# Performance Appraisal and Rewards

## Reward Systems in Organizations

1. How do organizations choose the best appraisal system for their organization?
After a company has designed and implemented a systematic performance appraisal system and provided adequate feedback to employees, the next step is to consider how to tie available corporate rewards to the outcomes of the appraisal. Behavioral research consistently demonstrates that performance levels are highest when rewards are contingent upon performance. Thus, in this section, we will examine five aspects of reward systems in organizations: (1) functions served by reward systems, (2) bases for reward distribution, (3) intrinsic versus extrinsic rewards, (4) the relationship between money and motivation and, finally, (5) pay secrecy.

### Functions of Reward Systems

Reward systems in organizations are used for a variety of reasons. It is generally agreed that reward systems influence the following:
1. Job effort and performance. Following expectancy theory, employees’ effort and performance would be expected to increase when they felt that rewards were contingent upon good performance. Hence, reward systems serve a very basic motivational function.
2. Attendance and retention. Reward systems have also been shown to influence an employee’s decision to come to work or to remain with the organization. This was discussed in the previous chapter.
3. Employee commitment to the organization. It has been found that reward systems in no small way influence employee commitment to the organization, primarily through the exchange process. That is, employees develop ties with organizations when they perceive that the organization is interested in their welfare and willing to protect their interests. This exchange process is shown in . To the extent that employee needs and goals are met by the company, we would expect commitment to increase.
4. Job satisfaction. Job satisfaction has also been shown to be related to rewards, as discussed in the previous chapter. Edward E. Lawler, a well-known researcher on employee compensation, has identified four conclusions concerning the relationship between rewards and satisfaction: (1) satisfaction with a reward is a function of both how much is received and how much the individual feels should have been received; (2) satisfaction is influenced by comparisons with what happens to others, especially one’s coworkers; (3) people differ with respect to the rewards they value; and (4) some rewards are satisfying because they lead to other rewards.
5. Occupational and organizational choice. Finally, the selection of an occupation by an individual, as well as the decision to join a particular organization within that occupation, are influenced by the rewards that are thought to be available in the occupation or organization. To prove this, simply look at the classified section of your local newspaper and notice how many jobs highlight beginning salaries.
Reward systems in organizations have far-reaching consequences for both individual satisfaction and organizational effectiveness. Unfortunately, cases can easily be cited where reward systems have been distorted to punish good performance or inhibit creativity. Consider, for example, the Greyhound Bus Company driver who was suspended for 10 days without pay for breaking a company rule against using a CB radio on his bus. The bus driver had used the radio to alert police that his bus, with 32 passengers on board, was being hijacked by an armed man. The police arrested the hijacker, and the bus driver was suspended for breaking company rules. Such incidents hardly encourage employees to focus their efforts on responsible performance.

### Bases for Reward Distribution

A common reality in many contemporary work organizations is the inequity that exists in the distribution of available rewards. One often sees little correlation between those who perform well and those who receive the greatest rewards. At the extreme, it is hard to understand how a company could pay its president $10 to $20 million per year (as many large corporations do) while it pays its secretaries and clerks less than $15,000. Each works approximately 40 hours per week, and both are important for organizational performance. Is it really possible that the president is 1,000 times more important than the secretary, as the salary differential suggests?
How do organizations decide on the distribution of available rewards? At least four mechanisms can be identified. In more cases than we choose to admit, rewards go to those with the greatest power (either market power or personal power). In many of the corporations whose presidents earn eight-figure incomes, we find that these same people are either major shareholders in the company or have certain abilities, connections, or status that the company wants. Indeed, a threat of resignation from an important or high-performing executive often leads to increased rewards.
A second possible basis for reward distribution is equality. Here, all individuals within one job classification would receive the same, or at least similar, rewards. The most common example here can be found among unionized workers, where pay rates are established and standardized with little or no reference to actual performance level. Instead of ability or performance, these systems usually recognize seniority as the key factor in pay raises or promotions.
The basis for the social welfare reward system in this country is need. In large part, the greater the need, the greater the level of support. It is not uncommon to see situations in business firms where need is taken into account in layoff situations—where an employee is not laid off because she is the sole support of a family.
A fourth mechanism used by organizations in allocating rewards is distributive justice. Under this approach, employees receive (at least a portion of) their rewards as a function of their level of contribution to the organization. The greater the contribution (such as performance), the greater the reward. This mechanism is most prominent in merit-based incentive programs, where pay and bonuses are determined by performance levels.

### Extrinsic and Intrinsic Rewards

The variety of rewards that employees can receive in exchange for their contributions of time and effort can be classified as either extrinsic or intrinsic rewards. Extrinsic rewards are external to the work itself. They are administered externally—that is, by someone else (usually management). Examples of extrinsic rewards include wages and salary, fringe benefits, promotions, and recognition and praise from others.
On the other hand, intrinsic rewards represent those rewards that are related directly to performing the job. In this sense, they are often described as “self-administered” rewards, because engaging in the task itself leads to their receipt. Examples of intrinsic rewards include feelings of task accomplishment, autonomy, and personal growth and development that come from the job.
In the literature on employee motivation, there is considerable controversy concerning the possible interrelationship of these two kinds of reward. It has been argued (with some research support) that extrinsic rewards tend to drive out the positive effects of some intrinsic rewards and can lead to unethical behavior. Consider, for example, the child next door who begs you to let her help you wash your car. For a young child, this task can carry considerable excitement (and intrinsic motivation). Now, consider what happens on a Saturday afternoon when you need your car washed but the child has other options. What do you do? You offer to pay her this time to help wash your car. What do you think will happen the next time you ask the neighbor to help you wash the car for free? In other words, when extrinsic rewards such as pay are tied closely to performance (called performance-reward contingency), intrinsic motivation—the desire to do a task because you enjoy it—can decrease.
Also, it is important to keep in mind that because extrinsic rewards are administered by sources external to the individual, their effectiveness rests on accurate and fair monitoring, evaluating, and administration. Implementation can be expensive, and the timing of performance and rewards may not always be close. For example, you may perform well on a task, but unless there is a way for that to be noticed, evaluated, recorded, and rewarded within a reasonable time frame, an extrinsic reward may not have a significant impact. Intrinsic rewards are a function of self-monitoring, evaluation, and administration; consequently, these rewards often are less costly and more effectively administered. For example, even if no one else notices or rewards you for superior performance on a task, you can still reward yourself with a mental pat on the back for a job well done or a sense of satisfaction for overcoming a challenge. The implications of this finding will become apparent when exploring efforts to enrich employees’ jobs.

### Money and Motivation: A Closer Look

A recurring debate among managers focuses on the issue of whether money is a primary motivator. Some argue that most behavior in organizational settings is motivated by money (or at least monetary factors), whereas others argue that money is only one of many factors that motivate performance. Whichever group is correct, we must recognize that money can have important motivational consequences for many people in many situations. In fact, money serves several important functions in work settings. These include serving as (1) a goal or incentive, (2) a source of satisfaction, (3) an instrument for gaining other desired outcomes, (4) a standard of comparison for determining relative standing or worth, and (5) a conditional reinforcer where its receipt is contingent upon a certain level of performance. Even so, experience tells us that the effectiveness of pay as a motivator varies considerably. Sometimes there seems to be an almost direct relationship between pay and effort, whereas at other times no such relationship is found. Why? Lawler suggests that certain conditions must be present in order for pay to act as a strong motivator:
1. Trust levels between managers and subordinates must be high.
2. Individual performance must be able to be accurately measured.
3. Pay rewards to high performers must be substantially higher than those to poor performers.
4. Few, if any, negative consequences for good performance must be perceived.
Under these conditions, a climate or culture is created in which employees have reason to believe that significant performance-reward contingencies truly exist. Given this perception (and assuming the reward is valued), we would expect performance to be increased.

