Dysfunctional Behavior in Organisations: Can HRD reduce the impact of dysfunctional

organizational behavior – A Review and Conceptual Model

Keywords: DYSFUNCTIONAL ORGANIZATIONAL BEHAVIOR, S/HRD, MULTI-LEVEL

ANALYSIS

Clíodhna MacKenzie, University of Limerick

Thomas N. Garavan, University of Limerick

Ronan Carbery, University of Limerick

Abstract

This article provides a review of the literature on dysfunctional organizational behavior

and its relationship with human resource development (HRD) interventions. This paper will

firstly, define dysfunctional organizational behavior, secondly, describe environmental factors

argued to influence dysfunctional organizational behavior and finally provide insight on the

negative impact of dysfunctional organizational behavior at an individual, organization and

societal level. Applying the current financial crisis as the context of this paper, we argue that

dysfunctional organizational behavior has the capacity to negatively affect not just the stability of

the firm but society and the larger economic community. In this paper we propose a re-

conceptualization of the HRD framework through a dysfunctional behavior lens using a multi-

level analysis (individual, organizational and societal) and argue that dysfunctional behavior has

the potential for significantly negative societal impact that HRD academics and practitioners will

need to address in a new economic landscape. We conclude that HRD may not be able to fully

prevent dysfunctional organizational behavior; however, through thoroughly understanding

antecedents that influence dysfunctional behavior the capacity exists to reduce the potential for

dysfunctional behavior and minimize the impact at an individual, organization, institutional and

societal level. Finally, we propose a new organizational governance and agency mediation control

role in the new post economic landscape. The creation of this role may be the difference between

history repeating itself and HRD becoming a credible organizational partner, not just to the

business but to society.

Analysis of the global economic crisis that has adversely affected almost every country in

the world illustrates the societal impact of organizational behavior that was neither safe nor sound

(Honohan 2010). In terms of impact felt at a societal level, the International Monetary Fund

(IMF) estimated that banking losses in Ireland [2010] alone may be as high as €35 billion with a

contraction of 14 per cent of Ireland‟s GDP (Mody 2009), that figure revised to €73 billion

(Oliver 2010; Barrett et al. 2010) in order to ensure the survival of the Irish banking system and

solvency of the country. The US bank bailout is expected to exceed US$11 trillion with US$3

trillion already committed (Goldman 2009), the knock-on effect on the US economy is the worst

since the Great Depression in the 1930‟s. Andrew Haldane of the Bank of England estimates the

global loss of economic output from the financial crisis may be as high as US$200 trillion

(Hannon 2010). An ex-post analysis points to a number of causes for the international financial &

banking failure: regulatory enforcement not equipped to deal with complexity of the market;

socially harmful risk-taking behavior (Honohan 2009); failure of governance, knowledge and

cognition (Power 2009); and macroeconomic policy ill-equipped to deal with innovation and

systemic risk in the financial system (Blanchard, Caruana, and Moghadam 2009). The agreed

consensus within the financial community is that the systemic, or “macro-prudential”

interconnectedness (Federal Reserve System 2010) of the global financial & banking system was

improperly regulated and as a result of this “light touch” regulation, excessively-risky investment

strategies in terms of securitized products, sub-prime mortgage exposure, commercial property

investment strategies coupled with and historically low interest rates and access to a cheap money

supply culminated in events over the past 24 months.

There are lessons to be learned in terms of ensuring organizations have sufficiently robust

risk-management & assessment apparatus in place to mitigate the risk of a repeat of the current

financial crisis; however, a more thorough understanding of the dysfunctional dimensions of

organizational behavior is an imperative for organizations and more crucially, for HRD.

Contemporary organizations are a complex and multi-dimensional construct in which members

share an organizational identity, broadly defined as a process of interaction between

organizational members and senior management that serves to affirm who or what the

organization is and the individuals’ self-identification (Chreim 2002; Cornelissen, Haslam, and

Balmer 2007; Hatch and Schultz 2002; Herrbach 2006) that is influenced by the organization’s

social construct of values, norms and beliefs – its culture (Denison and Mishra 1995; Hatch 1993;

Schein 2004; Zheng, Qu, and Yang 2009). Hatch and Schultz (2002) argued that “knowing how

organizational identity dynamics works helps organizations to avoid organizational dysfunction”

(p.1014) with Zheng et al., (2009) positing that organizational culture exerts its influence through

“shaping the behavior” of its members (p.3). These arguments are quite salient if it is

contextualized in terms of the international financial crisis that has impacted societies across the

globe.

The concept of dysfunctional organizational behavior is not a contemporary phenomenon,

it has been examined and analysed from multiple perspectives over the past decade (see

Balthazard, Cooke, and Potter 2006; Bennett and Robinson 2000; Dellaportas, Cooper, and

Braica 2007; Duffy, Ganster et al. 2006; Kets de Vries and Miller 1984; Lawrence and Robinson

2007). Whilst the capacity for dysfunctional behavior among individuals/teams or within

organizations is a concern for most senior management teams, the institutional / community /

societal impact of the behavior has far wider reaching consequences. The Enron collapse is

perhaps the most cited and easily recognizable in terms of organizational failure as a result of

dysfunctional behavior. In the case of Enron, both agency issues and unethical / corrupt business

practices were linked to the collapse of the company cited six times in Fortune magazine as

“innovative company of the year” (Stein 2007). Levine (2005) provides insight into how

unethical and corrupt behavior was viewed by one of the executives at Enron, stating they viewed

“rules differently than other people” (p.727), this acceptance of rule bending became an

organizational norm, embedding in the organizational orthodoxy whereby organizational

members derived a certain pride in “getting around the rules”. Enron is a classic example of

dysfunctional behavior that led to the collapse of an organization; however, it is also perhaps a

very good example of how social contagion can spread from individual to team and become

deleterious to organizational performance, development and survival. Mid-level managers,

traders and professionals comprised the core of Enron (Werther 2003) and proclaimed themselves

to be the smartest guys in the room. Kets der Vries and Miller (1984) provided some insight on

organizational neuroticism that reflects the inner workings of Enron, they argued “….the

prevailing neurotic style can give rise to shared fantasies and permeate all levels of the

organization” (p.22). In the aftermath of the Enron collapse the public outcry for more stringent

and robustly enforced regulations led to the creation of The Sarbanes-Oxley Act (2002), a risk-

aversion intervention aimed at ensuring no repeat of the Enron story – recent events illustrate that

symptomatic responses are limited in their effect.

