1

RETHINKING OB IN AN E-WORLD

Stephen P. Robbins

San Diego State University

Paper presented via webcast

Orono, Maine
May 30, 2000
 2

Thumb through current OB books, including my own, and you find little or nothing on
the Internet and e-business. Why? Its too recent a phenomenon. In fact, this is an
excellent example of what were currently teaching in our classrooms and textbooks:
Change is occurring at an accelerated pace! Two years ago, if the Internet was discussed
in an OB course it was merely as an example of technological changes in the
workplace. The Internet was a topic that was more appropriately discussed in MIS
courses. Well this is no longer true. Business schools are rapidly adding courses in e-
business. Some are even creating entire majors on the subject. And e-commerce is
reshaping the field of marketing as we know it.
In my presentation today, I want to show how the e-world will effect OB. But
before I begin, let me qualify my remarks. There is currently a dearth of research on this
subject. What Ive done is reviewed the research that is out there and extrapolated it into
some observations and speculations. I certainly hope that by the time I sit down to begin
work on the next edition of my OB book, there will be an increasing body of substantive
research to draw on. My not-so-subtle message to doctoral students looking for a
dissertation topic or faculty seeking a new research stream: I encourage you to consider
how computers and the Internet are influencing everything from leadership to work-
family balance.

WHAT IS AN E-ORGANIZATION?
Lets begin by clarifying some concepts. Two terms that seem to cause considerable
confusion are e-commerce and e-business.(1)
The term e-commerce is becoming the standard label to describe the sales side of
electronic business. It encompasses presenting products on web sites and filling orders.
The vast majority of articles and media attention given to using the Internet in business
are directed at on-line shoppingmarketing and selling goods and services over the
Internet. When you hear about the tremendous number of people who are shopping on
the Internet; and how businesses can set up Web sites where they can sell goods, conduct
transactions, get paid, and fulfill orders, youre hearing about e-commerce. Its a
dramatic change in the way a company relates to its customers. And e-commerce is
exploding. Global e-commerce spending was $111 billion in 1999. It is expected to be
$1.3 trillion by 2003.(2) Let me note, however, that 90% of e-commerce sales that will
be things like Intel chip sales to Compaq or Goodyear sale to Ford rather than you and I
buying computers or sweaters for personal consumption.
In contrast, e-business refers to the full breadth of activities included in a
successful Internet-based enterprise. As such, e-commerce is a subset of e-business. E-
business includes developing strategies for running Internet-based companies, creating
integrated supply chains collaborating with partners to electronically coordinate design
and production, identifying a different kind of leader to run a virtual business, the
challenge of finding skilled people to build and operate intranets and Web sites, and
 3

running the back room or the administrative side. E-business includes the creation of
new markets and customers, but its also concerned with the optimum ways to combine
computers, the Web, and applications software.
An e-business uses the Internet and internal intranets to open a firms communication
channels, making it possible to integrate and share information, and allowing customers,
suppliers, staff, and others to communicate with and through the firm on a real-time basis.
Ive found it helpful to think in terms of degree of e-business involvement.
Companies like Amazon.com, E*Trade, e-Toys, VarsityBooks, and PetsMart didnt exist
ten years ago. They are totally products of the Internet revolution. Their customers never
physically walk through their stores nor do they ever meet an employee. These are
examples of total Internet firms. Their sole source of revenue is based on Internet-related
interactions.
Toys R Us, Tupperware, Merrill Lynch, and Office Depot also have Web sites
and are selling goods and services via the Internet. But the Internet operations of these
companies are, at least currently, a small part of their business. At this point, their e-
commerce operations are secondary to their traditional businesses. You can think of these
firms as being Internet enriched.
An increasingly popular application of e-business, which doesnt get much
media attention, is merely using the Internet to better manage an ongoing business. There
are literally millions of firms that arent selling anything over the Internet but they are
using ebusiness-applications to improve communications with internal and external
stakeholders and to better perform traditional business functions. For instance, General
Motors is improving its internal efficiencies and providing support to its wide-reaching
dealer network and to on-line sellers (such as AutoByTel and CarPoint) by creating a
shared and integrated network.(3) It wants to make comparison shopping easier for
consumers, create a central customer data warehouse, better link product design to
customer tastes, and eventually create an integrated network that can both manage the
building of cars and allow GM to stay in constant touch with its car buyers.
I prefer to use the terms e-organization or e-org. These terms recognize that
the electronic world isn't just applicable to business firms. Not-for-profit firms and
government also are going electronic. The IRS is dealing with taxpayers over the
Internet. Museums are selling items on their Web sites. State governments are using the
Internet for everything from purchasing supplies to renewing drivers licenses. City
governments are networking their computers to suppliers and shortening their supply
chain.
In the same way that we recognize that OB concepts relate to all organizations,
not just business firms, my reference to the e-organization is similarly noted.