### Pay Secrecy

Secrecy about pay rates seems to be a widely accepted practice in work organizations, particularly among managerial personnel. It is argued that salary is a personal matter and we should not invade another’s privacy. Available evidence, however, suggests that pay secrecy may have several negative side effects. To begin, it has been consistently found that in the absence of actual knowledge, people have a tendency to overestimate the pay of coworkers and those above them in the hierarchy. As a result, much of the motivational potential of a differential reward system is lost. Even if an employee receives a relatively sizable salary increase, she may still perceive an inequity compared to what others are receiving. This problem is highlighted in the results of a study by Lawler. In considering the effects of pay secrecy on motivation, Lawler noted:
Almost regardless of how well the individual manager was performing, they felt they were getting less than the average raise. This problem was particularly severe among high performers, since they believed that they were doing well yet received minimal reward. They did not believe that pay was in fact based upon merit. This was ironic, since their pay did reflect performance. . . . Thus, even though pay was tied to performance, these managers were not motivated because they could not see the connection.
Pay secrecy also affects motivation via feedback. Several studies have shown the value of feedback in motivating performance (see previous discussion). The problem is that for managers, money represents one of the most meaningful forms of feedback. Pay secrecy eliminates the feedback.
When salary information is open (or at least when the range of percentage increases within a job classification are made known to the people in that group), employees are generally provided with more recognition for satisfactory performance and are often more motivated to perform on subsequent tasks. It is easier to establish feelings of pay equity and trust in the salary administration system. On the other hand, publicizing pay rates and pay raises can cause jealousy among employees and create pressures on managers to reduce perceived inequities in the system. There is no correct position concerning whether pay rates should be secret or open. The point is that managers should not assume a priori that pay secrecy—or pay openness—is a good thing. Instead, careful consideration should be given to the possible consequences of either approach in view of the particular situation in the organization at the time.
1. How do organizations choose the best appraisal system for their organization?
Rewards serve several functions, including (1) stimulating job effort and performance, (2) reducing absenteeism and turnover, (3) enhancing employee commitment, (4) facilitating job satisfaction, and (5) facilitating occupational and organizational choice.
Rewards may be distributed on the basis of power, equality, need, or distributive justice. Distributive justice rests on the principle of allocating rewards in proportion to employee contribution. Intrinsic rewards represent those outcomes that are administered by the employee (e.g., a sense of task accomplishment), whereas extrinsic rewards are administered by others (e.g., wages).
Gain-sharing incentive plans base some of the employees’ pay on corporate profits or productivity. As a result, employees are generally more interested in facilitating corporate performance. Skills-based incentives reward employees on the basis of the skills they possess, not the skills they are allowed to use at work. As a result, employees are encouraged to continually upgrade their skill levels.
A lump-sum salary increase simply provides employees with their pay raises at one time (possibly shortly before summer vacation or a major holiday).
Participative pay decisions allow employees some input in determining their pay raises.


# Performance Appraisal and Rewards

## Individual and Group Incentive Plans

1. How do managers and organizations use incentives and rewards effectively to secure the best possible performance from employees?
We now turn to an examination of various employee incentive programs used by organizations. First, we consider the relative merits of individuals versus group incentive programs. Next, we focus on several relatively new approaches to motivation and compensation. Finally, we suggest several guidelines for effective incentive systems.

### Individual versus Group Incentives

Companies usually have choices among various compensation plans and must make decisions about which is most effective for its situation. Incentive systems in organizations are usually divided into two categories on the basis of whether the unit of analysis—and the recipient of the reward—is the individual or a group. Among individual incentive plans, several approaches can be identified, including merit-based compensation (commonly known as merit compensation), piece-rate incentive programs (where people are paid according to the quantity of output), bonus systems of various sorts, and commissions. In each case, rewards are tied fairly directly to the performance level of the individual.
Although individual incentive systems often lead to improved performance, some reservations have been noted. In particular, these programs may at times lead to employees competing with one another, with undesirable results. For instance, department store salespeople on commission may fight over customers, thereby chasing the customers away. After all, customers don’t care who they deal with, only that the service is good. Second, these plans typically are resisted by unions, which prefer compensation to be based on seniority or job classification. Third, where quality control systems are lax, individual incentives such as piece rates may lead employees to maximize units of output while sacrificing quality. And, finally, in order for these programs to be successful, an atmosphere of trust and cooperation is necessary.
In order to overcome some of these shortcomings, many companies have turned to group or organizational incentive plans. Group incentive programs base at least some of an employee’s rewards on group or organization performance. Hence, employees are encouraged to cooperate with one another and with the corporation so that all employees can benefit. Programs such as profit-sharing or gain-sharing plans (discussed below) are designed to tie the employees’ future rewards and prosperity to that of the company and reduce the age-old antagonism between the two. The results are often dramatic.

