JBAM January 2006

the Journal of Behavioral and Applied Management
January 2006 The official journal of the Institute of Behavioral and Applied Management
100 From the Editor John Humphreys Articles 103 Half full or half empty: The effects of top managers dispositional optimism on strategic decision-making and firm performance Chris Papenhausen 116 My Orange Is Bigger Than Your Apple: U. S. and Japanese Executive Compensation Abagail McWilliams, Samuel R. Gray, and David D. Van Fleet 128 Does Workplace Fun Buffer the Impact of Emotional Exhaustion on Job Dissatisfaction?: A Study of Health Care Workers Katherine A. Karl and Joy V. Peluchette 143 A Theoretical Model Applying Fuzzy Logic Theory for Evaluating Personnel in Project Management Darko Galinec and Slavko Vidovi 165 Outcomes of Values and Participation in Values-Expressive Nonprofit Agencies Granger Macy Case Study 182 The Demise of Harwich Point College New England University Herbert Sherman and Daniel James Rowley
Vol. 7, No. 2
Institute of Behavioral and Applied Management Officers

President: Vice President and Program Chair: Secretary: Treasurer: Immediate Past President: Assistant to the President: Proceedings Editor: JBAM Editor: JBAM Associate Editor: IBAM Webmaster: Melody Wollen, Eastern Illinois University Dave Schmidt, Cedarville University Michelle D. Jones, Providence College Frank Engert, University of Maine at Farmington Linda Thiede Thomas, Bellevue University Paul Poppler, Bellevue University Wendy Harman, University of Washington David D. Van Fleet, Arizona State University at the West campus Len White, Active Java, LLC Len White, Active Java, LLC
Past Editors (affiliation at the time of Editorship)