Regulations, rules and societal norms do not insure against dysfunctional organizational

behavior that has the capacity for institutional / societal reach, indeed as Werther (2003) argued,

in light of organizational failure, perhaps it is time to “supplement legal and regulatory rules with

insights from organization theory and research” (p.571). There is a significant opportunity for

HRD to contribute to the management of dysfunctional organizational behavior by examining the

antecedents, influences, motivational dimensions and impact at individuals, organization,

institutional and societal levels. It is unlikely that HRD interventions will remove dysfunctional

behavior from the organization; however, it can potentially reduce the risk of dysfunctional

organizational behavior occurring and minimize the impact at an individual, organization and

institutional level and negative outcome at a societal level when it does occur. The global effect

of the financial & banking crisis provides a rare opportunity of HRD scholars and practitioners to

address the crisis by focusing on the four primary practice areas of HRD: Organizational

Development (OD), Career Development, Learning and Development (L&D) and Performance

Management (Garavan 2007; Peterson 2008; Ulrich and Brockbank 2005) in pursuit of

developing new theories that result in a more robust application of HRD interventions aimed at

minimizing dysfunctional organizational behavior. The development of an organizational level

governance role that will augment the four key practice areas of HRD in ensuring socially

responsible behavior is the organizational rule rather than exception.

The purpose of this paper is to examine how SHRD can minimize the impact of

antecedents that have the capacity to influence, motivate and facilitate dysfunctional

organizational behaviour. Whilst the literature on both SHRD and dysfunctional organizational

behaviour is vast and diverse in terms of definitions and context of the phenomenon being

examined, this paper aims to provide a narrow focus using a multi-level analysis (Garavan,

McGuire, and O'Donnell 2004) of the relationship between SHRD and organizational antecedents

that can influence dysfunctional organizational behaviour. This paper will examine and define

recent instances of dysfunctional organizational behavior in the context of the international

financial and banking crisis, examine implications for individuals, organizations and society and

reconceptualise the HRD framework through a dysfunctional organizational behavior lens.

Context:

The intellectual failure some argue is central to the global economic crisis (FSA 2009;

Power 2009) may have a noticeable impact on how future risk-management interventions are

deployed and managed within the organization. The impact of the crisis is highlighted by

McSweeney (2009) who argues that “extensive financial market failure precipitated and

continues to perpetuate widescale economic and social problems”(p.844) arguably, the

dysfunctional behavior may have been influenced by environmental factors as Kish-Gepart‟s

(2010) research suggest, “antecedents in an individual‟s workplace environment…had

simultaneous and significant unique impacts on either unethical intention or unethical behavior”

(p.15). The capacity of human resources to add to the sustained competitive advantage of the

organization is accepted; however, paradoxically, human resources are also capable of

counterproductive work behavior (Levine 2010) which can have the opposite effect –

organizational/institutional failure.

In the context of the current international financial & banking crisis, property lending

teams [in Irish banks] were anecdotally guilty of reckless lending practices (Honohan 2009)

despite economic indicators of a „property bubble‟. Between 2003 and 2007 Irish banks

“increased their borrowings from abroad by 50 per cent of annual GDP” (Honohan 2008:3) in an

effort to compete with one another, loan to value (LTV‟s) ratios were increased, lending

standards and stress testing of loans were relaxed and the reckless lending practices became the

modus operandi de jour. The procyclicality of bank lending behavior is well accepted (Berger and

Udell 2004) but the excessively risky strategies were as Honohan (2010) argues, “neither safe nor

sound” and described as “socially harmful risk-taking behavior”. The lending practices engaged

in by Irish banks were potentially hazardous to the organization but as the evidence shows,

detrimental to the Irish economy as a whole. At an individual level, the leadership in many of

Ireland‟s previously well respected banks had engaged in “egregious” activities that resulted in

the majority of those banks becoming nationalized (NAMA 2010). The behavior of senior

management in the Irish banks prior to their collapse is now viewed as ethically questionable and

was not in acting in the best interest of any of the stakeholders, indeed, the office of the director

for corporate enforcement (ODCE) is pursuing legal advice and may prefer criminal charges

against many of the senior management in Irish banks. Leaders have a central role in developing

and influencing organizational culture (Schein 2004), this was reflective of many of the Irish

banks who engaged in excessively risky strategies in pursuit of profits, Berson et al., (2008)

argued that organizations that emphasize “risk-taking” and advantage taking behavior do so even

at the risk of stability and growth. This risk-taking strategy became a normative value with the

banking culture, not just in Ireland but in many of the banks prior to the collapse. If taking a risk

is viewed as a cultural value, excess risk taking may override „rational‟ decision making in what

Schein refers to as the cultural amplifier hypothesis (Schein 1994: 168).

In both the UK and US, dysfunctional organizational behavior may have contributed to

the failure of notable commercial/investment banks and insurance giant AIG; however, the

dysfunctional behavior may have been more on the deviant scale as incentive structures may have

motivated individual and team investment strategies that were “socially irresponsible” (Levine

2010) and may have existed within a culture or subculture that facilitated the behavior. Hackman

(cited in Felps, Mitchell, and Byington 2006) elucidated group (team) members “co-regulate”

their behavior through “ambient” and “discretionary” stimuli to elicit “group uniformity”, this

insight may illustrate how collective thought processes may have rationalized excessively risky

lending practices in Ireland and ignored sound economic data in the US. The financial collapse in

2008 of Lehman Brothers, AIG, Bear Sterns, Citigroup, Freddie Mac and Fannie May highlights

a number of common dimensions. Firstly, there was an overreliance on complex financial models

to reduce risk exposure (an intellectual and learning & development failure), secondly, there was

a degree of hubris among the senior management of many of these groups (a failure in leadership

development), finally, there may have been an excessive success culture (Probst and Raisch 2005)

which exacerbated the failures (a cultural and organizational development failure). The incentive

structures at the time of the collapse almost certainly contributed to the excessively risky

strategies and highlights agency issues prevalent in many organizations. In recent days, the

announcement by the SEC (2010) that it intends bringing a charge of fraud against Goldman

Sachs and one of its vice presidents citing it acted “deceptively” and in a “conflict of interest”

with its clients relating to a collateralized debt obligation (CDO) related to subprime mortgages

again illustrates failings at a leadership and organizational level. The charges by the SEC

highlight agency or moral hazard issues many claim were central to how senior management,

traders and brokers in US banks operated prior to the crisis; this was also a common feature

among senior management in Irish banks. These practices, if found to be true in a court of law are

on the upper scale of dysfunctional organizational behavior defined as unethical or corrupt (Kish-

Gepart, Harrison, and Trevino 2010).