WHATS UNIQUE ABOUT E-ORGANIZATIONS?

Before we can talk about e-organizations and how theyre likely to influence OB issues,
we need to note whats unique about e-organizations. If theyre not distinct from more
traditional organizations, then there is nothing unique to consider. But I think there are
some unique things here. Let me briefly mention a half-dozen of the new rules of e-
business and e-commerce.
 4

1. There are no generally accepted rules. There are no proven e-business

models or strategic plans. What worked in March may need to be scrapped
in May. E-business is in its infancy and players are being forced to
experiment.
2. Advantage goes to first-movers. In e-commerce, the early bird gets the
worm. The economics of e-commerce are such that a small, early edge in a
market can provide a significant long-term advantage. The Internet creates
huge advantages for the No. 1 player in a market.
3. Victory goes to the quick. Fast is no longer fast enough. The big used to eat
the small. In the e-world, the fast eat the slow. Competition is forcing
organizations to make decisions quickly, develop new products and services
in record time, move into markets fast, and be able to respond to competitive
actions immediately. The old saw Ready, Aim, Fire has been replaced by
Fire, Ready, Aim.
4. Prices are under constant pressure. The lower cost structure of Internet-
based companies allows them to price their products lower than traditional
businesses. And the Internet makes comparison shopping a snap (on
shopping-comparison sites PriceScan.com and MySimon.com). The
Internet squeezes out excess profits that historically could be earned because
customers didnt have the time or information to find the lowest-cost seller.
This applies to retailers, too, who now have to price their goods
competitively or lose the business.
5. Location doesnt matter. In the past, the people you hired, the suppliers you
used, and the customers you serviced were largely defined by your
geographic location. For instance, you hired from the labor pool in your
community or tried to entice prospective employees to move from where
they lived to where your business is located. Now employers in remote
locations have access to the best and brightest. And talented people no
longer have to move their residence to pursue job opportunities in far-away
places.
6. Integrated information is everything. Intranets and the Internet have
changed the whole way information moves inside organizations. Open and
integrated information systems are bypassing traditional organizational
hierarchies; making it easy for employees and managers alike to track
projects; democratizing internal decision making; and linking firms to their
suppliers, partners, and customers.

In addition to these half-dozen differences, I also want to propose what I

call the e-organization paradox. E-orgs are unique in that they promote two
opposing processes at the same time. They increase employee isolation while
also building community. As Ill elaborate on later, the Internet creates social
isolation. And this has some serious implications for work behavior. But as a
number of experts on information and work design have argued, the Internet
creates communities by bringing like-minded individuals together. (4) It
restructures social networks by breaking down organizational and geographical
barriers. It allows employees to easily collaborate with others in their own
 5

organization and outside. For instance, the recent decisions by Ford Motor Co.
and Delta Air Lines to provide all their employees with computers and Internet
access for a nominal fee will increase employees ability to communicate with
each other, facilitate a feeling of community, and make it easier for management
to communicate with workers. Of course, it will also make it easier for
employees to share grievances and collectively band together against
management!

IMPLICATIONS FOR EMPLOYEES

What are the implications of e-organizations on employees? In a moment, Ill
go through a number of OB topics and offer some ideas. But a couple of
general patterns are evolving. The uncertainty surrounding viable business
models and the pressures to react quickly creates high levels of anxiety and
stress for employees. And this climate of rapid change has led employers to
seek flexibility. In order to keep staff levels low, theyre asking their permanent
employees to put in extraordinarily long hours. And theyre increasingly
relying on contingent workers to avoid making long-term commitments.
If you want a picture of what most e-organizations are like, from the
employees side, get a copy of Netslaves. (5) The authors destroy the myth that
everyone in Internet-based firms is getting rich. Quite the contrary. Very few
are getting rich. Thats limited to a couple thousand entrepreneurs and the lucky
few who are among the first dozen employees hired at companies like Yahoo! or
eBay. The authors of NetSlaves show that most of the millions of workers in e-
organizations are slaving away in electronic sweatshopsworking long hours,
with high pressure, and little job security.

