1.5 Trends Influencing Organizational Behavior

Business ethicsWhen ethical principles are applied to situations that arise at work. refers to applying ethical principles to situations that arise at work. It feels like it’s been one ethical scandal after the other in the business world. Wells Fargo, Facebook, Enron Corp., Samsung, WorldCom, and Halliburton Energy Services have all participated in activities that can be described in terms ranging from poor judgment to outright illegal behavior. The immediate response by government of ethical lapses within organizations was the Sarbanes-Oxley Act, which went into effect in 2002. This act consists of 11 specific requirements aimed at greater accountability, which companies must comply with in terms of financial reporting.

Unfortunately, while there may be some benefit to businesses from complying with these rules, few see this as the long-term solution to dealing with unethical behavior. The challenge is to continue to think about business ethics on a day-to-day basis and cultivate cultures that support ethical decision making. The opportunity for organizations to be at the forefront of ethical thinking and actions is wide open. OB research finds that the most important determinant of whether a company acts ethically is not necessarily related to the policies and rules regarding ethical conduct but instead whether it has a culture of consistently ethical behavior and if leaders are committed to this ethical behavior.

Another aspect of ethics relates to how data about individuals are used. Online data privacy concerns have become prevalent due to hacking, human error, and data scraping from social media and other websites becoming a major challenge for individuals and organizations alike, with 92% of companies surveyed reporting that data privacy and security are among their top concerns. Data privacy refers to individuals’ control over the collection, storage, access, and reporting of their own personal data.  The issue of data privacy concerns became heightened in 2018 when the General Data Protection Regulation (GDPR) went into effect for all companies having a presence in a European Union (EU) country. This regulation states that for all of the EU’s 500 million citizens, they have the right to have their data “forgotten” and purged from online records. The penalties for violating this regulation are large, amounting to 4% of the company’s annual revenue or $20 million dollars, whichever is higher.

While new laws are beginning to regulate data privacy and provide greater protection for individuals, it remains a challenge. Individuals rarely read the terms and agreements when they create online accounts with companies and they are often willing to trade their privacy for convenience.  For example, the rise of “wearables” means that data exist regarding where you are with insights into what you are doing, which gives a great deal of information power to organizations.

Studies suggest that fostering engagement, a concept related to passion, in employees has a significant impact on the corporate bottom line. Gallup, for instance, has been on the forefront of measuring the impact of what is called employee engagement. Employee engagementThe degree to which employees are fully involved in and enthusiastic about their work. is a concept that is generally viewed as managing discretionary effort; that is, when employees have choices, they will act in a way that furthers their organization’s interests. An engaged employee is a person who is fully involved in and enthusiastic about their work. The consulting firm BlessingWhite offers this description of engagement and its value: “Engaged employees are not just committed. They are not just passionate or proud. They have a line-of-sight on their own future and on the organization’s mission and goals. They are ‘enthused’ and ‘in gear’ using their talents and discretionary effort to make a difference in their employer’s quest for sustainable business success.”

Engaged employees are those who are performing at the top of their abilities and happy about it. According to statistics that Gallup has drawn from 300,000 companies in its database, 87% of employees worldwide are not engaged at work. This is unfortunate on both a personal level for those employees and in terms of profitability as companies with highly engaged workforces outperform their peers by 146% in earnings per share. In their global study of engagement, Gallup analyzed findings from nearly 82,000 business units across 49 industries and 73 countries and found that overall, engagement was related to higher profitability, productivity, sales, safety, and customer metrics as well as fewer quality defects, lower turnover, and lower absenteeism.

Job satisfaction studies in the United States routinely show job satisfaction ratings of 50%–70%. But one study of American workers by the American Psychological Association and Harris Interactive went a step further to understand what factors led to job satisfaction. What did the researchers find?  