The failure of the Icelandic banking systems was in many ways similar to that of Ireland,

the three main banks accounting for approximately 85 per cent of the banking system (Thomsen

2008) collapsed in quick succession. The highly leveraged banks engaged in a “foreign-funded

boom” to expand abroad and accumulated assets of almost 900 per cent of GDP by end of 2007,

this was similar to the Irish banking failure, although not as exposed, the Irish banks engaged in a

property speculative business model that was also negatively impacted by the global financial

crisis. The negative impact on both the Icelandic and Irish economies was also quite similar; both

countries have experienced a dramatic decrease in the standard of living with Iceland going from

being one of the “lowest indebted countries in Europe, to one of the must indebted advanced

countries in Europe (IMF 2008). Similarly, Ireland is experiencing a decreased standard of living

as a result of the bank lending behavior and lax regulatory enforcement (Barrett et al. 2010). The

dysfunctional behavior of senior leadership may have been in line with organizational objectives;

however, the negative impact in terms of loss of output (GDP) and rising unemployment

highlights the central role HRD must play in developing tomorrow‟s leaders and organizations to

ensure their behavior does not become socially irresponsible.

It is important to illuminate how individual and collective dysfunctional contagion can

spread within the organization negatively impacting an organizations‟ ability to achieve its goals

and objectives.

In notable cases of dysfunctional organizational behavior involving the banking &

financial sector over the past decade, there is evidence that dysfunctional behavior can and does

result in fundamental damage to the organization or its failure. The Société Générale Fraud

(Allen 2008) highlighted the fraudulent and deviant behavior by Jerome Kerviel which resulted in

losses of $7.2 billion (€4.9 billion). The Lehman Brothers collapse was argued to be the result of

a culture of hubris, “imprudence”, “corruption” and “fraudulent behavior” (Gaffney 2009;

Jameson 2009), the knock-on effect of the Lehman Brothers failure was at an institutional level

that generated a contagion effect impacting other banking institutions. Schlich and Prybylski

(2009) argue for the adoption of “risk awareness culture” in US banks in the aftermath of the

financial collapse, this argument was echoed by Professor Patrick Honohan (2009) who calls for

banks [Irish] to “renew and reform” business models and their culture. Dysfunctional behavior in

Irish banks is not a recent phenomenon, with reported cases of “corruption” and “unethical

behavior” (Knights and O'Leary 2005) that existed within a “culture of unacceptable behavior

and practices” (IFSA 2004) and most recently Irish bank failures have been blamed on lending

behavior that was questionably ethical and socially irresponsible. These examples of

dysfunctional behavior in the financial & banking sectors provide a solid basis with which to

pose the question – can anything be done to reduce the impact of this behavior?

The recent economic crisis demonstrates that dysfunctional organizational behavior has

the capacity for systemic failure that extends beyond the individual and organization and into the

larger societal landscape (Ely 2009; Federal Reserve System 2010; FSA 2009; Honohan 2009;

IMF 2008; Power 2009). Kulik (2005) argued, “agency culture” was potentially as detrimental to

corporate America as it was to Enron (p.358), a wake-up call that may have been ignored by

organizational theorists. The question now remains – can HRD interventions do anything to

minimize dysfunctional organizational behavior in the post economic crisis landscape?

Literature Review:

The concept of dysfunctional organizational behavior provides for a multitude of

descriptors, many of which are beyond the scope of this paper. The search criteria included but

was not limited to: Organizational Dysfunction, Dysfunctional Organizational Behaviour,

Counterproductive Work Patterns, Dysfunctional Ethical Behaviour, Team Dysfunction,

Management Dysfunction, Financial Collapse, Banking Failure and Workplace Deviant

Behavior using standard academic databases such as: Business Source Premier, Academic Source

Premier, Econlit, Web of Science and Web of Knowledge. From the results of the searches a

number of distinct themes emerged such as: Anti-Social Behaviour, Socially-Undermining

Behavior, Ethics, Corruption, Deviant Behavior and Dysfunctional Behavior. The search criteria

was not confined to S/HRD results, dysfunctional organizational behavior is present at individual,

team, organizational and institutional levels and the search criteria was designed to capture this.

Within this paper, the term dysfunctional organizational behavior will refer to any behavior that

is counterproductive to organizational performance, development or long-term viability.

Defining Dysfunctional Organizational Behavior:

Dysfunctional organizational behavior is observable on a number of levels, it exists at the

individual, organizational and institutional level and the impact of dysfunctional behavior can

range from a mere annoyance to organizational destruction.

Individual / Team Level Dysfunctional Behavior

At the individual/team level of analysis, a number of notable papers identify the negative

role anti-social behavior, socially-undermining behaviour, deviant behavior, abusive supervision

and unethical behavior can have on the organization. There is however, some overlap in terms of

dysfunctional behavior that resides within all levels of analysis, e.g. morally questionable

behavior and unethical intention / behavior (Kish-Gepart, Harrison, and Trevino 2010) and

organizational wrongdoing (Palmer 2008). While the definitions are diverse, there are more

similarities than differences (see Duffy, Ganster et al. 2006; Griffin and Lopez 2005; Mitchell

and Ambrose 2007). Griffin and Lopez (2005) defined bad behavior as “any form of intentional

behavior that is potentially injurious to the organization and/or individuals within the

organization” (p.988) with Duffy et al., (2006) arguing that socially-undermining behavior is

intended to “hinder over time” an organizational members ability to maintain a “positive and

successful work-related reputation”. Individual behavior is reflective of “organizational cues” and

the behavior of other colleagues and supervisors could arguably indicate a cultural or subculture

environmental influencing force.

In their study of the negative consequences of abusive supervision, Tepper et al., (2008)

found that workplace norms play a “moderating” role in organizational deviance (p. 729). They

argued that abused subordinates withdraw and should “experience less affective commitment to

the organization” (p.722). The impact of withdrawal and reduced commitment to the organization

in terms of positive organizational citizenship behavior (OCB) can have a bottom-line affect on

organizational efficiency, productivity and development. Cole et al., (2008) posited dysfunctional

team behavior is “any observable, motivated behavior by an employee or group of employees that

is intended to impair team functioning” (p.945) with Litzky et al., (2006) identifying “social

pressures to conform” (p.94) as antecedents of dysfunctional behavior. The darker side of

leadership behavior (Resick et al. 2009) illuminates a narcissistic personality characteristic that

has the capacity through “pervasive” patterns of “grandiosity”, to spread throughout the

organization and influence organizational cultural norms and behavior. Indeed, there are

examples of narcissistic behavior in some of the banking collapses and near collapses. The

former head of Allied Irish Banks plc (AIB) Eugene Sheehy was famously quoted as saying

[AIB] “would rather die than raise equity”, this comment was in relation to AIB‟s solvency - this

statement was reversed within weeks with the Irish government now a majority shareholder in the

bank.