E-ORGANIZATIONS AND OB ISSUES

OK, lets get specific. How are these new e-organizations going to effect OB
issues like leadership, motivation, and communication?

E-LEADERSHIP
Is leadership in an e-organization different than in a traditional organization? E-
business executives whove worked in both think there is. They tend to focus
on four differences: the speed at which they have to make decisions, the vision
of the future, the importance of maintaining flexibility, and the ability to master
high expectations.

MAKING DECISIONS FAST

Managers in all organizations never have all the data they want when making
decisions. But the problem is much worse in e-organizations. The world is
moving fast and the competition is intense. Meg Whitman, the president and
CEO at eBay says, Were growing at 40 percent to 50 percent per quarter. That
pace absolutely changes the leadership challenge: Every three months we
become a different company. In one year we went from 30 employees to 140,
and from 100,000 registered users to 2.2 million. At Hasbro [where she had
previously been an executive], we would set a yearlong strategy, and then we
 6

would simply execute against it. At eBay, we constantly revisit the strategy
and revise the tactics.(6)
Leaders in e-orgs see themselves as sprinters and their contemporaries in
offline businesses as long-distance runners. They frequently inject the term
Internet time a reference to a rapidly speeded up working environment.
Every [e-business] leader today has to unlearn one lesson that was drilled into
each of them: You gather data so that you can make considered decisions. You
cant do that on Internet time.(7)

FOCUSING ON THE VISION

The founder of PriceLine.com says, Forget about todays problems: Youve got
to focus constantly on the next generation of problems.(8) This requires
visionary leadership and a deep understanding of how technology is going to
change the leaders business. The best leaders carry a mental map of the
industry, of opportunities, and of discontinuitiesand they check that map
constantly.(9)
Visionary leadership is undoubtedly important in every business. But in a
hyperkinetic environment, people require more of their leaders. The rules,
policies, and regulations that characterize more traditional business firms
provide direction and reduce uncertainty for employees. Such formalized
guidelines dont typically exist in e-orgs, and it falls back upon e-leaders to
provide direction through their vision.

MAINTAINING FLEXIBILITY
E-leaders need high flexibility. They have to be able to roll with the ups and
downs. They need to be able to redirect their organizations when they find that
something doesnt work. They have to encourage experimentation. Mark
Cuban, cofounder of Broadcast.com, amplifies on this point: When we started,
we thought advertising would be the core of our business. We were wrong. We
thought that the way to define our network was to distribute servers all over the
country. We were wrong. Weve had to recalibrate again and again and well
have to keep doing it in the future.(10)

MASTERING HIGH EXPECTATIONS

Finally, e-leaders live in a world of high expectations. Investors in dot-com
firms, particularly, expect rapid growth. And once an e-business has gone
public, incredibly high market valuations put tremendous pressure in leaders to
deliver. Those towering market caps are built on foundations not of reality but
of expectations, so a mere change in Wall Street psychology could annihilate a
companys value. All CEOs have to master the expectations game, but e-CEOs
have less to work with and more at stake.(11)

E-STRUCTURE
Traditional authority hierarchies and departments have little place in e-
organizations. The dominant structure is strongly shaped by massive enterprise-
wide information systems.
 7

Forget contingency theory. E-organizations rely exclusively on organic

structures. They need high vertical, horizontal, and lateral communication,
cross-hierarchical and functional teams, and low formalization to achieve
flexibility and openness. E-organiztions are team-based structures designed
around projects.
What does this mean for employees? People who need the structure and
predictability provided by job descriptions, rules, procedures, and readily
available supervisors wont last in e-orgs. These organizations require
employees with a high degree of ambiguity tolerance, who thrive in chaos, and
possess strong team skills.

DECISION MAKING
Our traditional take on decision making needs to be modified for e-
organizations. Exactly what those modifications should be, Im not sure. But
let me offer two projections.
First, individual decision-making models are likely to become increasingly
obsolete. E-organizations are team-based communities. Group decision-
making models will offer greater relevance.
Second, the thoughtful, analytical models of decision making which
dominate the strategic management literature will be replaced by action
models. There are no proven business models for e-organizations. Success goes
to firms that value experimentation those that utilize trial and error, are able to
gather data quickly and assimilate it, and who accept failure and learn from it.
E-organizations dont have the luxury of trying to fine-tune decisions in
search of perfection. E-organizations make decisions with often very limited
information and, as a result, dont fear making mistakes. Decisions in e-
organizations are in continual flux, with past choices being continually modified
and even discarded. And routine decision programs are essentially useless
because few of the decisions that need to be made have been encountered
before. So not only do decisions in e-orgs need to be made fast, they have to be
based on little previous experience. This, of course, increases the probability of
errors and the need to be able to recover fast from mistakes and move on.