### Creative Pay Practices

Recently, we have seen several innovations in the way corporations approach reward systems. These efforts are designed to facilitate the integration of employee and company interests in a way that maximizes both productivity and quality of working life. Five such creative pay practices should be noted: (1) gain-sharing plans, (2) skills-based incentives, (3) lump-sum pay increases, (4) participative pay decisions, and (5) flexible benefits programs. These approaches, along with their major advantages and drawbacks, are summarized in .
Gain-Sharing Plans. Giving executives and senior managers bonuses to reflect their contributions to organizational effectiveness is commonplace. In fact, in some companies executive bonuses are often larger than salaries. Recently, companies have increasingly applied this same principle to all employees in the form of gain-sharing (profit-sharing) plans. Here, employees are given a chance to share in corporate productivity gains through increased earnings. The greater the productivity gains, the greater the earnings. Several variations on this theme can be found, including the Scanlon Plan, IMPROSHARE, the Ruker Plan, and the Lincoln Electric Plan. Regardless of the title, the basic plan is similar.
For example, under the Scanlon Plan (probably the oldest such program), three operating guidelines are used: (1) each department or division is treated as a business unit for purposes of performance measurement, (2) specific cost measures associated with the production process are identified and agreed to by all parties, and (3) bonuses are paid to all employees according to a predetermined formula tying the amount of the bonus to the actual cost savings realized during the time period. Under such a plan, it is clearly in the employees’ best interest to contribute to cost savings, thereby increasing their own incomes.
Skills-Based Incentives. Typical compensation programs are tied to job evaluations. In these, jobs are analyzed to assess their characteristics, and then salary levels are assigned to each job on the basis of factors such as job difficulty and labor market scarcity. In other words, pay levels are set on the basis of the job, not the individual. This approach fails to encourage employees to improve their skills on the job, because there is no reward for the improvement. This thinking also keeps all employees in their places and minimizes the possibility of inter-job transfers.
Under the skills-based incentive program, employees are paid according to their skills level (that is, the number of jobs they can perform), regardless of the actual tasks they are allowed to perform. This approach has proved successful in organizations such as Procter & Gamble and General Foods. Employees are encouraged to learn additional skills and are appropriately rewarded. The organization is provided with a more highly trained and more flexible workforce. However, training and compensation costs are necessarily increased, so the program is appropriate only in some situations. The technique is most often seen as part of a larger quality-of-working-life program, where it is associated with job redesign efforts.
Lump-Sum Pay Increases. Another technique that has received some attention is to allow employees to decide how (that is, in what amounts) they wish to receive their pay raises for the coming year. Under the traditional program, pay raises are paid in equal amounts in each paycheck over the year. Under the alternate plan, employees can elect to receive equal amounts during the year, or they can choose to take the entire raise in one lump-sum pay increase. This plan allows employees greater discretion over their own financial matters. If an employee wants to use the entire pay raise for a vacation, it can be paid in a lump sum in June. Then, if the employee quits before the end of the year, the unearned part of the pay raise is subtracted from the final paycheck. This plan increases the visibility of the reward to the employee. The employee receives, for example, a $600 pay raise (a rather sizable amount) instead of twelve $50 monthly pay raises. As with the flexible rewards system discussed below, however, the administration costs of the lump-sum plan are greater than those of the traditional method.
Participative Pay Decisions. In addition, of concern to many managers is the extent to which employees should be involved in decisions over pay raises. This is the issue of participative pay decisions. Recently, several organizations have been experimenting with involving employees in pay raise decisions, and the results seem to be quite positive. By allowing employees to participate either in the design of the reward system or in actual pay raise decisions (perhaps through a committee), it is argued that decisions of higher quality are made on the basis of greater information. Also, employees then have greater reason to place confidence in the fairness of the decisions. On the negative side, this approach requires considerably more time for both the manager and the participating subordinates. Costs must be weighed against benefits to determine which approach is most suitable for the particular organization and its goals.
Flexible Benefits Systems. A typical fringe benefit package provides the same benefits—and the same number of benefits—to all employees. As a result, individual differences or preferences are largely ignored. Studies by Lawler indicate variations in benefit preferences. For instance, young unmarried men prefer more vacation time, whereas young married men prefer to give up vacation time for higher pay. Older employees want more retirement benefits, whereas younger employees prefer greater income. Through a flexible benefits program (also called a “cafeteria benefits program”), employees are allowed some discretion in the determination of their own packages and can make trade-offs, within certain limits. Organizations such as PepsiCo, TRW, and the Educational Testing Service already use such programs. Although certain problems of administration exist with the programs, efforts in this direction can lead to increased need satisfaction among employees.
We have seen a number of different creative solutions to the compensation dilemma. Which approaches are most effective in motivating employees? This is obviously a difficult question to answer. However, one way to get relevant information on this question is to see what corporations actually use. One such study asked major employers which of a variety of approaches had been used with a high success level. The results are shown in . As can be seen, skills-based compensation, earned time off, and gain sharing all received high marks from personnel executives, although other programs are also widely supported. It would appear from these results that many approaches can be useful; the choice of which one to use would depend upon the circumstances and goals of a particular organization.

### Guidelines for Effective Incentive Programs

Whatever incentive plan is selected, care must be taken to ensure that the plan is appropriate for the particular organization and workforce. In fact, a simple test of the effectiveness of an incentive plan would be as follows:
1. Does the plan capture attention? Do employees discuss the plan and take pride in their early successes?
2. Do employees understand the plan? Can employees explain how the plan works, and do they understand what they must do to earn the incentive?
3. Does the plan improve communication? As a result of the plan, do employees understand more about corporate mission, goals, and objectives?
4. Does the plan pay out when it should? Are incentives being paid for desired results, and are they withheld for undesirable results?
5. Is the company performing better as a result of the plan? Are profits or market share up or down? Have any gains resulted in part from the incentive plan?
If a new (or existing) pay plan can meet these tests, it is probably fairly effective in motivating employee performance and should be retained by the organization. If not, perhaps some other approach should be tried. On the basis of such a test, several specific guidelines can be identified to increase the effectiveness of the programs. These include the following:
1. Any reward system or incentive plan should be as closely tied to actual job performance as possible. This point was discussed earlier in this chapter.
2. If possible, incentive programs should allow for individual differences. They should recognize that different people want different outcomes from a job. Flexible benefits programs such as the ones discussed here make an effort to accomplish this.
3. Incentive programs should reflect the type of work that is done and the structure of the organization. This simply means that the program should be tailored to the particular needs, goals, and structures of a given organization. Individual incentive programs, for example, would probably be less successful among unionized personnel than would group programs such as the Scanlon plan. This point has been clearly demonstrated in research by Lawler, which points out that organizations with traditional management and those with more participative management might approach reward systems quite differently in order to be effective. As shown in , both types of company can be effective as long as their reward systems are congruent with their overall approach to management.
4. The incentive program should be consistent with the culture and constraints of the organization. Where trust levels are low, for example, it may take considerable effort to get any program to work. In an industry already characterized by high levels of efficiency, basing an incentive system on increasing efficiency even further may have little effect, because employees may see the task as nearly impossible.
5. Finally, incentive programs should be carefully monitored over time to ensure that they are being fairly administered and that they accurately reflect current technological and organizational conditions. For instance, it may be appropriate to offer sales clerks in a department store an incentive to sell outdated merchandise because current fashion items sell themselves. Responsibility falls on managers not to select the incentive program that is in vogue or used “next door,” but rather to consider the unique situations and needs of their own organizations. Then, with this understanding, a program can be developed and implemented that will facilitate goal-oriented performance.
1. How do managers and organizations use incentives and rewards effectively to secure the best possible performance from employees?
Flexible benefits allow employees to choose the fringe benefits that best suit their needs.
A good reward system (1) is closely tied to performance, (2) allows for individual differences, (3) reflects the type of work that is being done, (4) is consistent with the corporate culture, and (5) is carefully monitored over time.

### Chapter Review Questions

1. Identify the various functions of performance appraisals. How are appraisals used in most work organizations?
2. What are some problems associated with performance appraisals?
3. Define validity and reliability. Why are these two concepts important from a managerial standpoint?
4. How can errors in appraisals be reduced?
5. Critically evaluate the advantages and disadvantages of the various techniques of performance appraisal.
6. Discuss the role of feedback in employee performance.
7. What is the difference between intrinsic and extrinsic rewards?
8. Identify the major bases of reward distribution.
9. How does money influence employee motivation?
10. Discuss the relative merits of individual and group incentive programs.
11. Describe the benefits and drawbacks of several of the new approaches to reward systems. Which ones do you feel would be most effective in work organizations?

### Management Skill Exercises

### How Would You Rate Your Supervisor?

Instructions: Think of your current supervisor or one for any job you have held, and evaluate her on the following dimensions. Give a “1” for very poor, a “3” for average, a “5” for outstanding, etc.
Think of a current or previous job, and evaluate the source and quality of the feedback you received from your supervisor. When you are through, refer to  for scoring procedures.

### How Much Feedback Are You Getting from Your Job?

Instructions: Think of a current or previous job. With this in mind, answer the following questions as accurately as possible.
1. My boss lets me know when I make a mistake.