Within the literature on counterproductive organizational behavior, Levine (2010)

succinctly illuminates the negative effect of counterproductive behavior on the organization

[Arthur Andersen], he argued “counterproductive behavior by the individual” was a critical

dimension of organizational success or failure, more importantly however, were his remarks

about counterproductive behavior being “permitted” or “encouraged” by the organization (p. 4).

Levine defined counterproductive work behavior (CWB) as actions or behavior taken by a

“substantial number of organizational members” through policies or norms that the organization

either “intentionally overlooked or implicitly or explicitly encouraged” that adversely affected

“customers, competitors, government agencies and entire nations” (p.6).

The influential role of leadership should not be underestimated when examining

dysfunctional behavior, as Prati et al., (2009) posit “leaders develop quality relationships” with

organizational members and can influence “norms and guide behavior” (p.411). It is this

dysfunctional behavior that may have metastasized into organizational level and institutional

level dysfunction. The failure of Freddie Mac and Fannie May in the US was predicated on a

“destructive race” (Timiraos 2010) to lower lending standards in an attempt to compete with Wall

Street banks. Ultimately, poor management and lax regulation were identified as central to the

failure of these banking institutions; this was also true of the banking crisis in both the UK and

Ireland.

Organizational Level Dysfunctional Behavior

There are numerous definitions of dysfunctional behavior at an organizational level within

the literature with Lange (2008) defining organizational corruption as the “pursuit of individual

interest by one or more organizational actors” through “intentional misdirection” of

organizational resources or “perversion of organizational routines”. Levine (2005) however

argues that corruption entails a “higher end”, something more than increasing ones personal

wealth, there must be a “perversion of public trust”. In examination of the current crisis, it is

apparent, that Levine‟s proposition holds true. Indeed, there are striking similarities between the

collapse of Enron in 2001 and events that led up to the current financial crisis. Deregulation in the

energy market led to an “elimination of norms” in terms of “legally imposed limits”, there was, as

Levine argues, a general acceptance of treating accounting practices (in the case of Enron) as

rules to get around. During the current economic crisis, a similar organizational culture emerged,

one of engaging in unethical behavior (Kish-Gepart, Harrison, and Trevino 2010) not at an

individual level but at an organizational level. In terms of the current economic crisis, this

behavior could be categorized as counterproductive to organizational survival. At an

organizational level, Levine (2010) defined counterproductive behavior as “actions” taken by a

“substantial number of organizational members” that adversely affects “customers, competitors,

government agencies and even entire nations”. In light of the global economic crisis and financial

cost, counterproductive behavior at an organizational level may have had an impact at an

institutional and macro-institutional level. Investment teams within US banks dealing with

subprime mortgages and securitized products such as CDO‟s knowingly and intentionally

labelled high-risk investment products as low-risk products with the aid of ratings agencies such

as Moody‟s and Standard & Poor‟s who colluded in the deceptive practices.

The proclivity of banks to engage in risky strategies that were unsound and in

contravention of their fiduciary responsibilities highlights what Palmer (2008) refers to as

collective wrongdoing, defined as “behavior perpetrated by organizational officials (i.e.,

directors, managers, and / or employees) in the course of fulfilling their organizational roles

judged by social control agents to be illegal, unethical or socially irresponsible” (p.107)”. Corrupt

organizational behavior Pinto et al., (2008) posit, is when a “group of employees” carries out

corrupt behaviors “on behalf of the organization”, this is primarily a “top-down phenomenon”

(p.689) that benefits both the organization and the “dominant coalition”. It is important to note

that external environmental factors such as regulations, shareholder pressure and analysts

expectations may have influenced the collective dysfunctional behavior in US, UK and Irish

banks. The violation of organizational rules such as prudent risk assessment and loan stress

testing may have been in pursuit organizational goals and as Lehman and Ramanujam (2009)

argue, rule violation is higher when the expectation that “regulatory enforcement” is low. Initial

evidence from the current financial crisis would support this position. What led so many financial

and banking institutions to engage in this type of dysfunctional behavior? The procyclicality of

bank lending behavior (Berger and Udell 2004) explains only the mechanics behind lending

practices in the banking industry and its relationship to the business cycle – it does not fully

explain the irrational behavior of banks at an organizational level or institutional level.

Rational behavior gave way to irrational exuberance and overreliance on complex risk

models, there was as Krugman (2009) argues, a “romanticized” and “sanitized” view of the

economy that led economists to ignore bubbles and bust cycles, this myopic perspective spread to

the financial & banking institutions with devastating consequences. What is interesting about the

current economic crisis is the institutional level of dysfunction which was not contained within

the financial & banking institutions but existed on a macro level and included government and

the regulators.

Institutional Level Dysfunctional Behavior

The benefit of the institutional level of analysis is that it takes a systemic or aggregate

perspective of organizations, i.e.: financial & banking organizations, insurance organizations,

accountancy & auditing practice and their interaction with for example: government agencies,

financial regulators, auditing firms. This level of analysis according to Dimaggio and Powell

(1983) is that it “directs our attention” to not just the inter-organizational interaction but to the

“totality of relevant actors” (p.148). In examination of the current economic crisis, it would seem

an appropriate level of analysis to view dysfunctional behavior on a macro scale given the

mimetic isomorphic pressure on banking institutions to seek legitimacy among other banking

institutions in what became a race to the bottom in terms of lending behavior and investment

strategies. Institutional level dysfunction has been defined by Misangyi, Weaver, and Elms

(2008) as “misuse of a position of authority for private or personal benefit” with Venard and

Hanafi (2008) arguing that corruption in financial institutions “relies” on “transgressions of legal

norms”. Both of these definitions provide insight into corruption as a dysfunctional behavior that

can be applied at an institutional level; however does not fully capture the macro dimensions that

typify the current financial crisis. Nielsen‟s (2003) definition on the other hand, illustrates the

macro dimensional reach of institutional corruption that was evident in the international financial

& banking crisis. Nielsen argued corruption at an institutional level was characterized as “sub-

systems of corruption that extend beyond geographic, socio-political and political-economic

systems”. This is perhaps the most accurate description of institutional level corruption that

applies to the current economic crisis.