Technology has transformed the way work gets done and has created many great opportunities. This was further accelerated in 2020 during the COVID-19 pandemic, which led to a heavier reliance on technology and automation than ever before. The nexus of increasing personal computing power, the internet, and nanotechnology are allowing things to be created that weren’t even imaginable 60 years ago. And the rate of technological change is not expected to slow down anytime soon. Gordon Moore, a cofounder of Intel Corp., shocked the world in 1975 with what is now termed Moore’s Law, which states that computing power doubles every two years. This explains why a three-year-old computer can barely keep up with the latest video game you have purchased. As computers get faster, new software is written to capitalize on the increased computing power. We are also more connected by technology than ever before. For years it has been possible to send and receive emails or text messages with your coworkers and customers regardless of where in the world you are. There are more than 3.8 billion email accounts worldwide and users around the world send over 293 billion emails every day. Technology has also brought a great deal of challenges to individuals and organizations alike. To combat the overuse of email, companies such as Intel have experimented with ideas such as “no e-mail Fridays,” in which all communication is done via other communication channels. At the same time, a survey found that 37% of those surveyed worry about automation putting jobs at risk while 73% think technology can never replace the human mind.  The technology trend contains several challenges for organizational behavior. 

Thomas Friedman’s book The World Is Flat: A Brief History of the Twenty-First Century makes the point that the internet has “flattened” the world and created an environment in which there is a more level playing field in terms of access to information. This access to information has led to an increase in innovation, as knowledge can be shared instantly across time zones and cultures. It has also created intense competition, as the speed of business is growing faster and faster all the time. 

There are few barriers to information today, which has created huge opportunities around the globe. Of course, information by itself is not as important as having the right information at the right time. A major challenge for individuals with such vast amounts of information is learning how to evaluate the quality of the information they find. As has become more and more apparent, access to information does not necessarily mean that the information is accurate. Thus, checking facts and reading source materials is more important than ever before. Santa Clara University helped establish The Trust Project, which seeks to identify indicators of trust for information.

These include the following eight factors related to higher trust in published information:

› Best Practices: What are your standards? Who funds the news outlet? What is the outlet’s mission? Plus commitments to ethics, diverse voices, accuracy, making corrections, and other standards.

› Author Expertise: Who reported this? Details about the journalist who wrote the story, including expertise, and other stories they have worked on.

› Type of Work: What am I reading? Labels to distinguish opinion, analysis, and advertiser (or sponsored) content from news reports.

› Citations and References: For investigative or in-depth stories, greater access to the sources behind the facts and assertions.

› Methods: Also for in-depth stories, information about why reporters chose to pursue a story and how they went about the process.

› Locally Sourced: Lets people know when the story has local origin or expertise.

› Diverse Voices: A newsroom’s efforts to bring in diverse perspectives.

› Actionable Feedback: A newsroom’s efforts to engage the public’s help in setting coverage priorities, contributing to the reporting process, ensuring accuracy, and other areas.

The primary role of for-profit companies is to generate shareholder wealth. More recently, the concept of the triple bottom lineEvaluating organizations against three performance criteria including economic, social, and environmental viability. has been gaining popularity. Those subscribing to the triple bottom line believe that beyond economic viability, businesses need to perform well socially and environmentally. While some organizations have embraced the concepts underlying the triple bottom line, businesses are also undergoing a great deal of “greenwashing,” which refers to the marketing of products or processes as green to gain customers without truly engaging in sustainable business practices. Sustainable business practicesPractices that meet the current needs of businesses without compromising the needs of future generations. are those that meet the present needs without compromising the needs of future generations. The challenge is to reconcile the accountability that publicly owned firms have in generating wealth for their shareholders while attending to the triple bottom line. On the other hand, organizations also have an opportunity to leverage a proactive stance toward innovative processes that can result in even greater profits for their products. For example, sales of the Toyota Prius, which combines combustion engine efficiency with hybrid electric technology, have been dramatic and have helped propel Toyota to record market share and profits and also spurred other companies to follow suit with their own hybrid offerings.

An unlikely leader in the sustainability movement is Walmart. Walmart hired Adam Werbach, the former president of the Sierra Club, to help train 1.3 million North American Walmart employees about sustainability. This program was so successful that it was expanded across 80 countries. Walmart has also been pressuring suppliers to produce compact fluorescent lightbulbs with less mercury and has slashed the resources needed in packaging by requiring all suppliers to make packages smaller.