2. My coworkers help me improve on the job.

3. I receive formal evaluations from the company on my job.

4. My boss always tells me when I do a good job.

5. This company really appreciates good performance.

6. When I do something especially well, I receive a “thanks” from my boss.

7. My coworkers are very appreciative when I do a good job.

8. My coworkers compliment me on the quality of my work.

9. My coworkers are very supportive of my efforts.

10. I know when I have done a good job.

11. My job provides me with solid feedback on my performance.

12. I can see the results when I learn to do something better.

### Management Decision Exercises

1. You are the general manager of a floral supplies distributor that provides independent florists with things that they need for their business, such as vases, ribbons, and balloons. You have read that many organizations use incentive pay plans that reward employees when the organization does well. You have 6 drivers, 12 warehouse workers, 3 inside salespeople, and an assistant that reports to you. What types of incentive plan would you propose for an organization like yours?
2. You are the HR manager at a midsized auto parts manufacturer. What are the pros and cons of establishing a 360-degree performance appraisal system in your organizations? Write a memo to the CEO outlining what you think should be done.

### Critical Thinking Case

### HubSpot Focus on Flexible Benefits

What would your manager say to you if you came up with the idea of traveling with Justin Timberlake on tour for an entire year? This would not just be a work from home agreement but an actual out of office plan for one full-year sabbatical. That is exactly what happened at HubSpot when Rosalia Cefalu had a crazy idea that actually got approved.
HubSpot, a global inbound marketing company, has approximately 19,000 customers in over 90 countries and 1,960 employees, stretching from Cambridge, MA, to Sydney, Australia.
“We don’t think that culture is about free beer and ping-pong and dogs in the office, it’s about what you believe, why you do what you do, and who you choose to work with,” states CTO and cofounder Dharmesh Shah. Although HubSpot has plenty of free snacks on hand for their employees to enjoy, other flexible benefits HubSpotters enjoy are unlimited vacation time, tuition reimbursement, flexible hours, and an overall environment that balances freedom with accountability.
At HubSpot it goes deeper than just the perks. The focus from the top down instills pride and passion within its employees, which then translates into happy customers.
Although flexible benefits are a big perk of working at the third-best tech company to work for, according to Glassdoor’s annual Employee Choice awards, the culture isn’t for everyone. The company practices a sense of understanding, knowing that employees will move on and do not need to stay to be loyal and that sometimes someone is no longer needed—either because of performance, or changes in the company’s needs. This isn’t taken personally, and HubSpot is able to grow and continue to grow because it objectively sees the performance of its employees and what is best for the company and employee.
2. How does HubSpot’s focus on culture affect employee performance?
3. What concerns would you have regarding giving employees countless flexible benefits such as HubSpot does; for example, a yearly sabbatical?
Sources: S. Leibowitz. “What it's like to work at HubSpot, one of the best workplaces of 2018.” Business Insider, January 21, 2018, https://www.businessinsider.com/hubspot-best-workplaces-united-states-2018-1; K. M. Newman. “Inside the Company Culture of Hubspot.” Tech.co, April 5, 2013, https://tech.co/company-culture-of-hubspot-2013-04; InHerSight. “Company Profile: Hubspot.” The Motley Fool, October 5, 2016, https://www.fool.com/investing/2016/10/05/company-spotlight-hubspot.aspx.


# Group and Intergroup Relations

## Introduction

### Learning Outcomes

After reading this chapter, you should be able to answer these questions:
1. How do you manage group and intergroup processes effectively?
2. How do group norms, roles, and status systems affect employee behavior and performance?
3. How do managers develop group cohesiveness, which facilitates organizational goal attainment?
4. What are barriers to intergroup cooperation, and how do you take action to minimize such impediments and understand how to get the most out of the collective actions of groups in organizations in order to enhance industrial competitiveness?


# Group and Intergroup Relations

## Work Groups: Basic Considerations

1. How do you manage group and intergroup processes effectively?
Available research on group dynamics demonstrates rather conclusively that individual behavior is highly influenced by coworkers in a work group. For instance, we see many examples of individuals who, when working in groups, intentionally set limits on their own incomes so they earn no more than the other group members. We see other situations where individuals choose to remain in an undesirable job because of their friends in the plant, even though preferable jobs are available elsewhere. In summarizing much research on the topic, Hackman and Morris concluded the following:
There is substantial agreement among researchers and observers of small task groups that something important happens in group interaction which can affect performance outcomes. There is little agreement about just what that “something” is—whether it is more likely to enhance or depress group effectiveness, and how it can be monitored, analyzed, and altered.
In order to gain a clearer understanding of this “something,” we must first consider in detail what we mean by a group, how groups are formed, and how various groups differ.

### What Is a Group?

The literature of group dynamics is a very rich field of study and includes many definitions of work groups. For example, we might conceive of a group in terms of perceptions; that is, if individuals see themselves as a group, then a group exists. Or, we can view a group in structural terms. For instance, McDavid and Harari define a group as “an organized system of two or more individuals who are interrelated so that the system performs some function, has a standard set of role relationships among its members, and has a set of norms that regulate the function of the group and each of its members.” Groups can also be defined in motivational terms as “a collection of individuals whose existence as a collection is rewarding to the individuals.” Finally, a group can be viewed with regard to interpersonal interactions—the degree to which members communicate and interact with one another over time.
By integrating these various approaches to defining groups, we may conclude for our purpose here that a group is a collection of individuals who share a common set of norms, generally have differentiated roles among themselves, and interact with one another toward the joint pursuit of common goals. (The definitions of roles and norms is provided later in this chapter.) This definition assumes a dynamic perspective and leads us to focus on two major aspects of groups: group structure and group processes. Group structure is the topic of this chapter, and group processes will be discussed in later chapters.

### Types of Groups

There are two primary types of groups: formal and informal. Moreover, within these two types, groups can be further differentiated on the basis of their relative degree of permanence. The resulting four types are shown in .
Formal Groups. Formal groups are work units that are prescribed by the organization. Examples of formal groups include sections of departments (such as the accounts receivable section of the accounting department), committees, or special project task forces. These groups are set up by management on either a temporary or permanent basis to accomplish prescribed tasks. When the group is permanent, it is usually called a command group or functional group. An example would be the sales department in a company. When the group is less permanent, it is usually referred to as a task group. An example here would be a corporate-sponsored task force on improving affirmative action efforts. In both cases, the groups are formal in that they are both officially established by the company to carry out some aspect of the business.
Informal Groups. In addition to formal groups, all organizations have a myriad of informal groups. These groups evolve naturally out of individual and collective self-interest among the members of an organization and are not the result of deliberate organizational design. People join informal groups because of common interests, social needs, or simply friendship. Informal groups typically develop their own norms and roles and establish unwritten rules for their members. Studies in social psychology have clearly documented the important role of these informal groups in facilitating (or inhibiting) performance and organizational effectiveness. Again, on the basis of their relative degree of permanence, informal groups can be divided into friendship groups (people you like to be around) and interest groups (e.g., a network of working women or minority managers). Friendship groups tend to be long-lasting, whereas interest groups often dissolve as people’s interests change.
One of the more interesting aspects of group processes in organizations is the interaction between informal and formal groups. Both groups establish norms and roles and goals and objectives, and both demand loyalty from their members. When an individual is a member of many groups—both formal and informal—a wide array of potentially conflicting situations emerges that has an impact upon behavior in organizations. We will focus on this interplay throughout the next few chapters.

