Charismatic leadership perspectives emphasise the kind of leader–follower social relationship summarised above and are the first of the wholly new leadership approaches considered. House’s version of this approach defines charismatic leaders as those who by force of their personal abilities are capable of having a profound effect on followers. The work of Conger and Kanungo suggests that if leaders use behaviours such as vision and articulation, environmental sensitivity and unconventional behaviour, rather than maintaining the status quo, followers will attribute charismatic leadership to them. Yukl draws a distinction between charismatic and transformational leadership (see below) by suggesting that transformational leadership requires leaders to empower others and make them partners in a change process, whereas charismatic leadership requires followers to place their trust in the leader’s special expertise to achieve radical change.

Notwithstanding Yukl’s distinction, transformational leadership is typically seen as a broader approach than charismatic leadership. Bass and associates’ transformational perspective is a particularly well-known theory that includes charisma as one of its dimensions. It separates vision-oriented transformational leadership from day-to-day transactional leadership and argues that the two work in combination. Transactional leadership is typically seen as based on contingent rewards, management by exception (active and passive), and laissez-faire behaviour. Transformational leadership is dependent on the four ‘I’s’ of individualised consideration, intellectual stimulation, inspirational motivation and idealised influence. Transformational and charismatic leadership, and the new leadership in general, are important because of their facilitation of change in our increasingly fast-moving world.

This chapter is organised around two key questions or issues: encouraging and facilitating desired work behaviours through use of extrinsic rewards; and the difference between teaching and learning organisations. Both issues depend upon a broad understanding of learning.

Learning is about acquiring the capacity to perform, whereas performance implies that a person has acquired these capacities, and is motivated to engage in appropriate behaviour, to apply the learning. Learning can be defined as a relatively permanent change in behaviour resulting from experience. It is an important part of rewards management.

The four general approaches to understanding or describing learning are classical conditioning, operant conditioning, cognitive learning and social learning.

Classical conditioning is a form of learning through association that involves the manipulation of stimuli (which incite action) to influence behaviour.

Operant conditioning is the process of controlling behaviour by manipulating its consequences. Reinforcement is the means through which operant conditioning takes place. Its foundation is the law of effect, which states that behaviour will be repeated or extinguished, depending on whether the consequences are positive or negative. Reinforcement is related to extrinsic rewards (valued outcomes that are given to the individual by some other person) because these rewards serve as environmental consequences that can influence people’s work behaviours through the law of effect.

Organisational behaviour modification (OB Mod) systematically utilises four reinforcement strategies to change behaviour: positive reinforcement, negative reinforcement (avoidance), punishment and extinction. Positive reinforcement is used to encourage desirable behaviour through the administration of positive consequences that tend to increase the likelihood of a person’s repeating a behaviour in similar settings. Positive reinforcement should be contingent (administered only if the desired behaviour is exhibited) and immediate (as close in time to the desired behaviour as possible). It can be scheduled either continuously or intermittently. The latter involves variable intervals and ratios schedules of reinforcement as somewhat different applications are better in difference situations.

Negative reinforcement, or avoidance, is also used to encourage desirable behaviour. The withdrawal of negative consequences tends to increase the likelihood that a person will repeat a desirable behaviour in similar settings. Punishment is the administration of negative consequences or the withdrawal of positive consequences, which tends to reduce the likelihood of repeating a given behaviour in similar settings. Punishment is used to weaken or eliminate undesirable behaviour. There are a number of problems that can occur with punishment. Thus, one must be especially careful to follow appropriate reinforcement guidelines (including the laws of contingent and immediate reinforcement), when using it. Punishment is likely to be more effective if combined with positive reinforcement.

Extinction is the withdrawal of the reinforcing consequences for a given behaviour. It is often used to withhold reinforcement for an undesirable behaviour that has previously been reinforced. This is done to weaken or eliminate the undesirable behaviour. It is an especially powerful strategy when combined with positive reinforcement.

Reinforcement strategies continue to be analysed and debated. A number of success stories have been reported, but many lack controlled scientific research designs. Some argue that these results may be due to variables other than reinforcement. Others point out that using the various reinforcement strategies may manipulate workers and lead to managerial abuse of power (somewhat contrary to the empowerment approach of chapter 4). The criticisms raise ethical considerations. Advocates of reinforcement approaches respond that all managerial strategies are manipulative in some sense and that managers must be sensitive to the abuse of their power. Employees can also be encouraged to provide input to the design of the reinforcement system and to use behavioural self-management whenever feasible.

Social learning theory advocates learning through the reciprocal interactions among people, behaviour and environment. Thus, it combines operant and cognitive learning approaches. Behavioural self-management builds on social learning theory to emphasise both behavioural and cognitive foci with a special emphasis on enhancing a worker’s self-efficacy and feeling of self-control. Self-management is useful both in treating workers as individuals and as part of self-managed teams.