The macro-prudential interconnectedness of the global financial system manifested in a

contagion effect that spread from bank to bank as they questioned their exposure to the subprime

market following the collapse of Lehman Brothers in September 2008. What is interesting from a

HRD perspective is the herding behavior that senior management engaged in at the largest US

commercial and investment banks. Rajan (2005) argued that because [investment] managers

compensation relates to returns, there is a “greater incentive to take risks” (p.316). The behavior

of their peers was also cited as a dimension that provided insurance against “underperformance”

– an institutional culture influence of sorts? This prescient argument resonates in the most

visceral way in light of the US banking collapse in 2008-2009. When Lehman Brothers collapsed

it started a contagion effect among US investment banks which then spread globally, severely

impacting and prolonging recovery from the recession. It also highlights how bank behavior is

sometimes not based on sound business decisions but those of the „herd‟. In the case of the Irish

bank AIB, aggressive lending practices by a competitor Anglo Irish Bank “pushed” AIB to “relax

its lending standards” (Kenna 2010). Levinson (2009) provided some insight into how senior

executives in US banks made decision on their investment strategies, Chuck Prince ex-CEO of

Citigroup was quoted by the Financial Times as saying “when the music stops” in terms of

liquidity “things will be complicated but as long as the music keeps playing, we have to dance”.

The admission by the ex-CEO of one of the largest banks that collapsed in the crisis provides a

stark reminder that despite evidence to the contrary, their decision making can be based on little

more than neuroticism (Kets de Vries and Miller 1984). Venard and Hanafi (2008) illustrate the

isomorphic nature of organizations at an institutional level, they argue that “similarity is the result

of organizations‟ quest to attain legitimacy within their environment”(p.484). This institutional

level dysfunction is evident in the financial and banking institutions affected by the current

economic crisis. Competitive isomorphism within the financial and banking sector illustrates the

pressure toward similarity resulting from market competition; an example of this was the practice

of a large portion of US banks to engage in the business of selling securitized products brought

about by pressure from their competitors. The inability or complacency of the financial regulator

in the US, UK or Ireland to enforce financial regulations may have stemmed from not wanting to

“alienate powerful constituencies in the process of rule enforcement” (Lehman and Ramanujam

2009: 649).

In Ireland, there was a similar mindset in operation, however, the focus was on the

property market and not securitized products. Competition among banks in the commercial

property market may have fuelled their risk appetite to a point where their lending decisions

exposed them to potential failure Canoy et al., 2001 (cited in O' Sullivan and Kennedy 2007).

This embedded risk culture may have prevented banks from recognizing or understanding their

overexposure, this type of behavior was, with hindsight, injurious to the organization (Griffin and

Lopez 2005) but more crucially, injurious at an institutional level. In both the Irish case and

internationally, regulatory bodies were operating in a “complacent and permissive” way with a

“light touch” regulatory approach (Honohan 2009), the UK was no different, in the UK the

Financial Services Authority (FSA) concluded that there were “deficiencies in supervision” and

an opaque understanding of the macro-prudential characteristics of the financial and banking

sector (FSA 2009) that contributed to the banking failure there. Nielsen (2003) argued that

corrupt sub-systems quite often choose to ignore the dysfunctional behavior because of their

“compromised” positions. An example of this in the Irish context is the close relationship

between senior management in Irish banks and the regulators office in which annual growth of 36

per cent in Anglo Irish Bank failed to attract the attention of the regulators office, Central Bank or

Department of Finance (O'Halloran 2010).

This socially irresponsible behavior has had a detrimentally negative effect on society and

illustrates the very worst outcome as a result dysfunctional organizational behavior. In monetary

terms, the dysfunctional organizational behavior is expected to be in the region of $11 trillion US

and the impact on the Irish economy is thought to be in the region of €75 - €80 billion with a

global loss in economic output estimated at US$200 trillion (Hannon 2010). The human costs are

much higher with organizations failing or significantly reducing their workforces as a result of

the dysfunctional behavior. Unemployment levels globally have risen sharply resulting in

emigration from the worst affected economies with the knock-on effect of prolonged recovery

that may last for a number of years. The announcement by the SEC of pursuing Goldman Sachs

and one of its vice presidents on a charge of fraud illustrates the institutional effect of

dysfunctional behavior. Following the announcement, Goldman shares plummeted 13% wiping

out US$12 billion in shareholder wealth with a knock-on effect in other major banks such as

JPMorgan Chase, Morgan Stanley and Citigroup who lost between 3% - 5%.

In the context of this paper, we define dysfunctional organizational behavior as being

behavior that has the capacity to negatively affect the well-being of the individual, team and/or

organization in terms of psychological safety, positive affective organizational commitment and

organizational development and has potential for organizational, institutional and/or societal

reach that is potentially harmful.

Author Dysfunctional Behavior

(Individual / Team Level)

Definition

Duffy et al. (2002); Duffy et al. (2006a);

Duffy et al.( 2006b);

“Social Undermining”

“…behavior intended to hinder, over time, a worker’s ability to establish and

maintain positive interpersonal relationships…favourable reputations”

Berry et al. (2007); Brown and Trevino

(2006); Diefendorff and Mehta (2007);

Dunlop and Lee (2004); Flemming and

Zyglidopoulos (2007); Glomb and Liao

(2003); Griffin and Lopez (2005); Judge et

al. (2006); Lawrence & Robinson (2007);

Litzkey et al. (2006); Robinson & Bennett

(1995); Palmer (2008)

(Bad Behavior) Deviant behavior; Aggressive

behavior; Anti-social behavior 2Organizational Wrongdoing”

“...any form of intentional behavior that is potentially injurious to the organization

and/or individuals within the organization”

“…voluntary behavior that violates organizational norms…threatening the

wellbeing of the organization or its members”

“…2behavior perpetrated by organizational officials (i.e., directors, managers, and

/ or employees) in the course of fulfilling their organizational roles judged by social

control agents to be illegal, unethical or socially irresponsible”

Tepper et al. 2008 “Negative effect of Abusive Supervision” “.. organizational members will experience less affective commitment to the

organization” (p.722)

Cole et al. 2008; Felps et al. (2006) “Dysfunctional Team Behavior”

“…any observable, motivated behavior by an employee or group of employees that

is intended to impair team functioning” (p.945)

Author Dysfunctional Behavior

(Organizational Level)

Definition

Levine (2010) “Counterproductive organizational behavior”

“…actions that adversely affect customers, competitors, government agencies, even

entire nations taken by a substantial number of organizational members, and the

organization through its policies or norms permits, intentionally overlooks or

encourages such actions either explicitly or implicitly”

Ashforth et al. (2008); Kish-Gephart et al.