John Humphreys, Eastern New Mexico University Herbert Sherman, Southampton College - L.I.U. Daniel James Rowley, University of Northern Colorado
Editor: Associate Editor: Consulting Editors: Editorial Board:
David D. Van Fleet, Arizona State University at the West campus Len White, Active Java, LLC John Humphreys, Texas A&M University Commerce Fred Luthans, University of Nebraska Charlotte D. Sutton, Auburn University RuthAnn Althaus, Saint Xavier University Barry Armandi, SUNY Old Westbury Joy K. Benson, University of Wisconsin Green Bay Conna Condon, P.C. Specialists Sandi L. Dinger, Eastern University LaVerne Higgins, Le Moyne College Jane Humble, Arizona State University Polytechnic Campus Francis (Frank) L. Jeffries, University of Alaska, Anchorage Geraldine A. Kisiel, AK Research & Testing and Central Michigan University Keiko Krahnke, University of Northern Colorado Thomas Martin, University of Nebraska at Omaha Luiz, Mesquita, Arizona State University at the West campus Tim O. Peterson, Texas A&M University Joy Van Eck Peluchette, University of Southern Indiana John R. Schermerhorn, Jr., Ohio University Herbert Sherman, Southampton College L.I.U. Ernest E. Stark, Bellevue University B. Irvin ("Irv") Summers, Independent Researcher Linda Thiede Thomas, Bellevue University Melody Wollan, Eastern Illinois University
2006 Institute of Behavioral and Applied Management. All rights reserved.
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From the Editor Thank you and help! These were the first words I offered the readership of the Journal of Behavioral and Applied Management when I assumed the Editorship. The good news is many of you stepped up to the plate and provided extraordinary assistance for which I am extremely grateful. As some of you are aware, this will be my last issue as Editor of JBAM as Ill soon be heading to the Dongbei University of Finance and Economics in Dalian, China to spend several months as a Fulbright Scholar. Therefore, I would like to use this space to thank those who have been instrumental in the success of the journal and introduce our new Editor. I must start my thanks with the leadership of the Institute of Behavioral and Applied Management. It has been a great honor to edit the journal and I will be eternally grateful for the opportunity and experience. As part of that leadership, I must acknowledge the two previous Editors, Dan Rowley and Herb Sherman. These gentlemen made the Editorial transition seamless and their assistance and input were invaluable to me. In addition, I simply cannot offer enough thanks and praise for Len White. Len has served as the Webmaster and Associate Editor during my tenure and his knowledge, cooperation, and performance during these last two years have been remarkable. The quality publication you see is due in large part to his expertise and commitment to JBAM. As always, I would also like to thank the many reviewers with which I have had the pleasure to work. A superior journal cannot exist without a group of dedicated volunteers who are willing to sustain the publication and I very much appreciate the sacrifice you have made to support me and JBAM. I trust you will support our new Editor with even greater fervor. It gives me great pleasure to introduce Dr. David Van Fleet as the new Editor of the Journal of Behavioral and Applied Management. David is Professor of Management at Arizona State Universitys West campus. He has over forty years of full-time teaching experience and over 200 publications and presentations. Many of you will remember David as a past Editor of the Journal of Management. He is a Fellow of the Academy of Management and of the Southern Management Association, which recently awarded him the Sustained Outstanding Service Award (2005). I consider it a tremendous coup for JBAM to have David accept the position of Editor and a personal privilege to be succeeded by such an eminent scholar. I am excited about the future and direction of the journal under his leadership. This issue of JBAM offers our readers a wide range of interesting topics. We begin with a couple of best paper winners from the recent IBAM conference in Scottsdale. The first article, by Chris Papenhausen, is entitled Half Full or Half Empty: The Effects of Top Managers Dispositional Optimism on Strategic Decision-Making and Firm Performance. This study specifically examined the relationship between managerial optimism and problem recognition and solution. Based upon data from a strategy
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simulation, results indicated a positive influence on problem recognition and subsequent managerial action, but unexpectedly, a negative influence on firm performance. Our second article also received a best paper designation from IBAM 13. Abagail McWilliams, Samuel Gray, and David Van Fleet bring us My Orange is Bigger than Your Apple: U.S. and Japanese Executive Compensation. The authors tackle the issue of considerable differences in the compensation of American and Japanese executives. They propose that differing forms of compensation results in a classic computational error. When applying a broader definition of compensation, they suggest the differences may not be as large as conventional wisdom might indicate. In the third article, Katherine Karl and Joy Peluchette present Does Workplace Fun Buffer the Impact of Emotional Exhaustion on Job Dissatisfaction?: A Study of Health Care Workers. Their results showed the negative impact of emotional exhaustion on job satisfaction was significantly lower for health care workers who experienced greater levels of fun at work. These results, their implications, and directions for future research in this area are discussed. Darko Galinec and Slavko Vidovic, in our fourth article, present our readers with a rather unusual assessment approach. Their article, A Theoretical Model Applying Fuzzy Logic Theory for Evaluating Personnel in Program Management, addresses the problem of incomplete information in leading and appraising project management teams. The authors apply fuzzy logic in the attempt to reduce evaluation subjectivity. The fifth article is Outcomes of Values and Participation in Values-Expressive Nonprofit Agencies by Granger Macy. Values have frequently been suggested as having important organizational outcomes but support for this assertion has been limited. This study focused on the relationship between values and management practices and how this relationship affected the perceived satisfaction and social climate in not-for-profit organizations. The findings showed both direct and contingent effects of values on critical organizational results. Finally, we offer one teaching case in this issue. Herb Sherman and Dan Rowley give us The Demise of Harwich Point College New England University: The Day the Music Died. This is an excellent case study which describes, from a faculty members perspective, the events which led to the closing of the undergraduate programs at this fictional university. The case raises numerous management issues, particularly those dealing with effective communication in the electronic age. We have also taken the unusual step of publishing the teaching notes as well as a guide for those aspiring case writers in our readership. For those of you who were not able to attend IBAM 13 in Scottsdale, Herb and Dan received the JBAM Editors Award for last years best teaching case, D & H Management, LLC: Parts A & B which appeared in Volume 6, Issue 1 (2004, September). The 2005 JBAM Best Article Award went to Susan Madsen, Cameron John, and Duane Miller for Work-family Conflict and Health: A Study of Workplace, Psychological, and Behavioral Correlates (Volume 6, Issue 3, 2005, May). Please join me in congratulating these authors on their accomplishments.
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Finally, if you missed the Scottsdale Conference, you missed a lot! I know I speak for many when I say it was one of the best conferences I have attended in my academic career. Make plans to join us October 5th 7th in Memphis, Tennessee for IBAM 14. Great food, great music, Beale Street, the Orpheum theatre, Mud Island, the Pyramid, the National Civil Rights Museum, and the most collegial group of people you will ever meet! The paper deadline is April 11th and you can visit us and register online at www.ibam.com. On a personal note, I will be back from China and looking forward to seeing all of my IBAM friends once again. Come join us!
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Half full or half empty: The effects of top managers dispositional optimism on strategic decision-making and firm performance Chris Papenhausen University of Massachusetts-Dartmouth ABSTRACT This study explores the effects of top managers dispositional optimism on firm behavior and performance, and more specifically, the relationship between top managers optimism and firm problem recognition, firm problem solving actions and firm performance. To test these hypotheses, surveys and other data from a strategy simulation game were analyzed. Results indicate that top managers optimism positively influences problem recognition and problem solving actions, but unexpectedly, negatively influences firm performance. Introduction To date, the effects of managerial optimism on strategic decision-making have not been researched by management scholars. Psychological researchers, on the other hand, have widely studied the trait of dispositional optimism and have found it positively influences a variety of individual behaviors and outcomes in various settings. This article intends to fill this gap between psychological and strategic management research. A major reason why personality traits in organizations and strategy research has not been widely studied in strategy research is that many studies find that managerial personality traits (e.g., need for achievement, leadership, and overall affective disposition), at most weakly influence individual attitudes and behaviors within organizations (Mischel, 1968; Davis-Blake & Pfeffer, 1989; Peterson, Owens, Tetlock, Fan, & Martorana 1998). However, strategic decisions, are different from many organizational decisions because they are psychologically "weak" situations where available stimuli are numerous, complex, and ambiguous and decision-makers' choices vary greatly (Finkelstein & Hambrick, 1996). Therefore, these factors are likely to be influenced by personality traits and dispositions. Strategy scholars have published a handful of studies that have found that managerial personality characteristics influence a firms strategic decision-making. Empirical work on the personalities of top managers in corporations, for example, focuses primarily on the traits of locus of control (Miller, Kets de Vries, Manfred, & Toulouse, 1982; Boone & De Brabander, 1993), willingness to take risks and tolerance for ambiguity (Gupta & Govindarajan, 1984), need for achievement (Miller & Droge, 1986), tolerance for risk (Wally & Baum, 1994), and hubris (Hayward & Hambrick, 1997). The personality trait, dispositional optimism, has been shown to positively influence a wide variety of individual behaviors in a number of domains (Peterson, 2000). Indeed, among all personality traits, dispositional optimism stands out in the psychology literature as contributing to almost entirely favorable outcomes. Dispositional optimism
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as used in this study is a uni-dimensional trait on a continuum with optimism at one end and pessimism at the other end. Scheier and Carver (1985) define dispositional optimism as a generalized expectancy that good as opposed to bad outcomes will generally occur across important life domains. To date, there exists one study that examines the positive effects of optimism on individual managerial career success (House, Howard, & Walker, 1991) and one study that shows the positive effects of player and team manager optimism on professional baseball team win/loss records (Seligman, 1990). However, I find no studies in any field that examine the influence of top managers dispositional optimism on firm behaviors, outcomes such as firm performance, or strategic decision-making. Thus, this article addresses the proposition that top managers dispositional optimism influences firm strategic decision-making and performance. Hypotheses Optimism and Problem Recognition Problem recognition serves as the impetus for decision-making (Cyert and March, 1963). Problem recognition is the recognition of difficulties facing the firm. Research demonstrates optimists recognize more problems than do pessimists. For example, Scheier, Weintraub and Carver (1986) find optimism related positively to accepting the reality of the situation. In contrast, pessimism related positively to denying and distancing oneself from the problem. Additionally, Aspinwall, Richter and Hoffman (2001) cite studies (e.g., Aspinwall, 1998) that show optimists process information in a different and more beneficial manner than do pessimists. Specifically, "optimists pay more attention to negative information, remember more of it, and show evidence of greater elaborative processing of it, and rather than devoting attention to all of the information presented, optimists pay particularly close attention to the most useful information available. In contrast, pessimists often pay less attention to negative information, and they do not vary their attention to such information as a function of its relevance to the self or to other potentially important properties (Aspinwall, 1998: 225). These findings have been supported in subsequent studies (Geers, Handley & McLarney, 2003.) Optimists therefore appear to gather and retain more information about self-relevant problems (Radcliffe and Klein, 2002.) Aspinwall (1998) tests whether "optimism functioned as does denial or other defensive processes by assessing the prospective relation of optimism to attention to threatening information as a function of increasing severity or self-relevance (Aspinwall et al., 2001: 225). She finds (1998) that an optimists attention increases as the information became more threatening; a finding that suggests that optimism is adaptive in confronting negative information. Aspinwall and Taylor argue that people with "favorable expectations may be better able to process threatening information because they are less worried about their personal vulnerability" (1997: 424). In addition, Aspinwall et al. (2001) report that optimists tend to respond to difficulty with continued efforts to solve their problems, instead of denying the problems or wishing they would go away.
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If top managers respond the same way as experimental subjects, optimistic top managers should recognize more problems than pessimistic top managers. This leads to the following hypothesis: Hypothesis 1: Top managers optimism positively influences their recognition of firm problems. Optimism and Problem Solving Actions Optimism can also lead to superior problem solving through active coping. When optimists face adversity, they draw on a generalized sense of positive expectancies. In addition, contrary to expectancy theory, the scope of the expectancy is broad and imprecise. However, similar to expectancy theory, positive expectancies lead to increased effort in solving problems. Further, Aspinwall et al. find that "there is ample evidence across a wide range of stressors that optimists are more likely to engage in active coping and less likely to engage in avoidant coping (2001: 234). Thus, optimists are more likely to react to problems by trying things, whereas pessimists will tend to react by denying or ignoring the problems. I posit that optimists will initiate more actions to solve problems than will pessimists. These arguments lead to: Hypothesis 2: Top managers optimism positively influences problem solving actions. Optimism and Firm Performance The psychology literature contains extensive evidence that optimists perform better than pessimists across a range of situations. Peterson summarizes the literature on the benefits of optimism as follows: "Optimism, conceptualized and assessed in a variety of ways, has been linked to positive mood and good morale; to perseverance and effective problem solving; to academic, athletic, military, occupational, and political success; to popularity; to good health; and even to long life and freedom from trauma. Pessimism, in contrast, foreshadows depression, passivity, failure, social estrangement, morbidity, and mortality" (2000: 44). Optimisms benefits across such diverse domains suggest that there are additional pathways to optimists success that involve more than just effective problem-solving. One such pathway may be optimists tendency to explore and create opportunities instead of only reacting to problems. Optimists are more likely than pessimists to put more effort into experimentation and exploration or the pursuit of new knowledge or things that are possible, but not yet known (Levinthal & March, 1993). Seligman (1990), for example, argues that optimists are open to new experiences and challenges. He asserts that expecting success or attributing failure to temporary or specific causes frees cognitive resources from further rumination and leads to a focus on new and unknown opportunities. These multiple ways optimism improves performance suggests that optimism may directly and positively influence performance. This leads to the following hypothesis:
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Hypothesis 3: Top managers optimism positively influences firm performance. Methodology The hypotheses developed in this article are tested using a business simulation game and survey method. The simulation game employed is MARKSTRAT, which is used extensively for educational and research purposes. Experiential simulations such as MARKSTRAT, as opposed to other types of simulations, entail the interaction of people with or inside a simulated environment (Cohen & Cyert, 1975; Lant & Montgomery, 1992). The MARKSTRAT simulation represents an industry where each company competes against each other company for multiple periods. The competitors choose to continue to produce and sell current products as well as to introduce new products and tap new markets. Competitors make many decisions including funding research and development projects, setting prices, advertising levels, sales force size, targeting distribution channels and ordering market research studies. The primary performance indicator is the stock market results of each company. Simulation games like MARKSTRAT let researchers study dynamics. The participants make decisions and receive feedback over multiple time periods, which allows for longitudinal study. This is particularly important for the study of personality effects on firm behaviors as the generation of time series data allows the researcher to differentiate between a general optimistic disposition and the effects of performance feedback. That is, I am able to test the stability of top managers dispositional optimism as measured both before and after the game. The MARKSTRAT simulations planned for this study used a combination of executives and managers in masters degree programs, executives involved in a corporate training program, as well as MBA students at a top tier business school, all of whom had at least some work experience. The teams were therefore comparable in sophistication and ability. The total number of participants was 194. The average age of the participants was 37 (the range was 26-57 and the standard deviation was 7.5) and 79% were male. The average number of teams in each of the seven simulations was 5 (the range was 4-6), while the average number of participants on each of the 35 teams was 5.5 (the range was 4-7.) The team assignments were not under the researchers control, however, the teams appeared to be assigned randomly. The teams played the game for an average of 6 decision periods each (the range was 5-7.) Optimism was measured with an instrument called the Life Orientation Test-Revised (LOT-R) (Scheier, Carver, & Bridges, 1994). An established body of evidence substantiates the reliability and validity of LOT-R as a measure of dispositional optimism. The LOT-R is a 10-item measure containing four filler items (the filler items were dropped here because several other items were added), three positively worded items, and three reverse-scored items. The three positively-worded items are: Overall,
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I expect more good things to happen to me than bad, I'm always optimistic about my future, and in uncertain times, I usually expect the best. The reverse scored items are: I rarely count on good things happening to me, I hardly ever expect things to go my way, and if something can go wrong for me, it will. The items are scored using a five-point response scale ranging from "strongly disagree" to "strongly agree'" with the negatively worded items reverse scored. The LOT-R was administered to each participant twice, once before the simulation and once afterwards. Cronbachs alpha was .84 and the LOT-R test-retest reliability was .64. These results suggest that the LOT-R is fairly reliable. Since the LOT-R measures individual optimism and the variable top managers dispositional optimism in this study is tested at the team level, the individual survey responses were aggregated to the team level. Top management team behaviors reflect both some aggregation of individual characteristics (e.g., the information available to the team includes the information available to the members), and some factors explicitly at the team level. Studies of the average age of team members, average organizational tenure, or average educational level take individual level variables (the age of individuals, organizational tenure, or educational level) and aggregate these to the group level (Bantel & Jackson, 1989; Wiersema & Bantel, 1992). In parallel to the use of average age or education, I will describe the level of optimism in a team as the average of its member optimism. The result of this technique is that the level of analysis for this study is at the individual level and not the team level. The unit of analysis, however, is at the team level. For the problem recognition and problem solving actions measures, a single-item measure was constructed for each construct. Single item measures were used because respondents time was limited due to the constraints of the simulation schedule. Each participant answered the items individually, but the questions asked about the individuals estimate of a team behavior. These items were averaged for each team to obtain a team score. To assess whether aggregation to the team level was appropriate for the constructs of problem recognition, search, and problem solving actions, intra-class correlation coefficients to test within-team agreement were computed for each self-reported firm measure. A commonly suggested guideline for determining sufficient within-team agreement is an ICC of greater than 0 and a statistically significant ANOVA F-statistic (Kenny & La Voie, 1985.) All 21 measures used had a positive ICC and all but three were statistically significant at the 5% level (Period 3 search; Period 3 problem solving actions; and Period 6 problem solving actions). The results suggest that aggregation of the scores is appropriate. To measure the problem recognition of each team, I aggregated the survey responses from each team member for the question The simulation feedback showed our team faced many problems. Problem solving actions were measured by the survey question Our team made few changes in the way we did things (reverse scored.)
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Common method variance or mono-method bias can be a problem when the independent and dependent variables are measured by the same method. Since three measures were collected using the same method, the Harmans single factor test (Podsakoff & Organ, 1986) was used to determine the extent to which correlations among the variables in this study may have resulted from common method variance. Common method variance could be a problem if either (1) one factor emerged or (2) one factor accounted for the majority of the variance among the variables (Flannery & May, 2000). The results indicate that neither condition was found (no single factor emerged or accounted for the majority of the variance among the variables), suggesting that common method variance did not explain the findings presented here. There are three constructs, distinct from optimism, prominent in the strategic management literature that may directly influence the behaviors and outcomes proposed in this study. These three are used as control variables in all equations: task conflict, relationship conflict and trust. Task conflict constitutes perceptions of disagreements among group members about the content of their decisions and involves differences in viewpoints, ideas, and opinions. In contrast, relationship conflict is the perception among group members of interpersonal incompatibility and typically includes tension, annoyance, and animosity among group members (Rau, 2001; Jehn, 1995). Task conflict generally has beneficial effects on decision quality while relationship conflict has exclusively negative consequences for the group (Jehn, 1995). Task conflict may improve the teams decision-making ability by increasing the number of perspectives to bear on the problem, which can affect the quality of decisions (Hambrick & Mason, 1984; Bantel & Jackson, 1989; Roure & Keeley, 1990; Murray, 1989). In a manner similar to the optimism, conflict can affect vigilant problem solving, where groups are required to carefully survey their objectives, extensively search for information, and make contingency plans after selecting an alternative (Janis, 1989). Because task and relationship conflict influence information processing, these are included as control variables in all regression equations. Mishra defines trust as one party's willingness to be vulnerable to another party based on the belief that the other party is a) competent, b) open, c) concerned, and d) reliable (1996: 265). Trust among team members may modify member interactions in such a way that the group as a whole will be able to draw upon the diversity of expertise fully available to it. Thus, trust may influence information processing and will be included as a control variable. Each of the three control variables is measured by survey instruments validated in prior research on team decision-making. This study used Jehns (1995) widely used fouritem summative Likert-type scales to measure relationship and task conflict with the modifications to enhance clarity proposed by Simons and Peterson (2000). Trust was measured using a five-item summative Likert-type scale that has been developed and used successfully previously by Simons and Peterson (2000). All items were analyzed at the team level. Results
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The proposed model is tested using the cross-sectional time series regression technique of a random-effects panel model. Using a random-effects panel model allows each observation to be independent despite multiple observations from the same firm. It also allows variation in the administration of the multiple simulations to be controlled for. Table 1 provides the descriptive statistics on the dependent and independent variables and the correlation matrix. Table 1 Means, Standard Deviations, and Correlationsa Variable Top Managers Optimism Problem Recognition Problem Solving Actions Task Conflict Relationship Conflict Trust Stock Price Stock Price Lagged Mean 34.05 4.48 3.92 13.92 11.05 24.28 3.12 3.09 Std.dev. 3.02 1.26 1.14 4.36 4.58 2.03 0.18 0.16 1 2 3 4 5 6 7
1. 2. 3. 4. 5. 6. 7. 8.
a
.09 .16 -.09 -.17 .16 -.29 -.28 .21 .33 .31 -.23 -.47 -.43 .06 .03 .04 -.29 -.31
.93 -.47 -.28 -.24 -.60 -.34 -.29 .32 .29
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There are 210 observations. Correlation coefficients greater than .12 are significant at the 5 percent level. The variables top managers dispositional optimism, problem recognition, and problem solving actions were standardized in all regression equations. Standardizing the indicators helps prevent computational errors by lowering the correlation between the interaction terms and their individual components (Aiken & West, 1991.) Hypothesis 1 states that top managers dispositional optimism positively influences problem recognition. The hypothesis is supported. The results reported in Table 2 indicate that top managers dispositional optimism has a statistically significant effect (b = .14, p = .03). Table 2 Results of Regression Analysis of Problem Recognition, Search, Problem Solving Actions and Firm Performancea Independent Variables Problem Recognition Problem Solving Actions Firm Performance
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Top Managers Optimism Problem Recognition Problem Solving Actions Trust Relationship Conflict Task Conflict Prior Years Firm Performance R2
a
0.14*
0.01*
-0.02* -0.02** -0.01
-0.05 0.01 0.06 -2.01** 0.41
0.03 -0.02 0.05
0.00 -0.01 0.00 0.84**
0.04
0.76
For the analyses with Problem Recognition, n=175; for all other analyses, n=210. *p<.05, **p<.01
As expected, prior year stock price percent change (the control for prior year performance) is negatively related to problem recognition (b = -2.01, p = .00). Supporting Hypothesis 1, in the context of complex strategic decision-making optimists recognize more problems. Hypothesis 2 states that top managers dispositional optimism positively influences problem solving actions. Results show that top managers dispositional optimism has a significant and positive effect (b = .13, p = .04) on problem solving actions. Thus, Hypothesis 2 is supported. Finally, Hypothesis 3 examines whether top managers dispositional optimism directly influences firm performance. To test this hypothesis, stock price (the dependent variable) was regressed on top managers dispositional optimism, problem recognition and problem solving actions. The equation also controlled for prior period stock price. Stock price was converted to a base 10 log. The results in Table 2 indicate that the coefficient for top managers dispositional optimism is negative and statistically significant (b = -.01, p = .03). Therefore, contrary to Hypothesis 3, top managers dispositional optimism is negatively related to firm performance. The results also indicate that two other parameter estimates are significant as well: problem recognition (b = -.02, p = .00) and prior year stock price (b = .84, p = .00). In other words, the higher problem recognition, the lower the performance; and the higher the stock price in the previous year, the higher the stock price in the current year. Finally, as in all the hypotheses tests in this study, the parameter estimates for the controls were statistically insignificant. Discussion
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In summary, top managers dispositional optimism affects firm behaviors and performance. In this section, the implications of the results, limitations of the study, and the contributions of the study to the field of strategic management are discussed. Hypothesis 1, which states that top managers dispositional optimism is positively related to problem recognition, and Hypothesis 2, which states that top managers dispositional optimism is positively related to problem solving actions, are both supported. These results are consistent with previous studies that show optimists pay greater attention to problems, and accept the reality of problems instead of denying their existence (Aspinwall, 1998) and cope with problems more actively. This finding has implications for the strategy literature in areas such as environmental awareness, scanning, and strategic change, which all rely on the notion of managerial recognition of problems and problem solving actions. Contrary to Hypothesis 3, top managers dispositional optimism was negatively related to firm performance. The positive relationship between firm performance and problem recognition (controlling for prior performance) suggests that optimistic top managers are aware of the problems they face, but why optimists perform worse can not be explained by this study. One possibility is that optimists take more risks, and in this context at least, risk taking leads to inferior performance. Recent research has shown that dispositional optimists take more risks in decisions involving investments and casino gambling (Felton, Gibson, & Sanbonmatsu, 2003; Gibson & Sanbonmatsu, 2004). These authors also suggest that many of the previously identified beneficial outcomes of optimists are contingent on the setting. For example, much of the research that has demonstrated the benefits of optimism has been undertaken in health related areas. Optimists greater information seeking and active problem solving strategies likely lead to actions that ameliorate health problems because any actions taken in this domain are generally beneficial (exercise, taking medications, seeking expert advice). However, in a context such as financial markets, increased information seeking and action may result in more risk taking with more potential for inferior performance. Pessimists penchant for withdrawal and disengagement, on the other hand, indicates a tendency to reduce risk taking. In the context of this study, high levels of risk taking could very well lead to impaired performance. For example, the designers of the simulation game warn instructors that too much risk taking in the game impairs learning. Learning from previous actions becomes difficult due to the complexity involved when rapid and large swings involving multiple decisions are taken simultaneously. This negative effect is likely present in many complex organizations as well. Future research should put greater emphasis on the influences of optimism in various contexts as well as exploring the effects of optimists risk taking. This study is subject to limitations. The study used self-reported data to measure problem recognition and problem solving actions, which may result in biased data because of differences in the way optimists and pessimists perceive themselves and their behaviors. In addition, the use of single-item measures for some of the variables may impinge on the respective construct validities. Another limitation is that the top management teams studied were not ongoing teams, but were teams during the simulation game only. The lack of team history may have created a weaker
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psychological setting than would be found in actual ongoing top management teams (Carpenter & Golden, 1997). In addition, while nearly all of the participants in the study had substantial business experience, most were not top executives before the simulation. Thus, the results of the study may not be fully generalizable to top management teams in actual organizations. Research implications These findings suggest a need to further explore the effects of dispositional optimism on strategic decision-making. The evidence suggests that top managers dispositional optimism influences various firm behaviors as well as firm performance. In addition, the results indicate that dispositional optimism may affect firm outcomes differently from individuals outcomes. Further research identifying the role of context on the influence of dispositional optimism should provide answers regarding these differences. Managerial implications Organizational procedures could be effective in altering non-adaptive behaviors of pessimists and optimists. For example, organizational interventions that induce organizational problem recognition could be applied to pessimists. If firms wish to encourage problem solving actions, organizational actions could be forced on pessimists. Further research should attempt to identify the causes of the negative association between optimism and firm performance. It may be possible to alter the organizational setting to prevent the specific deleterious behavior of optimists. Finally, if optimism can be learned as some have suggested (Seligman, 1990), organizations could benefit from attempts, where applicable, to increase managerial pessimism or optimism. Conclusion This article provides the only test of the effects of top managers dispositional optimism on strategic decision-making and firm performance. The findings suggest that top managers dispositional optimism positively influences firm problem recognition, positively influences problem solving actions, and negatively influences firm performance. In conclusion, the results highlight top managers dispositional optimism as influential in the problem solving behavior and success of firms. References Aiken, L. S., & West, S. G. (1991). Multiple regression: Testing and interpreting interactions. Thousand Oaks, CA: Sage. Aspinwall, L. G. (1998). Rethinking the role of positive affect in self-regulation. Motivation and Emotion, 22: 1-32.
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Hambrick, D., & Mason, P. (1984). Upper echelons: The organization as a reflection of its top managers. Academy of Management Review, 9: 193-206. Hayward, M., & Hambrick, D. (1997). Exploring the premium paid for large acquisitions: Evidence of CEO hubris. Administrative Science Quarterly, 42(1): 103-27. House, R.J., Howard, A., & Walker, G. (1991). The prediction of managerial success: A competitive test of the person-situation debate. Paper presented at the annual meeting of the Academy of Management, Miami, Florida. Janis, I.L. (1989). Crucial decisions: Leadership in policymaking and crisis management. New York: Free Press. Jehn, K. (1995). A multimethod examination of the benefits and detriments of intragroup conflict. Administrative Science Quarterly, 42: 530-557. Kenny, D. A., & La Voie L. (1985). Separating individual and group effects. Journal of Personality and Social Psychology, 48: 339-348. Lant, T., & Montgomery, D. (1992). Simulation games as a research method for studying strategic decision making: The case of Markstrat. Working paper no. 1242, Stanford University, Palo Alto, CA. Levinthal, D.A., & March, J.G. (1993). The myopia of learning. Strategic Management Journal, 14: 95-112. Miller, D., & Droge, C. (1986). Psychological and traditional determinants of structure. Administrative Science Quarterly, 31(4): 539-60. Miller, D., Kets de Vries, M. F., & Toulouse, J-M. (1982). Top executive locus of control and its relationship to strategy-making, structure and environment. Academy of Management Journal, 25(2): 237-253. Mischel, W. (1968). Personality Assessment. New York: Wiley. Mischel, W. (1977). The interaction of person and situation. In D. Magnusson & N. S. Endler (Eds.), Personality at the crossroads: Current issues in interactional Psychology: 252-283. Hillsdale, NJ: Erlbaum. Mishra, A.K. (1996). Organizational responses to crisis: The centrality of trust. In R. Kramer & T. Tyler (Eds.), Trust in organizations: Frontiers of theory and research: 261287. Thousand Oaks, CA: Sage Publications, Inc. Murray, A.I. (1989). Top management group heterogeneity and firm performance. Strategic Management Journal, 10: 125-141. Peterson, C. (2000). The future of optimism. American Psychologist, 55: 44-55.
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Peterson, R., Owens, P., Tetlock, P., Fan, E., & Martorana, P. (1998). Group dynamics in top management teams: Groupthink, vigilance, and alternative models of organizational failure and success. Organizational Behavior and Human Decision Processes, 73(2/3): 272-305. Podsakoff, P. M., & Organ, D. W. (1986). Self-reports in organizational research: Problems and prospects. Journal of Management, 12: 531-544. Radcliffe, N., & Klein, W. (2002). Dispositional, Unrealistic, and Comparative Optimism: Differential Relations With the Knowledge and Processing of Risk Information and Beliefs About Personal Risk. Personality and Social Psychology Bulletin, Vol. 28, No. 6, 836-846. Rau, D. (2001). Knowing who knows what: The effect of transactive memory on the relationship between diversity of expertise and performance in top management teams. Unpublished doctoral dissertation, University of Minnesota, Minneapolis. Roure, J.B., & Keeley, R.H. (1990). Predictors of success in new technology based ventures. Journal of Business Venturing, 7: 505-518. Scheier, M., & Carver, C. (1985). Optimism, coping, and health: Assesment and implications of generalized outcome expectancies. Health Psychology, 4: 219-247. Scheier, M., Carver, C., & Bridges, M. (1994). Distinguishing optimism from neuroticism (and trait anxiety, self-mastery, and self-esteem): A reevaluation of the life orientation Test. Journal of Personality and Social Psychology, 67(6): 1063-1078. Scheier, M. F., Weintraub, J. K., & Carver, C. S. (1986). Coping with stress: Divergent strategies of optimists and pessimists. Journal of Personality and Social Psychology, 57: 1024-1040. Seligman, M. (1990). Learned optimism, New York: Knopf. Simons, T., & Peterson, R. (2000). Task conflict and relationship conflict in top management teams: The pivotal role of intragroup trust. Journal of Applied Psychology, 85, 102-111. Wally, S., & Baum, J. (1994). Personal and structural determinants of the pace of strategic decision making. Academy of Management Journal, 37(4): 932-956. Wiersema, M., & Bantel, K. (1992). Top management team demography and corporate strategic change. Academy of Management Journal, 35: 91-121.
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My Orange Is Bigger Than Your Apple: U. S. and Japanese Executive Compensation Abagail McWilliams University of Illinois at Chicago Samuel R. Gray New Mexico State University David D. Van Fleet Arisona State University ABSTRACT There appear to be large differences in the compensation of American and Japanese executives. Such statements suffer from a number of shortcomings, one of which is that compensation takes different forms in the U.S. and Japan. As a result, a classic error of comparing apples and oranges occurs. We use a broad definition of compensation and some preliminary data and find that the large differences may disappear when adjusted for the value of insider information. Background The man who works for the gold in the job rather than for the money in the pay envelope, is the fellow who gets on. - Joseph French Johnson While the above may be wisdom, when attention is directed to top executives it is almost always the money in the pay envelope that is of interest. Criticisms aimed at the compensation of corporate executives in the U.S. frequently make comparisons between the pay of U.S. and Japanese executives. For example, Business Week has reported that Japanese CEOs receive about one-fourth the compensation of comparable U.S. CEOs (Cover Story, 1993). And, Industry Week has pointed out that while Japanese executives earn about eleven times what a typical factory worker does; in the U.S. executives earn more than twenty-four times what the typical factory worker does (Verespej, 1992). Such comparisons have been almost universally dependent upon anecdotal evidence because, unlike American firms, Japanese firms are not required by law to disclose the compensation of their executives. Despite constant attention of the popular press and a profusion of anecdotal evidence, the compensation of U.S. executives relative to Japanese executives has escaped the scrutiny of academic research. This is understandable given the lack of reliable information on Japanese compensation. Lacking hard evidence to the contrary, it is tempting for researchers to jump on the anecdotal bandwagon and denounce U.S. compensation practices. The typical conclusion drawn from the popular press and often supported by the academic community has been that, because U.S. executives receive several times the
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compensation of their Japanese counterparts, there is something inappropriate about the level of compensation in the U.S (Bron, 1992). Such conclusions are often followed by calls for government regulation or self reform of the compensation practices of U.S. firms (Brown, 1992). The purpose of this paper is to present preliminary evidence to address the apparent large compensation difference noted above. The main hypothesis is that the apparent substantial difference between U.S. and Japanese executive compensation level may be due, in part, to differences in the manner in which executives in the different countries are compensated. That is, the popular press has been comparing oranges to apples. We propose using a broader definition of compensation -- income and wealth creation that results directly from the employment relationship -- to compare the compensation of U.S. and Japanese executives. This definition allows us to test for differences in more comparable measures of compensation. Determinants of Compensation The level of executive compensation depends on many factors. One factor is firm performance, which is typically estimated by looking at either stock price or accounting rates of return (Buchhottz, Young, & Powell, 1998). Using stock prices, researchers have demonstrated that this relationship is very weak, especially for very large firms (Jensen & Murphy, 1990). It was suggested that this is a result of political forces operating both in the public sector and inside firms. Using accounting rates of return, it was found that while executive pay is correlated to profits, compensation is primarily determined by the managerial labor market (Ciscel & Carrol, 1980). Other factors that have been identified as determinants of the level of compensation include the industry in which the firm operates, the size of the firm, the growth rate of the firm, the tenure of the executive, and governance structures (Boyd, 1994; Deckop, 1988; Gomez-Mejia, Tosi, & Hinken, 1987). To the extent that any of these factors varies significantly between firms in the U.S. and Japan, these differences could be contributing to observed differences in compensation levels (Kato, 1997). There are also institutional and cultural differences that might lead to a disparity in compensation between Japanese and U.S. CEOs (Abowd & Bognanno, 1995; Kato & Hebner, 1997). One of these differences is that U.S. and Japanese executives do not bear the same level of compensation risk. Japanese executives are seldom fired even when company performance is extremely poor. For U.S. executives, on the other hand, firings have become a way of life. Therefore, because of the positive relationship between risk and return, we might expect that the pay of U. S. executives would be somewhat higher than that of Japanese executives. Another difference is that the labor market for managers is much less competitive in Japan than it is in the U.S (Kang & Shivdasani, 1995). The Japanese culture rewards long term commitment and loyalty and places extreme limits on the opportunities that executives have to seek employment with a different firm. As a consequence, Japanese executives seldom leave their employers and join other firms. In the U. S., on the other hand, changing employers is relatively commonplace. Therefore, it can said that a relatively competitive labor market for managers exists in the U.S., while in Japan the labor market more closely resembles a monopsony (single buyer). We would expect that the market wage rate would be
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higher in the more competitive U.S. market than in the less competitive Japanese market. Finally, compensation levels might appear to differ because of differences in the manner in which executives are compensated. There may be fundamental differences in the manner in which executives are compensated in Japan and the U.S. One difference concerns the cultural and legal implications of insider trading in the two countries. In the U.S. insider trading is illegal and the laws against it are vigorously enforced. Therefore, U.S. executives cannot receive any of their compensation through the value of insider information. In Japan sanctions against insider are generally not enforced and the cultural norm supports trading on insider information. Therefore, Japanese executives may receive some of their compensation through the value of insider information. Insider trading is simply not viewed as wrong in Japan (Swan, 1990), although the practice has been technically illegal since the end of World War II (George, Standberry, & Boss, 1990). The law on insider trading (as well as other securities regulation) was imposed by the Allied Occupation Headquarters (Matsui, 1991). The Japanese never bought into the regulation, however, and enforcement of insider trading laws has been virtually non-existent. Prior to the passage of reform legislation in 1988, there had been no criminal prosecution for insider trading (New Laws for Old, 1988). The reform legislation passed in 1988 also apparently had very little impact on the practice of insider trading. The first insider trading case to go to trial in Japan was decided in 1992, when a senior managing director of Macross Corporation was found guilty of trading on insider information. The directors punishment consisted of a fine of the equivalent of $4,144 (Japanese Executive Found Guilty of Insider Trading, 1992). Because insider trading is deeply ingrained in the social and cultural fabric of Japanese life, enforcement and prosecution are unlikely (George, et al., 1990). In addition, the regulatory and legal structures of Japan are ill suited to vigorous enforcement. The Securities Bureau of the Ministry of Finance (the equivalent of the U.S. Securities and Exchange Commission) has only 140 investigators, compared to over 2,000 for the SEC (George, et al., 1990). In addition, the Japanese Securities Bureau has no enforcement arm, leaving only the local police to implement the laws (Over to the Men in Uniform, 1990). In addition, civil suits or class action suits are hampered by the cultural norms. Japanese society emphasizes harmony; litigation is seen as a threat to this norm (Swan, 1990). In summary, according to The Economist, Insider trading is as illegal in Tokyo as breaking the speed limit--and about as widespread. (Over to the Men in Uniform, 1990).
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Defining and Measuring Compensation Differences in the cultural and legal implications of insider trading in Japan and the U.S. are central to the argument of this paper. This argument is that compensation should be defined as the income and wealth that an executive receives as a direct result of his/her employment relationship. Because Japanese executives apparently can reap income from trading on the information they receive as employees, the value of insider information constitutes a portion of the compensation of Japanese executives. This form of compensation is illegal and vigorously prosecuted in the United States. Hence, any comparisons of Japanese and U.S. executive compensation that do not consider the wealth effects of trading on inside information are erroneous and misleading. The argument is as follows: Japanese executives are privy to inside information which has a positive economic value. This information can readily be converted into cash. Therefore, Japanese executives may be partially compensated in the form of information. To the extent that the value of insider information is not treated as compensation, Japanese executive compensation is understated. U.S. executives, on the other hand, receive information which has no market value since they are not free to trade in their personal accounts based on this information. Therefore, U.S. executive compensation is not understated, but, in fact, properly reflects total compensation. Our hypothesis that U.S. executives do not receive any of their compensation in the form of inside information is consistent with the finding of Jensen and Murphy that there has been a dramatic decline in the CEO stock ownership over the past 50 years... (1990, p. 258). As it has become easier to detect insider trading and the enforcement of laws against such trading has become more vigilant, we would expect that CEOs would have traded stock ownership for higher salaries. Because of differences in insider trading laws, we would expect Japanese executives to receive some compensation in the form of information and U.S. executives to receive all of their compensation in more measurable (and visible) forms, such as salary, bonus, fringe benefits, stock, and stock options (Lavelle & Jespersen, 2001 and 2002). This is consistent with the different cultures of the two countries as well. Japanese culture places a high value on harmony. Very large wage differentials might lead to disharmony. Therefore, we would expect that measurable (or visible) differences in wages would be kept as low as possible. The American cultural, on the other hand, places a high value on individuality and a lower value on harmony. Therefore, we would expect to see more effort to encourage individual success and less concern about the effects of wage differentials on harmony. The argument outlined in this paper does not imply equality of compensation for Japanese and U.S. executives. It does imply, however, that previous reports of large differences in pay may be unwarranted. This research was designed to analyze the differences in compensation using our broader definition -- income and wealth creation that results directly from the employment relationship. Therefore, we compare compensation after adjusting for the value of insider information. The hypothesis to be tested is:
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H: After adjusting for the value of insider trading, there is no significant difference between the compensation of Japanese and U.S. CEOs. To test this hypothesis directly we would need compensation data (including the value of inside information) for Japanese CEOs. The determination of the monetary value of insider information to a given Japanese executive represented a formidable challenge to the present research, since no methodology exists for its estimation. The valuation process was further complicated by the fact that data were not available on the magnitude of insider trading activity by these Japanese executives, although anecdotal evidence suggests that the practice is pervasive. Data were available, however, that allowed us to estimate the value that insider trading would have to a U.S. executive, if the practice were legal in this country. The logic of the methodology for adjusting the value of compensation for insider trading is outlined below. Let U = the reported (unadjusted) salary of a U. S. executive and J = the reported salary of a Japanese executive in comparable size firms. Consider what would happen if insider trading laws were abandoned in the U. S., making U. S. executives free to trade in their own accounts using information that was not available to the market. The value of the U. S. executives inside information would immediately increase by . The rational executive, then, would be just as well off by negotiating a new salary of U - . The executive would then receive part of his or her compensation in information rather than cash and stock-related bonuses. We would expect the following relationship if there were no substantive differences in compensation in the two countries: J = U - . This implies that, in the absence of differences in insider trading laws, there would be equality of pay in Japan and the U.S. If one could calculate , then, one could make comparisons between J and U, Japanese and U.S. executive compensation, that are closer to comparing oranges to oranges or apples to apples. To conduct our test we first estimated the value of inside information for the U.S. CEOs. Next, we subtracted this value from the reported compensation figures. This gave us a dollar value for U - . We then compared U - to J to determine if there was any significant difference. Data In order to assure comparability of data, we had to use some that are a bit outdated. Clearly the validity of our results depends upon obtaining and analyzing a more current set of data. Because we did use older data, we have labeled our results as preliminary. Data on Japanese executives compensation, for 1991, were obtained from the Business Week article, What Do Japanese CEOs Really Make? (Cover Story, 1993). These data were compiled for the CEOs of the 50 largest firms in Japan by the consulting firm of Towers and Perrin. Towers and Perrin got its information on income
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from public tax information. Because the tax information was not broken down by source of income, it was possible that reported income included such items as capital gains on personal property. Therefore, Towers and Perrin used information from 5 years of tax records to estimate the employment income to the Japanese CEOs. While not perfect, this is the best data source available to date. The 50th observation had to be dropped because complete compensation figures were not available for that executive. The final data set, therefore, consisted of the cash compensation of the CEOs of the largest 49 Japanese firms. The compensation data on the CEOs of the 49 largest U.S. firms, for 1991, were also obtained from Business Week (Byrne, 1992). These compensation data consisted of salary, cash bonus, and the value of stock grants and stock options and were compiled from the firms proxy statements. Method We estimated using conventional event study technique (Fama, Fisher, & Roll, 1969). This technique is widely used and accepted in accounting and finance as a way to determine the impact of some event on the value of a firm. It is generally accepted that some events, such as the announcement of a merger, will generate an abnormal return for a firms stock on the days surrounding the event. (This is the type of information that insider-trading laws prevent executives from using to their personal advantage.) If the abnormal return per share is multiplied by the number of shares, the result is the total change in the value of the firm attributable to the event. Because it may take more than one day for the stock price to adjust to new information, it is typical to sum the abnormal returns over a few trading days, to allow for full adjustment of the stock price to the announcement. The number of days over which the abnormal returns are accumulated is known as the event window. This technique allowed us to estimate the affect that announcements such as an impending merger or unexpected earnings had on the stock price of the 49 largest U. S. corporations in 1991. To use this technique, one first estimates the return that a given stock will have, relative to the market return, for any one day period. This is the firms expected daily return. The actual return for any day can then be compared to the expected. Any difference is considered to be an abnormal return. For this study we use five trading days (a commonly used period) as our window for estimating the total abnormal return. These five days included the day of the announcement, two days following the announcement and two days preceding the announcement. Two days preceding the announcement were included, because information about an announcement is often leaked to the market. Two days following the event were included to give time for the market to fully adjust. The event window we used, then, began 2 days prior to an announcement and ended 2 days after an announcement in The Wall Street Journal. This short event window was chosen to permit a conservative estimate of the value of insider information. The accumulated abnormal returns we calculated represent the gains that the CEO could have made on each share of stock for a trade executed two days prior to an announcement and liquidated two days after an announcement. For each of the 49
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U.S. firms, we calculated the abnormal return for each event and summed all of these for the year. This calculation yielded the total value of insider information per share of stock for each firm for the 1991 calendar year. The value of insider information to the CEOs was calculated by using the number of shares of stock that the CEOs owned, as recorded in the firms proxy statements, as follows. We multiplied the per share total value of insider information (the sum of the abnormal returns) for the year by 1/2 the number of shares of stock that the executive owned. Only half the executives stock ownership was used in the evaluation since this represents the standard margin requirement of U.S. brokerage firms. Thus, this estimation method is very conservative as it ignores other forms of wealth that the executive may have had at his or her disposal to use for trading. Results The reported (unadjusted) compensation of CEOs in the top 49 Japanese and American firms are reported in Table 1. These results are consistent with prior reports that U.S. executives earn several times as much as their Japanese counterparts. We found that the mean for U.S. CEO compensation was approximately three times the mean for Japanese CEO compensation. In addition, a difference of means t-test and a nonparametric median difference test indicate that these differences are statistically significant. TABLE 1 COMPARISON OF UNADJUSTED EXECUTIVE COMPENSATION IN TOP 49 FIRMS IN JAPAN AND THE UNITED STATES (U.S. DOLLARS) Japan $983,531 $630,000 1,150,277 49 4.7*** 50.0*** U.S. $2,802,306 $993,523 2,453,270 49
Mean Unadjusted Compensation Median Unadjusted Compensation Standard Deviation N t-statistic, mean difference test -square, median difference test *** p < 0.001
The results shown in Table 2 represent a comparison of compensation of Japanese and U.S. executives after adjustments were made for the value of insider information, as outlined above. As indicated in the table, when adjustments were made for the value of insider information, the differences between CEO compensation in the top 49 firms in Japan and the U.S. are not statistically significant. TABLE 2
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EXECUTIVE COMPENSATION IN THE TOP 49 FIRMS IN JAPAN AND THE UNITED STATES (U.S. DOLLARS) ADJUSTED FOR VALUE OF INSIDER INFORMATION. Japan $983,531 $630,000 1,150,277 49 0.60 9.18** U.S. $356,743 $1,293,434 7,196,654 49
Mean Adjusted Compensation Median Adjusted Compensation Standard Deviation n t-statistic, mean difference test -square, median difference test *** p < 0.001
In order to investigate the possibility that some outliers might be driving these results, U.S. executives with extremely large stock holdings and/or unusually large values for insider information were dropped from the analysis. The results of the analysis after this adjustment was made are essentially the same as those reported in Table 2. While the differences in compensation are not statistically significant, the median U.S. compensation is higher than the median Japanese compensation (the median difference test approaches significance at the 0.10 level). Because some of the factors that are thought to determine the level of compensation may vary between the U.S. and Japan, we also conducted an analysis that controlled for some of these factors. We report the results of this analysis in Appendix A Discussion Periodically, politicians and interest groups suggest that the compensation of U.S. executives should be regulated, because it is too high (Conyon & Peck, 1998; Colvin & Lose, 1992). This position is often supported by arguing that U.S. executives must be overpaid, because they are paid much more than the executives of comparable Japanese firms. Although there is widespread belief in this comparison, there is scant empirical evidence to support it (Taft & Singh, 2003; Kaplan, 1994; Kato, 1997). Most such claims are supported by anecdotal evidence that ignores the differences in compensation laws and customs in the two countries, and does not control for differences in such things as firm size, profit ratio, and growth rate. This research was undertaken so that we might inject some objective evidence, albeit preliminary, into this debate. With that in mind, we provide an examination of differences in the level and form of compensation between U.S. and Japanese executives. First, we discussed the determinants of compensation level and ways in which these might vary across countries. Some of the determinants include: 1) firm performance, 2) growth rate of the firm, 3) firm size, 4) industry in which the firm competes, and 5) governance structures. It is possible that the link between compensation and any of these variables may vary across countries because of cultural and institutional differences. Institutional differences that were discussed include the employment risk borne by the executives and the efficiency of the managerial labor markets in the two
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countries. Finally, we discussed differences in cultural norms and the enforcement of laws pertaining to insider trading. We concluded that differences in the treatment of insider trading could be expected to result in Japanese executives receiving some of their compensation in the form of (valuable) information and U.S. executives receiving compensation only in more easily measurable (i.e., visible) forms, such as salary, bonus, fringe benefits, stock, and stock options. We are not offering this as evidence that Japanese executives necessarily trade on inside information. We are, instead, demonstrating that, to the extent that American executives cannot trade on inside information, they are more likely to be compensated in more traditional ways. Based on our conclusion that the way in which executives are compensated might differ across these cultures, we examined the compensation of the CEOs of the 49 largest Japanese and U.S. firms. We found that, using standard measures of compensation, the U.S. CEOs were paid about three times as much as the Japanese CEOs. However, after controlling for the value of inside information, we found that there was no significant difference in compensation. This demonstrates that simply comparing the mean reported compensation for CEOs between countries may be misleading. It may be equivalent to comparing oranges to apples. Our results suggest that the apparent large difference between the compensation of Japanese and U.S. CEOs may shrink when the concept of compensation is expanded to include the value of information received as a consequence of the executives position with the firm. Any residual differences are understandable as resulting from differences in other factors, in particular institutional factors such as the difference in employment risk between the two countries. Most importantly, this study points out that calls for regulating the compensation of U.S. executives based on a comparison between U.S. and Japanese executives are clearly misguided, because a fair comparison cannot be made based on the widely reported evidence. Appendix A Because some of the factors that are thought to determine the level of compensation may vary between the U.S. and Japan, we also conducted an analysis that controlled for some of these factors. This was accomplished by running three separate regressions in which we regressed 1) unadjusted pay, 2) adjusted pay, and 3) adjusted pay with outliers dropped, on variables known to covary with compensation. Included were the logarithm of firm size (as measured by sales in dollars), firm performance (using return on sales as a proxy), and industry growth rate. These data were obtained from the Compact Disclosure Worldscope Database. In these regressions, we also included a dummy variable defined as one if the executive was from a U.S. firm, zero is from a Japanese firm. The results are displayed in Table 3. TABLE 3 COMPENSATION REGRESSED ON LOG OF SALES, RETURN ON SALES, GROWTH RATE, AND DUMMY VARIABLE (T-STATISTICS IN PARENTHESES)
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1. Unadjusted Pay
2. Adjusted Pay
3. Adjusted Pay with Outliers Dropped
Intercept Dummy variable Log of Sales Return on Sales Growth Rate N R2 *p < 0.1, ** p < 0.05, *** p < 0.001
-12089545*** (-2.76) 2001225*** (5.84) 433182** (2.33) 185769*** (5.08) 51379* (1.67) 98 .403
-7840565 (-0.565) -721512 (-0.664) 943756 (0.696) 115133 (-.296) -30736 (-0.316) 98 .010
-11907388 (-1.05) 500445 (0.804) 115622 (1.442) 237289*** (3.55) 37010 (0.67) 96 .140
The dummy variable was added to test for a significant difference between U.S. and Japanese executives. As shown in Table 3, the coefficient on the dummy variable is significant only when the dependent variable is Unadjusted (reported) Pay. Once adjustments are made to account for the value of insider information, the results indicate a statistically insignificant difference between the Japanese and U.S. executives. This supports our hypothesis that, when adjustments are made for the value of insider information, there is no significant difference in the compensation of U.S. and Japanese CEOs. It is also worth noting that the regression results show that the difference in the mean unadjusted compensation from the regression was approximately the same as the difference in the mean unadjusted compensation that was reported in Table 1. This shows that controlling for firm size, profit rate, and growth rate did not significantly affect the relative compensation levels. Therefore, there is no evidence that the impact of these factors on compensation varies across the two countries. References Abowd, J. & Bognanno, M. (1995). International differences in executive and managerial compensation. In R. Freeman & L. Katz (Eds.), Differences and Changes in Wage Structures (67-103). Chicago, IL: The University of Chicago Press. Boyd, D. (1994). Board control and CEO compensation. Strategic Management Journal, 15, 335-344.
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Bremner, B. (1999, April 19). The stock-option option comes to Japan. BusinessWeek Online, 1-3. Brown, D. (1992). Can we put the brakes on CEO pay? Management Review, May, 10-15. Buchholtz, A., Young, M., & Powell, G. (1998). Are board members pawns or watchdogs? The link between CEO pay and firm performance. Group & Organization Management, 23 (1), 6-26. Byrne, J.A. (1992). What, Me overpaid? CEOs fight back. Business Week, May 4, 142-143. Ciscel, D., & Carroll, T. (1980). The determinants of executive salaries: An econometric survey. Review of Economics and Statistics, 62, 7-13. Colvin, G., & Losee, S. (1992, April 6). How to pay the CEO right. Fortune, 125 (7), 6068. Conyon, M. & Peck, S.. (1998). Board control, remuneration committees, and top management compensation. Academy of Management Journal, 41 (2), 146-157. Cover Story. (1993). Business Week, April 26, 56-64. Deckop, J. (1988). Determinants of chief executive officer compensation. Industrial and Labor Relations Review, 41, 215-226. Fama, E., Fisher, L., Jensen, M., & Roll, R. (1969). The adjustment of stock prices to new information. International Economic Review, 10, 1-21. George, B., Stanberry, K., & Boss, M. (1990). New steps to prohibit insider trading in Japan: A serious commitment or simply saving face. Asian Thought and Society, 15, 227-235. Gomez-Mejia, L., Tosi, H, & Hinken, T. (1987). Managerial control, performance, and executive compensation. Academy of Management Journal, 1987, 51-70. Japanese executive found guilty of insider trading. (1992). Wall Street Journal, September 29, A11. Jensen, M., & Murphy, K. (1990). Performance pay and top-management incentives. Journal of Political Economy, 98,. 225-264. Kang, J., & Shivdasani, A. (1995). Firm performance, corporate governance, and top executive turnover in Japan. Journal of Financial Economics, 38, 29-58. Kaplan, S. (1994). Top executive rewards and firm performance: A comparison of Japan and the United States. Journal of Political Economy, 102 (3), 510-546.
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Kato, T. (1997). Chief executive compensation and corporate groups in Japan New Evidence from Micro Data. International Journal of Industrial Organization, 15(4), 455467. Kato, T., & Hebner, K.J. (1997). Insider trading and executive compensation: Evidence from the U.S. and Japan. International Review of Ecnomics and Finance, 6(3), 223237. Lavelle, L., & Jespersen, F. (2001, April 16). Executive pay. BusinessWeek Online, 16. Lavelle, L., & Jespersen, F. (2002, April 15). Executive pay: Special report. BusinessWeek Online, 80-86. Matsui, I. (1991). The regulation of insider trading in japan--Comparing with the American Law. Comparative Law, 8, 83-97. New laws for old. (1988). The Economist, October 1, 92. Over to the men in uniform. (1990). The Economist, May 19, 91. Reingold, J., & Jespersen, F. (2000, April 17). Executive pay. BusinessWeek Online, 1-8. Reingold, J., & Grover, R. (1999, April 19). Special Report: Executive pay. BusinessWeek Online, 1-10. Swan, W. (1990). The 1988 Japanese insider trading amendments: Will Japan see results from these tougher laws? University of Pennsylvania Journal of International Business Law, 12, 275-302. Taft, D., & Singh, G. (2003). Executive compensation: A comparison of the United States and Japan. Compensation and Benefits Review, 35(3), 68-78. Verespej, M. (1992). Pay-for-skills: its time has come. Industry Week, June 15, 22-30.
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Does Workplace Fun Buffer the Impact of Emotional Exhaustion on Job Dissatisfaction?: A Study of Health Care Workers Katherine A. Karl Marshall University Joy V. Peluchette University of Southern Indiana ABSTRACT This study examined health care workers (N= 142) attitudes toward workplace fun and the level of fun they experienced at work as well as their emotional labor, emotional exhaustion and job satisfaction. Our results showed that the negative impact of emotional exhaustion on job satisfaction was significantly lower for health care workers who experienced greater levels of fun at work. In general, the health care workers in this sample expressed positive attitudes toward workplace fun. These results, their implications, and directions for future research are discussed. Introduction Should the workplace be fun? A growing number of business writers and consultants would agree, arguing that fun is essential for enhancing employee motivation and productivity, reducing stress, and increasing customer satisfaction (Lundin, Paul, & Christensen, 2002; McGhee, 2000; Paulson, 2001; Ramsey, 2001, Weiss, 2002). In support, recent analyses of Fortunes 100 Best Companies to Work For show that a fun work environment is one of the factors distinguishing superior performers from others (Chan, Gee & Steiner, 2000; Joyce, 2003). But, can this same philosophy be extended to health carea workplace that typically deals with the more serious and/or tragic aspects of life? It appears so. Since the release of the best-selling Fish! books (Lundin, Paul, & Christensen, 2002, 2003; Lundin, Christensen, Paul, & Strand, 2002), many health care organizations have been touting widespread success with the introduction of a fun philosophy into their workplace including Silver Cross Hospital (Joliet, IL), Cooley Dickinson (Northhampton, CT), and Knoxville Area Community Hospital (Mellen, 2003; FISH! Philosophy, 2003; Employees KACH-the-Attitude, 2004). CEO Rob Curry of Banner Thunderbird Medical Center believes that his hospitals consistently high patient satisfaction scores can be traced to its lighthearted approach to health care, arguing that when your employees are happy, then your patients, by and large, will be happy too (Patient Care Performed With Flair, 2004). As illustrated in the following model, the purpose of this paper is to examine whether the negative impact of emotional exhaustion on job satisfaction is significantly lower for health care workers who experience greater levels of fun at work than it is for those experiencing lower levels of fun. In addition, the model shows that emotional labor influences emotional exhaustion which, in turn, influences job (dis)satisfaction. The model also shows that attitudes toward workplace fun will influence the level of fun
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experienced at work. While there are undoubtedly many individual (e.g., age, gender, personality, experience, occupation) and organizational (e.g., culture, trust, industry) antecedents that may influence attitudes towards fun, these factors are beyond the scope of the present research. Figure 1. Theoretical Model
Attitudes Toward Fun
Experienced Fun Emotional Labor