EMPLOYEE SELECTION
Alan Naumann, head of Calico Technologies, expresses a view widely held by
e-business executives: Despite all our focus on speed, we consciously slow
down for one thing: hiring peopleIts the one aspect of business today in
which the cost of mistakes is greater than the advantage of acting in real
time.(12)
Recruiting good people is particularly challenging in e-orgs. They require
a unique brand of people. They have to be smart and able to survive in the
demanding cultures of e-business firms. In addition, those people who
understand e-business are in short supply and can go wherever they like.
Finally, rapid growth converts into a need for lots of hiring. So the supply of
quality applicants is limited.
 8

Its not irrelevant that venture capitalists place the greatest importance,
when deciding whether or not to invest in a new Internet-based company, on the
people in the firm. Given the choice between an A+ team with a B- idea and an
A+ idea with a B- team, venture capitalists choose the former every time.(13)
They bet on the ability of a smart team of people to adjust the idea as needed.
In response, most e-business firms take an aggressive approach to
recruitment. They involve senior executives more than traditional businesses
and actively search out qualified applicants. For instance, Jeff Bezo, founder
and CEO at Amazon.com, spends a lot of his time recruiting and says he puts it
near the top of his priority list.(14) E-commerce software maker Interwoven
lures new software-engineers to its Sunnyvale, California offices with BMW
Z3s. The firm pays for a two-year lease and auto insurance.(15) Austin, Texas-
based pcOrder considered hiring so critical that it moved some of its best
marketers into recruiting. The firm recently blitzed Austin with paid
advertisements, events, and direct mail. They created a turn in your friend
campaign and rewarded employees with $5,000 finders fee and a chance to win
a Porsche if they hired their friend. The program resulted in pcOrder adding
more than 30 new people.(16)
Once applicants have been identified, e-orgs need to carefully screen final
candidates to insure they fit well into the organizations culture. E-orgs tend to
have common cultural characteristics: an informal workplace, team spirit,
intense pressures to complete projects quickly and on time, and a 24-7 (24 hours
a day, 7 days a week) work mentality. Selection tools such as tests, interviews,
and references need to select out people that arent team players and cant
handle ambiguity and stress.

SOCIALIZATION
Once hired, new employees need to be socialized into the e-business. This
transition for new employees provides a challenge because they tend to be
young, with limited work experience and little understanding of how the
business operates. And the problem isnt that much different when hiring
middle and upper-level managers. Even though they may be seasoned with
more business experience, they often come from more traditional companies
and take a while to adapt to the e-business environment.
To help new employees adjust, Pinnacle decision Systems relies heavily
on its employee Web site, dubbed HQ.(17) Before reporting to work, new
hires receive HQs Web address. In the comfort of their homes they can read up
on Pinnacless policies and procedures, review the companys structure, and
even order business cards and nameplates. They can also visit the virtual
lounge and meet some of their new work colleagues. Management has found
that this site helps people better assimilate into the firm and facilitates
communication in a company where the number of new employees is growing
at 40 percent a year.

RETENTION AND MOTIVATION

 9

Once hired, e-businesses face the task of keeping qualified employees. As

previously noted, this is a challenge because demand is high for these people.
They have lots of attractive options. Other employers are likely to be
aggressively trying to steal them. Moreover, turnover is particularly damaging
to e-business firms because they rely heavily on teams. Teams are more
effective when theyre made up of people who have experience working with
each other.
The potential for perceived inequities is very high among employees in
Internet-based organizations. To acquire some employees with scarce talents
particularly software designers and engineers firms have to offer signing
bonuses, stock options, and high salaries. Other employees get far less special
treatment. This creates the potential for demotivating those who feel theyre
being inequitably treated.
I also want to mention potential motivation problems caused by inter-firm
comparisons. How do you feel when you see people with similar experience,
age, and qualifications making $30 million in an IPO while you make $50,000?
It creates a wanderlust mentality among some employees always chasing the
next wealth-creating opportunity. It can create an angry workforce that feels
under-rewarded. And remember to consider relative rewards, not only absolute
ones. For many dot-com employees, its no longer the desire to have enough
money to upgrade air flights from economy to first-class. Now its envy of those
who have their own private jets.
So what can e-orgs do to motivate employees and minimize turnover?
Provide challenging projects for employees to work on; give people the freedom
to make decisions; provide the support to help teams succeed; offer attractive
compensation plans that reward loyalty; and provide lifestyle options like
flextime, telecommuting, fitness centers, and day care.