(2010); Pinto et al. (2008); Pfarrer et al.

(2008)

“1Unethical intention” – “

2Unethical Behavior” /

“3Corrupt Behavior”

“…1the expression of one’s willingness or commitment to engage in an unethical

behavior” “…2any organizational member action that violates widely accepted

(societal) moral norms” (p.2) “…3in which a group of employees carries out

corrupt behaviors on behalf of the organization”

Van Fleet and Griffin (2006); Guerra et al.

(2005); Lehman and Ramanujam (2009)

“Dysfunctional Organizational Culture”

“..one that constrains or limits individual or group-level capabilities or that

actually encourages and rewards mediocre individual- and group-level

performance”(p.699)

Lange (2008) “Organizational Corruption” “…the pursuit of individual interest by one or more organizational actors through

the intentional misdirection of organizational resources or perversion of

organizational routines”

Author Dysfunctional Behavior

(Institutional Level)

Definition

Misangyi et al. (2008) “Institutional Corruption”

“…misuse of a position of authority for private or personal benefit”

Venard and Hanafi (2008) “Corruption in Financial Institutions” “….relying on transgression of legal norms”1

“….behavior by public officials that deviates from accepted moral standards”2

Neilsen (2003) “Corrupt Networks” “….systemic sub-systems of corruption that extend beyond geographic regions and

socio-political and political-economic systems”

1 Nye (1967)

2 Brooks (1970)

Re-conceptualizing the strategic HRD framework

Over the past number of years strategic HRD has been extensively examined and

conceptualized (see Ardichvili and Jondle 2009; Budhwar and Sparrow 2002; Garavan 2007;

Garavan and McCarthy 2008; Garavan, McGuire, and O'Donnell 2004; Lengnick-Hall et al.

2009; McGuire et al. 2007; O'Donnell et al. 2007; Peterson 2008), with the focus being on

presenting models or frameworks that depict how various interventions provides for positive

impact and potentially contribute to sustained competitive advantage through utilization of the

organizations human intellectual capital. There has been little by way of examining HRD

dimensions / interventions through a dysfunctional organizational behavior lens. The proposed

framework illustrates organizational capacity for dysfunctional behavior through HRD

interventions, the behavior may be the bi-product of environmental and socio-environmental

conditions and in examination of these potentially negatively impacting organizational behaviors.

The authors have provided linkages illustrating the negative impact on and influence of HRD

interventions as well as indicating the degree of impact using the levels of analysis approach. The

framework proposes a new level of HRD intervention primarily aimed at acting as a safeguard for

the organization. In the new economic environment, HRD will need to adopt the role of

organizational governance and agency mediation control to ensure agency culture (Kulik,

O'Fallon, and Salimath 2008; Kulik 2005) does not result in negative organizational and societal

impact but also to ensure the organizational culture remains a positive dimension and does not

turn toxic or dysfunctional.

The framework provides an analysis of how HRD interventions have a potentially

negative impact on organizational behavior which has a resultant knock-on effect / impact on

SHRD goals & objectives. The conceptual framework highlights areas for further study in terms

of how SHRD interventions influence dysfunctional organizational behavior.

At level 1 of the proposed conceptual model, the primary unit of analysis is on individual

dysfunctional behavior that is influenced by HRD interventions and/or has a negative impact on

HRD interventions. „Bad‟ behavior and socially-undermining behavior (Duffy, Ganster, and

Pagon 2002; Duffy, Ganster et al. 2006; Duffy, Shaw et al. 2006; Griffin and Lopez 2005) could

potentially be influenced by organizational culture/subculture. Griffin and Lopez (2005) argue

that a once “talented” and “hardworking” employee may engage in activities deemed to be bad or

dysfunctional if he / she were moved to a new group / team whose norms were incongruent to

his/her own, that employee may engage in dysfunctional behavior directed at the new team

members or may embrace the team behavior and engage in dysfunctional behavior toward the

organization. Eden and Spender (1998) provide a rich analysis of the tension between the social

and systemic dimensions of cognition and the individual who acts within that social context,

eventually becoming an autonomous member whose actions reflect the “reality” of that universe

(p.33), this cultural backdrop has the ability to influence not just the cognition of the individual

but that of the collective. When we examine the impact of this behavior on HRD interventions, it

is reasonable to argue that this type of dysfunctional behavior can have a negative impact on

HRD interventions such as: building organizational trust, open communications, psychologically

safe environment and commitment to perform. If dysfunctional organizational behavior such as

abusive supervision (Mitchell and Ambrose 2007; Tepper et al. 2008) is ignored by senior

management because organizational goals and objectives are being met, it may create hostility

and result in what Mitchell and Ambrose refer to as “displaced” deviant behavior directed at the

organization, in turn the behavior may negatively affect how other employees perceive the

psychologically safe environment and also have a negatively impact both OCB and

organizational performance & development.

Concepts such as a culture of learning and organizational culture have the potential to

influence dysfunctional behavior such as have been described at an individual level. This

behavior can then snowball and infect the team or organization (Ashforth et al. 2008). In the

proposed model we illustrate the potentially influencing relationships through a dysfunctional

lens identifying how the behavior may manifest and the impact of that behavior on HRD

interventions such as those described in Figure 1. Providing interventions that address how

dysfunctional behavior is influenced, motivated and facilitated at an individual level is a critical

first step in addressing how dysfunctional behavior can embed and spread at an organizational

and institutional level.

Werbel and Balkin (2009) argued that at an organizational level, performance rewards

aimed at employees who achieve and exceed goals and objectives through “misconduct” sends a

clear “symbolic” message, it legitimizes the behavior. Further, employees engage in a process of

rational choices where the employees weigh up the opportunity gain from the reward/incentive

against the “fear of being caught” (performance assessment). The thrust of the paper illuminated

how HR practices can potentially influence misbehaviour from an individual bottom-up

perspective; it does not address the behavior from a systemic perspective. Ashforth et al., (2008)

contend that corruption as a dysfunctional behavior is both a “state” and a “process”, engaging in

a symptomatic response is limited as it fails to address the complexity of the interconnections,

furthermore, in their analysis of organizational corruption they argued that the corrupt behavior of

the individual can spread like a “virus” (p.671). Moreover, if the actions of the individual are left

unchecked they can “spread to other individuals and magnify in scope and audacity”, potentially

impacting at an organizational and institutional level. What is clear from the research is that

individual actions of dysfunctional behavior are rarely contained and can influence the behavior

of others, organizational learning and socialization is particularly susceptible in acting as a

conduit for this behavior to be transmitted throughout the organization. If one examines how new

Enron employees were socialized into its culture it becomes clear that the processes of

socialization of corrupt and unethical work practices were an organizational norm that was the

vision or organizational identity developed by senior leadership.