Frequency Variety (range) Intensity Emotional Dissonance
Emotional Exhaustion
Job Satisfaction
Emotional Labor All human service workers are vulnerable to a phenomenon known as emotional labor. This is a process of emotion management whereby individuals control their true emotions by displaying what they perceive as acceptable workplace behaviors and emotions (Ashforth & Humphrey, 1993; Hochschild, 1983). Displaying such organizationally or professionally sanctioned emotions to customers, clients, or patients has been argued to be a form of labor since such effort involves planning and adjustment to situations that may require one to display emotions that one does not privately feel. While emotional labor has been examined in a variety of human service occupations (Ashforth & Humphrey, 1993; Morris & Feldman, 1997), it is particularly relevant in the health care industry (Gorman, 2000; Henderson, 2001; Scott, 2000). For example, James (1989) argued that emotional labor in health care is hard work and can be sorrowful and difficult. It demands that the laborer gives personal attention, not just a formulaic response. A recent article published in the Journal of the American Medical Association (Larson & Yao, 2005) went even further arguing that emotional labor should characterize all health care professions. They added that physicians are more effective healers--and enjoy more professional satisfaction--when they engage in the process of empathy. We urge physicians first to recognize that their work has an element of emotional labor and, second, to consciously practice deep and surface acting to empathize with their patients. This suggests the need for a closer look at the role emotional labor plays in this professional work.
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Emotional Exhaustion Emotional exhaustion is widely regarded as the core component of job burnout (Jackson, Schwab, & Schuler, 1986; Maslach, 1982). It is characterized by feelings of tiredness and fatigue, a lack of energy, and the depletion of an individual's emotional resources (Moore, 2000). This has been found to be a common phenomenon in helping and caring professions and in customer-service positions. Early research suggested that nurses and social workers are likely to suffer from emotional exhaustion because their jobs often require the display of intense emotions (Kahn, 1983). Recent studies of various health care professions indicate that emotional exhaustion and job burnout are common problems associated with such occupations and that emotional detachment, increasing caseloads of patients, close interaction with patients, and emotional strain are prominent sources of emotional exhaustion (Dorz, Novara, Sica, & Sanavio, 2003). The intensity of emotional exhaustion tends to be highest in acute care situations (Happell, Martin & Pinikahana, 2003; Waldrop, 2003). Given the results of past research demonstrating a positive relationship between emotional labor and emotional exhaustion (Brotheridge & Lee, 2003; Morris & Feldman, 1997), we predict: Hypothesis 1: The greater the degree of experienced emotional labor, the greater the emotional exhaustion. Job Satisfaction Job satisfaction has been found to be adversely affected by job-related stress and burnout (Cameron, Horsburgh & Armstrong-Stassen, 1994; Lee & Ashforth, 1996). For example, in a study of nurses, Aiken, Clarke, Sloane, Sochalski, and Siber (2002) found that workload was negatively related to burnout, emotional exhaustion, and job satisfaction. These authors reported that each additional patient per nurse was associated with a 23% increase in the odds of burnout and a 15% increase in the odds of job dissatisfaction. While early theoretical work on emotional labor predicted a negative relationship between emotional labor and job satisfaction (Hochschild, 1983), more recent research found that high emotional labor was positively related to job satisfaction (Wharton, 1993). Rather than having a direct effect, it is more likely that emotional labor influences job satisfaction through its impact on emotional exhaustion. More specifically, we believe that emotional labor will not explain any additional variance in job satisfaction after controlling for emotional exhaustion. Therefore, we predict: Hypothesis 2: Emotional exhaustion will mediate the relationship between emotional labor and job satisfaction. Experienced Fun Experienced fun is the extent to which a person perceives the existence of fun in their workplace. Proponents of fun at work claim that when people have fun doing their jobs,
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they are more energized and motivated, get along together better, provide better customer service, experience less stress, and are less like to be absent or leave the organization (Berg, 2001; Mariotti, 1999; Meyer, 1999). While many of these claims are based on anecdotal evidence, there is some empirical research, which suggests that humor plays an important role in buffering the potentially negative impact of job-related stress and emotional labor. For example, in his review of the literature, Martin (1996) found support for the notion that a healthy and playful sense of humor serves as a moderator for the aversive effects of stress on health and well-being. Broussine, Davies, and Scott (1999) conducted interviews with social service workers and found evidence that humor is used as a means of coping with distressing and threatening events. They reported that some social work is so distressing that if it were not possible to laugh about it, it would be difficult to deal with and that humors effectiveness may stem from its ability to help individuals create psychological distance from the stress they are experiencing (Broussine et al., 1999). With regard to health care, humor appears to be receiving increasing attention as an appropriate means of stress release and building camaraderie. Leslie Gibson, a registered nurse and founder of The Comedy Connection at Morton Plant Hospital in Clearwater, FL, cites the advantages of using appropriate humor in the workplace and recommends ways to add humor to the break room, meetings, memos and newsletters, and in the patient lounge (Gibson, 2004). Empirical studies are finding that employees are also touting the benefits of workplace humor. For example, a recent study of both doctors and nurses of HIV/AIDS and oncology patients found that humor was indicated as an effective coping strategy in handling the emotional stress of their work (Dorz, et al, 2003). Similarly, a study of nurses found that an overwhelming majority (92%) believed that laughing and a sense of humor helped them cope with workplace stress (Wooten, 1993). Almost half of the respondents reported that their immediate supervisor used and encouraged humor on the job, and about thirty percent indicated that there was some form of an active humor program evident at their worksite. Based on these findings, we propose that the level of fun experienced at work will moderate the relationship between emotional exhaustion and job satisfaction. More specifically: Hypothesis 3: The negative impact of emotional exhaustion on job satisfaction will be significantly weaker for those individuals who experience greater levels of fun at work than it is for individuals who experience low levels of fun at work. Attitudes Toward Fun Just as with other psychological variables, individuals are likely to differ in their attitudes toward fun. As suggested by Aldag and Sherony (2001), these attitudes may have several dimensions. For example, there are likely to be differences in whether individuals view efforts to foster fun in the workplace as appropriate. This was the case at Cooley Dickinson Hospital where some employees reacted to the introduction of such activities as being too silly for a hospital (Mellen, 2003). Whether one finds fun at work as appropriate or not may depend on ones early socialization experiences, work history, peer influences, and personality characteristics (Aldag & Sherony, 2001). These factors may also account for varying attitudes on the salience or importance of
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having fun at work. For some with high social needs, fun may play an important role in their job satisfaction. For others, this may be less important. In addition, the consequences of having fun at work are likely to be perceived differently by individuals. Some may view fun activities as a means of enhancing productivity, while others may see such efforts as creating chaos or more work for employees. One nurses initial reaction to the introduction of the Fish! Philosophy at Missouri Baptist Medical Center was that this was another program to drain more effort out of the staff (Lundin, Christensen, Paul & Strand, 2002). Clearly, evidence suggests that differences in attitudes toward fun warrant further investigation. To that end, this study will examine the relationship between attitudes toward fun and experienced fun. It is predicted that: Hypothesis 4: Respondents with more positive attitudes toward fun will be more likely to report that they have experienced fun in the workplace. Method Sample The sample consisted of 142 health care workers enrolled in undergraduate and graduate health care administration courses at two medium-sized universities, one located in the Midwest and the other located in the southeastern part of the United States. Most of the respondents (72%) were female and 54% were married. Although respondents ranged in age from 20 to 59, the mean age was 30 years. About 40% of the sample consisted of registered nurses, with the remaining portion holding various clinical or administrative positions. The mean number of years in the current position was 3 years, with 7 years (SD = 7.07) in the profession. On average, respondents spent 80% of their work day interacting with others, with two-thirds of that time spent interacting with patients. The surveys were distributed to the respondents during class by their instructor. Of the 200 surveys that were distributed, 187 were returned, producing a response rate of 93 percent. Because one of the surveys contained missing data and 44 of the respondents were not working in health care positions, 142 surveys were used in the data analysis. Survey Instrument The survey instrument consisted of two sections: (1) work-related emotions, and (2) work-related beliefs and attitudes. Demographic information was tapped through single item questions, including gender, age, marital status, education, job title, job tenure, and type of employer. Work-related emotions The work-related emotions section included measures of emotional labor and emotional exhaustion. Consistent with past research on the emotional labor concept (Brotheridge & Lee, 2003; Morris & Feldman, 1997), the emotional labor measure included items to assess the frequency, variety, and intensity of emotional requirements, as well as
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emotional dissonance (i.e., the conflict between genuinely felt emotions and organizationally or professionally sanctioned emotions). The Emotion Work Requirements Scale (EWRS) by Best, Downey and Jones (1997), and two additional items developed for this study, were used to measure frequency, variety, and intensity. Sample items include: I frequently reassure people who are distressed or upset, I usually have to express friendly emotions (e.g., smiling, giving compliments, making small talk), I frequently have to hide my anger or disapproval about something someone has said or done and, I often hide my disgust over something someone has said or done. Two new items developed for this study reflect the often difficult and frustrating experience that health care workers face when they have to deliver bad news: I usually have to tell people things they dont want to hear and I ordinarily have to attempt to get people to do things they dont want to do. For each item, respondents were asked to indicate their level of agreement using a 5-point scale (1=Strongly Disagree, 5=Strongly Agree). Emotional dissonance was measured using three items adapted from Kruml and Geddes (2000). These authors reported a coefficient alpha of .80 for this three-item scale. Sample items include: I show feelings to patients that are different from what I feel inside, and I have to cover up my true feelings when dealing with patients. In addition, two additional items were added that assess the frequency of emotional dissonance experienced by respondents: I spend most of my work day hiding my true emotions and I spend most of my work day faking positive emotions. Each item was rated on a 5-point scale (1=Strongly Disagree, 5=Strongly Agree). A composite emotional labor score was computed for each respondent by computing the average of the ratings given for all 13 items: the five emotional dissonance items and the eight items used to measure variety, frequency, and intensity. Emotional exhaustion was measured using six items developed by Barnett, Brennan, and Gareis (1999). These authors reported a Cronbachs alpha of .89 for this six item measure. Using a 7- point scale (1=never, 2=less than 12 times a year, 3= once a month, 4=more than once a month but less than once a week, 5=once a week, 6=2 to 4 times a week, 7= 5 times a week or more), respondents were instructed to indicate the frequency with which they felt a particular emotion. Sample items include: emotionally drained, and tired facing another day. Work-related beliefs and attitudes The work-related beliefs and attitudes section consisted of three measures: (1) attitudes toward fun at work, (2) level of fun experienced at work, and (3) job satisfaction. All items in this section were rated on a 5-point scale (1=Strongly Disagree, 5=Strongly Agree). The measure of attitudes toward fun was developed using the three attitudinal categories of appropriateness, salience, and perceived consequences of fun. Four items measure appropriateness, five items measure salience, and 8 items measure perceived consequences. Three of the items were taken from the sample items provided by Aldag and Sherony (2001), the remaining items were developed by Karl and Harland (2005). The composite score was computed as the average of all 17
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items. The level of fun experienced at work was measured using 5 items developed by the authors. Job satisfaction was measured using 5 items from the Brayfield and Rothes (1951) job satisfaction index, and when used in a previous study, a coefficient alpha of .88 was reported for this reduced 5-item measure. Sample items include: I feel fairly satisfied with my present job, and Each day at work seems like it will never end. Results Table 1 contains the mean scores, standard deviations, correlations, and reliability coefficients for the variables measuring work-related emotions, attitudes toward fun, experienced fun, and job satisfaction. The mean scores indicate that respondents were generally satisfied with their jobs (M=3.7, SD=.62 on a 5-point scale) and did not experience high levels of emotional labor (M=3.04, SD=.50 on a 5-point scale), or emotional exhaustion (M=3.77 on a 7-point scale). However, there was a considerable amount of variation in emotional exhaustion (SD = 1.2). Respondents expressed very positive attitudes towards fun (M=3.96, SD=.38) and experienced a moderate level of fun in their workplaces (M=3.16, SD=.63). Table 1. Means, Standard Deviations, Reliability Estimates, and Correlations for Variables Measuring Work-related Emotions and Attitudes Variable
1. Emotional Labor 2. Experienced Fun 3. Attitudes Toward Fun 4. Emotional Exhaustion 5. Job Satisfaction
M
3.04 3.16 3.96 3.77 3.7
SD
.50 .63 .38 1.2 .62
1
(.79) -.30** -.14 .42*** -.31***
(.79) .25** -.33*** .57*** (.84) -.18* .20* (.87) -.46*** (.86)
Note: Coefficient alphas are in the diagonal, *p < .05, ** p < .01, *** p < .001
As predicted in Hypothesis 1, we found a positive relationship between emotional labor and emotional exhaustion (r = .42, p<.001). To test the second hypothesis, we conducted a regression analysis in which emotional exhaustion was entered first, followed by emotional labor. As predicted, emotional labor did not explain any additional variance in job satisfaction (R2 =.00, n.s.) over that explained by emotional exhaustion (Beta = -.46, R2 = .21, p < .001), supporting Hypothesis 2 (see Table 2). Consistent with past research, those who experienced greater emotional exhaustion reported lower job satisfaction. Table 2. Regression Results for the Impact of Emotional Labor and Emotional Exhaustion on Job Satisfaction
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Dependent Variable: Job Satisfaction Model 1 Emotional Exhaustion
Beta s.e. -.46 .05
t -5.44***
R2
df
.21 Model 2 Emotional Exhaustion Emotional Labor
1/113
-.46 .02
.05 .02
-5.33*** .237n.s. .21 2/112
Note: The Betas presented are the standardized coefficients. * p < .05, ** p < .01, *** p < .001
The third hypothesis predicted an interaction effect for emotional exhaustion and experienced fun on job satisfaction. Using a hierarchical moderated regression analysis, a significant interaction effect was found (see Table 3). More specifically, the negative impact of emotional exhaustion on job satisfaction was significantly lower for those who experienced higher levels of fun at work (see Figure 2), thereby providing support for hypothesis 3. Finally, as predicted in hypothesis 4, those respondents with a more positive attitude towards fun reported that they experienced more fun in the workplace (r = .25, p<.01). DISCUSSION One of the most significant contributions of this study is our finding that experiencing fun in the workplace can lessen the negative impact of emotional exhaustion on job satisfaction. While there may be little that health care institutions can do to reduce the emotional demands of health care providers work, it appears that efforts to improve the workplace environment may have positive implications for employees mental health and job satisfaction. By providing opportunities for employees to experience fun in the workplace, health care organizations are also likely to benefit from lower staffing costs since both emotional exhaustion and job satisfaction are strongly related to turnover (Cordes & Dougherty, 1993; Happell, Martin & Pinikahana, 2003; Lee & Ashforth, 1996). Such endeavors can also reap benefits in terms of ones reputation as an employer. A study by Hewitt Associates showed that those companies on Fortunes 100 Best Companies to Work For have lower turnover rates and receive more employment applications than those not selected (Benefits Payoff, 1999). Table 3. Hierarchical Moderated Regression Results for the Interaction Between Emotional Exhaustion and Experienced Fun on Job Satisfaction Dependent Variable: Job Satisfaction
Step 1
Beta
Adj. R2
R2
F Change (df)
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Emotional Exhaustion Experienced Fun Step 2 Emotional Exhaustion x Experienced Fun
-1.07 -.059 .41 .79 .43 .40 .42 .41 .02 48.23 (2, 140)*** 5.90 (1,139)*
Note: The Betas presented are those derived at the second step. * p < .05, ** p < .01, *** p < .001
Figure 2. The Interaction Between Emotional Exhaustion and Experienced Fun on Job Satisfaction.
4.5 4 3.5 3 2.5 2 1.5 1 0.5 0
Low High Low Emotional Exhaustion
High Emotional Exhaustion
Job Satisfaction
Experienced Fun
Another important finding of this study was that health care workers expressed positive attitudes toward workplace fun. Employees with positive attitudes towards fun were more likely to experience fun in the workplace, have higher job satisfaction, and suffer less emotional exhaustion. Health care institutions that might be considering the use of fun workplace activities can take comfort in the fact that these appear to be well received by employees and that the use of such activities are likely to result in positive outcomes for both the employees and the organization. While our study produced some significant findings with regard to the benefits of a fun work environment, it also raises some interesting questions for future research. One important question that needs to be addressed is---what do health care workers consider to be fun? To date, there has been very limited research in this area. Two exceptions are a study of human resource professionals by Ford, McLaughlin, and Newstrom (2003) and a study of MBA students by Karl and Harland (2005). Ford et al. (2003) surveyed 572 human resource professionals and found that the top three most
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frequently used activities to create a fun work environment were casual dress days, employee recognition and rewards, and company-provided food and refreshments (these activities were used by 84%, 83%, and 82%, respectively). Some less frequently used activities included costume days (used by 39% of respondents), fun committees (21%), and creative skits and songs for company events (20%). In a study of 180 MBA students, Karl and Harland (2005) identified 40 fun activities from recommendations made by authors in the popular press literature (e.g., Berger, 2002; Firth, 1995; Greenwich, 2000; Hemsath, 2001; Putzier 2001). These 40 activities were grouped into one of nine categories: (1) contests (e.g., baby picture, bake-off), (2) gift exchanges, (3) games (e.g., Bingo, cards, board games), (4) awards, (5) food and refreshments, (6) company-wide outings (e.g., golf, amusement park), (7) humorous communications, humor kits, or humor committees, (8) self-deprecation or lets laugh at ourselves activities (e.g., ugliest tie, employees share stories of most embarrassing moment), and (9) wild and wacky (e.g., office Olympics with office-related events such as wastebasket shot put, or theme days such as Hawaiian Day, or Halloween). These authors found that the types of fun activities most favored by respondents were company-wide outings (e.g., golf, baseball game, amusement park) and food-related events (e.g., everyone goes out to lunch once a month, potluck lunch or dinner, celebrate employees birthdays with cake and ice cream). However, it is possible that health care workers may differ in the types of fun activities they would prefer. Without such information, there is a risk that the use of some activities may have unintended consequences. Certain workplace activities, which are intended to be fun, may actually cause more stress or more emotional exhaustion. For instance, having a costume contest, theme day (Hawaiian, back tie, etc.) or potluck lunch may cause more stress for those who feel they have to spend their valuable offwork hours devoting time and money to either acquiring the appropriate attire or preparing food. Similarly, company-wide outings or celebrations scheduled during offwork hours may result in increased work-family conflict for those employees who would rather spend time with their families, but feel obligated to attend work-related events. A thorough investigation of various fun activities would aid health care organizations in their decisions about what kinds of activities would be most well received by employees. Although this study did not examine patient satisfaction, there is evidence to suggest that the benefits of workplace fun for employees could have positive implications for patient satisfaction. However, this warrants further investigation given that there has been some debate as to whether more satisfied employees "create" more satisfied patients, or whether working with satisfied patients tends to make employees more satisfied (Kaldenberg & Regrut, 1999). Furthermore, it would be important to examine patient reactions to workplace fun. Currently, there is no research which directly examines how customers/clients might react to seeing employees having fun at work. It is possible that while workplace fun may have positive effects for employees, those being served may feel that employees are goofing off and not devoting sufficient attention to them. This might be especially true in health care environments. Differences in patient reactions may also depend on where fun activities are being used in the health care workplace (e.g. clinic vs. hospital floor), given differences in the intensity of patient care needs. Thus, health care organizations should not consider this
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as a panacea for reducing employee emotional exhaustion, but as one possible tactic to be used in combination with other workplace environment changes. This study is not without limitations. First, replication is needed. In general, our respondents reported low levels of emotional labor and low levels of emotional exhaustion. Thus, the relationships reported here may not be representative of those found in work environments eliciting higher levels of emotional labor and exhaustion. Another limitation is that there are undoubtedly several unmeasured variables that may play a significant role in the relationship between experienced fun, emotional exhaustion, and job satisfaction. For example, individual and situational variables such as personality (e.g., extroversion, agreeableness) or work context (e.g., emergency room, critical care) may influence both the perceived appropriateness and outcomes of workplace fun. Future research is needed to examine these possibilities. In conclusion, there is ample anecdotal evidence suggesting that workplace fun can lead to positive outcomes. The results of this study provide empirical support for those claims. Future research addressing the issues raised above will help clarify the impact that fun in the workplace can have in the health care industry. References Aiken, L., Clarke, S., Sloane, D., Sochalski, J., & Silber, J. (2002). Hospital Nurse Staffing and Patient Mortality, Nurse Burnout, and Job Dissatisfaction. JAMA: The Journal of the American Medical Association, 288(16), 1987-1994. Aldag, R., & Sherony, K. (2001). A Spoonful of Sugar: Some Thoughts on Fun At Work. Current Issues in Management, 1(1), 62-76. Ashforth, B., & Humphrey, R. (1993). Emotional Labor in Service Roles: The Influence of Identity. Academy of Management Review, 18, 88-115. Barnett, R. C., Brennan, R. T., Gareis, K. C. (1999). A Closer Look at The Measurement of Burnout. Journal of Applied Biobehavioral Research, 4(2), 65-78. Benefits Payoff for the Best Companies. Compensation & Benefits Report, 2/7/99, 13 (3), 4. Berg, D. H. (2001). The Power of a Playful Spirit At Work. The Journal for Quality & Participation, 24 (2), 57-62. Berger, C. (2002). Funny Works!: 52 Ways to Have More Fun at Work. Encino, CA: SJS Press. Best, R. G., Downey, R. G. & Jones, R. G. (1997, April). Incumbent Perceptions of Emotional Work Requirements. Paper presented at the 12th annual conference of the Society for Industrial and Organizational Psychology, St. Louis, MO.
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A Theoretical Model Applying Fuzzy Logic Theory for Evaluating Personnel in Project Management Darko Galinec Ministry of Defence, Republic of Croatia Slavko Vidovi University of Zagreb ABSTRACT Project team work depends considerably on the contribution of its members and its management as well. Cooperation among members depends on the leader who is supposed to encourage interactions, growth and knowledge exchange among members. To identify the importance of each individual, a leader/manager must evaluate individual contributions. On the basis of such assessments, necessary and possible actions will be undertaken to improve the achievements of the team as a whole. A leader usually has defective and incomplete information at his disposal and, besides, is subjective. To solve the aforesaid problem, fuzzy approach and fuzzy logic are used. Fuzzy logic, as a method for soft-computing, as input values employs data with the following features; uncertainty and partial verity, indistinctive borders among particular categories. Fuzzy evaluation system has been designed to reduce evaluation subjectivity. Classical and Fuzzy Approach to Classification Classical theory of sets has considerably contributed to the development of numerous scientific program solutions designed for decision making where phenomena can be precisely measured. In problem fields where there are no such measuring possibilities, classical set theory does not render good results. Employment of classical sets theory can lead to misinterpretation of data and knowledge. Sometimes transfer from one set to another is not precise but gradual. In such cases, to classify members into well defined groups, it is necessary to define arbitrary boundaries among sets. The problem is even bigger when information needed for decision making is not available in exact, mathematic form, so judgement must be made with certain percentage of uncertainty. Such reflections have resulted in the development of fuzzy sets theory, which according to Zadeh (Schneider, Kandel, Langholz & Chew, 1996) differs from classical theory in one key standpoint: An element can belong to the fuzzy set, be completely excluded from the fuzzy set, or it can belong to the fuzzy set to any intermediate degree between these two extremes. Membership or not to a fuzzy set and its presentation through certain values makes classical theory a special case of fuzzy set theory. In classical sets theory a member can belong to a set if, and only if, it fulfils all conditions of the membership, otherwise it doesnt belong to the set. If, for example, the set satisfying contains the values from 8 to 14, an individual to get such a mark must have at least 8 and at the most 14 points. If he/she has 7.9 points, he/she will not belong to the set satisfying. Since there are no indicators showing how close an eliminated individual is to a set membership, an individual having only 1 point will be eliminated from the set satisfying (and ranged, put into the set unsatisfying) as well as an individual having
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7.9 points. Classifying the one having only 1 point and the one having 7.9 points into the same category, i. e. ranging the persons having 7.9 and 8 points into different categories leads to, if we apply classical sets theory, inconsistency. Necessity to Evaluate Performance of the Members within Program Organizational, financial, human and material resources are requisite for the information system development. According to this paper, human resources are in the centre of a star, other resources being points around it. Professional profile of the necessary staff belongs mainly to informatics field, minor part relating to the clerical staff. A program manager, the one who is the most responsible for the plan realization, must have possibility to evaluate to the utmost the contribution and reliability of each member, so that each member could be managed in a way that leads to success - successful completion of the program. In this way behavior and matter of fact contribution of each individual will be determined, as well as favorable moment and the ways suitable for the application of available mechanisms for human resources management. Because of impossibility to evaluate contribution of each individual (which is immanent to evaluation process), i.e. inability to define and determine precise and strict bounds between possible evaluation ratings for an individual, with a view to find the adequate way to solve the problem, ratings in this work are represented as fuzzy sets. Their mutual bounds are not strictly defined, changes are gradual, common part being maintained. Due to complexity, numerous problem situations can not be solved in a distinctive way. To resolve real problems, like program management of human resources, financial, and organizational resources, as well as the tracking of their development, we lack timely and reliable data. Reasons are numerous and can be found inside (inadequate competency and to small a staff, interpersonal relations, motivation, decision making in connection with priorities and necessary financial support, planning and acquisition of necessary equipment) and outside (political decisions, economic measures, economic stability, international situation etc.). If, in a better case, there are data, they are late, incomplete, indefinite, not precise, in short, doubtful and because of that considerably subject to subjective assessments of an individual or a group resolving the problem. In spite of the aforesaid, it is necessary to create the best possible basis for rational decision making and problem elaboration, calculate the parameters value and create solution rules. It is not possible to eliminate completely assessment subjectivity, but it is possible to shape it and thus reduce its influence on decision making and management. Performance of the Members in Programs and Projects To obtain synergetic staff efficiency and rise in proficiency it is necessary, apart from material and financial resources, to provide for the other prerequisites. They are reflected in providing pleasant working environment, possibility to discuss assigned duties, expressing opinion about problems in good faith, respecting individual opinions, views and ideas, solution of possible conflicts on the basis of analysis and arguments, getting familiar with assigned duties and unambiguous assignment to a particular team member. Problems in connection with duties and related risks should be foreseen and actions should be undertaken to prevent problem occurrence. If such actions are not possible, problems must be solved without delay to minimize bad consequences.
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Program Management Program management involves planning, organizing and control of a system development. Program management relates more to the prediction of possible events and less to the analysis of the present facts. It represents coordination of the tasks assigned to the team members, its basic duty being restraint of changes. Efficient leadership is, among other things, the result of actions taken by the leader and led team members and actual work situation. Very often such a situation is not simple - it depends on the number and complexity of the influencing factors. It is very difficult, sometimes even impossible, to overcome them all. So, it is necessary to identify the most important ones, which in a particular case have the biggest influence. As for the program manager, amongst all factors, the most appreciated factor is the staff. The staff should be managed in a way which will provide for the best results and insure success of the work. In this connection he/she must be able to accelerate the accomplishment of the assigned tasks, on the assumption that there is no one and the same way to manage and lead a team, a way which will be suitable for all problem situations. Because of the aforementioned restrictions - subjectivity which is immanent quality of a human being, leader can develop fuzzy evaluation models in order to minimize subjectivity and to make his assessment objective as much as possible, using imprecise and uncertain values - the only ones at his disposal. A possible evaluation model is represented in this work. Fuzzy Approach to Problem Solving The goal for a role-oriented organization is to move away from traditional notions of how organizations must be structured, while accommodating both data-centric, traditional hierarchies in coexistence with newer, innovative structures. It is not important whether roles are insourced or outsourced. Identifying and staffing individual functions is the consequence of determining whether the roles can be best filled by internal or external resources, and whether it is appropriate to supplement existing personnel with part-time contractors or systems integrators. A role orientation is not a function, it breaks up requirements into a grouping of capabilities that can be fulfilled in several ways, including teams, specialty centers and by individuals assuming more than one function. The emphasis is on communications, process and governance. Each is critical in supporting the flexibility to change as requirements dictate. Fuzzy Logic Theory The membership function associated with a fuzzy set assigns degrees of membership to elements in the set. The extent to which an element belongs to a given fuzzy set is called the grade of membership or degree of membership. For example, we can assign the following values to the membership function associated with the temperature of the beer (Schneider, Kandel, Langholz & Chew, 1996, p. 25): the degree of membership of 38O F beer in the fuzzy set of cold beers is 1, (38) = 1, but the degree of membership of 46O F beer is only 0.2, (46) = 0.2. The use of fuzzy set theory is very appealing in
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cases where the decision must be made in environments in which the information available is incomplete, vague, or ambiguous. The result, referred to as the certainty factor (CF), which is computed for each decision process, represents the degree of belief that the decision reached is correct. Note that although the certainty factor can have a value in any range, it is commonly normalized to the interval from 0 to 1. Since the creation of logic rule that every statement is at the same time true and false, there have been some doubts about that (Bojadziev & Bojadziev, 1997, p. 41). Although the roots of such reflections can be found in Aristotel, Bool, Peirce, Vasiliev, in contemporary sense we must consider Lukasiewiczs and Posts early works. Independently from each other, these authors have systematically defined multi-valued logic systems, Lukasiewicz being motivated by philosophical reasons and Post by mathematic ones. Lukasiewiscz in his work On determinism states if allegations about future events are true (sign 1) or false (sign 0), then the future is as much determined as the past, the only difference is that the future has not happened yet (Gabbay & Guenthner, 1994, p. 72). The ancient Epicurus teaching supported indeterminism and rejected the principle of logic bivalence, while the Stoics accepted it and strongly advocated determinism (Gottwald, 1996, p. 8). To overcome the dead-end of determinism, Lukasiewicz abandoned the traditional rule on the elimination of the third one, which reads: every allegation is whether true or false in the same sense, i.e. every allegation must be assigned one and only one value - truth or untruth. He added the third value - possible (sign ) and thus introduced the principle of logic threevalency. Later on he widened the set of possible values permitting number of values n 3 from [0, 1], introducing n-valued or multi-valued logic by means of infinite and countable set of rational numbers Q. If truth values are represented by all real numbers in [0, 1], i.e. truth set is T = [0, 1] (the set of real numbers is infinite and uncountable) then multi-valued logic is logic where judgements can assume infinite number of values (infinite valued logic) or standard Lukasiewicz logic. There is correspondence between fuzzy sets and infinite valued logic. Complement, intersection and union of fuzzy sets correspond respectively to negation, conjunction and disjunction of infinite valued logic. Fuzzy logic uses fuzzy sets theory as a main tool, basic mathematic ideas of fuzzy logic originated from infinite valued logic, and that is the connection between these two logics. Fuzzy logic can be considered an extension of infinite valued logic since it incorporates fuzzy sets and fuzzy relations (Bojadziev & Bojadziev, 1997, p. 43). The triangular membership function, see equation (1) and Figure 2 (Appendix A) is the most frequently used function and the most practical, but other shapes are also used (McNeill, Thro & Thro, 1994, p. 33). It is very often used in fuzzy applications for fuzzy controller, managerial decision making, business and finance, social sciences, etc. It can be created in a simple way, on the basis of small amount of information (Bojadziev & Bojadziev, 1997, pp. 22-23).
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Methodological Steps for Model Construction The evaluation system is made by defining membership functions of linguistic variables, through the research in which author has shaped and implemented the original fuzzy evaluation system with that kind of internal structure - with original linguistic variables and original business rules - which enables tracking of the level of efficiency of the members of the project teams within the program, using incomplete (the only available) input values. It is the result of the execution of the following methodological steps: 1. The choice of the membership function of form: triangular 2. The choice of the number of fuzzy linguistic variable sets: 4 3. The determination of the width of the membership function interval: [1, 7] 4. The construction of fuzzy production rules. A system like this is meant to increase the level of efficiency of leadership and control, in all project/program phases, by performing ex-post evaluation of the work contribution of each member. Membership functions of the linguistic variables were created, as were the linguistic variables themselves, based on the results the author produced by research conducted while leading complex informatics projects within programs. In order to successfully lead team members and control of the proceedings of the whole program, in the authors opinion, it was necessary to create a system with such a form and width of membership functions of linguistic variables as to enable the necessary evaluation of the project and program team members' work. These are the membership functions used to create the input and output values of the system, in the creation of which the existing working conditions and effectively available information decision making basis were taken into consideration. It consists of incomplete, subjective information which is to be used in the best manner possible, since no other is available. The triangular membership function has been chosen for reasons stated in the previous part of the paper (McNeill, Thro & Thro, 1994, p. 33; Bojadziev & Bojadziev, 1997, pp. 22-23). In its definition the author took into account that the evaluation interval should neither be too narrow nor too wide. If it were too narrow, with a small number of possible membership function values (two, for instance), the evaluation criteria would need to be very high, that is, it should be possible to speculate that this is an efficiency evaluation of a team with a high level of excellence. This assumption is hard to accept, because not only the most excellent individuals take part in programs for a certain type of work. If we would, in contrast, use too wide an interval, it would be difficult for the evaluator to conduct the evaluation, since it is hard for a human to decide on a specific value when the granulation level is too high. Therefore each of the membership functions of linguistic variables has a predetermined evaluation interval [1, 7]. The number of membership functions for each linguistic variable is 4 and this is not only within previously stated demands, but it also enables the number of fuzzy rules to be neither too big, nor too small (in reality, it equals 16 for calculating each output linguistic variable).
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Fuzzy Evaluation Model Since different kinds of uncertainty can be well explored and described within theory of fuzzy sets, instead of insisting upon precise and sharp bounds, necessary linguistic expressions are formalized by fuzzy sets with overlapping possibilities. According to Schneider, Kandel, Langholz & Chew (1996) in Outline of a New Approach to the Analysis of Complex Systems and Decision Processes Zadeh states in his principle of incompatibility: As the complexity of system increases, our ability to make precise and yet significant statement about its behavior diminishes until a threshold is reached beyond which precision and significance (or relevance) become almost mutually exclusive characteristics. Linguistic Variable and Membership Function As for fuzzy logic, expression used in natural language to describe some phenomena having fuzzy value is called a linguistic variable. A linguistic variable is often described in terms of its fuzzy space. This space is generally composed of multiple, overlapping fuzzy sets, each fuzzy set describing a semantic partition of the variables allowable problem state (Cox,1994, p. 40). For example, the linguistic variable Responsibility is broken down into four fuzzy sets: unsatisfying (UN), satisfying (SA), successful (SU) and very successful (VS). This total problem space, from the smallest to the largest allowable value, is called the universe of discourse. The universe of discourse for the linguistic variable Responsibility is 1 to 16 measurement units - points in our example. Linguistic variable Ability, Reliability, and Resulting value can be modeled by means of sets ABI, REL, REV containing certain number of values, see expression (6) (Appendix A). Fuzzy Rules and Logic Operations Preconditions and conclusions about phenomena can be found within fuzzy rules which create the knowledge basis on a certain phenomenon. Knowledge is presented as the following rule: If P then C, P represents rule precondition and C its conclusion. Rule precondition consists of clauses mutually connected with logic operators. Conclusion consists of truth statement. Creation of fuzzy rules basis presents the most complex part of the work since collected knowledge about systems behavior is presented in a formal shape, thus containing the elements of artificial intelligence. Membership function which refers to a fuzzy set joins degree of membership to set members. Membership to a certain fuzzy set is described as a degree of membership or grade of membership and refers to precondition on phenomenon. Certainty factor, CF, which refers to the conclusion on phenomenon is calculated for each decision making process and represents degree of belief that decision is correct. Although certainty factor can use the values from any interval, it is usually normalized on the interval [0, 1]. True value reaching procedure by means of fuzzy reasoning includes implicitly elaboration of all activated rules together. Each of the aforesaid rules contributes to the conclusion in a certain degree, that degree being equal to the degree to which is
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satisfied the portion of the rule referring to the precondition. Such an imitation process resembles to human deduction - a man making decisions takes into account different facts, each of them having particular influence on the final decision. The choice of appropriate logic operator represents an important part of a fuzzy system design. Originally, theory of fuzzy sets formulates standard Zadehs minimum, maximum and complement operations. Since 1965 a few classes of logic operators satisfying corresponding axioms have been introduced for each of the aforementioned operations (Rudas, 1999, p. 1). By acceptance of some basic conditions, by means of t-operators, a huge class of operation sets for union and section has been created. T-norm concept and t-co-norm has been originally developed by Menger in 1942 within theory of probabilistic metric spaces. Since then, numerous types of t-operators have been developed. In many applications, such common operators are not efficient, so there are demands for compensational behavior (Rudas, 1999). Because of the aforesaid, compensation operators are introduced. Evaluation Model Structure Figure 1 displays input and output originally developed linguistic variables of a fuzzy system model. Figure 1. The Structure of Modules
Competence Ability Efficiency EVALUATOR Responsibility Reliability Management Resulting value
The first input module contains the input linguistic variable Competence which refers to the level of knowledge and expertise in the problem area referring to the performance
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of the members of the program, and is a result of the formal education of the team members, including completed courses and training. Efficiency represents the rate of produced effect of an individual measured by the volume and quality of the execution of the assigned tasks. Both dimensions of the program member affect the level of his Ability, which is a linguistic variable that represents the first output value of the model. The other linguistic variable input module includes Responsibility as a measure of gravity and excellence of task execution performance, and Management that acknowledges the fact that within the modern organization forms nowadays the prevailing opinion is that all members of the team are management oriented managers, regardless whether they have subordinates or not. If the latter is the case, they are managers of their own tasks only. The output linguistic variable that is created within this module is Reliability, and as a result of the two input variables it represents the measure of certainty with which the program manager can rely on the person in question, in order to maintain the quality and the dynamics of the work. The third module uses output values of the previous two modules as its input values, and its goal is to put together the level of quality of Ability and Reliability of a specific individual, so that it could, based on the derived Resulting value, finally be decided on his or her future, form and type of cooperation in the common work. Conclusions A complex work like program and project elaboration and management, among other things, strongly requires qualitative evaluation of human capabilities and capacities in order to manage them. Improvisation and subjective evaluation should be reduced as much as possible. The aforesaid can be achieved by the development and employment of models which will produce decisions made on the basis of more objective assessments. By means of fuzzy approach and fuzzy logic employment, the system model supporting evaluation processes and decision making is rendered possible. Fuzzy evaluation model is complex and structured. According to its modules, fuzzy evaluation of individual characteristics is made, in conformity with beforehand defined rules modeling relationship among characteristics. On the basis of calculated output module values, the resulting, final evaluation value is reached. Shaped model is adaptable, it can be improved according to the business needs, introducing changes through the selection of features - linguistic variables, their values, and interaction rules as well - until satisfactory shape is achieved.
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Appendix A. Formulas, Graphs and Comments Membership Functions 0 , x < a1 x a1 , a1 x a M a M a1 triangle ( x) = x a2 , aM x a2 aM a2 0 , x > a2
(1)
Figure 2. The Triangular Membership Function