### Reasons for Joining Groups

People join groups for many reasons. Often, joining a group serves several purposes at once. In general, at least six reasons can be identified for joining groups:
1. Security. Most people have a basic need for protection from external threats, real or imagined. These threats include the possibility of being fired or intimidated by the boss, the possibility of being embarrassed in a new situation, or simply the anxiety of being alone. Groups can be a primary source of security against such threats. We have often heard that there is “safety in numbers.”
2. Social Needs. In addition, as discussed in previous chapters, basic theories of personality and motivation emphasize that most individuals have relatively strong social needs. They need to interact with other people and develop meaningful relationships. People are clearly social creatures. Groups provide structured environments in which individuals can pursue friendships.
3. Self-Esteem. Similarly, membership in groups can assist individuals in developing self-esteem. People often take pride in being associated with prestigious groups; note such examples as professors elected to membership in the National Academy of Sciences or salespeople who qualify for a million dollar club as a reward for sales performance.
4. Economic Self-Interest. People often associate with groups to pursue their own economic self-interest. Labor unions are a prime example of this phenomenon, as are various professional and accrediting agencies, such as the American Bar Association. These organizations often attempt to limit the supply of tradespeople or professionals in order to maintain employment and salaries.
5. Mutual Interest. Some groups are formed to pursue goals that are of mutual interest to group members. Included here are bridge clubs, company-sponsored baseball teams, and literary clubs. By joining together, individuals can pursue group goals that are typically not feasible alone.
6. Physical Proximity. Finally, many groups form simply because people are located in close physical proximity to one another. In fact, office architecture and layout can have considerable influence over the development of social networks and groups. Consider, for example, two floors in the same building. On the first floor, all the managers have private offices arranged in a long row, with their assistants arranged in a similar row in front of them. This horizontal pattern of offices does not allow for frequent interaction between either the managers or the secretaries, and as a result group formation may be slowed. On the second floor, however, suppose all the managers’ offices are arranged in a cluster surrounding a similar cluster of assistants. The result would be more frequent social interaction among employees. This is not to say that one arrangement is superior to the other; rather, it is simply to point out how variations in office arrangements can have an impact on group formation.

### Stages in Group Development

Before we begin a comprehensive examination of the structure of groups, consider briefly the stages of group development. How do groups grow and develop over time? Tuckman has proposed one model of group development that consists of four stages through which groups generally proceed. These four stages are referred to by the deceptively simple titles forming, storming, norming, and performing (see ).
1. Forming. In the first stage of development, when group members first come together, emphasis is usually placed on making acquaintances, sharing information, testing one another, and so forth. This stage is referred to as forming. Group members attempt to discover which interpersonal behaviors are acceptable or unacceptable in the group. In this process of sensing out the environment, a new member is heavily dependent upon others for providing cues to acceptable behavior.
2. Storming. In the second stage of group development, a high degree of intergroup conflict (storming) can usually be expected as group members attempt to develop a place for themselves and to influence the development of group norms and roles. Issues are discussed more openly, and efforts are made to clarify group goals.
3. Norming. Over time, the group begins to develop a sense of oneness. Here, group norms emerge (norming) to guide individual behavior. Group members come to accept fellow members and develop a unity of purpose that binds them.
4. Performing. Once group members agree on basic purposes, they set about developing separate roles for the various members. In this final stage, role differentiation emerges to take advantage of task specialization in order to facilitate goal attainment. The group focuses its attention on the task (performing). As we consider this simple model, it should be emphasized that Tuckman does not claim that all groups proceed through this sequence of stages. Rather, this model provides a generalized conceptual scheme to help us understand the processes by which groups form and develop over time.
1. How do you manage group and intergroup processes effectively?
A group is a collection of individuals who share a common set of norms, who generally have differentiated roles among themselves, and who interact with one another in the joint pursuit of common goals. Groups may be divided into permanent and temporary groups and formal and informal groups. Formal groups include command and task groups, whereas informal groups include friendship and interest groups.


# Group and Intergroup Relations

## Work Group Structure

1. How do group norms, roles, and status systems affect employee behavior and performance?
Work group structure can be characterized in many different ways. We examine several characteristics that are useful in describing and understanding what makes one group different from another. This matrix of variables will, when taken together, paint a portrait of work groups in terms of relatively enduring group properties. The aspects of group structure to be considered are (1) work roles, (2) work group size, (3) work group norms, (4) status relationships, and (5) work group cohesiveness. Each of these factors has been shown to influence group processes, as shown in . Thus, the material presented here will be important when we focus on group processes later in the text.

### Work Roles

In order to accomplish its goals and maintain its norms, a group must differentiate the work activities of its members. One or more members assume leadership positions, others carry out the major work of the group, and still others serve in support roles. This specialization of activities is commonly referred to as role differentiation. More specifically, a work role is an expected behavior pattern assigned or attributed to a particular position in the organization. It defines individual responsibilities on behalf of the group.
It has been suggested that within organizational settings, work roles can be divided into three types on the basis of the nature of the activities that encompass the role. These are:
1. Task-oriented roles. These roles focus on task-related activities aimed at achieving group performance goals.
2. Relations-oriented roles. These roles emphasize the further development of the group, including building group cohesiveness and consensus, preserving group harmony, looking after group member welfare, and so forth.
3. Self-oriented roles. These roles emphasize the specific needs and goals of individual members, often at the expense of the group.
As we might expect, individual group members often perform several of these roles simultaneously. A group leader, for example, must focus group attention on task performance while at the same time preserving group harmony and cohesiveness. To see how this works, consider your own experience. You may be able to recognize the roles you have played in groups you have been a member of. In your experience, have you played multiple roles or single roles?
Perhaps the best way to understand the nature of work roles is to examine a role episode. A role episode is an attempt to explain how a particular role is learned and acted upon. As can be seen in , a role episode begins with members’ expectations about what one person should be doing in a particular position (Stage 1). These expectations are then communicated to the individual (Stage 2), causing the individual to perceive the expectations about the expected role (Stage 3). Finally, the individual decides to act upon the role in terms of actual role-related behavior (Stage 4). In other words, Stages 1 and 2 deal with the expected role, whereas Stage 3 focuses on the perceived role and Stage 4 focuses on the enacted role.
Consider the following simple example. A group may determine that its newest member is responsible for getting coffee for group members during breaks (Stage 1). This role is then explained to the incoming member (Stage 2), who becomes aware of his or her expected role (Stage 3). On the basis of these perceptions (and probably reinforced by group norms), the individual then would probably carry out the assigned behavior (Stage 4).
Several aspects of this model of a role episode should be noted. First, Stages 1 and 2 are initiated by the group and directed at the individual. Stages 3 and 4, on the other hand, represent thoughts and actions of the individual receiving the stimuli. In addition, Stages 1 and 3 represent cognitive and perceptual evaluations, whereas Stages 2 and 4 represent actual behaviors. The sum total of all the roles assigned to one individual is called the role set.
Although the role episode presented here seems straightforward, in reality we know that it is far more complicated. For instance, individuals typically receive multiple and sometimes conflicting messages from various groups, all attempting to assign them a particular role. This can easily lead to role conflict. Messages sent to an individual may sometimes be unclear, leading to role ambiguity. Finally, individuals may simply receive too many role-related messages, contributing to role overload. Discussion of these topics is reserved for later study, where examination of several important aspects of psychological adjustment to work.