Level 2 / Level 3 of the proposed conceptual model examine the organizational /

institutional level and antecedents of influence on dysfunctional behavior. Arguably, SHRD input

variables such as: alignment with organizational goals, commitment to improving performance

and capacity for strategic engagement (Garavan 2007; O'Donnell et al. 2007; Peterson 2008) are

essential dimensions that potentially facilitate sustained competitive advantage. These

interventions however, can also influence dysfunctional behavior, a point illustrated by Palmer

(2008) who suggested “subtle rewards and punishments, moulded attitudes and behaviors defined

the situation” (p.122), perhaps an indication of how influential cultural, social and environmental

cues are in dysfunctional organizational behavior. Dysfunctional behavior is not confined to

individual or teams, it has also been shown to originate in organizational leadership (Van Fleet

and Griffin 2006) and become “contagious” (Godkin and Allcorn 2009), “toxic” (Goldman 2006)

and “counterproductive” (Harvey and Martinko 2006). In the future organizational landscape,

strategic HRD may need to assume a more moderating role, one that recognizes that forming and

maintaining strategic partnerships and capacity for strategic engagement should be in the best

interest of not just the organization but society as well.

Alignment with organizational goals/objectives and a strategic perspective may be linked

to dysfunctional behavior that is “symbolically” accepted by the organization (Werbel and Balkin

2009). These objectives can be a moderator in dysfunctional team behavior and deviant

workplace behavior which can negatively impact HRD interventions such as commitment to

perform, capacity for trust and organizational learning & socialization. This level has the capacity

to reinforce individual level dysfunction but also infect a supra-organization level (societal) that

has the potential to have detrimental impact at an institutional and societal level.

Environmental factors both internal and external have been shown to influence

dysfunctional behavior within the organization (see Balthazard, Cooke, and Potter 2006; Gelfand,

Leslie, and Keller 2008; Goncalo and Duguid 2008; Harrison, Ashforth, and Corley 2009;

Linnenluecke and Griffiths 2009), a point clearly made by Chreim 2002 cited in (Prati,

McMillan-Capehart, and Karriker 2009) arguing, the more a member views the organization as

the embodiment of his or her own self, the “stronger the identification and higher the cognitive,

emotional and behavioral components” (p.411). It is difficult to divorce dysfunctional behavior

from organizational culture as individuals behave in ways that are consistent with group norms,

values and beliefs, there are as Gregory et al., (2009) argue, “behavioral expectancies that dictate

the way employees behave consistent with their cultural beliefs” (p. 674). In a similar tone,

Gelfand et al., (2008) posited that “dominating conflict cultures will be more prevalent in highly

competitive industries” whereby the highest value is placed on “coming out ahead or beating the

competition” (p.149). This type of cultural backdrop reflects an environment that is neither

conducive to nor facilitative of an operationally sound organization. Moreover, HRD

interventions in terms of creating and maintaining strategic alliances with all organizational

stakeholders and managing organizational knowledge and a culture of learning is paramount as a

first step in ensuring organizational capability does not become organizational incapacity.

This level of analysis is perhaps the most critically important, although organizational

culture may influence individual behavior, as Ashforth et al (2008) alluded to, “people can

engage in [dysfunctional] practices as a result of “immersion in, and socialization into the social

and cultural environment of a corrupt organization”. In examination of the institutional and

societal impact of the global financial crisis 2008-2009, there are indications that incentive

structures may have influenced some of the reckless behavior, both in Ireland, UK and US

(Levinson 2009; McSweeney 2009; Schlich and Prybylski 2009; Federal Reserve System 2010;

Greenfield 2010; Honohan 2010). There are also indications that organizational leadership was

highly influential in infecting the behavior of organizational members at a toxic and disruptive

capacity and further indications that reckless lending practices and investment strategies existed

within an agency culture (Kulik, O'Fallon, and Salimath 2008) that contributed to the collapse of

so many well respected organizations. We propose a new role for HRD in light of the global

financial & banking crisis. In this new role, HRD will assume an Organizational Governance and

Agency Mediation Control mandate. This responsibility should be to sit at board level and

provide insight to senior management and executive level personnel on organizational

dimensions that are not visible but can have a significantly negative impact on organizational

development and survival – culture & socialization. This new role will also provide HRD with a

place at the table and a more influential position in developing organizational goals and

objectives rather than implementing them through the organizations human intellectual capital.

The desire for HRD to become strategic partners to the business and aligned with

organizational goals/objectives can potentially lead to instances of dysfunctional organizational

behavior in pursuit of profit. The impact on HRD is a potential reduction in organizational trust,

questionable contribution to stakeholder value and short-term performance gain at the expense of

long-term viability.

Table 4: SHRD perspectives with negative effect and levels of analysis impact

Author SHRD Intervention Negative Effect of Interventions

(Dysfunctional Behavior)

Levels of Analysis Impact

Ulrich 1998 Strategic partner with management Employee Champion

Business Acumen

Facilitate organizational transformation

Socially-Undermining Behavior

Individual / Team

McCracken & Wallace 2000 Help shape organizational goals & objectives

Formulate HRD plans & policies

Partnership with management & HRM Influence culture

Dysfunctional Organizational Culture

Abusive Supervision / Workplace Deviance

Counterproductive organizational behavior / Unethical Behavior / Organizational wrongdoing

Individual / Organization / Institutional

Individual / Organization

Organization / Institutional

Ulrich & Brockbank 2005 Environment scanning

Developers of Business Strategy Embedded with senior management

Human capital developers / Strategic partners /

Functional Experts

Dysfunctional team behavior / Dysfunctional culture Workplace deviance / Dysfunctional culture

Unethical Behavior / Dysfunctional culture /

Organizational wrongdoing

Organization / Institutional

Individual / Organization / Institutional

Boudreau & Ramstad 2007 Impact / Effectiveness / Efficiency

Talent pools / Manage resources & processes /

Sustainable strategic success Human intellectual capital (capacity)