1
a1
aM
a2
Other shapes are also used (see equation 2), as shown in figure 3. One is the trapezoid which contains more information than triangle. x a1 b a , a1 x b1 1 1 1, b x b2 trapezoid ( x) = 1 (2) x a2 , b x a 2 b2 a2 2 0, x < a1 ili x > a2
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Figure 3. The Trapezoidal Membership Function

1
a1
b1
b2
a2
A fuzzy set can also be represented by a quadratic equation which produces a continuous curve. Three shapes are possible: S, (bell) and Z (1 S) given by equations (3), (4) and (5). Functions are shown in figure 4. 0, x a1 2 x a1 2 , a1 < x < b a 2 a1 S ( x) = 2 x a2 1 2 a a , b < x < a2 1 2 1, x a 2
1 2 2( p b a )2 ( x a1 ) , a1 x p b 1 1 2 2 ( x p ) + 1, p b x p + b bell ( x) = 2b 1 (x a2 )2 , p + b x a2 2 2( p + b a 2 ) 0, x < a ili x > a 1 2
(3)
(4)
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1, x a1 2 x a1 1 2 a a , a1 < x < b 1 2 1 S ( x) = 2 x a2 2 a a , b < x < a2 2 1 0, x a 2 Figure 4. S, Bell and Z Membership Functions

1
(5)
0.5 0
a1
b b = (a1 + a 2 ) / 2 (p, 1)
a2
0.5 0
2b (p-b, 1/2) (p+b,1/2)
a1
p-b
p+b
a2
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0.5
a1
b b = (a1 + a 2 ) / 2
a2
Values of Membership Functions With fuzzy sets membership function can assume the value of real number from the interval [0, 1]. The value of membership function to a particular set should be defined for each number of universal set. For example, fuzzy set is marked with A. Imagine an universal set containing 6 members, U = {x1, x2, x3, x4, x5, x6} and a fuzzy set A defined with the following values of membership functions: or (x1) = 0.15, (x2) = 0.4, (x3) = 0, (x4) = 1, (x5) = 0.2, (x6) = 0.7 A = {x1|0.15, x2|0.4, x3| 0, x4|1, x5|0.2, x6|0.7}. For fuzzy sets A U and B U relations between sets can be determined: A is subset of B, then and only then, when for x U is valid that (x) (x). A is equal to B only when for x U is valid that (x) = (x). B is complement of A only when for x U is valid that (x) = 1 - (x). If a complement is marked with a symbol ~, it is written that B = ~A. So, ~ (~A) = A is valid. Section A B (fuzzy conjunction) is obtained so that for x U membership function value with the section is defined in the following way: (x) = min ( (x), (x)). Union A B (fuzzy disjunction) is obtained so that for x U membership function value with the union is defined in the following way: (x) = max ( (x), (x)). Linguistic variable Ability, Reliability, and Resulting value can be modeled by means of sets ABI, REL, REV containing certain number of values:
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ability ABI = { ABI 1 , ABI 2 , ABI 3 , ABI 4 } = {UN ,SA, SU ,VS}, reliability REL = {REL1 , REL2 , REL3 , REL4 } = {UN ,SA, SU ,VS }, resulting value REL = {REV1 , REV2 , REV3 , REV4 } = {UN , SA, SU ,VS}, UN unsatisfying , SA satisfying , SU successful ,VS very successful. The terms of linguistic variables ability, reliability, and resulting value have the same triangle membership functions, presented analytically below: (6)
1, 1 v 4, UN (v) = 7 v , 4 v 7, 3
v 4 , 4 v 7, 3 SA (v) = 10 v , 7 v 10, 3 v 7 , 7 v 10, SU (v) = 3 13 v , 10 v 13, 3
v 10 , 10 v 13, VS (v) = 3 1 , 13 v 16.
(7)
(8)
(9)
(10)
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Appendix B. Charts, Tables, Formulas, Calculations and Comments Evaluation Process Model behavior and fuzzy deduction procedure can be described in a few successive steps. First of all, an evaluator must assess the value of input linguistic model variables. Values found are turned into fuzzy sets to show assessment uncertainty that is called fuzzyfication. Then logic operators are applied to the causative portion of the rule, after that implication procedure from causative to consecutive portion of the rule is made. On the basis of fuzzy rules, the values of output linguistic variables - fuzzy set for each variable - are calculated. Obtained fuzzy sets are aggregated - resulting in a fuzzy set. Finally, on the basis of output fuzzy set, one, precise value of linguistic variable is calculated. It represents the best assessment - defuzzyfication is being implemented. Fuzzy model presented in this work consists of 3 modules: first two having 2 inputs and 1 output. After calculation, outputs of both modules constitute inputs of the third one, output of which represents the required value. This way modeling is possible since mathematic prerequisite has been fulfilled - the following axiom has been fulfilled: chosen logic operations are associative; application of addition when working with chosen logic t-norm and t-co-norm operators makes toperation extension for more than two arguments unique. Figure 5 shows the process flow within the fuzzy evaluation system and its basic parts. Figure 5. The Model of Fuzzy Evaluation System
Fuzzy production rules database
Fuzzy reasoning Fuzzyfication/ binary fuzzy conversion Application of a Implication from logic operator to causative to causative part of consecutive part a rule Aggregation (joining of consecutive parts of a rule) Defuzzyfication/ fuzzy binary conversion
Input values
Project leader
Output values
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The program manager, based on available information, inputs the values into the input modules of the linguistic variable information system, in which the quantitative values are transformed into quality - the values of fuzzy sets of linguistic variables. They, as input values, present inputs for a module for fuzzy deduction of a production rules database of the IF-THEN structure. On the causal parts of the production rules a chosen logical operator is used (in Fuzzy Knowledge Builder this is Zadeh's minimum logic operator). Next an implication is executed from the cause to the consequential part of the rule, and next the consequential parts of the activated rules are joined. The result of the aggregation of the activated rules is a fuzzy set of the output linguistic variable, where the transformation from the quality value into a quantity value is executed. The created output values are used by the program manager as a basis to take appropriate actions, in order to catalyze positive changes and occurrences coming from the actions of individuals that constitute a team. The model is shaped and implemented by using the Fuzzy Knowledge Builder tool programming system, which was used to insert, process and display data. On the basis of phenomena described by linguistic variables the bases of fuzzy rules are made. Figure 6 presents basis of 2nd module fuzzy rules, needed to calculate the value of linguistic variable Reliability. Fuzzy Production Rules Figure 6. Basis of 2nd Module Fuzzy Rules
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Figure 7 represents calculation rules for output linguistic values - 1st and 3rd module Ability and Resulting value). Figure 7. Calculation Rules for Output Linguistic Values
SU (11) = 0.61, VS (11) = 0.39, SU (9.1) = 0.71, SA (9.1) = 0.29.