In the future, increasing interdependence between businesses, governmental agencies, not-for-profit organizations, and non-governmental organizations (NGOs) is bound to effect change throughout the economy. In a compelling example of this, ReCORK was founded to annually divert some of the more than 13 billion used wine corks from landfills starting in 2007. By 2020, they had collected over 110 million corks. In 2009 they partnered with SOLE, a Canadian footwear company that used the donated cork to make the soles of new shoes. Additional partners include the Aria resort and casino in Las Vegas and American Airlines, which gather and donate their used corks. Allbirds is a San Francisco-based company also seeking to create sustainable footwear. Their products are crafted with natural materials such as wool to make shoes with a smaller ecological footprint, and their business is booming.

Social responsibility is not just something organizations do at the price of profits. Toms operates as a for-profit company but also operates a nonprofit subsidiary called Friends of Toms, which is responsible for running a unique program. For every pair of shoes sold by Toms, a pair of shoes is donated to an impoverished child, with more than 75 million shoes donated in countries around the world.

You have probably heard that the American workforce is aging. Over the next 30 years, 76 million baby boomers will retire, but there will only be 46 million new workers from Generations X and Y entering the labor force. This demographic trend creates both challenges and opportunities for organizations.

The aging trend has been predicted for decades. Near the turn of the century, it was predicted that the number of workers in the labor force aged 55 and older would grow from 13% in 2000 to 20% in 2020. This prediction was actually fulfilled sooner than expected. In 2018, workers aged 55 and older comprised over 23% of the labor force. There will be record numbers of retirements, with 10,000 baby boomers entering retirement age every day until 2029 when the last baby boomer will turn 65. Aging workforces can create great opportunities for industries such as health care, but it can also mean great challenges lie ahead as entire industries related to basic infrastructure face massive retirement projections. For example, every job from air traffic controllers to truck drivers are predicted to be in huge demand as thousands of retiring workers leave these industries at roughly the same time.

You have probably heard of the gig economyThe prevalence of temporary employment positions where individuals are independent contractors rather than employees of organizations., which consists of temporary, flexible jobs where organizations hire independent contractors instead of, or in addition to, full-time employees. Gig workers may work as a contractor for a single organization or they may work for several simultaneously. The number of contract workers at U.S. businesses in 2019 was over 18 million which is up 15% from 2010. Some gig workers have other full-time jobs, some are seeking the flexibility of part-time employment, and yet others do not have other options. A key issue regarding a gig economy is the changing nature of the employment contract—both from a legal as well as attitudinal approach. For example, it is not unusual to see both Lyft and Uber signs and stickers on cars with drivers choosing which ride to pick up based on a variety of factors, indicating no particular attachment or loyalty to either organization. 

OutsourcingAn organization asking an outside organization to perform functions that could have been performed by itself. has become a way of life for many organizations. Outsourcing refers to having someone outside the formal ongoing organization doing work previously handled in-house. An example of this is for a company to hire the services of a different firm to handle payroll and benefits, instead of having these administered within the company. OffshoringRefers to some or all of a business process being moved from one country to another country. means sending jobs previously done in one country to another country. An example of offshoring is for a company to open a factory in Mexico to take advantage of lower cost of labor. Nowhere is there more outsourcing and offshoring than in the software technology industry. It was recently estimated that 43% of the companies in the United States outsource IT work. Some of the top countries identified for this work include Ukraine, Poland, India, China, Mexico, and Argentina. 

Microsoft has been expanding their use of employees in Canada for a variety of reasons, such as closer proximity to Microsoft’s headquarters in Seattle, Washington, as well as similarity of language and time zones. With the advent of software automation and cloud computing, the interest in outsourcing is growing. In fact, 84% of executives surveyed by Deloitte indicated that they have either considered or implemented new outsourcing options. The challenge for organizational behavior is managing teams consisting of different nationalities separated not only by culture and language but also in time and space as well as the fairness and equity issues associated with different types of employees working together over time.