Managing pay as an extrinsic reward is particularly important because pay has multiple meanings — some positive and some negative. A major and highly visible extrinsic reward, pay plays a role in reinforcement and in the motivation theories discussed previously. Its reward implications are especially important in terms of merit pay. Other pay practices that are important and offer creative reward opportunities are skill-based pay, gain-sharing plans, lump-sum pay increases and flexible benefit plans.

The role of learning is highlighted as a critical factor if organisations are to cope effectively with the transition to an information society. A learning organisation is a new, company-wide philosophy which involves all organisational participants. Factors involved in creating a learning organisation include a shared vision of future growth, the development of strategies and action plans to inspire commitment to future goals, a process of ongoing consultation to achieve consensus, renewal of organisational structures and processes, employing systems thinking and creating self-directed teams of employees.

Following the rise to significance of the learning organisation in the 1990s, the notion of a teaching organisation has become apparent for the new millennium. Organisational learning is acquiring or developing new knowledge that modifies or changes behaviour and improves organisational performance. Teaching organisations aim to pass on learning experiences to others, thereby allowing the organisation to achieve and maintain success.

What is the psychological contract? Why is it important to understanding employment? What responsibility should organisations have to help employees deal with work stress? What major challenges to the quality of work life are presented by the conditions and environment of today's organisations?

As the text states, a psychological contract is the set of expectations held by the individual that specifies what the organisation and individual expect to give and receive from one another in their working relationship. When an inducement-contributions balance exists, the value exchange in the psychological contract is felt to be fair; thus, the individual can be expected to feel positive toward the organisation and his or her position. However, when the exchange of values is perceived to be unfair, the individual may feel negatively toward the organisation and his or her position, possibly resulting in negative attitudes, work behaviour, etc. Managers should take care to first create a healthy psychological contract by fairly representing inducements and discussing expectations about employee contributions. The same honesty applies when maintaining the psychological contract. Quality of work life encompasses such areas as participation, independence, equity and responsiveness.

Organisations should help employees deal with stress for several reasons — not the least being the high costs of employee turnover and absenteeism, low productivity and labour shortages in some areas. As well, in terms of the psychological contract, the organisation has the responsibility to ensure the balance of expected contributions from the employee with inducements. There will be a limit to what an employee can feasibly do, no matter what the contributions, and this limit needs to be monitored. It is also important to achieve optimum performance from employees and this means not losing performance due to the health and other problems associated with stress. Finally, there is a social responsibility to care for the humans in the workplace and the likely negative publicity of employees or former employees who criticise the organisation's treatment of its workforce.

Today's organisations present many challenges for quality of work life. There is no limit to the points that might be raised. These might include complexity, constant organisational change, stress, quality of management, uncertainty, family/social pressures. The important thing would be for students to consider and discuss these rather than coming up with a definitive list.

Organisational behaviour (OB) is formally defined as the study of individuals and groups in organisations. In today’s dynamic environment, new workplace realities are impacting all areas of organisations: the work force is changing, the work organisation is changing, customer expectations are changing, organisations are changing, the definition of the workplace is changing and managers, too, must change.

The study of OB begins with understanding the nature of organisations. An organisation is a collection of people working together in a division of labour to achieve a common purpose, usually to produce goods or services. As open systems, organisations interact with their environments as they create product outputs from resource inputs (human and material). Division of labour specifically is the process of breaking the work to be done into specialised tasks that individuals or groups can perform.

An effective manager is defined as someone whose work unit achieves high levels of both task accomplishment and human resource maintenance. The latter is often neglected but it is a vital concern for OB and is essential for long-term maintenance of performance. An effective manager must be concerned with productivity, which is a summary measure of the quantity and quality of work performance with resource utilisation considered. The manager’s challenge is the position of being held both accountable to higher-level supervisors for work unit results and dependent on the efforts of subordinates and other team members to make these results possible. In the new workplace, managers need to add value by increasing productivity and bottom-line performance.

The manager’s job involves planning, leading, organising and controlling. Managers of today are faced with a rapidly changing and dynamic environment. Managers must be willing and able to deal with these circumstances and must help others to do the same. These circumstances centre around the increasing globalisation of work, the requirement for human rights in the workplace, rapid and continuous developments in information technologies, the need for ongoing organisational transitions, and new ways of organising. Managers may experience ‘future shock’, the discomfort experienced in times of continual and constant change. There are new types of organisational forms such as the shamrock organisation, virtual corporations, virtual workplaces and upside-down pyramids which affect the way in which managers and employees will behave and react to their work environments.

