1.3 Trends Influencing Organizational Behavior

The rise of remote workA type of flexible work arrangement that allows an employee to work outside of an organization’s office. has been a transformative trend in the modern workforce, sparked by technological advancements and shifting attitudes towards workplace flexibility. Before the COVID-19 pandemic, remote work was already gaining momentum, with companies adopting flexible work policies to accommodate employee preferences and enhance productivity. For instance, tech giants like Google and Facebook offered remote work options to attract top talent and promote work-life balance. However, the pandemic accelerated this trend as organizations worldwide implemented remote work mandates to comply with social distancing measures. Companies swiftly adapted their operations, leveraging digital tools such as video conferencing platforms and cloud-based collaboration software to facilitate remote work. For example, companies like Slack and Zoom, which helped employees communicate remotely, experienced surges in usage as online interactions became the norm for many. Now, remote work remains prevalent and attractive to employees and employers alike, with many companies adopting hybrid work models that combine in-office and remote work to accommodate employee preferences and enhance organizational resilience. This shift has profound implications for organizational behavior, requiring leaders to foster virtual collaboration, maintain employee engagement, and rethink traditional approaches to performance management and organizational culture in a remote or hybrid work environment.

You have probably heard of the gig economy, which consists of temporary, flexible jobs where organizations hire independent contractors instead of, or in addition to, full-time employees. Such jobs are often facilitated by technology. Gig workersIndependent contractors, online platform workers, contract firm workers, on-call workers, and temporary workers who provide on-demand services. may work as a contractor for a single organization, or they may work for several simultaneously. The number of contract workers in U.S. businesses is over 27 million, which is up sharply from 2010. Some gig workers have other full-time jobs, some are seeking the flexibility of part-time employment, and some do not have other alternatives. A key issue regarding a gig economy is the changing nature of the employment contract—both from a legal and an 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. 

The rise of artificial intelligence (AI)The simulation of human intelligence processes by machines, especially computer systems. and automation has profound implications for organizational behavior, fundamentally altering how work is conducted, managed, and perceived. AI technologies enable the automation of routine tasks, decision-making processes, and complex cognitive functions. With the introduction of AI on everyone’s desktop, applications such as ChatGPT and Bard seem to be everywhere. And 62 percent of those surveyed by Pew Research Center believe AI will have a major impact on job holders over the next 20 years. This shift augments efficiency and productivity and has the potential to transform the nature of jobs, skills requirements, and organizational structures. For instance, chatbots equipped with natural language processing capabilities automate customer service interactions, reducing the need for human intervention. Given the prevalence of AI and its ongoing influence on organizational behavior, we are including a special feature highlighting AI and OB in each chapter, starting with this one, called AI Insights: Navigating the Future of Work.

Another aspect of AI and technology 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, with 81 percent of Americans saying they are concerned about the data companies collect about them. Data privacy refers to individuals’ control over their data collection, storage, access, and reporting. Data privacy concerns heightened in 2018 when the General Data Protection Regulation (GDPR) went into effect for all companies with a presence in a European Union (EU) country. This regulation states that all of the EU’s 500 million citizens have the right to have their data “forgotten” and purged from online records. The penalties for violating this regulation are large, amounting to 4 percent of the company’s annual revenue or $20 million, whichever is higher. While new laws are beginning to regulate data privacy and provide greater protection for individuals, data privacy 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.

The global workforce has been diversifying in numerous ways. Diversity may be defined by any characteristic that varies within a particular work unit such as gender, race, age, education, tenure, or functional background (such as being an engineer versus being an accountant). The U.S. workforce is increasingly diverse, with women comprising 46 percent of the workforce. Further, 12.9 percent of the workforce is Black, 15.7 percent is of Hispanic origin, and 18.1 percent of the workforce was born in a different country. These demographic trends create both challenges and opportunities for organizations. An increasingly diverse workforce offers strengths such as employees that bring in unique perspectives, opportunities for creative problem solving, and the ability to meet the needs of a diverse customer base. At the same time, organizations are finding it a challenge to ensure that everyone feels respected, valued, and included in decision-making. For example, the representation of employees from different age groups creates conditions ripe for misunderstandings, the need to manage career goals of a diverse set of employees, and the need to design reward systems that appeal both to employees who are just starting off in their careers and employees getting close to retirement, all the while ensuring that all employees are committed to the organization’s mission. 