### Work Group Size

Obviously, work groups can be found in various sizes. Early management theorists spent considerable time and effort to no avail attempting to identify the right size for the various types of work groups. There is simply no right number of people for most group activities. They did, however, discover a great deal about what happens as group size increases. A number of relevant size-outcome relationships are summarized in .
Group Interaction Patterns. First, we will consider the effects of variations in group size on group interaction patterns. A series of classic studies by Bales and Borgatta examined this issue using a technique known as interaction process analysis. This technique records who says what to whom; through using it, Bales and his colleagues found that smaller groups (2–4 persons) typically exhibited greater tension, agreement, and opinion seeking, whereas larger groups (13–16 persons) showed more tension release and giving of suggestions and information. This suggests that harmony is crucial in smaller groups and that people in them have more time to develop their thoughts and opinions. On the other hand, individuals in larger groups must be more direct because of the increased competition for attention.
Job Attitudes. Increases in work group size are fairly consistently found to be inversely related to satisfaction, although the relationship is not overly strong. That is, people working in smaller work units or departments report higher levels of satisfaction than those in larger units. This finding is not surprising in view of the greater attention one receives in smaller groups and the greater importance group members typically experience in such things as their role set.
Absenteeism and Turnover. Available research indicates that increases in work group size and absenteeism are moderately related among blue-collar workers, although no such relationship exists for white-collar workers. One explanation for these findings is that increased work group size leads to lower group cohesiveness, higher task specialization, and poorer communication. As a result, it becomes more difficult to satisfy higher-order needs on the job, and job attendance becomes less appealing. This explanation may be more relevant in the case of blue-collar workers, who typically have little job autonomy and control. White-collar workers typically have more avenues available to them for need satisfaction. Similar findings exist for employee turnover. Turnover rates are higher in larger groups. It again can be hypothesized that because larger groups make need satisfaction more difficult, there is less reason for individuals to remain with the organization.
Productivity. No clear relationship has been found between group size and productivity. There is probably a good reason for this. Unless we take into consideration the type of task that is being performed, we really cannot expect a clear or direct relationship. Mitchell explains it as follows:
Think of a task where each new member adds a new independent amount of productivity (certain piece-rate jobs might fit here). If we add more people, we will add more productivity. . . . On the other hand, there are tasks where everyone works together and pools their resources. With each new person the added increment of new skills or knowledge decreases. After a while increases in size will fail to add much to the group except coordination and motivation problems. Large groups will perform less well than small groups. The relationship between group size and productivity will therefore depend on the type of task that needs to be done.
However, when we look at productivity and group size, it is important to recognize the existence of a unique factor called social loafing, a tendency for individual group members to reduce their effort on a group task. This phenomenon occurs when (1) people see their task as being unimportant or simple, (2) group members think their individual output is not identifiable, and (3) group members expect their fellow workers to loaf. Social loafing is more prevalent in larger groups than in smaller groups, presumably because the above three factors are accentuated. From a managerial standpoint, this problem can be reduced by providing workers with greater responsibility for task accomplishment and more challenging assignments. This issue is addressed in the following chapter on job design.

### Work Group Norms

The concept of work group norms represents a complex topic with a history of social psychological research dating back several decades. In this section, we will highlight several of the essential aspects of norms and how they relate to people at work. We will consider the characteristics and functions of work group norms as well as conformity with and deviance from them.
Characteristics of Work Group Norms. A work group norm may be defined as a standard that is shared by group members and regulates member behavior within an organization. An example can be seen in a typical classroom situation when students develop a norm against speaking up in class too often. It is believed that students who are highly visible improve their grades at the expense of others. Hence, a norm is created that attempts to govern acceptable classroom behavior. We see similar examples in the workplace. There may be a norm against producing too much or too little, against getting too close to the supervisor, against being late for work, and so forth.
Work group norms may be characterized by at least five factors:
1. Norms summarize and simplify group influence processes. They denote the processes by which groups regulate and regularize member behavior.
2. Norms apply only to behavior, not to private thoughts and feelings. Although norms may be based on thoughts and feelings, they cannot govern them. That is, private acceptance of group norms is unnecessary—only public compliance is needed.
3. Norms are generally developed only for behaviors that are viewed as important by most group members.
4. Norms usually develop gradually, but the process can be quickened if members wish. Norms usually are developed by group members as the need arises, such as when a situation occurs that requires new ground rules for members in order to protect group integrity.
5. All norms do not apply to all members. Some norms, for example, apply only to young initiates (such as getting the coffee), whereas others are based on seniority, sex, race, or economic class.
Functions of Work Group Norms. Most all groups have norms, although some may be more extensive than others. To see this, examine the norms that exist in the various groups to which you belong. Which groups have more fully developed norms? Why? What functions do these norms serve? Several efforts have been made to answer this question. In general, work group norms serve four functions in organizational settings:
1. Norms facilitate group survival. When a group is under threat, norms provide a basis for ensuring goal-directed behavior and rejecting deviant behavior that is not purposeful to the group. This is essentially a “circle the wagons” phenomenon.
2. Norms simplify expected behaviors. Norms tell group members what is expected of them—what is acceptable and unacceptable—and allow members to anticipate the behaviors of their fellow group members and to anticipate the positive or negative consequences of their own behavior.
3. Norms help avoid embarrassing situations. By identifying acceptable and unacceptable behaviors, norms tell group members when a behavior or topic is damaging to another member. For example, a norm against swearing signals group members that such action would be hurtful to someone in the group and should be avoided.
4. Norms help identify the group and express its central values to others. Norms concerning clothes, language, mannerisms, and so forth help tell others who belongs to the group and, in some cases, what the group stands for. Norms often serve as rallying points for group members.
Conformity and Deviance. Managers often wonder why employees comply with the norms and dictates of their work group even when they seemingly work against their best interests. This concern is particularly strong when workers intentionally withhold productivity that could lead to higher incomes. The answer to this question lies in the concept of conformity to group norms. Situations arise when the individual is swept along by the group and acts in ways that they would prefer not to.
To see how this works, consider the results of a classic study of individual conformity to group pressures that was carried out by Solomon Asch. Asch conducted a laboratory experiment in which a native subject was placed in a room with several confederates. Each person in the room was asked to match the length of a given line (X) with that of one of three unequal lines (A, B, and C). This is shown in . Confederates, who spoke first, were all instructed prior to the experiment to identify line C as the line most like X, even though A was clearly the answer. The results were startling. In over one-third of the trials in the experiment, the naive subject denied the evidence of his own senses and agreed with the answers given by the unknown confederates. In other words, when confronted by a unanimous answer from others in the group, a large percentage of individuals chose to go along with the group rather than express a conflicting opinion, even though these individuals were confident their own answers were correct.
What causes such conformity to group norms? And, under what conditions will an individual deviate from these norms? Conformity to group norms is believed to be caused by at least three factors. First, personality plays a major role. For instance, negative correlations have been found between conformity and intelligence, tolerance, and ego strength, whereas authoritarianism was found to be positively related. Essentially, people who have a strong self-identity are more likely to stick to their own norms and deviate from those of the group when a conflict between the two exists. Second, the initial stimulus that evokes responses can influence conformity. The more ambiguous the stimulus (e.g., a new and confusing order from top management), the greater the propensity to conform to group norms (“I’m not sure what the new order from management really means, so I’ll just go along with what others think it means”). In this sense, conformity provides a sense of protection and security in a new and perhaps threatening situation. Finally, group characteristics themselves can influence conformity to group norms. Factors such as the extent of pressure exerted on group members to conform, the extent to which a member identifies with the group, and the extent to which the group has been successful in achieving previous goals can influence conformity.
What happens when someone deviates from group norms? Research indicates that groups often respond by increasing the amount of communication directed toward the deviant member. This communication is aimed at bringing the deviant into the acceptable bounds set by the group. A good example of this process can be seen in Janis’s classic study of the group processes leading up to the abortive Bay of Pigs invasion in Cuba. At one meeting, Arthur Schlesinger, an adviser to President Kennedy, expressed opposition to the plan even though no one else expressed similar doubts. After listening to his opposition for a while, Robert Kennedy took Schlesinger aside and said, “You may be right or you may be wrong, but the President has his mind made up. Don’t push it any further. Now is the time for everyone to help him all they can.” Janis elaborated on this group decision-making process and termed it “groupthink.”
When a deviant member refuses to heed the message and persists in breaking group norms, group members often respond by rejecting or isolating the deviant. They tell the deviant, in essence, that they will no longer tolerate such behavior and prefer to reconstitute the group. If the deviant is not expelled, the group must continually confront behavior that conflicts with what it holds to be true. Rather than question or reexamine its beliefs, the group finds it simpler—and safer—to rid itself of dangerous influences.