COMMUNICATION
E-organizations are rewriting the rules of communication. Because they are
designed around comprehensive enterprise-wide information systems,
traditional hierarchical levels no longer constrain communication. E-
organizations allow, even encourage, individuals to communicate directly
without going through channels. Employees can communicate instantly
anytime, with anyone, anywhere. These open communication systems break
down historical status hierarchies. They make obsolete or revise interpersonal
communication concepts such as distinction between formal and informal
networks, nonverbal communication, and filtering. They also redefine how
activities such as meetings, negotiations, supervision, and water cooler talk
are conducted. For instance, Virtual meetings allow people in geographically
dispersed locations to meet regularly. And its now easier for employees in San
Francisco and Singapore to covertly share company gossip than those off-line
employees who work two cubicles apart.
The downside of this open communication network is communication
overload. A recent poll found that the average U.S. worker receives five phone
calls, 36 e-mails, 18 pieces of mail, and 18 in-house memos daily. (18) He or
 10

she also reads 13 Post-it messages, 14 faxes, and listens to 23 voicemail or cell
phone messages. These frequent incoming communication interruptions cost
workers valuable time and are likely to erode their ability to concentrate.

BUILDING TRUST
People in organizations need to have positive expectations that others will not
act opportunistically and take advantage of them. That is, they need to be able
to trust.
But if trust is important in traditional organizations, its even more so in e-
organizations. Why? Studies indicate that the importance of trust increases
under conditions of change and instability.(19) And those are terms that
characterize e-organizations. When rules, policies, norms, and traditional
practices are in flux or absent, people turn to personal relationships for
guidance. And the quality of these relationships are largely determined by level
of trust.
OB has only recently discovered trust as a major topic of research interest.
It will become more so as we try to ascertain answers to questions such as: How
do people build trust with individuals theyve never met? How do temporary
teams build trust? Do trust-building processes differ between permanent and
contact employees or between intraorganizational teams? And what kinds of
behaviors are likely to increase customer trust in an organizations employees?

LEGITIMIZING OF EMOTIONS
The topic of emotions is a relatively new addition to the core content of OB. As
I note in the latest edition of my OB book (20), emotions were essentially
overlooked within the field of OB because of the myth of rationality and the
belief that emotions of any kind at work are disruptive. Essentially,
organizations were viewed as vehicles for rational action. And emotions had no
place in this idealized rational world. Of course this was nave. Emotions are
part of organizational life. People dont leave their emotions in the parking lot
when they come to work!
Is an understanding of emotions any more important in e-organizations
than traditional organizations? It just might be.(21) E-organizations allow
people to work together from separate places at separate times. This creates
social isolation. Additionally, e-organizations are characterized by rapid change
and instability. These conditions foster a need among employees for community
and strong emotional bonds. People need to be able to openly share feelings
and vent frustrations with colleagues. So while traditional organizations might
function more effectively by encouraging employees to keep their emotions
bottled up, e-organizations may be more productive when employees feel free to
openly express their emotions.

SEXUAL HARASSMENT AND OTHER FORMS OF ABUSE

Internet-based organizations must address the potential for harassment, bias,
discrimination, and offensive sexual behavior from Internet and e-mail abuses.
(22) There is increasing evidence that many employees fail to use the same
 11

constraints in electronic communications that they use in traditional work

settings. As one attorney noted, employees and managers all know they cant
hang up a penthouse calendar in the workplace. They all know that they cant
make a racist or sexist joke in the workplace.(23) But those same people may
think its OK to send racial or sexist jokes via e-mail usage, and specifies
disciplinary actions for transgressions.