Rules activated within third module are: 1. If ABI is SU and REL is SA then REV is SA;
(11)
2.If ABI is SU and REL is SU then REV is SU; 3.If ABI is VS and REL is SA then REV is SA; 4.If ABI is VS and REL is SU then REV is SU .
The strength of the rules is calculated as follows: 11 = SU (11) SA (9.1) = min(0.61,0.29) = 0.29,
(12)
12 = SU (11) SU (9.1) = min(0.61,0.71) = 0.61, 21 = VS (11) SA (9.1) = min(0.39,0.29) = 0.29, 22 = VS (11) SU (9.1) = min(0.39,0.71) = 0.39.
(13)
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Values of Evaluation Process All input and output processing values produced during evaluation process have been numerically displayed in Table 1. Finally, following this procedure, the value of output linguistic variable Resulting value is reached. Table 1. Linguistic Variables of a Model With Evaluation Process Values
Linguistic variable
Point
Fuzzy set
Grade of membership/ certainty factor 0.56 0.84 0.61 0.91 0.86 0.71 0.60
Alternative fuzzy set
Competence Efficiency Ability Responsibility Management Reliability Resulting value
11 12 11 12 9.5 9.1 8.8
SU VS SU VS SU SU SU
VS SU VS SU SA SA SA
Alternative grade of membership/ certainty factor 0.44 0.16 0.39 0.09 0.14 0.29 0.40
Figure 7 represents 4 rules activated by input values presented in grey colour, calculated output values of afore-going modules. As for observed 3rd module, the values of linguistic variable Ability are presented on the horizontal axes, while the values of linguistic variable Reliability are presented on the vertical one. To calculate the value of output linguistic variable Resulting value in the causative part of the rules being activated, Zadeh's minimum logic operator TM ( x, y) = min(x, y) has been applied, which is one of the basic T-norms. Model can be shaped by tools for fuzzy modeling. Figure 8 and 9 represent input linguistic variables of the 3rd module with values awarded to a team member according to the assessment of the team leader.
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Input Linguistic Variables and Fuzzy Sets Figure 8. Input Linguistic Variable Ability
Figure 9. Input Linguistic Variable Reliability
Control output (CO) of each rule is defined by operation conjunction applied to its strength and conclusion:
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CO of rule 1: 11 SA ( z ) = min(0.29, SA ( z )), CO of rule 2 : 12 SU ( z ) = min(0.61, SU ( z )), CO of rule 3 : 21 SA ( z ) = min(0.29, SA ( z )), CO of rule 4 : 22 SU ( z ) = min(0.39, SU ( z )).
Output Linguistic Variable - Aggregated Fuzzy Set and Crisp Value The aggregated output is: agg ( z ) = max(min(0.29, SA ( z )), min(0.61, SU ( z ))).
0, 1 z 4, z 4 , 4 v 5, 3 0.29, 5 z 8, agg ( z ) = z 7 , 8 v 9, 3 0.61, 9 z 11, 13 z , 11 v 13. 3
(14)
(15)
(16)
Figure 10 represents output linguistic value, calculation of which brings evaluation procedure to an end. Figure 10. Output Linguistic Variable Resulting value
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The crisp value of an output linguistic variable is reached by the centre of gravity method. The crisp value z c according to this method is the weighted average of the zk numbers .
c = z
z
k =1 q 1 k =1
q 1
agg ( z k )
.
agg
(17)
(zk )
Estimation Surface
Centre of gravity calculation leads to the crisp value z c = 8.8 which inside fuzzy set successful is found on the certainty grade 0.60 while within fuzzy set satisfying is on 0.40. To get better insight into relations between input variables and output variables three-D graph may be used. Figure 11 presents action surface or estimation surface. Figure 11. Action Surface
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The inputs form the base of the graph, and the output is represented by the height of the graph above each input pair. References Bojadziev, G., & Bojadziev, M. (1997). Fuzzy Logic for Business, Finance, and Management. Singapore: World Scientific Publishing Co. Pte. Ltd. Cox, E. (1994). The Fuzzy Systems Handbook, A Practitioner's Guide to Building, Using, and Maintaining Fuzzy Systems. Boston: AP Professional. Dae-Ho, B., & Eui-Ho, S. (1994). Human Resource Management Expert Systems Technology. Expert Systems, 11(2), 12-21. Gabbay, D., & Guenthner, F. (1994). Handbook of Philosophical Logic Volume III: Alternatives to Classical Logic. Dordrecht: Kluwer Academic Publishers. Giarratano, H., & Riley, G. (1998). Expert Systems Principles and Programming. Boston: PWS Publishing Company, An International Thomson Publishing Company Inc. Gottwald, S. (1996). Many-Valued and Fuzzy Logics. Prague: Eight European Summer School in Logic, Language and Information. McNeill, F., Thro, M., & Thro, E. (1994). Fuzzy Logic A Practical Approach. Boston: AP Professional. Project Management Institute (2000). A Guide to the Project Management Body of Knowledge. North Carolina: PMI Publishing Division.
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Rudas, I. J. (1999). Computational Intelligence in Information/Intelligent Systems, Towards the Generalization of T-Operators: A Distance Based Approach. Proceedings of 10th International Conference Information and Intelligent Systems - IIS'99, 37-53. Schneider, M., Kandel, A., Langholz, G., & Chew, G. (1996). Fuzzy Expert System Tools. Chichester: John Wiley & Sons.
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Outcomes of Values and Participation in Values-Expressive Nonprofit Agencies Granger Macy Ithaca College ABSTRACT This paper demonstrates the effect of values and management practices on important employee outcomes including satisfaction, commitment, trust, and self-esteem based on a study of 18 not-for-profit social service agencies. The study focused on the relationship between values and management practices and how this relationship affected the perceived satisfaction and social climate in not-for-profit organizations. Results from the analysis of the survey support an important linkage between values and management practice. This study found support for both direct and contingent effects of values on important organizational outcomes. Introduction Thus, to redesign jobs, reward systems, and human resources management policies that will result in optimum job satisfaction and productivity, managers need to know what employees value (Karl & Sutton, 1998, p. 515). This statement represents the essential thrust of this paper. In addition to Karl and Sutton (1998) others including Jeavons (1992), Frumkin (2002), and Mason (1996) have supported this assertion in discussions of the not-for-profit sector. Jeavons (1992) contends that nonprofit organizations are values-expressive and thus the study of values in the nonprofit sector is an especially important investigation. Frumkin (2002) elaborates on this idea and states that (b)y committing to broad causes that are close to the heart or by giving to an effort that speaks directly to the needs of the community, nonprofit and voluntary action answers a powerful expressive urge (p. 23). Mason (1996) goes on to suggest why the proper support of personnel may be particularly important in the expressive nonprofit sector: People work with nonprofits to fulfill their expressive hunger for relatedness, rootedness, affection, approval, admittance, security, esteem, affiliation, and other expressive activities. (A) group enables and lifts up its members to accomplish more than they would alone, it buoys them up and supports them expressively. Individuals efforts and emotions are not constant. A group can mediate with and support its members during low periods, making these periods shorter and shallower than they would otherwise be (Mason,1996, p. 224) However, the impact of personal values and employee support on employee outcomes is largely untested. Karl and Sutton (1998) showed that public sector employees do have different values from private sector employees, but did not evaluate the core question of whether values do, in fact, influence work-related attitudes and behaviors. The present research is a cross-sectional study of small social service agencies. Specifically, this research examines the relationship between values, participative
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practices and important employee outcomes including job satisfaction, peer trust, and self-esteem. Participative practices are a focus since many studies have reported on the linkage between involvement and work-related attitudes and behaviors (e.g. Kim, 2002, Tesluk, Vance & Mathieu, 1999). This is an important issue since an understanding of the nature of the linkage between values, participative practices and important work outcomes can provide important guidance in the selection of appropriate management practices. Assessing Values and Management Practices Although values are discussed with increasing frequency, values are often conceptualized loosely and the discussion of values tends to be prescriptive. Thus it is important to begin by carefully identifying and defining specific values relevant to management practice. A value (or normative belief) can be defined as "an enduring belief that a specific mode of conduct or end-state of existence is personally or socially preferable to an opposite or converse mode of conduct or end-state of existence" (Rokeach, 1973: 5). Values can be understood as an individual's world view, one based on underlying principles of social justice and the importance of the individual in society. Values lie at the core of personality influencing individual choices and actions (Posner & Schmidt, 1996) and when they are socially derived, values can also act as norms which influence behavior in groups (Wiener, 1982). Values are proposed to have important effects on organizational and employee functioning. Collins and Porras (1996, p. 73-76) noted that the highest performing forprofit companies had strong core values unlike lower performing companies. And the consideration of values may be especially important for the nonprofit organization (Armstrong, 1992; Jeavons, 1992; Mason, 1996). In a study of a voluntary service organization, Rousseau (2000) found that normative beliefs, as a measure of shared cultural values impacted performance outcomes. Jeavons (1992) further suggests that values of organizational integrity, service to the public good, and concern for participant welfare are central concerns in many nonprofit organizations. Values should not be considered in isolation, but should be viewed as an integrated system. However, values research has largely failed to consider the overall structure of values (Connor & Becker, 2003). Although there are many different dimensions of values that have been offered in the literature, a common system of values appears particularly relevant to the concerns of organizations. Bucholz (1977), Wiener (1988), and O'Toole (1993) have each discussed related conceptions of values which could be described as control vs. choice, and individualism vs. collectivism. Each pair of these values represents different dimensions which can only be balanced. Each value represents an ideal, an extreme that would be unlikely to lead to a productive organization. The values of control vs. choice have been called functional (Wiener, 1988). Functional values concern the mode of conduct of organizational members and the degree to which divergent behaviors and performance are tolerated. Concerned with efficiency and order, control values place emphasis on the structuring of job behaviors into common, predefined categories. Choice values, on the other hand, emphasize work
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enrichment, the quality of work life, individual expression, and individual satisfaction. Managers with values identified as control may be unwilling to accommodate workforce differences. Their emphasis would be on control and commonality among different aspects of the workforce. A choice value, however, would likely lead to greater diversity and an appreciation of the different contributions that each member might bring to the workplace. The other dimension, individualism vs. collectivism has been used in many forms including, most typically, cross cultural research. The concern here is different, however, in that it focuses on assumptions about the nature of work and the status of individuals. These values have been identified as elitist (Wiener, 1988). Elitist values focus on whether work outcomes result from individual effort or from the contribution of a larger group. With an individual emphasis, value is placed on one's position, on differentiation between workers, and on self-reliance. Collectivism, on the other hand, values group support and rewards that would accrue to all equally. Under collectivism, one would be less concerned with seeking the superstar and more concerned with building a cohesive work unit that respects legitimate differences between workers. It would place less importance on performance differences in individuals, but would value cooperation and team work. In addition, humanistic or self-actualizing (Rousseau, 1990) values may be especially important in a nonprofit environment where employees may trade a reduced salary for more personal forms of compensation. Humanistic values focus on the nature of the work as satisfying and as a means of self-expression. These values represent a positive orientation to work. I contend that such values alone can impact on ones perception of work and lead to preferred worker outcomes. Rousseau (2000), for example, found that satisfaction-oriented beliefs were positively correlated with positive perceptions of the job such as role clarity and job satisfaction. Hypothesis 1. Humanistic values are related to successful employee outcomes. Management practices have been frequently based either explicitly or implicitly on the control of poorly motivated workers. Since the era of Henry Ford and Frederick Taylor, mainstream organizational and behavioral theories have considered an organization as a machine to be controlled, and employees to be a part of the machine (Morgan, 1986). The driving force in designing organizations under this view becomes the rational control of production focusing on such organizational characteristics as centralization, coordination, and job specialization. As organizations have begun to reduce their reliance on hierarchical controls and bureaucratic structures, many organizations have been undergoing redesign efforts including flat organization structures and increased employee participation. Clegg (1990) terms this new trend the 'post-modern organization' which he identified with democracy, market alignment, empowerment, trust, and collectivity (p203). It is based in the natural systems model which "recognizes the forces and energies in organizations that flow from the natural tendencies of individuals and groups to meet their needs for social relations, influence, and psychological growth by seeking autonomy to exercise their own purposefulness" (McKelvey & Kilmann, 1975, p.26).
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One might anticipate an increased sense of esteem and better social relationships or trust to result in such an environment. Locke (1976) suggested that values can impact job satisfaction if the job is perceived as fulfilling a workers important job values. Studies in the nonprofit sector (Kim, 2002; Tesluk et al., 1999) have also found that participation can lead to positive work attitudes and behaviors leading to the following hypothesis. Hypothesis 2. Participative practices are related to successful employee outcomes. Schein (1992) suggests that values and beliefs of both an organizations employees and leaders are important management considerations. I contend that values are important considerations because they can impact the effectiveness of certain management practices. Shared values and beliefs are cultural elements of an organization that can influence both perceptions and behaviors (Fiol, 1991) suggesting that specific values and beliefs within an organization may impact the acceptance or rejection of certain management practices. Leana, Ahlbrandt and Murrell (1992) noted that while involvement practices may affect attitudes and perceptions, proper implementation may be necessary for such programs to generate the desired effects. The Leana study found that frustration and not satisfaction was higher for employees in a participative decision making process. Yeung et al. (1991) found significant relationships between emphasis on certain human resource (HR) practices and cultures using the Quinn competing values model. Considering the possible linkages between values and practices, I can propose the following. Hypothesis 3. Individual values moderate the achievement of successful employee outcomes using participative practices. Methodology The data for this study included 184 participants in 18 social service, not-for-profit agencies. Based on the Jeavons (1992) and Beres and Wilson (1997), non profit organizations were considered the best candidates for an exploratory study on the importance of values. With a decreased emphasis on monetary rewards, such organizations depend on personal values for motivation. Many organizational members have also been educated and instilled with a set of professional values and ethics that would likely be conducive to more participative management practices. The participants in this study were largely female, educated, social service professionals. The study population was 73% female, and had an average age of 38.8. In addition, 56% had a four year college degree or greater, 74% had one year of tenure or more, 67% were employed full time and 17% of respondents were volunteers. Participants in the study were sought through monthly directors meetings of the United Way or through other local non profit associations. At the meetings, directors were briefed on the purpose and requirements of the study, and possible advantages which could accrue from their participation in the study. Because of the method of solicitation, it is impossible to get a precise estimate of the number of agencies that were reached. It is estimated, however, that at least 50 percent of the possible agencies in the region participated in the study.
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The research process included two major components: a survey of agency employees and/or volunteers, and interviews with agency directors. All data were collected on site. A convenient time was scheduled with each agency so that all needed data could be collected at one time. All data were collected by the primary researcher. Each visit began with a taped interview of the director. After the interview, all employees, including the director were convened in one place to complete the survey questionnaire. The time of the survey was selected so as to maximize the number of employees who could participate. In most agencies, the meetings coincided with the agencies monthly staff meetings. The surveys were administered to the employees under a pledge to keep all individual results strictly confidential. All employees were able to complete the survey in under half an hour. Employees who were not present at the data gathering session were given a questionnaire when they returned to work, and were given a return mail envelope to assure confidentiality. In addition to basic demographic information, the survey collected specific data on company practices, employee values, and employee affective responses. The measures of practices included constructs to measure progressive management practices, and psychological participation (Vroom, V.H. 1960). A scale for progressive management practices was constructed from typologies developed by Jackson et al. (1989), and Schuler & Jackson (1987). Scales for this measure included employee recognition, employee input and performance management practices. An additional scale for information access was developed from Lawler et al. (1992). The values component was measured using the Beliefs About Work scale developed by Bucholz (1977) and a scale to measure values relating to the management of organizations. There was no existing scale for this last measure. Prior to analysis all independent variables were factor analyzed and the scales were trimmed to eliminate items that loaded poorly. Progressive management practices and psychological participation failed to create separate factors. Progressive management practices were thus dropped since psychological participation created a more reliable scale. After the scales were trimmed the remaining items representing the independent variables were factor analyzed together. The results of this analysis, description of the final items, and the reliability coefficients for each scale are presented in Table 1.
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Table 1. Results of Factor Analysis of the Independent Variables Factors and Items 1 2 3 4 Humanist Values ( = .869) II.8 Work can be made satisfying 0.292 0.206 -0.012 0.779 II.19 Work can be a means for self-expression 0.269 0.167 0.083 0.831 II.24 Work can be organized to allow for 0.115 0.165 0.112 0.840 human fulfillment Collective Values ( = .828) II.9 Ones contribution to the group is the most 0.058 0.262 0.182 0.814 important thing about ones work II.10 One should take an active part in all 0.062 0.097 0.121 0.848 group affairs II.31 The group is the most important entity in 0.127 0.138 0.107 0.772 any organization Individual ( = .701) II.4 One must avoid dependence on other 0.043 0.207 0.051 0.162 people wherever possible II.7 Only those who depend on themselves get -0.078 0.039 0.151 0.071 ahead in life II.30 One should live ones own life 0.069 0.034 0.069 0.095 independent of others as much as possible Work Control Values ( = .735) IIA.5 Things are done better when employees 0.029 0.040 0.106 0.808 are told what to do IIA.8 Things would work better if policies are 0.139 0.175 0.285 0.683 closely followed IIA.9 Agencies should continuously monitor an 0.140 -0.017 0.048 individuals decisions and actions to be 0.824 sure that things are done right Worker Choice Values ( = .641) IIA.3 Expectations for the agency are best met -0.081 0.090 0.023 0.137 by letting employees figure out what needs to be done IIA.10 Work gets done better if a supervisor tells an employee what needs to be 0.268 0.170 0.264 0.109 done, and then lets the employee choose how to do it IIA.11 Agencies work better when employees are allowed to assume responsibility for 0.085 0.145 0.106 -0.091 setting their own performance goals Psychological Participation ( = .870) III.5 I have a great deal of influence on what 0.151 0.134 0.075 0.773 goes on in my job III.10 I can influence the decisions of my immediate superior regarding things 0.186 -0.085 0.045 0.812 about which I am concerned III.15 My supv. always asks my opinion when 0.108 0.129 0.097 0.845 a problem comes up that involves my job III.20 If I have a suggestion for improving the job or changing the work in some way, it 0.174 0.100 0.121 0.851 is easy for me to get my ideas across to my superior
5 0.092 0.104 0.086 0.077 0.094 0.120 0.727 0.792 0.783
6 0.139 0.149 0.162 0.041 0.141 0.146 -0.088 0.230 0.106
0.128 0.106 0.101
0.017 0.011 0.095
0.150
0.772
0.001
0.611
0.066
0.762
-0.086 -0.016 0.088 0.075
0.109 0.191 -0.020 0.037
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The dependent variables of the study focused on employee affective responses. These variables included measures of overall job satisfaction (Seashore et al. 1982), social reward satisfaction (Seashore et al. 1982), interpersonal trust at work (Cook & Wall, 1980), organizational commitment (London & Howat, 1978), and organization based self esteem. The scale for organization based self esteem was based on Pierce et al. (1989), but the items included in the survey focused on feelings of employee validation and recognition. Prior to analysis all dependent variables were factor analyzed and the scales were trimmed to eliminate items that loaded poorly. In this stage it was found that several items did not load as anticipated. Social reward satisfaction, organization commitment and trust in management were eliminated since organizationally based self esteem was sufficient to adequately represent the construct based on the results of the factor analysis. After those items were deleted and the other scales trimmed appropriately all remaining items representing the dependent variables were factor analyzed together. The results of this analysis, description of the final items, and the reliability coefficients for each scale are presented in Table 2.
Table 2 Results of Factor Analysis of the Dependent Variables Factors and Items Job Satisfaction ( = .816) VI.I I would leave this agency if offered the same job with another agency. (R) VI.7 In general, I dont like my job. (R) Peer Trust ( = .911) V.8 Most of my coworkers can be relied upon to do as they say they will do V.9 I have full confidence in the skills of my coworkers V.10 Most of my fellow workers would get on with the job even if supervisors were not around V.11 I can rely on other workers not to make my job more difficult by careless work Organizational Self Esteem ( = .946) V.13 My knowledge and experience are valued in this agency. V.14 I can make a difference here V.15 People here have faith in me V.16 My contributions to the agency are appreciated V.17 I am taken seriously around here V.18 I feel like a valued and unique person around here 0.832 0.762 0.858 0.818 0.834 0.843 0.228 0.290 0.313 0.348 0.347 0.328 -0.131 -0.026 0.049 -0.221 -0.138 -0.199 0.375 0.386 0.284 0.283 0.780 0.823 0.857 0.827 -0.134 -0.095 0.070 -0.017 -0.072 -0.148 -0.062 0.000 0.847 0.827 1 2 3
Results Table 3 on the next page shows the means, standard deviations, and correlation matrix for the final variables.
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Table 3 Means, Standard Deviations, and Correlations for All Variables Variables Values: 1. Humanist 2. Collective 3. Individual 4. Control 5. Choice Management Practice: 6. Psychological Participation Affective Outcomes: 7. Social Satisfaction 8. Job Satisfaction 9. Peer Trust 10.Org Self Esteem Controls: 11.Tenure 12.Paid Status 13.Hours/Week 14.Education Level 15.Female 16.Age *p < .10 ** p < .05 3.658 .835 33.659 3.099 .729 38.83 3.224 .372 11.301 1.577 .446 12.463 -.078 .170* .218** .322** .106 -.090 .139 -.084 -.074 -.22** -.001 -.032 -.118 .004 .024 .152* .075 .187* .123 -.045 .157* -.27** .162* .162* .050 .069 .148* .165* .069 -.097 .087 -.074 -.033 .066 -.070 -.028 .097 -.147* -.073 .068 -.109 .199** .085 -.20** -.144 -.092 .036 .120 .085 -.125 -.164* .002 .046 .221** .150* -.026 -.064 .141 -.052 .081 -.061 -.013 -.081 -.037 .268** .314** .188* .197** -.126 .341** .009 -.144 .177* -.099 .113 5.798 4.547 5.638 5.514 1.086 1.284 .985 1.121 .241** .284** .178* .266** .009 .074 .122 .076 -.067 -.052 .155* .191* -.043 -.082 -.064 .040 .018 -.029 .072 .016 .501** .494** .242** .586** .548** .600** .641** .441** .544** .535** 5.201 1.268 .260** .004 .072 .054 .037 5.985 4.674 3.556 4.136 4.808 .752 1.084 1.256 1.067 .914 .047 -.076 -.117 .034 .079 .199** .102 .185* .064 -.087 Mean s.d. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
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To test the specific hypotheses, moderated regression analysis was used to isolate the main effects of values on outcomes and to independently assess how each value moderated the relationship between practices and outcomes. Early in the analysis it became clear that volunteers were consistently more positive in their assessments and appeared to react to the issues of the studies differently than the paid participants. As a result, the regression analyses included the paid participants only (n=144) since there was inadequate statistical power to separately analyze the volunteers. It should also be noted that all data in the study at this point consists of individual perceptual data suggesting that the aggregation of data across companies is appropriate. Indeed, control for variances induced by organizational factors would likely strengthen any results that might be found. The overall procedure for each dependent variable was the same. In step one, control variables including tenure, work hours, education level, gender and age were added as a set. These variables were added to control for any demographic variations that may have impacted on the participants response. In step two, the set of values (individual, collective, control, choice, humanist) were added to control for any direct effects that values may have had on organizational outcomes. In the third step, practices which were included as psychological participation were added. In the fourth step, the cross products of practices and values were entered as a set. Entering the interaction terms simultaneously controlled for possible multicollinearity among the variables. Significant effects at this stage would indicate that values moderate the relationship between practices and organizational outcomes. The individual interaction terms can then be used to test the specific hypotheses if the terms accounted for significant residual variance. Tables 4, 5 and 6 show the results of the moderated hierarchical regression analyses.
Table 4 Results of Regression Analysis for Job Satisfaction
Variable Control Tenure Hours Education Level Female Age Values Individual Collective Control Choice Humanist Psychological Participation Psychological Participation interactions with Individual Collective Control Choice Humanist * p <.10, ** p < .05
Step 1 .054 -.097 .029 .062 .108
Step 2 0.92 -.079 -.157* -.016 .104 .054 .046 -.102 -.032 .470**
Step 3 0.47 -.055 -.157* .031 .145** .083 .068 -.153** -.063 .312** .429**
Step 4 0.35 -.052 -.155* .026 .147* -.237 -.267 .050 -.318 .220 -.457 .378 .494 -.259 .419 .202
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Table 5 Results of Regression Analysis for Peer Trust
Step 1 .018 -.163* .082 .064 .171**
Step 2 .023 -.179** -.021 -.001 .178** -.062 .116 -.111 .114 .170*
Step 3 .004 -.169* -.021 .019 .196**
Step 4 -.001 -.152* .005 .000 .188**
-.050 -.104 .126 .222 -.132 -.334 .101 -.833** .103 -.400 .181** -2.187* .024 -.152 .361 1.599** 1.253
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Table 6 Results of Regression Analysis for Organizational Self Esteem
Step 1 .117 -.156* .230** -.036 .080
Step 2 .121 -.119 .157 -.041 .048 -.119 .080 .089 -.054 .295**
Step 3 .067 -.091 .158* .015 .098 -.085 .107 .028 -.091 .104 .517**
Step 4 .045 -.079 .163** -.006 .114 -.542** -.220 .320 -.533 -.371 -1.433 .536* .477 -.386 .697 1.257
The main effects of the regression analyses will be discussed first. With the demographic variables entered as control, values as a set were significantly related to the dependent variables of job satisfaction (r2 = .21, F = 7.340, p <.001), peer trust (r2= .08, F = 2.312, p <.05), and organizational self esteem (r2= .10, F = 3.375, p <.01). Specifically, the humanist value orientation had a significant main effect on job satisfaction (b = .470, p < .001), on peer trust (b = .170, p < .10), and on organizational self-esteem (b = .295, p < .01). Overall, this provides support for the hypothesis that the humanist values orientation will affect employee outcomes. With both demographic variables and values in the regression, psychological participation was found to be related to job satisfaction (r2= .15, F = 33.451, p <.001), peer trust (r2= .03, F = 4.327, p <.05), and organizational self esteem (r2= .22, F = 49.677, p <.001). These results show support for the relationship between management practice and all measured organizational outcomes. The moderating effects of the regression analyses were similarly supportive. Beyond the direct effects of values and practices, there was support for contingency relationships between values and practices. As a set the interaction terms accounted for marginally significant incremental variance in peer trust (r2= .05, F = 1.747, p <.10) and organizational self esteem (r2= .04, F = 1.903, p <.10) but not in job satisfaction. Specifically, the choice value orientation significantly moderated the effect of participation on peer trust (b = 1.599, p < .05) and the individual value orientation significantly moderated the effect of participation on organizational self esteem (b = .536, p < .10).
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Discussion The analysis provides support for all the hypotheses demonstrating the linkages between practices, values, and organizational outcomes. As stated in hypothesis 1, the value orientations emphasizing employee worth was related to successful organizational outcomes. Specifically, the humanist value orientation was significantly related to all outcome measures. Individuals with a humanist value orientation basically believed that people should be entitled to fulfilling work. This belief was related to higher scores on all measures including job satisfaction, organizational esteem, and peer trust. Practices, too, were related to the outcome variables. As stated in hypothesis 2, participative practices were positively related to all outcome variables. Finally, in the case of peer trust and organizational self esteem I found support for the third hypothesis. The choice value orientation moderated the power of psychological participation in predicting peer trust. The individual value orientation moderated the power of psychological participation in predicting organizational self esteem. A range of related practice measures including employee needs/recognition, employee input, information sharing and performance management were collected and analyzed but all proved to be highly related to the measure of psychological participation. Thus in this study management practices are represented only in terms of psychological participation. However, this is clearly a very strong conceptual scale being related to other measures of supportive practices. Psychological participation also demonstrated very strong computational indices for both validity and reliability. It is also worth noting that the dependent measures clearly captured different aspects of organizational outcomes. The highly discrete factor loadings were just one indication of this. An examination of the control variables showed the inherent underlying dimensionality of these measures. For example, education level was significantly related to decreased job satisfaction. Educational level would likely sensitize employees to the larger possibilities of their work, and deficiencies in the current situation become more salient for these individuals. However, education level was positively related to organizational self esteem. The education level probably offered participants an improved status and hence self esteem about their position in the organization. Lastly, educational level was not related to peer trust. Interestingly, a decline in peer trust was significantly related to increased hours worked per week. Perhaps the old saw that familiarity breeds contempt holds true in the workplace as well. Considering the positive indications reported for the measures of psychological participation and outcomes, the strong results for psychological participation must be given considerable weight. Psychological participation impacted positively on several different dimensions of employee affective response. This brings us to the interaction effects. Two effects proved significant. The effect of psychological participation was impacted by choice in predicting peer trust, and by the individual value orientation in predicting organizational self esteem. These effects are especially noteworthy considering the modest sample size and the number of variables in the analysis at this point. Psychological participation was more important in the presence of a strong choice value orientation in predicting peer trust. This suggests that a belief in the value of employees determining their work
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priorities improves the formation of trust when they are actually given the ability to participate in organizational decisions. Perhaps in this environment participants were more fully freed to develop personal work relationships and respond to their peers when needs arose without undue concern for restrictive policies. Psychological participation was also more important in the presence of individual values in predicting organizational self esteem. In fact, the positive main effect between participation and organizational self esteem became negative in the presence of the interaction, as did the contribution of individual value scores. This suggests that the opportunity to express oneself through participation is particularly critical towards generating a sense of personal esteem at work. Esteem especially is an individually based concept. Thus esteem is fully supported in both the belief system and by the ability to express ones individuality through participative processes. Implications and Limitations This study has provided preliminary evidence to suggest that practices mirroring workplace values may be more effective. If progressive management practices depart from accepted values and beliefs, an organization may be less successful in utilizing these techniques because of employee values. Practices consistent with commonly held values may be more likely to produce positive outcomes. It is worth noting that values also change over time. Such changes could very likely affect attitudes towards new, as well as, existing practices. A broad survey of the membership of the American Management Association showed rapid growth in the importance of cooperative values (Posner & Schmidt, 1992). Posner and Schmidt reported that in 1981, cooperative values were rated important to the quality of work life by only 19% of the respondents compared to 40% in 1991. Individual values, on the other hand, declined from 61% to 46% in the same ten year period. Just as values of individualism and collectivism may change, values concerning control and choice may change also. Such changes could bring an increased receptiveness either to team based or to participative practices. If the success of management practices may depend on the values and beliefs in the organization, then value differences or value changes become an important management issue for study. As values vary over time or across different organizations, effective management may require a continual effort to match the characteristics of practices and values. And if nonprofits are valuesexpressive, as Jeavons (1992) contends, then the management of nonprofit organizations must be especially sensitive to values. The participation variable in this study had uniformly strong and significant results across all employee outcomes in this study. However, reviews of the literature on the effect of participation on employee outcomes have generally concluded the effect to be small (e.g. Cotton et al., 1988, Wagner, 1994). Several studies have searched for alternative explanations to explain the small effect size noted in the studies. Leana et al. (1992) considered implementation in an attempt to explain the sometimes weak results. A meta-analysis by Wagner et al. (1997) found that the nature of the participation construct had a small effect on the results.
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This study now suggests that a mismatch with values may also explain some of the weak findings. As noted earlier, Collins and Porras (1994) have suggested that strong core values are an attribute of the best performing for profit companies. In addition, their study of successful visionary companies also suggested that there was a linkage between values and administrative mechanisms. Similarly, the linkage of values and practices in this study also appears to lead to positive employee outcomes. Certainly, the strength of these findings gives credence the Jeavons (1992) claim about the values-expressiveness of nonprofits. The non profit social service organizations in this study may be an ideal case for showing the importance of values. However, Collins and Porras (1994) findings suggest that strong values can be developed elsewhere, and when these values are linked to appropriate practices beneficial outcomes could accrue for a broad range of organizations. A broader study could help clarify the generality of these findings to the for-profit sector. As noted earlier, the nonprofit sample was used since it was believed that the importance of values would be more readily observable in the non profit sector than in the for profit sector. Future work should now focus on the for profit sector to expand our understanding of the boundaries of the linkage between values, practices, and outcomes. Psychological participation, as a practice, appears to be an important construct. Unfortunately, in the present study I was limited to understanding the concept of progressive management practices in a fairly broad sense. Given the strong results for psychological participation, it would also be useful in the future to ascertain if there are dimensions of participation or other progressive management practices which are more important and perhaps more dependent on an individuals value orientation. Future studies should also incorporate a consideration of more conventional management practices built on control to determine how values orientations might impact their effectiveness. With the growing attention and rhetoric given to values and participation in the workplace, extending these results could provide very useful guidance to future managers. References Armstrong, M. (1992). A Charitable Approach to Personnel. Personnel Management, 24(12): 28-32 Beres, Z. & Wilson, G. (1997). Essential Emotions: The Place of Passion in a Feminist Network. Nonprofit Management & Leadership, 8(2): 171-182 Bucholz, R.A. (1977). The Belief Structure of Managers Relative to Work Concepts Measured By a Factor Analytic Model. Personnel Psychology, 30: 567-587 Clegg, S.R. (1990). Modern Organizations: Organization Studies in the Postmodern World. London: Sage Collins, J.C. and Porras, J.I. (1994). Built To Last: Successful Habits Of Visionary Companies. N.Y.: Harper Business Connor, P.E., and Becker, B.W. (2003). Personal Value Systems and Decision-Making Styles of Public Managers. Public Personnel Management, 32(1): 155-180
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Cook, J. & Wall, T.D. (1980). New Work Attitude Measures Of Trust, Organizational Commitment and Personal Need Fulfillment. Journal of Occupational Psychology, 53: 39-52 Cotton, J.L., Vollrath, D.A., Froggatt, K.L., Lengnick-Hall, M.L., & Jennings, K.R. (1988). Employee Participation: Diverse Forms and Different Outcomes. Academy of Management Review, 13: 8-22 Fiol, C.M. (1991). Managing Culture as a Competitive Resource: An Identity-Based View of Sustainable Competitive Advantage. Journal of Management, 17(1): 191-211 Frumkin, P. (2002). On Being Nonprofit: A Conceptual And Policy Primer. Cambridge, Ma.: Harvard University Press Jackson, S.E., Schuler, R.S. and Rivero, J.C. (1989). Organizational Characteristics as Predictors of Personnel Practices. Personnel Psychology, 42: 727-786 Jeavons, T.H. (1992). When the Management Is the Message: Relating Values to Management Practice In Nonprofit Organizations. Nonprofit Management and Leadership, 2(4): 403-417 Jones, E.E., G.C. Wood, and G.A. Quattrone. (1981). Perceived Variability of Personal Characteristics in In-Groups and Out-Groups: The Role of Knowledge and Evaluation. Personality and Social Psychology Bulletin 7: 523-528 Karl, K.A., Sutton, C.L. (1998). Job Values in Today's Workforce: A Comparison of Public and Private Sector Employees. Public Personnel Management, 27(4): 515-527 Kim, S. (2002). Participative Management and Job Satisfaction: Lessons for Management Leadership. Public Administration Review, 62(2): 231-241 Kotter, J.P., and J.L. Heskett. 1992. Corporate Culture and Performance. New York: Free Press Lawler, E.E., Mohrman, S.A. & Ledford, G.E. (1992). Employee Involvement and Total Quality Management. San Francisco: Josey Bass Leana, C.R., Ahlbrandt, R.S., & Murrell, A.J. (1992). The Effects of Employee Involvement Programs on Unionized Workers' Attitudes, Perceptions, and Preferences in Decision Making. Academy of Management Journal, 35(4): 861-873 Locke, E.A. (1976). The Nature and Causes of Job Satisfaction. In M.D. Dunnette (Ed.), Handbook of Industrial/Organizational Psychology. Chicago: Rand McNally London, M. & Howat,G. (1978). The Relationship between Employee Commitment and Conflict Resolution Behavior. Journal of Vocational Behavior, 13: 1-14 Mason, D.E. (1996). Leading and Managing the Expressive Dimension: Harnessing the Hidden Power Source of the Nonprofit Sector. San Francisco, Ca.: Jossey-Bass McKelvey, B. & Kilmann, R.H. (1975). Organization Design: A Participative Multivariate Approach. Administrative Science Quarterly, 20(March): 24-36
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Morgan, G. (1986). Images of Organization. Newbury Park: Sage O'Toole, J. (1993). The Executive's Compass: Business and the Good Society. New York: Oxford Pierce, J.L., Gardner, D.G., Cummings, L.L. and Dunham, R.B. (1989). Organization Based SelfEsteem: Construct Definition, Measurement, and Validation. Academy of Management Journal, 32: 622-648 Posner, B.Z., and W.H. Schmidt. (1992). Values and the American Manager: An Update Updated. California Management Review 34(3): 80-94 Posner, B.Z., and W.H. Schmidt. (1996). The Values of Business and Federal Government Executives: More Different Than Alike. Public Personnel Management, 25(3): 277-298 Rokeach, M. (1973). The Nature of Human Values. N.Y.: Free Press Rokeach, M. , P.W. Smith, and R.I. Evans. (1960). Two Kinds of Prejudice or One? In The Open and Closed Mind. Ed. M. Research. New York: Basic Books Rousseau, D. (1990). Normative Beliefs in Fund-Raising Organizations. Group and Organization Studies, 15(4): 448-460 Schein, E.H. (1992). Organizational Culture and Leadership. San Francisco: Josey-Bass Schuler, R.S. (1989). Strategic Human Resources Management and Industrial Relations. Human Relations, 42(2): 157-184 Schuler, R.S. & Jackson, S.E. (1987). Organizational Strategy and Organization Level as Determinants of Human Resource Management Practices. Human Resource Planning, 10(3): 125141 Seashore, S.E., Lawler, E.E., Mirvis, P., Cammann, C. (eds.) (1982). Observing and Measuring Organizational Change: A Guide to Field Practice. N.Y.: Wiley Snell, S.A. (1992). Control Theory in Strategic Human Resource Management: The Mediating Effect of Administrative Information. Academy of Management Journal, 35(2): 292-327 Tesluk, P.E., Vance , R.J. and Mathieu, J.E. (1999). Examining Employee Involvement in the Context of Participative Work Environments. Group and Organization Management, 24(3): 271-299 Vroom, V.H. (1960). Some Personality Determinants of the Effects of Participation. Englewood Cliffs: Prentice Hall Wagner, J.A. III, Leana, C.R., Locke, E.A., Schweiger, D.M. (1997). Cognitive and Motivational Frameworks in U.S. Research on Participation: A Meta-Analysis of Primary Effects. Journal of Organizational Behavior, 18(7): 49-66
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Wagner, J.A. III (1994). Participations Effect on Performance and Satisfaction: A Reconsideration of Research Evidence. Academy of Management Review, 19: 312-330 Wiener, Y. (1982). Commitment in Organizations: A Normative View. Academy of Management Review, 7: 418-428 Wiener, Y. (1988). Forms of Value Systems: A Focus on Organizational Effectiveness and Cultural Change and Maintenance. Academy of Management Review, 13: 534-545 Yeung, A.K.O., Brockbank, J.W. & Ulrich, D.O. (1991). Organizational and Culture Human Resource Practices: An Empirical Assessment. Organizational Change and Development, Volume 5, JAI Press
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The Demise of Harwich Point College New England University* Part A: The Day the Music Died Herbert Sherman Southampton College Long Island University Daniel James Rowley University of Northern Colorado ABSTRACT This is a two part, field-based case which describes, from a faculty members perspective, some of the events which lead to the closing of the undergraduate programs at Harwich Point College New England University. In Part A, a Professor receives an e-mail from the President of the University which was sent to the entire college community indicating that their undergraduate programs were to be transferred to another campus of the university; in Part B the professor has found some data on the colleges web site about the college and the university and wants to analyze the data in order to better understand the financial situation of both institutions. The case has a difficulty level appropriate for a junior level course. The case is designed to be taught in two class periods (may vary from fifty to eighty minutes each period depending upon instructional approach employed, see instructors note) and is expected to require between six to eight hours of outside preparation by students (again, depending upon instructors choice of class preparation method). Introduction It was a warm and balmy early summer day in Harwich Point College New England University (located on the southeastern portion of Cape Cod, Massachusetts, between Yarmouth and Chatham, see Exhibit One) and the summer tourist season was in full swing. Bumper to bumper traffic clogged Route 6 (the major thoroughfare in Cape Cod) and even the back road to Harwich Point, Route 28, was seeing more than its usual fair share of vacationers producing traffic jams and unhappy travelers (see Exhibit Two). The downtown area swarmed with anxious shoppers, all looking for that one special antique, painting, or specialty item that would commemorate their stay in the playground of Massachusetts. Others were spending a relaxing day at the beach, which, although always crowded, provided a unique setting given the contrast between the picturesque coastline and the intrusive multimillion dollar mansions that lined the seashore and created an unnatural barrier to the ocean. Dr. Shebekowski, however, sitting in his office in the Writing Center of Harwich Point College, one of the three major campuses of New England University, was oblivious to all of this; the cars, the weather, the beaches, and the beautiful people. For Harwich Point College, sitting nestled between Route 6 and Route 28, provided a haven of solitude for its students, staff, and faculty and sheltered these seekers of truth and wisdom from the banalities and distractions so associated with the Cape Cod vacationer lifestyle - the pursuit of pleasure and relaxation (see Exhibits Three and Four).
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Exhibit One Cape Cod
Exhibit Two Harwich Point Location Aerial Photograph
Route
Route 6
Harwich Point
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Exhibit Three Background Information New England University New England University was chartered by the Massachusetts Education Department in 1926 in Boston, as a nonsectarian, coeducational, privately supported university to provide effective and moderately priced education to people from all walks of life. Admissions to the University from its beginning have been based on merit and promise, and have included large numbers of immigrants and children of immigrants seeking to achieve the American dream. The institution has evolved into one of the largest private universities in the U.S., establishing the Springfield Campus in 1954, the Providence Campus in 1959, Harwich Point College in 1963, the Burlington Graduate Campus in 1975, the College of Osteopathic and Health Sciences in 1979, the Watertown Campus in 1980, the Provincetown Campus in 1982, and the International Abroad Program at Harwich Point College in 1991. New England University has three residential campuses. The Springfield Campus, across from Basketball Hall of Fame, is within walking distance of the downtown area and boasts the historic former Paramount Theatre as part of its campus. The Providence Campus is situated on a rolling landscape, property which consolidated the former estates of cereal heiress, Marjorie Merriweather Providence, financier E.F. Hutton and the Charles Hickox family. Harwich Point College, nestled on Cape Cods southeeastern tip, enjoys a spectacular view of nearby Herring River and is home to an early 18th century windmill which serves as a symbol of the campus. The residential campuses offer a broad range of outreach programs for the communities they serve. The Universitys central administration is located at the Providence Campus, also a former estate. Across its campuses, the University comprises more than 400 acres and 3 million square feet of buildings. Since 1985, as part of its capital improvement plan, the University has spent or authorized $400 million for new buildings and renovations. Regional campuses are located in Provincetown, Massachusetts, and Burlington Vermont. Special degree programs are operated at other sites throughout New England. Additionally, the University operates both the SEAmester Program aboard tall ships and the the International Abroad Program at Harwich Point College and five overseas locations: China Center East Asian Center (Japan) European Center (England) Latin American Center (Costa Rica) South Asian Center (India). The Vision and Mission of New England University (Toward a More Peaceful and Humane World) New England University envisions a learning community dedicated to empowering and transforming the lives of its students to effect a more peaceful and humane world that respects differences and cherishes cultural diversity; improving health and the overall quality of life; advancing social justice and protecting human rights; reducing poverty; celebrating creativity and artistic expression; rewarding innovation and entrepreneurship; honoring education and public service; and managing natural resources in an environmentally-responsible, sustainable fashion. It aspires to move toward
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this vision through an institutional culture that is open to all, cherishing and nurturing the expansion of knowledge; intellectual inquiry and critical thought; artistic and creative expression; teaching and learning; and community service as its core values. This vision sustains the University and provides the foundation upon which its mission rests. Mission: Excellence and Access The mission of New England University is to provide excellence and access in private higher education to people from all backgrounds who seek to expand their knowledge and prepare themselves for meaningful, educated lives and for service to their communities and the world. The University Today [2004] One of the nation's ten largest independent, private institutions of higher learning, New England University is a highly-diverse, non-sectarian, coeducational, multi-campus, regional university, offering a comprehensive range of undergraduate, graduate and professional degree programs, and doctoral study in several fields, as well as credit and non-credit certificate programs. Chartered as a single academic institution, led by a single president and governing board, and guided by a single, integrated academic structure, the University maintains an urban residential campus, a suburban residential campus), and a small town residential campus, as well as regional campuses serving commuter students in New England. It also supports such specialized programs as the College of Osteopathic and Health Sciences, a University School of Continuing Studies dedicated to offering lifelong learning opportunities, the International Abroad Program of global education for social change and its academic centers around the world, and the SEAmester Program with ships operating in both the Atlantic and Pacific oceans. The Board of Trustees, by providing policy leadership, critical insights, essential resources and independent assessment, oversees and supports the entire educational enterprise and is responsible for holding the University accountable to its mission in the public interest. Embracing many students whose life circumstances, economic means or previous academic opportunities might otherwise make private, higher education an impossible dream, the University provides an excellent academic, artistic, and cultural learning environment, complemented by opportunities for experiential education and lifelong learning. It offers its students access to the American dream of personal success and to the timeless and eternal goals of a liberal education. Toward that end, the University places its highest priority on inspiring and teaching students to realize their full potential as whole human beings. It seeks to prepare and empower its students to develop their intellectual capacities; engage in critical thought and scientific inquiry, especially with respect to the political and social aspects of their communities and physical environments; expand and refine their creative and artistic talents; acquire higher-level professional skills and knowledge, grounded in the liberal arts and sciences; and enjoy the benefits of the liberally-educated, selfreflective and civically-responsible life. Dedicated to the advancement of knowledge as well as its transmission across the generations, the University encourages its faculty to engage in active programs of research and academic service, to involve their students in those activities wherever possible, and to enrich their teaching and mentoring with the fruits of those endeavors. The University is also committed to providing an environment that fosters active campus life, academic and co-curricular student services, personal enrichment and community service opportunities, cultural and recreational activities, and intercollegiate athletics all designed to nurture the
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development and health of the whole human being. The University recognizes its responsibility to the community through numerous public outreach activities, including a public radio network spanning much of Massachusetts, a major regional center for the performing arts, several museums and galleries, readings and public forums, student performances, and non-credit programs for professional development, lifelong learning and cultural enjoyment. New England University takes special pride in the rich diversity of its unique and distinctive campuses. At the same time, its campuses and additional instructional sites around the globe benefit from the transcending unity and common purpose, shared identity and reputation, intellectual synergy and major resources of a large private institution of higher learning respected for the Universitys traditions of excellence and access. Exhibit Four Background Harwich Point College Harwich Point College was established in 1963 by New England University at the invitation, and with the financial support, of community leaders of eastern Cape Cod. The idea of establishing a college in eastern Cape Cod had been discussed at various times for more than 20 years. In the early 1960s is was given fresh impetus with the formation of the College Committee of Harwich Point. Under the leadership of Dr. William Macdonough Agar of Harwich, a geologist, author and educator, the committee soon found a site, the 60-acre Tucker Mill Inn property, and began a fund-raising drive for its purchase and conversion. The University was immediately receptive, and the College Committee went to work. New England University's Board of Trustees also responded positively. On December 20, 1962, Chairman William Zeckendorf declared, We are convinced the college is needed and wanted, and authorized the administration to proceed with plans to open the new college. Vice Chancellor Chester C. Wood, who joined the University after retiring from active naval service, had a major role in planning and implementing the establishment of the college and served as the chancellor's direct representative in University supervision. Harwich Point College opened its doors in the fall of 1963 with 249 students. Dr. Edward C. Glanz, a psychologist with ten years of experience at Boston University as a teacher, author, and administrator, was selected as provost. A Small, High Quality Institution The committee and the University agreed that the College would be a small, high quality institution of liberal arts and sciences. From the beginning the College emphasized close and continuing guidance for each student, a program that is today continued as the New England University Plan. Small class size with informal, congenial faculty-student relationships was and is emphasized. From 1964 to 1968 the College continued to grow with the direct support and involvement of the University. As a unit of New England University, the College was accredited by the New England States Association of Colleges and Secondary Schools in 1965. The College grew quickly during the mid 1960s and soon established a national reputation for its Marine Science program. At the time of its 25th anniversary in 1988, the College had grown to an enrollment of 1,200
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undergraduates with a full-time faculty of 67. Facilities and programs have continued to evolve, most recently with the addition of an MFA in Theatre, and a new academic center. The Mission of Harwich Point College Harwich Point College is dedicated to educating students to realize their full potential and make a positive contribution to the world in which we live. Excellent academic programs, a wide variety of opportunities for experiential learning, and a small, caring community with rich cultural and natural resources close at hand make Harwich Point a special place in which to study and grow. Harwich Point College Today [2004] Drawing on the resources of New England University, one of the largest private universities in the country, Harwich Point is a small and close-knit community of about 1300 students and 200 full-time faculty and staff, who live and work together among the waterways and villages of Cape Cods beautiful Eastern seaboard. The academic program is enhanced by the extraordinary natural and human resources that abound in this pristine coastal setting. A natural marine laboratory, comprised of the ocean, bays, salt marshes, tidal inlets and barrier beach, makes the College an unparalleled setting for the study of marine and environmental sciences. A thriving community of artists and writers and leaders of the world of industry, finance and entertainment who live in Cape Cod or in Boston and participate in workshops and master classes. The undergraduate curriculum of Harwich Point College is a unique blend of traditional liberal arts and sciences enriched by a strong commitment to experiential education in its many forms. Co-ops and internships allow students in all disciplines to learn on the job by working in real-life situations with practicing professionals in their fields. Small classes provide a stimulating yet supportive atmosphere in which every student can thrive. Programs are designed to sharpen critical thinking skills and encourage community service to prepare students for successful careers and meaningful contributions to society. The Greenprint, a student-generated program of environmental action, focuses on the need to protect the earth's resources -- so evident in the beauty of the surrounding area -- by starting within our own community. The College's philosophy of encouraging academic excellence and hands-on experience, coupled with the rich resources of the surrounding environment, enable us to offer distinctive programs in the following areas: Marine Science, Environmental Science. These nationally recognized programs have produced many Fulbright Scholars and graduates who are leaders in their fields all over the world. Visual and Performing Arts. Offering many options in the visual and performing arts, including rigorous studio experiences, our programs are supplemented by interaction with an internationallyknown community of artists. Writing and Literature. Students have many opportunities to meet and work with writers and publishers living in the area with outstanding student writers being recognized each year. Communication Arts. Students in our communications arts program go on to careers in television, radio, advertising, public relations and film at local and national levels.
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The International Abroad Program. This program offers many unique opportunities for experiential education through study at eight international centers in Africa, Asia, Latin America, Europe and the United States. Education. Extensive hands-on experience is an important part of our teacher training program which prepares fine teachers for future generations. Professional Studies/Business. Our program serves students and the community. Graduates manage their own business or become productive members of an organization. Social Sciences and Environmental Studies. The social science programs are designed to help students develop problem solving skills and to provide them with appropriate subject area knowledge. The environmental studies programs prepare students for careers in environmental planning and policy. Graduate Programs in Education, Theatre, and Business. Our Master's level programs recognize the needs of the working professional for a lifetime of learning. The Method: Critical Thinking, Critical Skills Traditional liberal arts and science offerings are taught by dedicated faculty who are experts in their fields and who have designed programs that will sharpen the critical thinking skills of their students. The Writing-Across-the-Curriculum Program, math and computer competency requirements, and a carefully constructed core curriculum prepare students for their Providence-graduate careers, and enable them to develop the essential literacy skills necessary to compete in today's world. An Honor's Program offers specialized courses in all disciplines for outstanding students. Experiential Learning: Learning by Doing Harwich Points commitment to experiential learning enriches the curriculum and extends the boundaries of the classroom to the entire world. These programs build a bridge between academic achievement and career or Providence-graduate study success. This learning takes many forms, including: Full and part-time cooperative education placements in all fields of study and work An international network of internships with professionals in many disciplines throughout the world SEAmester, a program in which those with a love of the sea -- or simply a spirit of adventure -can spend a semester studying on a 125-foot schooner as it sails the eastern seaboard The International Abroad Program, a globally oriented, student-centered program offered on eight international campuses WNEU-FM, the College's 25,000-Watt public radio station, which provides a learning laboratory for communication arts students Tropical Marine Biology, Australearn, and other travel courses in the sciences and the arts Independent studies for the self-motivated student Extensive field work and field placements
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Community Service A campus-wide commitment to community service at Harwich Point reinforces in students the skills and abilities developed in academic programs. Faculty and staff recognize that education is most valuable when new learning is used in the service of others. An award-winning Freshman Program encourages students to get to know their new community and to become involved through volunteering in local environmental organizations, civic groups, homeless shelters, public schools and in mentoring programs for students at risk. Care for Students, Care for the World Small class size, and ongoing academic advising and counseling ensure that students at Harwich Point are treated as individuals. The close human relationships among students, faculty, staff and the community provide a nurturing environment that prepares students with both the skills to become effective members of society and a sense of social obligation that will enrich their lives and careers. Harwich Point will remain strong in its commitment to care for students who will care for the world. The Stage Is Set With the air conditioner laboring on its highest setting, and an electronic version of Mossorgskys Pictures at an Exhibition blaring in the background, this day was no different from any other day as far as Dr. Shebekowski was concerned. Whether it was the dead of winter or the height of the summer season, Dr. Shebekowski could always be found in his office at his computer working on a paper or a project for the college. Banging away at his keyboard in rhythm with the cacophony of sounds he called music, Dr. Shebekowski following in the deep tradition of his fellow academicians, was following his own path in the discovery, development, and dissemination of knowledge. All seem right in the world and it was business as usual. Yet this day was to be like no other day he had ever experienced and would be remembered by the Harbor Point College community along side 9-11 and Pearl Harbor as a day of infamy. The events to unfold on this day, June 16th 2004, would dramatically change not only Dr. Shebekowskis life but the lives of the students, staff, and faculty forever for it would be the day that the music died at Harwich Point College. First Warning Shots Looking back at his nine years at Harwich Point College, it would not have been too hard for Dr. Shebekowski to reflect upon his experiences at Harwich Point and see the portents of the Colleges downfall. Arriving in the Fall of 1996, Dr. Shebekowski heard from many of the faculty that in the prior year their salaries had been frozen (called wage deferrals) in order to guarantee that courses that had enrollments of less than 10 students per class would run as a full classes (would count toward their 24 credit hour teaching load). When he queried the faculty as to why this was a problem, he found out that historically many classes had enrollments of lower than 10 students and faculty would,
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during the first week of class, have to scramble around for more students or worse, bounce less senior faculty and/or adjuncts out of fully enrolled classes. Nosing around a bit, he might have come across a document entitled Report of the Committee on Academic Planning and Deficit Reduction (September 8, 1995). The joint administration-faculty Committee was charged with recommending cost-effective measures consistent with long-term academic and fiscal improvement at the campus [because] The university administration and its Board of Trustees will no longer support massive deficits, nor is there any immediate prospect for external funding to finance losses in the range of 15% of operating costs. (p.2) This 38 page document denoted how the College should redeploy its personnel and resources by supporting its four leading academic programs (Marine and Environmental Sciences, Visual Arts, Writing, and Psychobiology), maintaining three of its five secondary programs (education, gerontology, and communications), adding two secondary programs (liberal arts, small business) and deleting the regular business major. It was estimated that the plan would save the institution over $2 million dollars by the third year of implementation. Interesting enough, a joint administration-faculty planning committee that Dr. Shebekowski served on reviewed the Deficit Reduction Report in the Fall of 2001 and this committee noted that many of the suggestions in the plan had not been implemented or were not successful in either increasing student enrollments or reducing operating costs. A Clear and Present Danger? Several critical pieces of information about the colleges economic well-being were considered common knowledge at Harwich Point College by the faculty and staff and, as such, became part of the urban legend of campus life and culture. The most important piece of information was that the College had started in 1963 under-budgeted and underdeveloped, that is, it was the belief of the local community that Harwich Point College did not receive adequate support for the colleges operation. The college was therefore placed in a position where they had to do more with less both in terms of a yearly operating budget as well as in terms of long term facilities planning. This inadequate support lead to two highly predictable outcomes: accumulating annual budget deficits throughout the colleges existence; and lack of planning and funding for infrastructure maintenance and development. The accumulated deficit became sort of a joke at the College since many of the faculty and staff perceived this deficit as being merely the indirect administrative expenses that the University charged the College for the use of centralized University services (i.e. payroll, mainframe support, human resource services, etc. ). It became understood that the College would operate at a deficit every year and that the University administration would continue to fund those deficits out of its general operating fund. Why? Because the chief financial officer (CFO) of the College, Brian Timmons, remained as CFO for over fifteen (15) years despite his inability to balance the budget. Many faculty and staff thought that as long as Mr. Timmons retained his job that he must be doing something right and that the deficit was really not a problem at all. In fact, many senior staff and faculty felt that if the College were an independent entity that these deficits would miraculously disappear; the College would be solvent if not for the onerous expense of paying for central administration.
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Lack of investment in the Colleges infrastructure, which started at the birth of the College, continued throughout its history. The aging infrastructure was continually cited by prospective students as a major weakness of the institution; they felt that they would be paying for a high priced college but receiving low income accommodations and classrooms. The Board of Trustees was faced with a chicken-egg predicament; do we invest now in infrastructure in the hope to attract more students or do we wait for more students to enroll with the understanding that more students would justify the investment in infrastructure? The Board took the conservative root. Except for a gymnasium built in the early 1970s, the only real investment in the campus came in 1999, the construction of Chancellors Hall. Again, many staff and faculty members took this lack of investment as a given. For example, they believed that the only way that the Writing Centers aging front doors would be replaced is if they fell off their hinges (and ironically that is exactly what happened). The University had drawn up numerous plans for renovating the campus but never implemented them due to lack of funding. A running joke (bet) between faculty members was whether the University would construct a new library before or after their head librarian retired; he had been at the college for over 25 years and threatened not to retire until a new library was built to replace him. The Bomb is Dropped It was late in the afternoon of June 16th, 2004 and Dr. Shebekowski was finishing up his work for the day. It had been a another long day at the office and all the good doctor wanted to do was to check up on the stock market and close down the office. He was answering a few last minute e-mails when he noticed that he had just received an e-mail from Dr. Stephen Davidson, the President of New England University. This was not only highly unusual but clearly quite astonishing since one, he had never received a direct e-mail from the president in his nine years of working at the College (all communication from the president to the faculty were sent by one of his assistants), and two, the summer was normally the time of the year that the administration tended to make decisions that would not cull favor from the faculty and students (most faculty and students were not on campus over the summer). He quickly thought of several incidents that had occurred over the past few summers that many faculty and students were extremely upset about and that were obviously made over the summer to minimize the negative reaction from the students and faculty. Yes, wasnt it three years ago that the Board of Trustees unilaterally appointed a new Dean of Academic Affairs? And two years ago that a tenured senior faculty member, who was deemed a nuisance by the administration, was mysteriously fired for unknown reasons? Dr. Shebekowski knew that a communiqu from the President did not bode well for himself and/or the college and with trepidation turned off his music and opened the e-mail (see Exhibit Five).
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Exhibit Five Presidents Letter To: The New England University Community From: Dr. Stephen Davidson, President Date: June 16, 2004 Subject: Relocation of Harwich Points Undergraduate Programs Yesterday, the Universitys Board of Trustees instructed the University Officers to relocate the undergraduate liberal arts and sciences programs currently offered at Harwich Point College onto the Providence Campus, effective September 2005. The University will continue to offer its outstanding graduate programs at Harwich Point. It is with a heavy heart that I write to inform you of this painful but necessary decision, one in which the University Officers unanimously concur. In response to the Boards unequivocal instructions, the administration now must move thoughtfully to bring this decision to fruition. In the fiscal year ending August 2004, the Harwich Point campus is anticipated to lose $9 million. The anticipated deficit for the 2004/05 fiscal year is projected at greater than $12 million. The cumulative deficit since inception at Harwich Point will have reached an unacceptable $77 million by September 2005. Despite the extraordinary efforts of a great many people on that campus and the embrace of generous alumni, overseers, trustees and supportive citizens on Cape Cod, hard fiscal realities make a continuation of high quality but very expensive undergraduate instruction at Harwich Point beyond the reach of this University. For more than four decades, New England University has sought to sustain three discrete residential campuses, each functioning in its own environment and developing its own character. The effort to create at Harwich Point an academically excellent, financially self-sufficient, worldclass, small college has been a labor of love for countless individuals over many years. Ultimately, however, the Universitys primary obligation always must be to its current students both those who study at Harwich Point College and, equally, those who study elsewhere in the University. Several years ago, after an exhaustive review and analysis, a special committee of the Board concluded that maintaining the status quo at Harwich Point was no longer a viable choice. The Board instructed the administration to draft a Master Plan, to redesign a dynamic core curriculum, to begin a capital construction effort and to launch a fundraising campaign. What could not be measured then was the timing and size of future enrollment increases as the result of new curricula and facilities. Despite a modest upturn in potential freshmen for the upcoming year, the required enrollment growth necessary to reduce significantly Harwich Points operating deficits is not foreseeable. Consequently, the loss of tuition dollars has created deficits beyond the Universitys ability to stay the marathon course. The Harwich Point deficit must not jeopardize the health of the entire University. The dynamic new core curriculum for freshmen as well as the existing courses required for returning students will be taught at the Harwich Point campus next year and at Providence thereafter. The University is also in active discussions about how best to meet the needs of those
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students enrolled in marine science after next year. We intend to work with every student to help each one meet his or her educational goals. Every Harwich Point student will be given a careful explanation of his or her options, a chance to visit Providence or Springfield, and an opportunity to receive professional help in any efforts to transfer to other colleges, if that is their choice. Over the next days and weeks, the University will communicate with the many Harwich Point stakeholders through detailed memos, personal meetings and individual sessions. Faculty, staff and administrators will receive an explanation of the implications of this decision. At every appropriate juncture, timely information and a comprehensive array of services will be provided for Harwich Point students and staff to help them through this transition. The Universitys fundamental commitment to provide each student a superior education and to treat every student, teacher and employee with genuine care, concern and respect will not waver. This Board decision will affect individual human lives, each with a unique set of circumstances, cares and concerns. Many at Harwich Point College have labored long and hard in pursuit of a dream that, sadly, now will not happen there. Although it pains me and my colleagues deeply, the Boards decision sets the parameters of what the University must do now to achieve its potential in the decades to come. In that spirit, I charge all of us to transform this disappointment into a renewed commitment to New England University.
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The Mushroom Rises He read the e-mail several times in total disbelief. How could they do this? he thought to himself. They just broke ground on a new library in May, in fact, the ground breaking ceremony was in conjunction with this years graduation! We have all worked so hard to make Harwich Point a college that is unique in educational programs and student relations. Furthermore, we were promised by the President that if we changed the core curriculum we would have three to five years to turn the school around. Where was the consultation with the faculty, staff, and students? Where was the request for help to local, state, and national representatives, all of whom are Harwich Point alumni? In fact our State Assemblyman, Brian Timmons, is the former CFO of the College! Many thoughts were simultaneously running through Dr. Shebekowskis head while his heart was on an emotional roller-coaster. He kept going from disbelief, to anger, to frustration, and back to disbelief. He kept wondering what would be the fate of the students, staff, and faculty of the College. Yet through the blare of these thoughts and the tumult of his emotions streamed a single verse of a song that he had not heard in many years but which now kept repeating in his head over and over again.
Bye bye Miss American Pie. Drove my Chevy to the levee but the levee was dry Them good ol' boys were drinkin whiskey and rye Singing "This'll be the day that I die, This'll be the day that I die.) (http://www.faqs.org/faqs/music/american-pie/, September 24, 2004.
*The names of the college, affiliated campuses, characters, and campus location has been changed upon the request of the editor. References have also been omitted in order to keep the disguise intact.
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The Day the Music Died: The Demise of Harwich Point College New England University (NEU) Part B: The After math Dr. Shebekowski, as well as the rest of the College community, were clearly in shock. Newspaper articles reported that faculty and students were stunned into silence while State Assemblyman, Brian Timmons, a former provost of Harwich Point College was quoted as saying It's a very sad thing. The core of the college is its undergraduate instruction. Once the shock and was over, several days later, Dr. Shebekowski surfed the colleges web site for more specific information. The Colleges web site yielded the following general information: We understand that this decision will affect you personally. We are committed to providing clear and specific information as this emerging situation unfolds. Please be assured that: - The College will be open in the Academic Year 2004-2005; - Your financial aid award will remain the same, including study grant, scholarship, loans, work study, federal and state programs, etc.; - You will have the opportunity to complete your major/degree program; - In September 2005, Harwich Point students will be embraced as full members of the Providence community, with full access to degree programs, support services, facilities and services; - Students may have the option to transfer to a Providence program. In the coming days, you and your family will undoubtedly have many questions. We have created a Web site where you will find answers to commonly asked questions and where you can ask new ones. A Transition Fact Sheet was also on the web and provided the following information:
Our plan is that in the fall of 2005,Harwich Points programs and faculty will move to the Providence campus of NEU. All courses and services will remain on the Harwich Point campus until fall of 2005. It is our plan that once we move to Providence in 2005, students will be able to participate in our core program and will be able to take courses through Harwich Point and through Providence. All Harwich Point faculty will be invited to teach at our "college within a college" at Providence. Students who have scholarships and financial aid from Harwich Point will continue to receive these benefits after the move to Providence, as long as they remain eligible for these benefits. Unfortunately, we do not have definite answers yet for students in the marine sciences. The University is at work trying to finalize arrangements for this program, and at this time there is nothing definite about where it will be located. It is our largest program and we are aware of how critical it is to our students that we answer this question as soon as possible. Please be assured that we will be in touch with you as soon as we know details about this programs future placement. Housing will be provided for Harwich Point students at Providence on or near the campus. Harwich Point students at the Providence campus will be welcome to use all of the Providence facilities and services, including the state-of-the-art Pratt Recreation Center which houses a fitness center, an eight-lane Olympic-sized pool, a basketball arena, and an indoor track; the Winnick Student Center for dining; and the B. Davis Schwartz Memorial Library, with access to
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more than 2.7 million volumes. Other facilities include Hillwood Commons which features a food court, a movie theater, club meeting rooms, computer labs, two art galleries, a bank and a hair salon. Harwich Point students who decide that they would rather attend either Providence or the Springfield campus of NEU will be able to easily transfer. Plans are underway to introduce Harwich Point students to the Providence campus this fall.
Dr. Shebekowski was also surprised to find that the college had provided some financial information, not only about the campuss last five years of operation, but also about the financial history of the university, its numerous campuses, and their analysis of what it would take to keep the campus open. (See Exhibits 6 through 9 below.) He decided that it would be a good idea to analyze the data presented so he could better understand the universitys position. Exhibit 6
Harwich Point College Fact Sheet