### Status Systems

A fourth characteristic, or structural property, of work groups is the status system. Status systems serve to differentiate individuals on the basis of some criterion or set of criteria. There are five general bases on which status differentiations are made: birth, personal characteristics, achievement, possessions, and formal authority. All five bases can be seen as establishing status in work groups. For example, an employee may achieve high status because he is the boss’s son (birth), the brightest or strongest member of the group (personal characteristics), the best performer (achievement), the richest or highest paid (possessions), or the foreman or supervisor (formal authority).
Reasons for Status Systems. Status systems can be seen throughout most organizations. We differentiate between blue-collar and white-collar employees (and even pink and gold collar), skilled tradespersons and unskilled workers, senior and junior managers, high achievers and low achievers, and popular and unpopular employees. Why do we do this? In essence, status differentiation in organizations (and their related status symbols) serves four purposes:
 We ascribe status to persons as rewards or incentives for performance and achievement. If high achievement is recognized as positive behavior by an organization, individuals are more willing to exert effort.
 Status and status symbols provide useful cues to acceptable behavior in new situations. In the military, for example, badges of rank quickly tell members who has authority and who is to be obeyed. Similarly, in business, titles serve the same purpose.
 People are often ascribed status as a means of signifying respect that is due them. A clergyman’s attire, for instance, identifies a representative of the church.
 Finally, status systems and symbols facilitate stabilization in an otherwise turbulent environment by providing a force for continuity. Authority patterns, role relationships, and interpersonal interactions are all affected and, indeed, defined by the status system in effect. As a result, much ambiguity in the work situation is reduced.
Status can be conferred on an individual in many different ways. One way common in organizations is through the assignment and decoration of offices. John Dean, counsel to former President Nixon, provides the following account concerning status in the White House:
Everyone [on the White House Staff] jockeyed for a position close to the President’s ear, and even an unseasoned observer could sense minute changes in status. Success and failure could be seen in the size, decor, and location of offices. Anyone who moved into a smaller office was on the way down. If a carpenter, cabinetmaker, or wallpaper hanger was busy in someone’s office, this was the sure sign he was on the rise. Every day, workmen crawled over the White House complex like ants. Movers busied themselves with the continuous shuffling of furniture from one office to another as people moved in, up, down, or out. We learned to read office changes as an index of the internal bureaucratic power struggles. The expense was irrelevant to Haldeman. . . . He once retorted when we discussed whether we should reveal such expense, “This place is a national monument, and I can’t help it if the last three Presidents let it go to hell.” Actually, the costs had less to do with the fitness of the White House than with the need of its occupants to see tangible evidence of their prestige.
Modern businesses looking to attract top talent do not have office spaces that have a group of workers siloed in their own walled-off offices with doors 20 years old.
One Orlando business, for instance, spent about $330,000 on the design and build-out of its space.
Status Incongruence. An interesting aspect of status systems in organizations is the notion of status incongruence. This situation exists when a person is high on certain valued dimensions but low on others, or when a person’s characteristics seem inappropriate for a particular job. Examples of status incongruence include the college student who takes a janitorial job during the summer (usually referred to as the “college kid” by the other janitors), the president’s son who works his way up through the organizational hierarchy (at an accelerated rate, needless to say), or the young fast-track manager who is promoted to a level typically held by older employees.
Status incongruence presents problems for everyone involved. The individual may become the target of hostility and jealousy from coworkers who feel the individual has risen above his station. The coworkers, on the other hand, may be forced to acknowledge their own lack of success or achievement. One might ask, for example, “Why has this youngster been promoted over me when I have more seniority?” At least two remedies for this conflict are available to managers. An organization can (1) select or promote only those individuals whose characteristics are congruent with the job and work group, and (2) attempt to change the values of the group. Neither of these possibilities seems realistic or fair. Hence, dynamic organizations that truly reward high achievement (instead of seniority) must accept some level of conflict resulting from status incongruence.

### Group Cohesiveness

A fifth characteristic of work groups is group cohesiveness. We have all come in contact with groups whose members feel a high degree of camaraderie, group spirit, and unity. In these groups, individuals seem to be concerned about the welfare of other group members as well as that of the group as a whole. There is a feeling of “us against them” that creates a closeness among them. This phenomenon is called group cohesiveness. More specifically, group cohesiveness may be defined as the extent to which individual members of a group are motivated to remain in the group. According to Shaw, “Members of highly cohesive groups are more energetic in group activities, they are less likely to be absent from group meetings, they are happy when the group succeeds and sad when it fails, etc., whereas members of less cohesive groups are less concerned about the group’s activities.”
We shall consider two primary aspects of work group cohesiveness. First, we look at major causes of cohesiveness. Following this, we examine its consequences.
Determinants of Group Cohesiveness. Why do some work groups develop a high degree of group cohesiveness while others do not? To answer this question, we have to examine both the composition of the group and several situational variables that play a role in determining the extent of cohesiveness. The major factors that influence group cohesiveness are shown in . These include the following:
1. Group homogeneity. The more homogeneous the group—that is, the more members share similar characteristics and backgrounds—the greater the cohesiveness.
2. Group maturity. Groups tend to become more cohesive simply as a result of the passage of time. Continued interaction over long periods of time helps members develop a closeness born of shared experiences.
3. Group size. Smaller groups have an easier time developing cohesiveness, possibly because of the less complex interpersonal interaction patterns.
4. Frequency of interaction. Groups that have greater opportunities to interact on a regular or frequent basis tend to become more cohesive than groups that meet less frequently or whose members are more isolated.
5. Clear group goals. Groups that know exactly what they are trying to accomplish develop greater cohesiveness, in part because of a shared sense of mission and the absence of conflict over mission.
6. Competition or external threat. When groups sense external threat or hostility, they tend to band together more closely. There is, indeed, “safety in numbers.”
7. Success. Group success on a previous task often facilitates increased cohesiveness and a sense of “we did it together.”
In other words, a wide variety of factors can influence work group cohesiveness. The precise manner in which these processes occur is not known. Even so, managers must recognize the existence of certain forces of group cohesiveness if they are to understand the nature of group dynamics in organizations. The second aspect of group cohesiveness that must be understood by managers relates to their consequences.
Consequences of Group Cohesiveness. As shown in , several consequences of group cohesiveness can also be identified. The first and most obvious consequence is maintenance of membership. If the attractiveness of the group is sufficiently stronger than the attractiveness of alternative groups, then we would expect the individual to remain in the group. Hence, turnover rates should be low.
In addition, high group cohesiveness typically provides the group with considerable power over group members. The power of a group over members depends upon the level of outcomes members expect to receive from the group compared to what they could receive through alternate means. When the group is seen as being highly instrumental to achieving personal goals, individuals will typically submit to the will of the group.
Third, members of highly cohesive groups tend to exhibit greater participation and loyalty. Several studies have shown that as cohesiveness increases, there is more frequent communication among members, a greater degree of participation in group activities, and less absenteeism. Moreover, members of highly cohesive groups tend to be more cooperative and friendly and generally behave in ways designed to promote integration among members.
Fourth, members of highly cohesive groups generally report high levels of satisfaction. In fact, the concept of group cohesiveness almost demands all this be the case, because it is unlikely that members will feel like remaining with a group with which they are dissatisfied.
Finally, what is the effect of group cohesiveness on productivity? No clear relationship exists here. Instead, research shows that the extent to which cohesiveness and productivity are related is moderated by the extent to which group members accept organizational goals. This is shown in . Specifically, when cohesiveness and acceptance of organizational goals are high, performance will probably be high. When acceptance is high but cohesiveness is low, group performance will typically be moderate. Finally, performance will generally be low when goal acceptance is low regardless of the extent of group cohesiveness. In other words, high performance is most likely to result when highly cohesive teams accept the goals of the organization. At this time, both forces for performance are congruent.
1. How do group norms, roles, and status systems affect employee behavior and performance?
People join groups because they offer security, meet social needs, enhance self-esteem, fulfill economic interests, introduce them to people with mutual interests, and, sometimes, because they are in close physical proximity. Groups typically develop through several distinct stages, including forming, storming, norming, and performing. A role may be defined as an expected behavior pattern assigned or attributed to a particular position in the organization. Roles may be oriented toward the task, social relations, or the self.