WORK DESIGN
The Internet, as part of the larger vision of communication networks, is helping
to reshape the work place and redesign jobs. It is making telecommuting easier.
Its allowing millions of workers to become free agent consultants who work
on virtual projects without ever setting foot in a firms physical facility. Its also
making it simple for teams of workers to communicate without physically being
in the same room. But these are all the positive things youve been reading
about for the past few years. Lets touch on the darker side of how e-
organizations are going to effect work design. Specifically, the long and brutal
hours of work, the effect of Internet access as an employee time waster, and the
physical liabilities associated with working long-term on a computer.
Weve already mentioned the long hours that the typical e-organization
demands from its employees. While some employees thrive on working 12-
hour days or six and seven day weeks, a lot dont! For such people, these all-
consuming work schedules take their toll. Employees are tired, anxiety-ridden,
and stresses. This can undermine employee health and productivity, and
eventually lead to burnout. Retention levels are also certain to suffer.
Additionally, many employees whose computers have access to the
Internet are using this access to squander work time. Theyre surfing the
Internet, chatting with friends, schmoozing in chat rooms, managing their stock
portfolios, and other behaviors that undermine productivity. For instance,
studies indicate that the average worker with Internet access spends 90 minutes
a day surfing the Internet.
Employees who spend day-in and day-out sitting in front of a computer
are susceptible to a number of negative outcomes. (24) For instance, computer
users who sit too far from their monitors risk fatigue and eye strain. And carpal
tunnel syndrome a common disorder causing pain in the hand, wrist and lower
arm is a major cause of missed workdays. The Bureau of Labor Statistics
reports that 42 percent of CTS cases require more than 30 days away from
work.(25)

WORK-FAMILY BALANCE
Theres a well-known story that circulates at Microsoft. It was 8 in the evening
when a young programmer, who was walking down a hall, ran into Bill Gates.
Gates asked him where he was going. The young man said, Time to go home.
Ive been here for 12 hours straight. To which gates replied, Oh, only
working a half day?
An increasing number of employees are putting in 12 hour days. And
working 6 and 7 days a week. High-tech companies, especially Internet-based
 12

firms, are developing workaholic cultures. Some of this is voluntary

employees who find their jobs interesting and challenging, and cant get enough
work. But firms are increasingly expecting people to work longer hours. Add
in the ability of technology to blur the lines separating work and home plus the
dramatic increase in two-career couples, and you have the ingredients for a
potential crisis.
People are increasingly finding that work is squeezing out personal lives.
And many are questioning this lifestyle. Balancing work life and personal life
is likely to be one of the most important issues of the next decade. Recent
articles with titles like How Much Is Enough? 9 to 5 Isnt Working
Anymore, A Living or a Life? and What Job Candidates Really Want to
Know: Will I have a Life? -- attest to this crisis. And a recent survey of more
than 2000 college students and recent graduates further confirms the relevance
of this issue.(26) When asked what they value most in their career decision, 42
percent chose balancing work and personal life, while only 26 and 23 percent
selected compensation and advancement potential, respectively.
Employers are aware of the problem. Family-friendly benefits such as
flexible work hours and on-site day-care facilities are attempts by organizations
to help their employees better cope with the demands from their personal life.
But a lot more needs to be done. I envision employers taking an increased role
in helping people understand the need to make trade-offs. As good people leave
or burn-out, its in the employers self-interest to help their employees cope.

ETHICS AND PRIVACY

Electronic surveillance of employees by employers is an issue that puts an
organizations desire for control against an employees right to privacy.
Increasingly sophisticated surveillance software only adds to the ethical
dilemma of how far a firm should go in monitoring the behavior of employees
who do their work on computers.(27)
For instance, the Web-activity of every one of Xeroxs 92,0000 employees
in countries around the world is routinely monitored by the company. In
October 1999, Xerox fired 40 of its employees because they were caught in the
act of surfing to forbidden Web sites. The companys monitoring software
recorded the unauthorized visits to shopping and pornography sites, and every
minute they had spent at those sites.(28)
Is Xerox unique? No. The American Management Association reports
that in 1999, at least 45 percent of employers monitored their employees phone
calls, computer files, or e-mail messages.(29) Employers argue that they need
surveillance controls. These controls allow them to make sure employees are
working and not goofing off; that employees are distributing organization
secrets; and to protect the organization against employees who might create a
hostile environment for women or members of minority groups.
This dilemma is exasperated by the blurring of workplace parameters.
There seems to be little dispute that employers have the right to monitor
employees at work, when using the organizations equipment, and when
employees know they are being watched. But a home life and work life are
 13

increasingly intermingled, the ethics and legality of surveillance is less clear.

Can an organization build a climate of trust with its employees if it relies
heavily on surveillance software to monitor their every keystroke?