Organisations are becoming increasingly global, which has implications for the way managers operate and the diversity of the work forces they manage. As the workforce becomes increasingly diverse in terms of race, ethnicity, age, gender, and culture, organisations and managers are faced with the challenge of interpersonal sensitivity and understanding, as well as responsive business practices. There are also implications for the labour market with ageing populations, workforce mobility and changing skill bases.

Managers must also consider the ethics and moral standards of their actions and decisions and may face ethical dilemmas in their roles. Ethical behaviour (that which is morally accepted as ‘good’ and ‘right’ as opposed to ‘bad’ and ‘wrong’ in a particular social context) is the responsibility of everyone throughout the organisation. Justice must be considered in both procedural (through rules and policies) and distributive (equality in treatment) contexts.

Corporations, too, are obliged to act in ethical and moral ways with both the external environment (including the physical environment and the societies in which they operate) and their organisational members. Socially-responsible organisations are concerned with helping members achieve high levels of job satisfaction through quality of work life (QWL). This includes ensuring a healthy psychological contract between the organisation and each member of the organisation. The psychological contract describes the expectations the individual and the organisation have of each other in the course of their working relationship. It can be seen as 'healthy' when inducements from the organisation to the individual are in balance with the contributions that the individual makes to the organisation. One aspect of the new workplace is the need to manage new work options with greater emphasis on flexibility to suit different employee circumstances and needs.

In a climate of constant change, managers must learn to change too and to become lifelong learners (continuously learning from all experiences and opportunities). They need to have an appreciation of the history of OB as a discipline and understand the scientific basis of OB research. Such lifelong learning will help to keep managers alert and receptive to understanding managerial demands and issues.

OB is an area of study with scientific foundations that enables the development of empirically tested generalisations about behaviour. While generalisations are applied, a contingency approach enables understanding to be considered in relation to the unique circumstances of any particular situation.

The Kirkpatrick Model

The most well-known and used model for measuring the effectiveness of training programs was developed by Donald Kirkpatrick in the late 1950s. It has since been adapted and modified by a number of writers, however, the basic structure has well stood the test of time. The basic structure of Kirkpatrick’s four-level model is shown here.

Figure 1 - Kirkpatrick Model for Evaluating Effectiveness of Training Programs

The difficulty and cost of conducting an evaluation increases as you move up the levels. So, you will need to consider carefully what levels of evaluation you will conduct for which programs. You may decide to conduct Level 1 evaluations (Reaction) for all programs, Level 2 evaluations (Learning) for “hard-skills” programs only, Level 3 evaluations (Behavior) for strategic programs only and Level 4 evaluations (Results) for programs costing over $50,000. Above all else, before starting an evaluation, be crystal clear about your purpose in conducting the evaluation.

In 1975, Donald Kirkpatrick first presented a four-level model of evaluation that has become a classic in the industry:

• Level One: Reaction
• Level Two: Learning
• Level Three: Behavior
• Level Four: Results

Level One: Students' Reaction

In the first level , students are asked to evaluate the training after completing the program. These are sometimes called smile sheets or happy sheets because in their simplest form they measure how well students liked the training. Because this type of evaluation is so easy and cheap to administer, it usually is conducted in most organizations.

Level Two: Learning Results

Level Two in the Kirkpatrick model measures learning results. In other words, did the students actually learn the knowledge, skills, and attitudes the program was supposed to teach? To show achievement, have students complete a pre-test and post-test, making sure that test items or questions are truly written to the learning objectives. By summarizing the scores of all students, trainers can accurately see the impact that the training intervention had. This type of evaluation is not as widely conducted as Level One, but is still very common.

Level Three: Behavior in the Workplace

Students typically score well on post-tests, but the real question is whether or not any of the new knowledge and skills are retained and transferred back on the job. Level Three evaluations attempt to answer whether or not students' behaviors actually change as a result of new learning.

• Ideally, this measurement is conducted three to six months after the training program. By allowing some time to pass, students have the opportunity to implement new skills and retention rates can be checked. Observation surveys are used, sometimes called behavioral scorecards. Surveys can be completed by the student, the student's supervisor, individuals who report directly to the student, and even the student's customers.

Level Four: Business Results

The fourth level in this model is to evaluate the business impact of the training program. Below are sample training programs and the type of business impact data that can be measured.

• Sales training. Measure change in sales volume, customer retention, length of sales cycle, profitability on each sale after the training program has been implemented.
• Technical training. Measure reduction in calls to the help desk; reduced time to complete reports, forms, or tasks; or improved use of software or systems.
• Quality training. Measure a reduction in number of defects.
• Safety training. Measure reduction in number or severity of accidents.
• Management training. Measure increase in engagement levels of direct-reports