# Group and Intergroup Relations

## Managing Effective Work Groups

1. How do managers develop group cohesiveness, which facilitates organizational goal attainment?
We have examined in detail the nature and structure of work groups, noting that work groups differ along such dimensions as size, norms, and roles. Some groups are more cohesive than others. In view of these differences, it is interesting to ask how managers can facilitate increased work group effectiveness. To answer this question, we will make use of Hackman’s model of group effectiveness. According to this model, illustrated in , the effectiveness of a work group is influenced by environmental factors, design factors, and task-related interpersonal processes. These three factors combine to influence what are called intermediate criteria, which, in turn, combine with the nature of the work technology to determine ultimate group effectiveness.

### What Is Work Group Effectiveness?

The first question to raise concerning work group effectiveness is what we mean by the concept itself. According to Hackman’s model, effectiveness is defined in terms of three criteria:
1. Productive output. The productive output of the group must meet or exceed the quantitative and qualitative standards defined by the organization.
2. Personal need satisfaction. Groups are effective if membership facilitates employee need satisfaction.
3. Capacity for future cooperation. Effective groups employ social processes that maintain or enhance the capacity of their members to work together on subsequent tasks. Destructive social processes are avoided so members can develop long-term cohesiveness and effectiveness.

### Determinants of Work-Group Effectiveness

Group effectiveness is largely determined by three factors that have been called intermediate criteria. These factors are as follows:
1. Group effort. The amount of effort group members exert toward task accomplishment.
2. Group knowledge and skill. The amount of knowledge and skills possessed by group members that are available for group effort and performance.
3. Task performance strategies. The extent to which the group’s strategies for task performance (that is, how it analyzes and attempts to solve problems) are appropriate.
Although the relative importance of each of these three intermediate factors may vary, all three are important. Without considerable group effort, appropriate skills and knowledge, and a clear strategy for task completion, groups are unlikely to be effective.
An important influence on the relative importance of these three variables is the nature of work technology. This includes the equipment and materials used in manufacture, the prescribed work procedures, and the physical layout of the work site. For example, if jobs are highly routinized, individual skills and knowledge may be somewhat less important than simple effort. On more complex tasks, however, such as research and development, effort alone will be of little help without concomitant skills and knowledge. Hence, although the relative importance of these three variables may vary with the job technology, all should be considered in any effort to understand determinants of work group effectiveness in a particular situation.
Finally, it must be recognized that these determinants of effectiveness are themselves influenced by three sets of factors (shown at the left-hand side of ). First, we must recognize a series of environmental context factors, such as the company’s reward system, training programs, job descriptions, and so forth. Second are several design factors, including group structure, member composition, and performance norms. Finally, the role of interpersonal processes—such as efforts among group members and management to reduce conflict, foster commitment, and share knowledge—must be recognized. These three sets of factors, then, are largely responsible for determining the so-called intermediate criteria that, in turn, combine with appropriate job technologies to determine work group effectiveness.

### Implications for Group Management

On the basis of this analysis of group processes in work organizations, we can identify several actions managers can take in order to help groups to be more effective.
Increased Managerial Awareness. To begin, managers can make themselves more aware of the nature of groups and the functions groups perform for individuals. By learning why individuals join groups, for example, managers should be able to better understand the motivational implications of group dynamics. Is high group cohesiveness in a particular group a result of high commitment to the organization and its goals, or is it a result of alienation from the organization?
Sensitivity to Group Norms. Managers can be sensitive to group norms and the extent to which they facilitate or inhibit group and organizational performance. The potency of group norms has been clearly established. It has also been shown that company actions can increase or decrease the likelihood that norms will work to the benefit of the organization. Much of the thrust of current organizational development efforts is to use process consultation techniques to develop group norms that are compatible with company goals.
Understanding Pressures for Conformity. Much has been said in the research literature about the effects of groups on individual conformity and deviance. Groups often place significant pressures on individuals to conform, and they punish deviants by such means as ostracism. From a managerial standpoint, conformity can represent a mixed blessing. On one hand, there are many work situations in which managers typically want workers to conform to standard operating procedures (this is called dependable role performance). On the other hand, employees must be sufficiently free to take advantage of what they believe to be unique or important opportunities on behalf of the organization (innovative and spontaneous behavior). If pressures toward conformity are too strong, this spontaneity may be lost, along with unique opportunities for the organization.
Harnessing Group Cohesiveness. Where it is desirable to develop highly cohesive groups, managers can show employees how group members can help one another by working together. It is important to note, however, that group cohesiveness by itself does not guarantee increased group effectiveness. Instead, managers must take the lead in showing group members why they benefit from working toward organizational goals. One way to accomplish this is through the reward systems used by the organization.
In short, there are several lessons for managers here concerning the effects of group dynamics on performance and effectiveness. The lesson is clear: managers must be sensitive to and deal with group processes in the workplace. Without doing so, the manager and the company are destined at best to achieve mediocre results.
1. How do managers develop group cohesiveness, which facilitates organizational goal attainment?
Social loafing is a tendency for individual members of a group to reduce their task effort in the belief that other members will cover for them. A norm is a standard that is shared by group members and that regulates member behavior within an organization. Norms facilitate group survival, simplify expected behaviors, help members avoid embarrassing situations, and help identify group members. Asch’s experiment in group pressure and individual judgment demonstrated that individuals will discount their own perceptions of a situation and follow the will of a group. Status systems serve to differentiate individuals on the basis of some criterion or set of criteria. Status incongruence occurs when one individual holds a position in the status hierarchy that is inconsistent with the conventional criteria for that position. Group cohesiveness is the extent to which individual members of a group are motivated to remain in the group. Work group effectiveness is defined by three criteria: group productivity, personal need satisfaction of the members, and the group’s capacity for future cooperation.