In 2023, the United States Surgeon General issued a report and declared a loneliness epidemic due to loneliness and isolation. He noted the health risks are as serious as those of smoking 15 cigarettes each day. Inclusive practices in the workplace are crucial for fostering a culture where all employees feel valued, respected, and empowered to contribute their unique perspectives and talents. These practices encompass a range of initiatives and policies aimed at promoting diversity  and belonging within organizations. For instance, implementing inclusive hiring practices, such as blind recruitment techniques that remove identifying information to reduce unconscious bias, can help ensure equitable opportunities for candidates from diverse backgrounds. Additionally, creating a culture of psychological safety, where employees feel comfortable speaking up, sharing ideas, and challenging the status quo without fear of reprisal, is essential for fostering innovation and collaboration. While loneliness is a challenge of our times, there are opportunities to reverse this trend by embracing inclusive practices. Organizations not only enhance employee engagement and retention but also drive business outcomes by leveraging diverse perspectives to solve complex problems and drive innovation. 

GlobalizationThe increasing interconnectedness of economies, cultures, and societies.  refers to the increasing interconnectedness of economies, cultures, and societies. Multinational companies operating in various countries must adapt to different cultural norms and values. Globalization has significantly impacted organizational behavior, reshaping the dynamics of the workplace and necessitating new approaches to management and leadership. With the increasing interconnectedness of economies and cultures, organizations now operate in diverse and multicultural environments, requiring leaders to navigate complex cross-cultural interactions and effectively manage diverse teams. For example, multinational corporations like Coca-Cola and Unilever have diverse workforces spanning multiple countries, each with its own cultural norms, communication styles, and work preferences. In this context, understanding cultural differences, promoting cultural sensitivity, and fostering inclusive practices are essential for promoting collaboration, creativity, and employee engagement. Moreover, globalization has also led to the adoption of virtual teams and remote work arrangements, enabling organizations to leverage talent from around the globe and accommodate flexible work arrangements. However, managing virtual teams presents unique challenges related to communication, coordination, and team cohesion, requiring leaders to employ effective communication strategies and utilize technology to facilitate collaboration across geographical boundaries. Therefore, globalization necessitates a nuanced understanding of cultural diversity and the development of cross-cultural competencies among organizational leaders and employees to thrive in today’s globalized workplace, as you will see throughout this textbook.

Ethical leadership focuses on integrity, transparency, and accountability in organizational leadership, shaping organizational culture and decision-making. Ethical leadership plays a pivotal role in shaping organizational culture, driving employee engagement, and fostering long-term success in the workplace. Ethical leaders demonstrate integrity, transparency, and accountability in their decision-making processes, setting a positive example for employees and cultivating a culture of trust and respect. For example, leaders like Satya Nadella of Microsoft have emphasized the importance of ethical behavior and responsible business practices, guiding the company’s efforts to prioritize sustainability, diversity, and ethical AI development. Ethical leadership also influences employee behavior and organizational outcomes, as research suggests that employees are more likely to exhibit ethical conduct and commitment to the organization when they perceive their leaders as ethical role models. Conversely, unethical leadership behaviors, such as dishonesty or favoritism, can erode trust, demotivate employees, and undermine organizational reputation and performance. Therefore, investing in ethical leadership development and promoting a culture of ethical decision-making are critical strategies for organizations seeking to enhance employee morale, stakeholder trust, and long-term sustainability. 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 to whether it has a culture of consistently ethical behavior and whether leaders are committed to this ethical behavior.

The primary role of for-profit companies is to generate shareholder wealth. However, 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 businesses need to perform well socially and environmentally beyond economic viability. 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 genuinely 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 reconciling publicly owned firms’ accountability 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 hybrid vehicles, which combine combustion engine efficiency with hybrid electric technology, have been dramatic, helped propel companies such as Toyota to higher market share and profits, and spurred other companies to follow suit with their own hybrid and fully electric offerings. Incentives by governments also affect sales and what car companies produce and sell. 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, ReCORK was founded to divert some of the more than 13 billion used wine corks from landfills annually, starting in 2007. By 2024, they had collected over 132 million corks. In 2008 they partnered with SOLE, a Canadian footwear company that used the donated cork to make new shoe soles. 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.

Corporate social responsibility (CSR)The idea that a good corporate citizen voluntarily adopts ethical, sustainable, and responsible business practices. refers to providing societal good. This might be through a company’s initiatives and focus on social impact and human rights, such as fair wages, safe working conditions, and ethical decision-making. Thus, social impact initiatives are seen as a key aspect of CSR. Social responsibility does not necessarily just have to be something organizations do at the price of profits. For example, TOMS operated as a for-profit company and a nonprofit subsidiary called Friends of Toms, which was responsible for running a unique program. They became a certified B corporation in 2018. For every pair of shoes sold by Toms, a pair of shoes is donated to a child living in poverty, with more than 100 million shoes donated in countries around the world as well as one-third of profits going toward grassroots causes.