooming change in information technology A. Manufacturing and Service Technologies Manufacturing is a form of business that combines and transforms resources into tangible outcomes that are then sold to others. A service organization is one that transforms resources into an intangible output and creates time or place utility for its customers. Managers have come to see that many of the tools, techniques, and methods that are used in a factory are also useful to a service firm. At the same time, though, service-based firms must hire and train employees based on a different skill set than is required by most manufacturers. B. Technology and Competition Technology is the basis of competition for some firms, especially those whose goals include being the technology leaders in their industries. But because of the rapid pace of new developments, keeping a leadership position based on technology is becoming increasingly challenging. Businesses have increasingly found that they can be more competitive if they can systematically decrease cycle times (the time that it takes a firm to accomplish some recurring activity or function from beginning to end).