POLITICS AND NETWORKING

OB recognizes the political nature of organizations, the role that politics play in
decision making, and the importance of networking in developing contacts both
within and outside the organization. Early indications suggest that effective
politicking and networking are different in e-organizations than in the more
traditional on-line firm.
In traditional organizations, effective politicians keep themselves visible,
utilize impression management techniques, and participate in activities that will
put them in close contact with influential people. But these are essentially face-
to-face activities, which arent as likely to work in e-organizations. E-
politicians are likely to rely much more on cyber-schmoozing.(30) Internet chat
rooms and message boards, for instance, open opportunities to meet and talk
with people who can help employees be more effective in their job and their
career.
Cyber-schmoozing isnt likely to replace the water cooler, cocktail party,
college alumni get-togethers, or trade shows as a place to make contacts and
build political allies. But on-line networking will become increasingly popular
and effective as a supplement to more traditional political channels.

THE FUTURE: THE DEMISE OF INTERPERSONAL SKILLS?

Earlier in this paper I mentioned the e-org paradox: they require community but
create isolation. Ive frequently mentioned the community dimension. But I
havent said much about how e-organizations isolate people. I am going to
conclude this paper by arguing that the Internet is cutting people off from social
contact; that this phenomenon is occurring even in young children; and that this
is a harbinger for a potential crisis in organizations. Specifically, we may be
setting the stage for entire generations of future employees who seriously lack
the interpersonal skills necessary to effectively work with others.
Im fearful that todays young people, who will grow up online, will enter
the workforce interpersonally challenged. Let me highlight some of the
evidence that scares me.
We know that the Internet usage is exploding. The U.S. online population
in 1999 was 111 million or 40.6 percent.(31) Only Sweden and Canada had
higher usage rates. And young people are actively using the Net. In 1996, 2.8
million U.S. teenagers were Internet users. In 1999, the number was 11.0
million. The projected figure for 2003 is 17.8 million.
Meanwhile, the time people spend on the Internet has been increasing. In
1997, the mean time people spent online was 4.4 hours. In 1999, it was 7.6
hours. This year its predicted to be 8.2 hours.(32) Young people have similar
numbers. The average time that kids and teen, aged 5 to 17, spend Web surfing
per week is 5 to 7 hours.(33)
 14

My fears were recently supported in a survey conducted by Stanford

Universitys Institute for the Quantitative Study of Society.(34) That survey
found that the more time people spend online, the less time they spend in real-
life relationships with friends and family. One of the studys co-authors
expressed concern that the Internet could become the ultimate isolating
technology, promoting individual behavior over community involvement.
Is it possible to build interpersonal relationships over the Internet? Yes,
but such relationships are clearly limited in their depth and richness. The other
co-author of the Stanford study said, after looking at the data, that there is no
evidence that virtual communities are a substitute for traditional human
relationships.(35)
If todays young people spend an increasing amount of their time on line,
at the expense of real-life social interaction, does it take time away from
learning interpersonal skills? I think so. It might well be that these skills can be
learned quickly; or young people may reach a threshold point early, at which
time new experiences add little or no additional interpersonal skill
competencies. But if these skills take considerable time to develop and I think
they do then loss of this experience by children and teenagers will mean that
theyll be deficient in interpersonal skills when they arrive at college. (My
worst case scenario: A child who lives in a rural or isolated residential location;
is cared for by parents or family during pre-school, thus experiencing no group
day care; who is then home schooled; and finally earns his or her college degree
through an online, distance-learning program!) I think were setting in place the
possibility for serious interpersonal-skill deficiencies in employees of the future.
I see a significant challenge here for business schools. They have to
address the question, for instance, of whether they can train people to manage
who havent developed basic interpersonal skills such as reading nonverbal
cues, sensitivity to others, patience, listening, sharing, and cooperation, team
play, trust, leadership, and social adaptability? Twelve years ago, the Porter-
McKibbin study reported that employers found business graduates most
deficient with regards to interpersonal skills.(36) Todays business students
have been raised on computers. Theyve been playing computer games for a
decade and surfing the Internet for several years or more. If employers were
critical of their new employees interpersonal skills a dozen years ago, theyre
going to be devastated by future applicants who believe interpersonal
relationships are conducted in chat rooms and romantic interests are found at
matchmaker.com.

In conclusion, I suggest theres a potential crisis breeding here. Unless

we, as management educators, rapidly increase the interpersonal skillbuilding
element in our business programs, we could soon be turning out millions of
interpersonally-handicapped graduates who are incapable of working in
tomorrows workplace especially e-organizations, which are highly team-
oriented and rely heavily on collaboration to be effective.
 15

QUESTIONS FOR DISCUSSION

1. What additional activities are included I an e-business that are not

included in e-commerce.