Affiliation: Private, nonsectarian, co-educational, independent, liberal arts based. Class Size: Average Undergraduate: 17 Average Graduate: 15 Tuition Rates: Undergraduate: $19,510 per year (full-time) Graduate: $609 per credit *These prices do not include University fees ranging from $65 to $310 and fees for student activities and specific programs. Tuition rates may differ for certain programs. Room and Board Charges: $9,210 per Year Students Receiving Financial Aid: Undergraduate: 88% Graduate: 40% Year Net Operating (Loss) in millions* FY99 FY00 ($3.3) FY01 ($4.7) FY02 ($5.9) FY03 ($6.9) FY04 Projected ($8.6) Discount Rate^ Enrollments# 1,312 33.4% 1,198 34.6% 1,211 35.3% 1,276 35.5% 1,120 35.9% 1,000 (projected)
*Net operating loss is shown before special one-time gift of $3.5 million credited as follows: FY01 - $536K; FY02 $958K; FY03 - $1.956mm. ^Total institutionally-funded scholarships as a percentage of total tuition and fee revenue. (FY04 comparisons: Springfield campus 11.4 %; Providence campus 13.8%)
#
Fall FTE census, exclusive of the International Abroad program - administered from offices located at Harwich Point College. Endowment $1.4 million Market value as of 6/30/03 of Endowment Fund restricted by donors for Harwich Point College. (Market value of total New England University Endowment Fund - $40 million.)
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Outstanding Debt $7.1 million Outstanding debt as of 8/31/03. Proceeds of debt used primarily for construction of Chancellors Hall. Debt matures through 2026.
Exhibit 7 Letter from the Vice President for Finance and Treasurer, NEU
Subject: Harwich Point College What it would have taken to succeed. Date: June 30, 2004 You mentioned to me that in light of the Boards decision to relocate Harwich Point Colleges undergraduate programming to the Providence campus a few people had raised the question of what it would have taken for the campus to succeed financially. As you know, upon the Universitys request PwC Consulting prepared a report in September 2002 which recommended among other things that the University develop an endowment of $100 million+ and raise significant funds to support facilities development. If this recommendation could have been realized it undoubtedly would have increased student interest in the College which in turn would have likely increased enrollment and stabilized, or perhaps reduced, the Universitys discount rate. If an endowment of that size would have existed in 2002 it would have generated annual spending of $5 million (using the Universitys 5% endowment spending rate) which would have been sufficient to eliminate the Colleges reported operating loss of $4.9 million in that year. The value of the Universitys endowment fund on June 30, 2003 was $40 million, of which $1.4 million was restricted by donors for the use of Harwich Point College. Attached is information obtained from the 2003 NACUBO Endowment Study regarding endowments of small, private, Northeastern colleges and universities. A quick review reveals a single great truth about college and university economics a small, private college requires an endowment many times the current value of Harwich Point Colleges to achieve fiscal stability and academic success. As you can see for a student body of 1,500 students (another PwC recommendation) the recommended endowment of $100,000,000 ($67,000 per FTE) would have ranked at the middle to lower end of the Endowment per FTE range of other similarly-sized private, Northeast colleges and universities. If the amounts necessary to be raised to support building renovations and the construction of critically needed new facilities (estimated at between $60 to $100 million) were to be added to the amount necessary to establish the Endowment Fund for the College it would have required approximately $200 million of gifts to allow the College to succeed financially and academically. Over its 40 years of its existence, that level of support - from alumni, friends, trustees, residents, et al. simply did not exist for the College. At Saint Louis University, a Jesuit university, the mantra was, No money, no mission. Though the mission was different, that was the story of Harwich Point College, too.
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He first starting examining Exhibits 6 and 7 and, shaking his head incredulously, then decided to dive head on into the Colleges and Universitys publicly-released financial statements (Exhibits 8 and 9, below). His maxim had always been that figures dont lie but liars figure and he felt that he was now going to put that old adage to the test. Given that he was a tenured, full professor, he believed that if he uncovered any financial mismanagement of the college that he would have nothing to loss if he reported his finding to the Massachusetts State Education Department, the governing body of all Massachusetts colleges and universities. Dr. Shebekowski voraciously went to work.
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Teaching Note The Demise of Harwich Point College New England University CASE SYNOPSIS Derived from personal observation and secondary research, this disguised case in Part A describes how a tenured full professor is caught off-guard by the announcement by the President that all of the undergraduate programs at Harwich Point College would be transferred to Providence, another campus of New England University. The narrator recounts numerous warning signs that the Professor could have picked up on in order to be more prepared for this eventuality. Part A ends with the Professor wondering as to the fate of the students, staff, and faculty and anguishing over the Universitys lack of outreach to the colleges constituency (students, staff, faculty, alumni, local community, and politicians). In Part B the Professor surfs the colleges web site for further information and finds information that describes a transition plan for students to attend Providence as well as financial data about the college and the university relative to the Universitys decision to close Harwich Point College. At the end of Part B, the Professor decided that it would be a good idea to analyze the data presented so he could better understand the universitys position. Overview The closing of a college or university, although certainly considered a major tragedy, should not be wholly unexpected in the 21st century. Standard and Poor predicted that colleges and universities might merge in large numbers or close. Their unusually blunt assessment of the financial problems in higher education was made as institutions struggled against stagnant levels of financial resources and substantially higher levels of debt. (Van Der Werf (a), 2002) For example, despite the fact that it received one of the largest gifts in the history of higher education, Polytechnic University in New York City is still, as of 2005, in economic decline. The university laid off 32 staff and announced a buy-out plan for senior professors. Following a deficit of $12.9 million in 2002, the operating debt for 2003 was expected to total $10.3 million. The programs that the university depended on, namely computer science and engineering, were losing favor amongst high school students, and the university could not afford to keep attracting students by offering more financial aid than its competitors. (Van Der Werf, 2003) This problem, however, is not just limited to the United States. A report commissioned by the Australian government in 2002 recommended that some universities be closed, that hundreds of courses be scrapped, and that research be conducted at just a few specialist universities. (Maslen, 2002) Private colleges in Ireland were under pressure to introduce a bonding arrangement to ensured students get their fees back if these colleges closed, following the closure of Advanced Technology College in Dublin, the third private college to close in Ireland in three years. (Walshe, 1997) Although there are signs that the U.S. as a whole is pulling out of recession, it is only just beginning to positively effect college campuses. Evidence from across the country suggests that private colleges are being harmed in major and minor ways. All types of institutions, including those that are large and prosperous, will face difficulties, but it is the small universities with the lowest tuitions and the slimmest operating margins that appear to be the most vulnerable. (Van Der Werf (c), 2002) Small colleges and universities such as Harwich Point College, those under 5000 students, have the greatest risk of closing given their smaller resource base, and their focus on small classes and personalized services. Smaller colleges also tend to develop a familial culture, one that tends
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to downplay formalized administrative behaviors including strategic planning (Rowley and Sherman, 2001). Unfortunately numerous examples exist of small college closings. Mount Senario College in Ladysmith, Wisconsin, went into receivership in May 10, 2002. The college had always struggled because it lacked a well-defined niche in the marketplace and was not supported by a strategy or vision. These problems were further compounded by poor decision-making and lazy oversight. (Van Der Werf (b), 2002) Officials at Trinity College (a small liberal arts institution in Vermont), in spite of their 1999 announcement that the college would remain open, concluded that they would not be able to redress a shortfall in students through fund-raising and would have to shut down. The college had a cumulative operating deficit of $2.7 million during the last four years, and its long-term debt in 2000 stood at around $5.6 million. (Van Der Werf (a), 2000) Bradford College in Haverhill, Massachusetts, closed on May 20, 2000. Founded in 1803, its closure was linked to shifting strategies, unrealistic projections, and the lack of a market niche. (Van Der Werf (b), 2000) Upsala College, East Orange, New Jersey, was unable to find a solution to a debt of nearly $13 million. Contributory causes in the college's demise included rising debts, diminishing gifts, plummeting enrollments in the 1980s, and a decreasing endowment. (Mercer, 1995) Given the plethora of college and university closings in the last few years, one would expect that college administrators would have formulated exit strategies, more specifically a public relations strategy, that would handle or head off unfavorable reporting of the closure while trying to put the best spin on an unfortunate event. (Armstrong and Kotler, 2003) The first part of this two-part case documents how New England University chose to announce the transfer of their undergraduate programs from Harwich Point College to Providence, namely through a system-wide e-mail to the staff, faculty, and students of Harwich Point College. The expectation is that students will examine this methodology and determine whether this was the best method for conveying this information. The second part of the case, Providence announcement, requires students to examine the actual material that the university put on the colleges web site in order to explain the Universitys decision to transfer the undergraduate programs. Again, students will be asked to determine whether this was the best method for conveying this information and what alternative methods were available to the university. Research Methodology and Data Collection The author in this case is actually the case protagonists, and therefore this research is subjective and phenomenological in nature.1 The writing style of the case therefore reflects a more colloquial style then one might find in a typical business case and tries to capture the points of view of the case character. The information for this case was collected by the author through personal reflection, observations, e-mails, and surfing Harwich Point Colleges web site. The e-mail and other material presented in this case are from the University President and Harwich Point Colleges web site. Intended Instructional Audience & Placement in Course Instruction
An excellent discussion of phenomenological research is provided by Stan Lester at http://www.devmts.demon.co.uk/resmethy.htm, October 27, 2004. 2006 Institute of Behavioral and Applied Management. All rights reserved.
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This case was primarily developed for undergraduates taking a course in Public Relations. The case should be introduced after the students have read the chapters on: public relations preparation and process (Seitel, 2004, Chapters 3-8; Cutlip, Center and Broom, 2000, Chapters 10-13), employee and consumer relations (Seitel, 2004, Chapters 11, 14), and the practice in educational organizations (Cutlip, Center and Broom, 2000, Chapter 16). Secondarily, this two-part case could also be employed in an Advertising and Promotion course when discussing the issue of public relations (Duncan, 2005, Chapter 17), a Business and Society course when discussing employee and customer relations (Lawrence, Weber, and Providence, 2005, Chapters 16, 18), and a Principles of Management course when discussing organizational communication (Hellriegel, Jackson, and Slocum, 2002, Chapter 16). This sequence of cases creates a continuity for the students yet are not sufficiently complex for graduate students. However, the case is broad enough to be employed as a comprehensive case in a Public Relations course although it would seem more appropriate as an end-of-chapter case for the other referenced courses. Learning Objectives The overall purpose of this two-part case is to introduce students to the nuances associated with communicating extremely sensitive and negative news to employees and customers. This case depicts a highly charged issue which may bring about extremely adverse conditions for the colleges students, staff, and faculty and may lead to highly damaging publicity for the University. Students are asked to deal with both the issue of how one announces such horrendous news so as to minimize negative publicity as well as what additional information should be conveyed after the initial news release. Specific objectives are as follows: 1. For students to recognize that numerous stakeholders (both internal and external) are impacted by the Universitys decision to transfer its undergraduate programs to Providence. 2. For students to analyze the Universitys initial communication with faculty, staff, and students and the effectiveness of that communication. 3. For students to develop an alternative method and/or content for this information release. 4. For students to analyze the effectiveness of the information Providenceed on the web from a public relations perspective. 5. For students to suggest alternative methods (content and process) for following-up the initial information about the transfer. Teaching Strategies Preparing the Student Prior to Case Analysis There are several approaches, none of which are mutually exclusive, that an instructor may employ in terms of utilizing these cases. It is strongly recommended that regardless of the specific methodology employed, that students prior to reading these cases be exposed to some material on managing Providencesecondary institutions and the role of media. This conceptual framework may be delivered prior to assigning the case by using at least one (1) of the follow methods:
a short lecture and/or discussion session on aforementioned topics. 201
a reading assignment prior to reading the case on the administration of educational institutions and the media (Rodgers and Adams, 1994; Oblinger and Katz, 1999). a short student presentation on each topic. a guest lecture from the college or university president, public information officer, or a local reporter.
The Case Method In the traditional case method, the student assumes the role of a manager or consultant and therein takes a generalist approach to analyzing and solving the problems of an organization. This approach requires students to utilize all of their prior learning in other subject areas as well as the field of marketing. This case in particular will also require students to draw upon their knowledge of public relations. It is strongly suggested that students prepare for these cases prior to class discussion, using the following recommendations:
allow adequate time in preparing the case read the case at least twice focus on the key issues adopt the appropriate time frame draw on all your knowledge of business (Pearce and Robinson, 2005).
The instructors role in case analysis is one of a facilitator. The instructor helps to keep the class focused on the key issues; creates a classroom environment that encourages classroom discussion and creativity; bridges theory to practice by referring back to key concepts learned in this or prior courses; and challenges students analyses in order to stimulate further learning and discussion. There are several variations of the aforementioned approach including: written assignments, oral presentations, team assignments, structured case competitions, and supplemental field work (Nicastro and Jones, 1994). Regardless of the variation employed, it is recommended that the students work be evaluated and graded as partial fulfillment of the courses requirements. Using Parts A-B: Some Suggestions The traditional method for using a multipart case is to assign Part A as the take home case and to then use the subsequent case as either an in-class reading (if time permits) and/or follow-up take home assignment to be discussed later in class. The epilogue to this two part case may then be handed out in class for students to read or described by the instructor in order to bring closure to the learning exercises. This method provides continuity to the story line and brings fairly quick closure to the case. Role-Playing An alternative or supplement to the case method is role playing. Role-playing enacts a case and allows the students to explore the human, social, and political dynamics of a case situation. This two-part case lends itself quite well to a role playing exercise since it involves a rather simple situation with only two to three characters and therefore most of the class can role play in this
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exercise. The use of the role playing exercises should correspond to the use of the case parts, with the role plays immediately following the case part assignment but occurring prior to the case part discussion. The instructor may wish to mix the instructional method, that is, use role playing for one of the parts, and use the traditional case method for the other, or even have a part or two where both methods are employed. The decision as to the mix of instructional methodologies may include several factors including time availability, class size, and instructor preferences. Prior to role-playing the case part, students should be asked to not only read the case part but to answer the following questions: 1. Who are the key participants in the case part? Why? 2. What is the role of each of these participants in the case? 3. What is their motivation or rationale for their behavior? 4. What are the critical junctures of the conversation between the characters in the case? The instructor may either go through these questions prior to case part enactment or wait for the role playing exercise to be completed in order to use this material to debrief the exercise. Instructions Step 1 (For Parts A, B): Assignment of Roles (10 minutes). The class should form groups of 4-5 students with one student enacting the role of Professor Shebekowski, and the other students enacting the role of new characters. One student will enact the role of the colleges public information officer, one a staff member of the college, and the last a college student. The students not enacting the any roles should act as observers. The instructor should pass out a short reminder notice about participants staying within their assigned roles. Step 2: Enactment of Part A (15-20 minutes). Part A ends with Professor Shebekowski being quite shocked and stunned at the e-mail announcement he received from the President. The student playing the role of Professor Shebekowski should summarize the situation, and then begin to ask questions about the colleges relocation to the student enacting the role of the public information officer (PIO). The students acting as the staff member and the college student should then ask their own questions. The student playing the role of the PIO should try to answer all of the questions keeping in mind that the job of the PIO is to both tell the truth and to ensure that the college is presented in the most positive light. Step 3: Debriefing of Part A (20 minutes). The instructor might want to ask the following questions: Did the PIO answer all the questions to everyones satisfaction? If not, what information would the PIO need in order to do so? Were there any questions that the PIO refused to answer? If so, what were they? Did the PIO remain positive throughout the questioning? Were there differences in the questions asked by the Professor, the staff members, and the student? If so, what were they? Step 4: Enactment of Part B (15-20 minutes). The same groups should be employed. Part B ends with Professor Shebekowski planning to analyze the financial information provided by the college on the colleges web site. Staying in the same roles, the role play should begin with Professor
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Shebekowski making some observations about the financial situation of the college (i.e. revenues were flat for the last four years yet expenses rose, most dramatically in the last two years, why?). Again, students acting as the staff member and the college student should then ask their own questions. The student playing the PIO should try to answer all of the questions with the knowledge that he or she will not have the answer to most of the questions posed. Step 5: Debriefing of Part B (20 minutes). The instructor might want to ask the following questions: The PIO could not have possibly known the answers to many of the questions that required specific knowledge as to how particular financial decisions were made how did the PIO handle these situations? If the PIO stated that he or she had no additional information, what was the questioners response? Looking at the financial data, do you think that it helped the Colleges public image to release this data? Why or why not? Step 6: Debriefing of the Entire Exercise. The instructor should have the class as a whole comment on the results of the role-playing exercises. Students should also be given the opportunity to comment on the role-playing exercises as a learning instrument. The instructor might ask the class the following questions: Did this exercises animate the cases? Did students get a feel for the issues surrounding the differing business situations? What were the strengths and weaknesses of the exercises? What changes would they make to the exercises given their experiences with it? The debriefing session should produce closure for students by connecting the theory underlying the cases with case specifics and the results of the role-playing exercises. Suggested Case Questions Part A 1. Who are the internal and external stakeholders that are impacted by the Universitys decision to transfer its undergraduate programs to Providence? The purpose of this question is to provide students an analytical framework as well as a context in which to analyze this case. Since stakeholders push and pull the college in different directions [and] stakeholders control certain resources that the college requires to operate properly (Rowley and Sherman, 2001, p. 214) it would seem incumbent that students be able to identify the significant parties affected by the Universitys decision. The below average student will answer this question by merely providing a list of stakeholders for the college with neither an explanation as to why each group could be considered a stakeholder group nor differentiating between internal and external stakeholders. The average student will answer this question by first defining what is meant by a stakeholder. Stakeholders are people or organizations with a stake in a particular issue or resource. (http://www .usaid.gov/cg/stakeholderdef.html, January 20, 2005) This student may then go on
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to define the difference external and internal stakeholders; the insiders are the individuals or groups that are stockholders or employees of the firm. (Pearce and Robinson, 2005, p. 48) From this definition the student might develop the following list of college stakeholders with a brief explanation:
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TN Table 1 Average Student List of Stakeholders: Harwich Point College Internal Stakeholders Faculty Staff/Administration Board of Trustees External Stakeholder Students
The above average student would note that there may be several college stakeholders not mentioned in the case who regardless still have a vested interest in the college. See list below. TN Table 2 Above Average Student List of Stakeholders: Harwich Point College2
Internal Stakeholders Faculty Staff/Administration Board of Trustees Other Personnel
External Stakeholder Students Competitors Alumni Parents Potential Students Creditors Local Community/Businesses General Public Suppliers Unions Professional Associations Accrediting Agencies Local Government/Politicians Philanthropists
Besides describing the import of each group, this student would denote that there would be an adverse economic impact from moving the undergraduate programs to another campus that may have deleterious affects on the local community, local suppliers, and any unions that may include college employees. This student might also discuss how there may be negative publicity related to the firing of the employees as it affects the continued operation of the college. It might also be mentioned that this move would be beneficial to any other local colleges in the area as well as colleges that may compete on a programmatic level with Harwich Point College (i.e. in Marine Sciences).
Adopted from Rowley and Sherman, 2001.
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The exceptional student might struggle with the question as to whether or not students should be considered an external stakeholder group. Rowley and Sherman (2001, 2004a) categorized students as internal stakeholders and indicated that they should be the focus of university academic planning. Rowley and Sherman (2004b) later denoted that students enact a multiple role set in the university setting (consumer/customer, fellow learner/researcher, possible employee) and therefore they possess the highest stake in the institutions success. Secondly, this student might note that the stakeholder question is a matter of perspective; is the question being asked in terms of the colleges stakeholders (which have already been discussed) or from the universitys stakeholders? This is an crucial point to make since the college is part of a larger university system and it was the Universitys Board of Trustees that made the decision to transfer these undergraduate programs from one campus to another (and one assumes for the benefit of the University). This perspective broadens the context of the decision and certainly captures all of the affected parties since Harwich Point Colleges financial woes affected the Universitys financial decision. This student may also note that a dual stakeholder analysis should be employed in order to determine which stakeholders are shared by the University and the college and which are not. This may be drawn as a Venn diagram, see TN Figure 1 on the next page:
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TN Figure 1 A Composite Venn Diagram of NEU/Harwich Point College Stakeholders
NEU Stakeholders
HP Stakeholders
Other campuss stakeholders: i.e. students, faculty, staff, local businesses,
NEU Board of Trustees University Personnel Students Accrediting Agencies General Public University Donors Suppliers/Creditors Regional: Community, Governments, Politicians
HP campuss stakeholders: i.e. students, faculty, staff, local businesses, alumni,
This diagram highlights the fact that HPs poor financial situation has a negative affect on the other campuses of NEU and its stakeholders; most directly their students, faculty, and staff. It also indicates that in the transferring of the undergraduate programs to Providence that their stakeholders will be impacted as well. 2. The Universitys initial communication with faculty, staff, and students about the transferring of the undergraduate programs to Providence was conveyed through a college-wide e-mail. Why might the university have released such important information in this manner? What are some of the drawbacks to using e-mail in this manner? This question is posed to the student in order for the student to analyze the communication medium of e-mail as a method for conveying both important and sensitive news. The below average student will answer this question without first defining the properties of e-mail as a communication medium for public relations. Secondly, this student will answer the question in an off-hand manner, that is, offer up personal opinion rather than refer to the textbook or other outside references that would support this students comments.
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The average student would first start by defining e-mail. e-mail: also E-mail, and email, Abbreviation for electronic mail. An electronic means for communication in which (a) usually text is transmitted (but sometimes also graphics and/or audio information), (b) operations include sending, storing, processing, and receiving information, (c) users are allowed to communicate under specified conditions, and (d) messages are held in storage until called for by the addressee. Some e-mail software permits the attachment of separate electronic files, e.g., wordprocessor files, graphics files, audio files. (http://www.its. bldrdoc.gov/projects/devglossary/_email.html, December 30, 2004.) These students will note that some of the strengths of using e-mail include its low cost, ease of use (similar to and/or linked with word processing packages), near instantaneous transmission, and high usage rate by computer users. (Straus and Frost, 2001; Marconi 2004) These students might conclude that e-mail was the logical choice for communicating with the faculty, staff, and students since it was quick, cheap, easy (assuming that lists of e-mail addresses existed for these groups), and targeted to the exact population they wanted to reach. (Kleindl, 2003) On the negative side, the average student might note that although e-mail may be sent to everyone immediately, that e-mails (like regular mail) are only read when they are opened; slow readers of e-mail would get the message late, non-email users would be missed entirely. The above average student will take a step back from the problem and ask the question what is the purpose of the universitys communication of this information with the employees, faculty, and students? This fundamental question strikes at the underpinnings of public relations and therefore this student will then define public relations role in an organization. Public Relations is a form of communication primarily directed toward gaining public understanding and acceptance. Public relations usually deals with issues rather than products or services, and is used to build goodwill with public or employees. (http://www. definethat.com/define/?id=52, December 30, 2004) These student might reason from this definition that the purpose of this communication was to then gain understanding and acceptance of the Universitys decision to move Harwich Point Colleges undergraduate programs to Providence and by the end of the communication to have built good will with the employees. These students would therefore ask whether an e-mail sent to faculty, employees, and students would obtain the aforementioned objectives. These students will perhaps then realize that it is not what you say but how you say it that counts; that the medium is the message. (McLuhan, 1964) They will then focus on the e-mail medium and recognize that other benefits of using e-mail include the ability to control the content of the message, the distribution of the message, the intensity of the message,3 the responses to the message (response would usually be in e-mail form since it is easy to reply) with minimal noise or interference. E-mail messages therefore simultaneously gain the attention of the target audience while obtaining the targeted recipients interest through customized and personalized content. (Kleindl, 2003) These students will also see drawbacks using e-mail. Many individuals who have e-mail disregard much of their mail because of unsolicited commercial e-mail (Spam). (Deitel, Deitel,
Sherman (1985) extended McLuhans concept of hot/cold media to e-mail and concluded that its similarities to other print media, coupled with its interactive features, made e-mail a very intensive (hot) medium; a strong attention grabbing device. 2006 Institute of Behavioral and Applied Management. All rights reserved.
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and Steinbuhler, 2001) Marconi (2004) suggested that in order to avoid e-mail being treated as junk mail, that the sender of the e-mail be highly recognizable to the recipient in this case the Presidents name would be highly recognizable to the college community. A second problem is that if active e-mail user will receive the message first, this will allow the development of a rumor mill (assuming that information of this nature would be quickly passed from an active e-mailer to a non-active e-mailer) and the passage of misinformation since in all likelihood this information would be conveyed verbally (live or phone conversation). These students might suggest that it would not be difficult for the concept of transfer to quickly be interpreted as closing and that the story could be stretched way out of proportion (see grapevine effect, Adler and Elmhorst, 2002). Exceptional students will note that perhaps the University employed e-mail because, in all candor, no one wants to personally delivery bad news (and more importantly deal with the reaction to said news). By using an impersonal approach, it was easier to be straight forward about both the Colleges economic problems and the Boards solution strategy to those problems. These students might also suggest that this method allowed the college to exercise logical reasoning to induce understanding and acceptance of the situation from the target audience; reasoning that perhaps would be lost in conversation and discussion of on this topic. Secondly, these students could also argue that this e-mail was both a preemptive strike against possible leaks and mistruths that might emanate from members of the Board of Trustees as well as a delaying tactic to give the university time to organize a thorough and well conceived public relations campaign. These same students, however, will see their prior explanations as more of mere rationalizations then good planning and public relations. These students will indicate that good public relations with employees both begins and ends with what Marconi (2004) called the personal touch and the adult approach. (p. 129) Rowley and Sherman (2004) in describing supervision within colleges and universities noted that issues such as trust, adult-adult relationships, collegiality, respect and honesty were the cornerstone to worker productivity. Both sets of authors acknowledged that that the most preferred means of communication within an organization, especially of matters of high import, was face-to-face personal contact. (Marconi, 2004, p. 131) These students might therefore speculate that faculty, staff, and students might become angry not only as to the content of the message but, more importantly, as to the impersonal means in which it was conveyed. This impersonal approach would seem to be counter to the value system of the college as well as the University as described in the background information presented in Exhibits 3 and 4. Finally, these students might also indicate that the University should have been in crisis management mode; that the story they had to tell was not a pleasant one. That being stated, the question becomes does the universitys action of sending out an e-mail to its employees build and sustain its reputation while being connected to a crisis? These students might argue whether or not the e-mail served as the appropriate first step in a much larger public relations campaign and how well served the university was in starting this campaign with an e-mail. 3. Assume that you disagree with the method in which the university first informed the students, faculty, and staff about the transfer decision. What would be your first step in this public relations campaign in terms of informing students, faculty, and staff? Message and media usage?
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The purpose of this question is twofold: one, to have students think about how they would have liked to have been informed if they were on the receiving end of this message. This should be a fairly easy task since college students are part of the target audience. More importantly, this question requires students to become empathetic with the recipient of the communication, a critical factor in effective communication. (Howell, 1982) Third, this question broadens the scope of the problem by placing this crucial incident (first contact so to speak) within a larger framework, that is, within the context of an overall public relations campaign. The below average student will answer this question in an off-hand manner (as described in question one) or might recommend that no action be taken by the University until a thorough public relations campaign has been developed. This student would indicate that without a public relations plan it will be hard to identify[ing] with whom you want to have a relationship with, what you want from that relationship, and what you can do to achieve it. (http://www.nku.edu/~turney/prclass/readings/plan. html, December 31, 2004) Unfortunately, Marconi (2004) recognized that no action is the worst action of all and recommended that organizations acknowledge the problem, deal with it, and move on. (p. 264) It is clear in this case that information of this import could not stay bottled up amongst the members of the Board of Trustees until a public relations plan was developed since the worst scenario would be for the University to have to respond to news breaking media coverage of this decision. The average student would accept the fact that some action needed to be taken immediately by the University, regardless if a public relations plan was in place, since the news constituted a crisis situation. This student would have noted that once the crisis hit that the University should have: a) designated one person to act as spokesperson for the crisis; b) get the story out quickly; c) presented the organization within a larger context than the crisis, constantly coming back to the positive attributes of the college; d) kept everyone in the organization informed; e) reinforced a sense of pride in the organization; f) been honest and responsive. (Marconi, 2004) This student would then detail how this information should have been released by indicating who should release the story (President, Chair of Board of Trustees, Chancellor of Harwich Point College, Public Information Officer of the University, etc), the recipients of the story (differing segments of the target population), the media employed (mass media, internal communications), the message (its actual content), and the staging of the information release (assuming the message is delivered in person, where, what setting, which media present, etc). The above average student would note that if the University had an active and engaged public relations officer (PRO) then that person would have (or should have) known that on the Boards agenda was the possible transfer of undergraduate programs from Harwich Point College to Providence and therefore should have sketched out a public relations campaign and more specifically the first step in that campaign prior to the Boards decision. The student would denote that as part of public relations planning the PRO should have performed a situation analysis (a what if study), establish measurable, verifiable, and attainable objectives for the campaign, identify the target audience, shape the message, and determine the media to be used to deliver the message. (http://www.graphicarts.org/nalc/ prmanual/pr1plan.htm, December 31, 2004) This student would then, like the average student, detail how this information should have been released.
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The exceptional student might also observe that the best way to prepare for a public relations crisis is to cultivate strong media relations; to be proactive. If the public relations staff truly has a customer-centered approach to its relationships with the media, it will have established itself as having the media's interests at the center of public relations program. This should mean that key media people will give the organization the benefit of any doubts and will give the organization a clear opportunity to get its story across. (http://www.campagne.com/pdfs/PR_planning. pdf, December 31, 2004, p. 3) More importantly, this student might also realize that the best way to diffuse the possible negative impact of this information would have been to take the surprise element out of the situation. (Kanter, 1983) Perhaps the faculty, staff, and students might not have a vociferous and raucous reaction to the announcement if the Board of Trustees and/or the President had approached them prior to the notice to discuss the colleges cash flow problems and the impact of this negative cash flow on the University. Furthermore, by including these target groups in a discussion of the problem (rather than in a discussion of the Boards solution to the problem) then perhaps alternative strategies could have been discussed, investigated, and implemented. This student would undoubtedly point out that the seemingly unilateral nature of the decisionmaking by the Board is just as much a problem as the actual announcement by the Board and may serve as a negative multiplier effect. In general, there should be some commonality between these differing students in terms of how this information should have been delivered to the students, staff, and faculty of Harwich Point College (we believe that a live, in-person announcement by the President and/or the Chairperson of the Board of Trustees followed by a question and answer session would have been most appropriate) as well as the differing media used to present the message (radio, TV, newspapers, college website), and the necessity of having a written press release sent to the media in question. Part B 1. Examine Exhibit 8 from Part B of the case. What is the relative financial position of the college? Although financial analysis is not part of a public relations course, students must understand that financial statements convey information about an organization and therefore constitute part of a public relations effort. The purpose of this question then is to have students confront their need to analyze financial data as well as to draw some preliminary conclusions about the financial position of an organization. The below average student might require assistance in answering this question or answer in such generalities as to hardly refer to the Exhibit. For example, this student may employ terms such as good or bad in terms of the colleges financial status rather than provide an actual quantitative analysis or refer to actual numbers provided in the exhibits. The average student will examine the exhibit and report, in general terms, financial trends over time i.e. operating results for the college indicated increasing losses from 99-04 while revenues remained stable over the same five year period. A list of trends for the college are reported below, see TN Table 3, below.
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TN Table 3 Financial Trends for Harwich Point College Qualitative Reporting