2. What explains the first-movers advantage in e-commerce? Why is it

any more of an advantage than would exist in a traditional off-line
business?

3.Explain why the Internet tends to squeeze out excess profits? If this is
true, why are stocks of so many publicly-held e-commerce firms selling at
such high prices?

4. How do you reconcile the view of e-organizations employees as net

slaves against the media depiction of young people becoming fabulously
wealthy?

5. Contrast the type of leader that will succeed in companies like

broadcast.com or AOL with his or her peer at Merck or General Electric.

6.Youve recently started a new e-commerce firm. Where will you find
staff? Once hired, how will you motivate them?

7.What responsibility, if any, does an e-organization have to help

employees with their career development?

8. Is loyalty to an employer important among e-org employees? Explain.

9. What can management do, beyond having a clearly stated policy, to

reduce sexual harassment in an e-org?

10. Are the politics in an e-org different than in an off-line organization?

Explain.

11.How do you think most people learn interpersonal skills?

12. What, if anything, can colleges do to improve the interpersonal skills

of their graduates?

REFERENCES

1. See, for instance, J.L. Hawkins, Whats E-Business? e-Business

Advisor, January 1999, p.60; and From e-Commerce to e-Business,
Fortune, August 16,1999, pp. 137-139.
 16

2. Cited in The Industry Standard, September 20, 1999, p.208.

3. J. Teresko, Remaking the Auto-Makers, Industry Week, October 4,
1999, pp. 41-44
4. See, for example, C. Grantham, The Future of Work (New York:
McGraw Hill, 2000)
5. B. Lessard and S. Baldwin, NetSlaves: True Tales of Working the Web
(New York: McGraw Hill, 2000).
6. P. Labarre, Leaders.com, Fast Company, June 1999, p.96.
7. Ibid., p.104
8. Ibid., p.100
9. Ibid., p.104
10. Ibid., p.100
11. G. Colvin, How to be a Great e-CEO, Fortune, May 24, 1999, p.106.
12. Cited in P. Labarre, Leaders.com, p.102
13. A. Tjan, This Months Challenge: Recruiting Talent, Red Herring,
February 2000, p.64.
14. G.Colvin, How to be a Great e-CEO, p.109
15. E. Iwata, Staff-Hungry Tech Firms Cast Exotic Lures, USA TODAY,
February 1, 2000, p. 1B.
16. P.Labarre, Leaders.com, p.102
17. Personal Best, INC. Technology, No. 4 1999, pp. 94-96
18. Cited in Communication Inflation Affecting Worker Performance,
Manpower Argus, March 2000, p.7.
19. See, for instance, D. Krackhardt and R. Stern, Informal Networks and
Organizational Crisis: An Experimental Stimulation, Social
Psychology Quarterly, June 1988, pp. 123-40.
20. S.P. Robbins, Organizational Behavior, 9th ed. (Upper Saddle River,
NJ: Prentice Hall, 2001), p.103.
21. C. Grantham, The Future of Work, pp. 82-84
22. M.A. Verespej, Inappropriate Internet Surfing, Industry Week,
February 7, 2000, pp. 59-64
23. Ibid., p.59
24. See, for instance, E. Witchel, A Painful Debate for the Year 2000,
The Industry Standard, February 14, 2000, p.47.
25. Ibid.
26. Students Place High Values on Work/Life Issues, HRMagazine,
March 2000, p.30.
27. See, for instance, M.J. McCarthy, You Assumed Erase Wiped Out
That Rant Against the Boss? Nope, Wall Street Journal, March 7,
2000, p.A1
28. L.Guernsey, The Web: New Ticket to a Pink Slip, New York Times,
December 16, 1999, p. D1+.
29. Ibid.
30. Chat-O-Matic, Working Women, March 2000, pp. 84-85.
31. Computer Industry Almanac, Central Intelligence Agency.
 17

32. Cited in The Industry Standard, January 24, 2000, p.252; and R.
Wright, Will We Ever Log Off? Time, February 21,2000, p.56.
33. Cited in Red Herring, December 1999, p.37
34. Reported in J. Markoff, A Newer, Lonelier Crowd Emerges in
Internet Study, New York Times, February 16, 2000, p.A1.
35. Ibid., p.A15
36. L.W. Porter and L.E. McKibbon, Future of Management Education
and Development: Drift or thrust into the 21st Century? (New York:
McGraw Hill, 1988)