For Harwich Point College Revenues: Tuition & Fees Scholarships & Fellowships Net Tuition & Fees State Aid University Revenue Unrestricted Gifts Transfer from Restricted New Fundraising Events Other Revenue Total Educational & General Auxiliary Enterprises Total Revenues Expenditures: Instruction Academic Support Student Services Staff Benefits Institutional Support Operations & Maintenance of Plant University Expense Mandatory Transfers Non-Mandatory Transfers Total Educational & General Auxiliary Enterprises Total Expenditures Educational & General: Auxiliary Enterprises Results Before Clear Channel Gift "Clear Channel Gift" Total Results of Operations Trend 99-04 Slightly up Up Flat Slightly down Dramatically down Went up then down Went up then down Once in 04 Went up then down Flat Went up then down Slightly down Up Up Up Up Up Up Down Flat Up then down Up Slightly Up Up Down Down Down Up Down
The average student after constructing this chart would conclude that overall revenues were relatively the same over the five year period while expenditures were up. The above average student would actually use the data in Exhibit 8 to generate new information about the college including quantitative trends and perhaps associated graphs. See TN Table 4 and TN Figure 2 below. TN Table 4 Financial Trends for Harwich Point College Quantitative Reporting
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(Dollars in 000's) Actual Harwich Point Revenues: Tuition & Fees Scholarships & Fellowships Net Tuition & Fees State Aid University Revenue Unrestricted Gifts Transfer from Restricted New Fundraising Events Other Revenue Total Educational & General Auxiliary Enterprises Total Revenues Expenditures: Instruction Academic Support Student Services Staff Benefits Institutional Support Operations & Maintenance of Plant University Expense Unallocated Salaries Mandatory Transfers Non-Mandatory Transfers Total Educational & General Auxiliary Enterprises Total Expenditures Results of Operations: Educational & General: Auxiliary Enterprises Results Before Clear Channel Gift Clear Channel Gift Total Results of Operations -3,332 -4,585 1,253 -3,332 -5,376 713 -4,663 536 -4,127 -6,912 1,031 -5,881 958 -4,923 -7,983 1,081 -6,902 1,956 -4,946 21,946 3,965 25,911 1,157 7,422 1,458 2,054 3,821 1,914 2,447 1,673 1,098 44 22,265 3,950 26,215 7,373 1,609 2,103 4,157 1,634 2,587 1,660 1,104 291 24,107 4,046 28,153 7,889 1,772 2,242 4,515 1,853 2,629 1,812 1,136 656 25,736 4,216 29,952 8,431 1,739 2,199 4,915 1,811 2,838 2,011 763 17,361 5,218 22,579 819 16,889 4,663 21,552 22,004 7,352 14,652 157 419 1,370 21,751 7,528 14,223 140 418 1,257 32 1,099 17,195 5,077 22,272 23,263 8,607 14,656 117 241 1,087 -5 1,111 17,753 5,297 23,050 24,930 9,923 15,007 103 164 1,347 21 1999-00 2000-01 2001-02 2002-03
2003-04 Projected @6/3/04 23,400 8,400 15,000 133 182 1,100 700 920 18,035 4,462 22,497 8,208 2,016 2,413 5,446 2,405 3,221 2,262 -200 1,155 110 27,036 4,060 31,096 -9,001 402 -8,599 -8,599 -158.07% 23.19% 2.40% 20.01% 96.31% -67.92% -158.07% -0.17% 20.58% 3.88% -14.49% -0.36% 10.59% 38.27% 17.48% 42.53% 25.65% 31.63% 35.21% % change 99-04 6.34% 14.25% 2.38% -15.29% -56.56% -19.71%
TN Figure 2 Harwich Point College Total Revenue, Total Expenses, and Total Operating Results: 99-04
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35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 -5,000 -10,000
1999-00 2000-01 2001-02 2002-03 2003-04 Total Expeditures
Total Revenues Total Results of Operations
The above average student would then indicate that although there was less than 1% decrease in revenue from 19992004 that there was a 20% increase in
expenses resulting in a 158% increase in total operating loss (nearly $8.6 million dollars). The exceptional student would also try to employ financial ratio analysis in order to analyze the colleges operation and realize that Exhibit 7 does not possess all of the information necessary in which to calculate all of the ratios. They would, however, present whatever analyses they could calculate, see TN Table 5, below.
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TN Table 54 Change in Profitability Ratios for Harwich Point College: 1999-2004

Sales = Total Education + General Cost of goods sold = Expenditures (Transfers + Auxiliary Enterprises) Operating expenses = Transfers + Auxiliary Enterprises Other Income = Auxiliary Enterprises (two listings) + Clear Channel Gift
Profitability Ratios
1999-01
2000-1
2001-2
2002-3 2003-4 (est.) % change
Gross Operating Net
-19.75% -24.27% -32.08% -49.25% -54.22% -63.73% -11.98% -19.44% -27.65%
-34.87% -68.72% -21.77%
-42.89% -236.91% -72.49% -196.44% -45.45% -391.36%
This student would note that the college is becoming a larger and larger cash drain on the university with little to no hope in sight of reversing the negative profitability trends. 2. Perform a similar financial analysis for the University given Exhibit 9. The purpose of this question then is to have students realize that the colleges financial position is just part of a much larger financial picture that includes other campuses. By having students examine the cash flow position of the university, they will be able to appreciate the perspective of the board of trustees and the other campuses stakeholders as to the impact of Harwich Point College and the universitys financial operation. The below average student might require assistance in answering this question or answer in such generalities as to hardly refer to the Exhibit. As mentioned in question 2, this student might refer to the Universitys overall situation in either positive or negative terms without referring to specific Exhibit data. The average student will examine the exhibit and report, in general terms, the general financial trends for the university and each of its academic units. For example, this student might report that only since 1995-6 has the university operated in the black and that it cumulative revenue peaked in 2002-2003; since then the universitys accumulated revenues had declined back to 2000-1 levels. See TN Table 6 for more details.
Using the financial ratio calculator at http://www.acctsite.com/calcs/Ratios.html the following ratios were calculated by year. 2006 Institute of Behavioral and Applied Management. All rights reserved.
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TN Table 6 Qualitative Analysis of NEU Cumulative Balance: Overall & by Campus

Campus Springfield Osteopathic Medicine Providence Harwich Point International Abroad Burlington Watertown Provincetown New England University Trend Largest deficits in the mid-1980s; largest surplus in early 2000s. Starting to reduce surplus. Largest accumulation in 1997-98; slightly declined from then on. Still has positive accumulation. Largest deficit in 1997-8; estimated to finally have a positive accumulation in 2004-5. Has never accumulated a surplus. In rapid decline. Surplus first year, declines thereafter. 2004-5 first year to reduce overall deficit. Always adds revenues to surplus (cash cow). Biggest single contribution in 2002-2. Always adds revenues to surplus (cash cow). Biggest single contribution in 1995-6. Always adds revenues to surplus (cash cow). Biggest single contribution in 2004-5. Largest negative accumulation in 1990-91; increasing surplus from 1995-6 to 2002-3.
This student may make several observations: 1) Burlington, Watertown and Provincetown are cash cows, that is, they are excellent revenue enhancers. 2) Harwich Point and International Abroad have always lost money. 3) The university has a negative cumulative deficit from 1959-94; surpluses have only been around for the last ten years. This student might wonder why the university now decided to move Harwich Points undergraduate programs to Providence and list several reasons: a) Providence was expected to show an accumulated surplus in 2004-05, the first time in over ten years. Why risk Providences possible growth in surplus? (Did they expect this move to add to Providences surplus?) b) The University was still in the black and had been in the red for 35 years. What changed in the universitys fiscal policy that would not allow them to operate with what seems to be a slowly decreasing surplus? c) Harwich Point College and International Abroad were always money pits; again, what changed in the universitys fiscal policy that would not allow this to continue? The above average student would use the data in Exhibit 8 to generate information about the university including quantitative trends and perhaps associated graphs. See TN Table 7 and TN Figure 3 below. TN Table 7 New England University Cumulative Unrestricted Funds
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AY 1959-60 1960-61 1961-62 1962-63 1963-64 1964-65 1965-66 1966-67 1967-68 1968-69 1968-69 1969-70 1970-71 1971-72 1972-73 1973-74 1974-75 1975-76 1976-77 1977-78 1978-79 1979-80 1979-80 1980-81 1981-82 1982-83 1983-84 1984-85 1985-86 1985-86 1986-87 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 Average
Current (000) 120 -891 445 377 -571 89 230 -885 463 -71 -1565 640 -1076 214 -72 -335 -1475 -534 257 280 141 263 119 963 79 -978 184 155 7 1671 -1475 -4923 -1271 126 -1000 91 1214 2172 3867 4220 2124 2157 2134 1535 749 2151 2781 -1822 -3486 146
Cumulative (000) -50 -941 -496 -119 -690 -601 -371 -1256 -793 -864 -2429 -1789 -2865 -2651 -2723 -3058 -4533 -5067 -4810 -4530 -4389 -4126 -4007 -3044 -2965 -3943 -3759 -3604 -3597 -1926 -3401 -8324 -9595 -9469 -10469 -10378 -9164 -6992 -3125 1095 3219 5376 7510 9045 9794 11945 14726 12904 9418 -1430
TN Figure 3 New England University Cumulative Unrestricted Funds: Trend Lines
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20000 15000 10000 5000 0
1959-60
1963-64
1967-68
1970-71
1974-75
1978-79
1981-82
1985-86
1988-89
1991-92
1995-96
1999-00
-5000 -10000 -15000
Current
Cumulative
This student might make several observations about the universitys cash flow: 1) That given the average annual university contribution of $146,000 it would make sense that the last few years of losses ($1.8 million in 2003-4; nearly $ 3.5 million in 2004-5) would be of grave concern to the university. 2) That the universitys average annual accumulation was negative $1.4 million and therefore their current accumulation of $9.4 million gave them somewhat of a cushion to absorb another year or two of losses. 3) That only since the mid-1990s was cash flow accumulations positive. Therefore the university should be accustomed to dealing with negative cash flows and the problems associated with it. The exceptional student would analyze all of the campuses (as well as the university) and might present the following summary chart of their calculations. See TN Table 8. TN Table 8 New England University Cumulative Unrestricted Funds by Campus: Summary Data In 000s Average Maximum Minimum Springfield* Osteopathic* Providence* Current Cumulative Current Cumulative Current Cumulative (34) (6912) 98 3541 (378) (252) 6666 3457 1855 4994 2281 3468 (4386) (30129) (847) (212) (2480) (5339) Harwich Point* International Abroad* In 000s Current Cumulative Current Cumulative Average (2038) (14369) (184) (1189) Maximum (14) (87) (60) (228) Minimum (12723) (77036) (417) (1629)
2003-04
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In 000s Average Maximum Minimum
Burlington^ Current Cumulative 1989 18872 4409 44278 1047 1704
Watertown^ Provincetown^ Current Cumulative Current Cumulative 5825 1260 9281 721 16575 1489 19482 1962 1051 1314 69 272
*Main Campuses (Osteopathic is attached to the Springfield campus, International Abroad to Harwich Point) ^ Satellite Campuses
This student might also make several observations: 1) None of the three main campuses, excluding Osteopathic, had an average positive current or cumulative revenue position 2) All of the satellite campuses had an average positive current and cumulative revenue position 3) The Burlington campus had the highest average and cumulative revenue position while Harwich Point had the lowest positions This student might take the position that these campuses constituted a portfolio of campuses comprising the overall university. Therefore in order to keep the universitys revenues from further reductions, the poorest economically performing campus had to be dismantled; Harwich Point College. 3. Analyze the effectiveness of the information provided on the web from a public relations perspective. How constructive was this information in meeting the general objectives of a public relations campaign? This questions asks students to determine whether or not the information provided on the colleges web site by the university establishes and maintains mutually beneficial relationships between an organization and the publics on whom its success or failure depends. (Cutlip, Center, and Broom, 2000, p. 6). This question requires students to understand the stages of public relations evaluation (preparation, implementation, and impact; Cutlip, Center, and Broom, 2000) and requires some content analysis of the web materials provided in the exhibits beyond those already discussed in questions 1 and 2. The below average student will answer this question without making any reference to the purposes, goals, and objectives of a public relations campaign. Talking only in generalities and providing only opinion, this student may or may not take a position as to the effectiveness of he material placed on the web site. The average student will note that there are three steps in evaluating a public relations program: 1) Preparation evaluation = assesses the quality and adequacy of information and strategic planning. 2) Implementation evaluation = documents the adequacy of the tactics and the effort. 3) Impact evaluation = provides feedback on the consequences of the program. (Cutlip, Center, and Broom, 2000, p. 436)
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More specifically this student will note that the web site content can be evaluated based upon the appropriateness of the message and activity content [and the] quality of the message and activity presentations. (Ibid, p. 437) The student would then proceed to first analyze the content of the material provided in Part B and the presentation approach (format) in a general manner. The first step would be to list the items in question: a) b) c) d) e) f) General Information Transition Fact Sheet Harwich Point College Fact Sheet Letter from the Vice President for Finance and Treasurer, NEU Harwich Point College AY 1999 to 2004 New England University Cumulative Current Unrestricted Fund
This student would then comment on the tenor of the material as well as some of its content, perhaps denoting portions of the material that they thought met the general goals of a public relations campaign. For example, this student might praise the fact that the university understand(s) that this decision will affect you personally [and is] committed to providing clear and specific information . (General Information) but wonder as to what a college within a college is or why the University has yet to work out the particulars for the Marine Science majors (Transition Fact Sheet). Furthermore they may comment on the seeming superfluous nature of the financial exhibits and the very negative tone of the letter from the VP for Finance and Treasurer. Last, there may be a general comment that the University needs to talk up the quality of the Providence campus facilities and the quality of the education offered by this campus that the students will in fact benefit from this move given the more comprehensive facilities and plethora of majors, programs, courses, and extra-curricula activities offered at Providence.
The above average student will deal with each item listed above as a separate document and comment accordingly. The material below is provided as a hypothetical response. General Information short, concise and very sympathetic to the plight of the students. Provides a good overview of the situation as well as a web site for commonly asked questions. ii. Transition Fact Sheet tone is quite factual in nature. Uses a confusing term college within a college. Mentions that housing may not be on campus and that details have not been worked out for marine science majors. Describes some of the facilities at Providence but does not sell the campus. iii. Harwich Point College Fact Sheet the general information about the college seems unnecessary. The factual presentation of net operating losses, discount rate and enrollments seems to support the assertion that the college has economic problems, however, the information on endowments and outstanding debt seems out of place the significance of this information is missing. iv. Letter from the VP for Finance this letter puts forth the argument that $200 million dollars is needed in order to turn around Harwich Point College ($100 million endowment; $ 100 million for building). At face value the argument seems logical, however, if the University only has a $40 million dollar endowment how could Harwich Point College be expected to obtain $ 100
i.
221
million? Furthermore, if you extend the argument used to move Harwich Point Colleges undergraduate programs (FTE about 1000 students) to the entire university (that you need $ 67,000 per FTE) then clearly the University should be closed given the fact that with 20,000 students attending the university (a rough figure) that an endowment of $1.34 billion dollars would be warranted. The argument put forth in the letter therefore has little validity and would raise questions as to the sincerity of the university. v. Harwich Point College AY 1999 to 2004 and New England University Cumulative Current Unrestricted Fund although it is a sign of good intentions to put his type of detailed information on the web, this information can be easily misinterpreted with readers jumping to the wrong conclusions. For example, as mentioned in question 1, given Harwich Point Colleges relatively flat revenues for the past five years, is the increasing expense of operating the college (and therefore the resultant deficit) due to resource mismanagement or just the result of labor and supply cost increases imposed by suppliers? It is suggested that more general statements about the cost of operating the college be presented on the web which then reference the above two documents. The exceptional student would have performed the above analyses and made several additional observations both in terms of the question and the resultant analysis. 1. That the material on the web is not necessarily the entire public relations program that in order to analyze this materials efficacy one would have to examine this material within the context of a broader public relations campaign. 2. That although the content of the messages as well as their presentation format is important in analyzing the effectiveness of the material, without analyzing the implementation and impact of the material on the web site on the target audiences one cannot properly deduce the materials value. You would need information from the web site that would track, for example, the number of hits on the site, the number of hits on each item on the site, recipient information (data mining of the readers cookies). You would also need to try to discern how many of those recipients learned the message content, changed or reinforced their opinions, behaved as NEU desired, repeated that behavior, and what changes might have occurred at a more macro level (social/cultural). (Cutlip, Center, and Broom, 2000) Epilog The summer of 2004 saw a flurry of articles in local and regional newspapers dealing with the transfer, several of which have misconstrued the transfer as a closing (Shutdown 101; All for the Sea: See You Later). There have also been numerous angry letters to the editor published in the local newspaper, the Harwich Point Press, denouncing the actions of the administration and the Board of Trustees. In the fall of 2004 the college hired a new director of public relations while several groups emerged to dispute the transfer (Save Harwich Points College, an alumni-driven group, and Orphans of Harwich Point College, a student-driven group). These groups held a press conference and joint protest march at Providence in November of 2004. The faculty in November cast a vote of no confidence in the administration and later that year petitioned the New York State Board of Education to investigate NEU for possible mismanagement of Harwich Point College. The University has published several press releases on the transfer and have maintained their web site in order to keep their students, staff, and faculty up-to-date. Both the Provost and the Dean of
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Academic Affairs have written to the Harwich Point Press to clarify what programs will remain and Harwich Point. References Adler, R. B. and J. M. Elmhorst (2002). Communicating at Work: Principles and Practices for Business and the Professions. 7th Edition. New York: McGraw-Hill Irwin. Armstrong, G. and P. Kotler (2003). Marketing: An Introduction. 7th Edition. Upper Saddle River, N.J.: Prentice-Hall. Brown, L. D. (1983). Managing Conflict at Organizational Interfaces. Reading, MA: AddisonWesley Publishing Company. Cutlip, S. M., A. H. Center, and G. M. Broom (2000). Effective Public Relations. 8th Edition. Upper Saddle River, N.J.: Prentice-Hall. Deitle, H. M., P. J. Deitel, and K. Steinbuhler (2001). e-Business and e-Commerce for Managers. Upper Saddle River, N. J.: Prentice-Hall, Inc. Duncan, T. (2005). Principles of Advertising & IMC. 2nd Edition. New York: McGraw-Hill Irwin. Hellriegel, D., S. E. Jackson, J. W. Slocum, Jr. (2002). Management: A Competency-Based Approach. 9th Edition. Cincinnati, Oh.: South-Western. Howell, W. S. (1982). The Empathic Communicator. Belmont, Ca.: Wadsworth Publishing Company. Isler, T. (2004). All for the sea: See you later? Harwich Point Press (Aug 26) p. A1, A12. Kanter, R. M. (1983). The Change Masters: Innovation for Productivity in the American Corporation. New York: Simon and Schuster. Kleindl, B. A. (2003). Strategic Electronic Marketing: Managing E-Business. 2nd Edition. Mason, Oh.: South-Western. Lawrence, A. T., J. Weber, and J. E. Providence (2005). Business and Society: Stakeholders, Ethics, Public Policy. 11th Edition. New York: McGraw-Hill Irwin. McLuhan, M. (1964). Understanding Media: The Extensions of Man. New York: McGraw-Hill Book Company, Inc. Marconi, J. (2004). Public Relations: The Complete Guide. Mason, Oh.: South-Western Educational Publishing. Maslen, G. (2002). Protests at university closure plan: Australia The Times Higher Education Supplement (Aug 9) 1550, p. 10.
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Mercer, J. (1995). Death throes at Upsala: College prepares for its final commencement The Chronicle of Higher Education (Apr 21) 41, p. A41-2. Nicastro, M. L. and D. C. Jones (1994). Cooperative Learning Guide for Marketing Teaching Tips for Marketing Instructors. Englewood Cliffs, N.J.: Prentice-Hall, Inc. Oblinger, D. G. and R. N. Katz (1999). Renewing Administration: Preparing Colleges and Universities for the 21st Century. Bolton, Ma.: Anker Publishing Company, Inc. Pearce, J. A. II and R. B. Robinson, Jr. (2005). Strategic Management: Formulation, Implementation, and Control. 9th Edition. New York: Irwin McGraw-Hill. Rodgers, J. E. and W. C. Adams (1994). Media Guide for Academics. Los Angeles, Ca.: Foundation for American Communications. Rothfeld, M. and O. Winslow (2004). Article title and reference deleted in order to keep the case disguise intact. Rowley, J. D. and H. Sherman (2004a). Academic Planning: The Heart and Soul of the Academic Strategic Plan. Lanham, Md.: University Press of America. Rowley, J. D. and H. Sherman (2004b). Supervision in Colleges and Universities. Lanham, Md.: University Press of America. Rowley, J. D. and H. Sherman (2001). From Strategy to Change: Implementing the Plan in Higher Education. San Francisco, Ca.: Jossey-Bass. Seitel, F. P. (2004). The Practice of Public Relations. 9th Edition. Upper Saddle River, N. J.: Prentice-Hall. Sherman, H. (1985). A model of communication processing in organizations in Bewayo et. al (eds.) Management Process and Organizational Behavior: Selected Readings. 2nd Edition. Lexington, Mass.: Ginn Custom Publishing. Strauss, J. and R. Frost (2001). E-Marketing. 2nd Edition. Upper Saddle River, N. J.: Prentice-Hall. Van Der Werf, M. (2003). From rags to rags The Chronicle of Higher Education (April 8) 49, 31, p. A36-A37, A39. Van Der Werf, M. (2002a). Many colleges may close or merge, Standard and Poor's predicts The Chronicle of Higher Education (Dec 12) 49, 16, p. A34. Van Der Werf, M. (2002b). Mount Senario's final act The Chronicle of Higher Education (June 14) 48, 40, p. A24-A27. Van Der Werf, M. (2002c). Recession and reality set in at private colleges The Chronicle of Higher Education (Mar 1) 48, 25, p. A26-A28.
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Van Der Werf, M. (2000a). Vermont's Trinity College announces plan to shut down The Chronicle of Higher Education (July 21) 46, 46, p. A28. Van Der Werf, M. (2000b). The death of a small college The Chronicle of Higher Education (May 12) 46, 36, p. A40, A42-A43. Walshe, J. (1997). Cash-back bond plan after third shutdown: Advanced Technology College, Dublin, Ireland The Times Higher Education Supplement (May 23) 1281, p. 8. http://www. definethat.com/define/?id=52, December 30, 2004. http://www.its. bldrdoc.gov/projects/devglossary/_e-mail.html, December 30, 2004. http://www.campagne.com/pdfs/ PR_planning.pdf, December 31, 2004, p. 3. http://www. definethat.com/define/?id=52, December 30, 2004. http://www.graphicarts.org/nalc/prmanual/ pr1plan.htm, December 31, 2004 http://www.usaid.gov/cg/stakeholderdef.html, January 20, 2005.
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the Journal of Behavioral and Applied Management

Institute of Behavioral and Applied Management Officers

Past Editors (affiliation at the time of Editorship)

Editor: Associate Editor: Consulting Editors: Editorial Board:

2006 Institute of Behavioral and Applied Management. All rights reserved.

2006 Institute of Behavioral and Applied Management. All rights reserved.

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.93 -.47 -.28 -.24 -.60 -.34 -.29 .32 .29

2006 Institute of Behavioral and Applied Management. All rights reserved.

-0.02* -0.02** -0.01

-0.05 0.01 0.06 -2.01** 0.41

0.03 -0.02 0.05

0.00 -0.01 0.00 0.84**

2006 Institute of Behavioral and Applied Management. All rights reserved.

2006 Institute of Behavioral and Applied Management. All rights reserved.

2006 Institute of Behavioral and Applied Management. All rights reserved.

2006 Institute of Behavioral and Applied Management. All rights reserved.

2006 Institute of Behavioral and Applied Management. All rights reserved.

2006 Institute of Behavioral and Applied Management. All rights reserved.

2006 Institute of Behavioral and Applied Management. All rights reserved.

2006 Institute of Behavioral and Applied Management. All rights reserved.

2006 Institute of Behavioral and Applied Management. All rights reserved.

2006 Institute of Behavioral and Applied Management. All rights reserved.

3. Adjusted Pay with Outliers Dropped

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2006 Institute of Behavioral and Applied Management. All rights reserved.

Attitudes Toward Fun

Experienced Fun Emotional Labor

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Dependent Variable: Job Satisfaction Model 1 Emotional Exhaustion

Beta s.e. -.46 .05

.21 Model 2 Emotional Exhaustion Emotional Labor

-5.33*** .237n.s. .21 2/112

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Emotional Exhaustion Experienced Fun Step 2 Emotional Exhaustion x Experienced Fun

High Emotional Exhaustion

2006 Institute of Behavioral and Applied Management. All rights reserved.

2006 Institute of Behavioral and Applied Management. All rights reserved.

2006 Institute of Behavioral and Applied Management. All rights reserved.

2006 Institute of Behavioral and Applied Management. All rights reserved.

2006 Institute of Behavioral and Applied Management. All rights reserved.

2006 Institute of Behavioral and Applied Management. All rights reserved.

2006 Institute of Behavioral and Applied Management. All rights reserved.

2006 Institute of Behavioral and Applied Management. All rights reserved.

2006 Institute of Behavioral and Applied Management. All rights reserved.

2006 Institute of Behavioral and Applied Management. All rights reserved.

Competence Ability Efficiency EVALUATOR Responsibility Reliability Management Resulting value

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Figure 2. The Triangular Membership Function

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Figure 3. The Trapezoidal Membership Function

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1, x a1 2 x a1 1 2 a a , a1 < x < b 1 2 1 S ( x) = 2 x a2 2 a a , b < x < a2 2 1 0, x a 2 Figure 4. S, Bell and Z Membership Functions

2b (p-b, 1/2) (p+b,1/2)

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2006 Institute of Behavioral and Applied Management. All rights reserved.

2006 Institute of Behavioral and Applied Management. All rights reserved.

Fuzzy production rules database

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2006 Institute of Behavioral and Applied Management. All rights reserved.

SU (11) = 0.61, VS (11) = 0.39, SU (9.1) = 0.71, SA (9.1) = 0.29.