Abusive supervision / Workplace deviance /

Dysfunctional team behavior / Dysfunctional Culture

Dependent Organization Disorder / Dysfunctional

Culture

Organization / Institutional

Organization / Institutional

Garavan 2007 Strategic Orientation

SHRD Strategies, Systems & Practices

Understand / Manage firm culture Strategic partnership with senior management

Workplace deviance / Dysfunctional team behavior

Workplace deviance / Dysfunctional team behavior

Counterproductive / Unethical behavior / Organizational Wrongdoing

Individual / Organization

Individual / Organization

Individual / Organization / Institutional Organization / Institutional

Peterson 2008 Climate of support Culture of Learning

Capacity for Strategy / commitment to perform

Aligned with Mission / Leadership Business acumen / strategic perspective

Forge relationships / create HPWS / develop

accountability

Workplace deviance

Dysfunctional team behavior

Dysfunctional organizational culture Counterproductive organizational behavior /

Organizational wrongdoing

Individual / Organization

Organization

Organization Organization / Institutional

Organization / Institutional

Figure 1:

Implications for Theory

The academic community have contributed significantly to understanding dysfunctional

organizational behavior from multiple perspectives. Analyzing dysfunctional organizational

behavior using a multi-level perspective provides a micro, meso-macro, macro analysis of the

impact of this behavior. The proposed model allows for analysis of HRD interventions through a

dysfunctional behavior lens illustrating the impact at a multi-level perspective that includes

institutional and societal impact. As the study of HRD is concerned with systems, processes and

procedures that utilize human intellectual capital in pursuit of organization goals/objectives with

the ultimate aim of achieving sustained competitive advantage, it is in imperative that as scholars,

we understand the systemic nature of dysfunctional organizational behavior and the toxicity in

which many organizations immerse themselves.

There are divergent thoughts on where the role of HRD lies; is it confined to primarily

organizational level interventions or is it responsible at all levels up to, and including national

level. The events of the past 24 months should illustrate that HRD interventions and the study of

HRD should be focused at the organizational level with an understanding of the institutional and

societal impact of those interventions. This multi-stakeholder perspective provides the contextual

basis for future abstractions of HRD interventions that may ensure against future organizational

failures of the magnitude witnessed in the international financial & banking crisis.

Future study of S/HRD should perhaps look beyond the systems thinking that seems to be

pervasive in the research and look to analysis through a behavioral or rational choice theory lens

in conjunction with the resource-based view (RBV) of the firm when considering future

developments in S/HRD. It is an imperative to understand the behavioral and cognitive

dimensions of organizational behavior as the recurrent them in organizational dysfunctional

behavior is not the systems, process or procedures – it is the human element.

Implications for Practice

The role of HRD professionals in the organization is a multifaceted and multidimensional

role that interfaces with senior management, middle management and team leader / line mangers

as well as organizational members on a daily basis. The ability to be cognizant of, and address the

needs of organizational stakeholders is a daunting task. As credible partners in the business, HRD

is expected to provide a role of consultancy to senior management, balance realistic expectations

of stakeholders, implement strategies aimed at achieving organizational goals and objectives, be

positive change agents, develop management and leadership skills, provide career development

interventions, manage organizational culture and ensure organizational development remains a

core function. This is a tough job.

In light of the current financial & banking crisis, the role of HRD will now need to shift

somewhat, it will need to take a more proactive role in the development, implementation and

management of the new mandate of corporate social responsibility agents. In the proposed model,

we argue that the creation of an Organizational Governance & Agency Mediation Control role is

an imperative in fully addressing the short-comings that were present in the current economic

crisis. This new role will see HRD take an active role at board level acting in an advisory

capacity to the board, providing insight into cultural dimensions of the organization, this role will

also allow the professional body tasked with developing the organizations human resources to act

as an objective intermediary between senior management and the organization to ensure

corporate social responsibility is a key feature and applied in practice not just theory.

The impact of the international financial & banking crisis has had a significantly negative

impact on many organizations and society. In the new ear, HRD professionals will need to

expand their role beyond traditional dimensions of organizational development, career

development, learning & development and performance management to consider the wider

impact human resources have on the organization and society. At a strategic level, HRD will need

to fully understand the implications and impact (positive & negative) of organizational goals and

objectives and may need to develop the ability to say no, when and where required. The

development of trust and credibility of HRD will have a much wider focus in future with

institutional and societal measurements of delivery.

Conclusion:

This paper adds to current theory in a number of ways. Firstly, the paper provides an

analysis of HRD interventions through a dysfunctional organizational behavior lens, to the best of

our knowledge; this has not yet been done. Secondly, it proposes a conceptual framework of

HRD interventions that have the capacity to influence dysfunctional organizational behavior and

finally, suggests a new mediating role for strategic HRD in a new economic landscape that will

act as organizational level governance interventions aimed at averting socially irresponsible

behavior from impacting at an organizational, institutional and societal level.

Ulrich and Brockbank (2005) apply a metaphor to highlight the strategic role of HRD in

the organization suggesting that HR should be “in the game” not just at the game; however, this

allegory may need to be re-conceptualized as being in the game may increase the risk of social

contagion in terms of dysfunctional organizational behavior which may have been a contributory

factor in the failure of the international financial and banking sectors. Godkin and Allcorn (2009)

argued that a “contagion perspective speaks to unconscious but shared interpersonal and group

dynamics” (p.485) so arguably then, strategic HRD will need to become referees of the game,

acting impartially in the best interest of all organizational stakeholders whilst also ensuring

strategic disengagement from management ideology or organizational orthodoxy if it is required,

in order to act in the best interest of the stakeholders at an organizational, institutional and

societal level. The role of architects now takes on a new perspective for HRD in the post

economic crisis landscape – as theorists the objective is in analyzing how HRD interventions may

have facilitated the failures and as practitioners, the focus is on looking to rebuilding

organizational capacity, human intellectual capability and perhaps most importantly - trust and

credibility. The proposed organizational governance and agency mediation control dimension of

HRD may provide a foundation in restoring credibility and trust of all stakeholders, internal to the

organization and also externally. The macro-dimensional reach of dysfunctional organizational

behavior extends beyond the firm as failures of large organizations have a knock-on societal

affect.

If leadership sets the behavioral tone of organizational behavior as Godkin and Allcorn

(2009) argue, then HRD will need to help set a new organizational tune. The global financial

crisis has implications for how HRD evolves and positions itself in a new economic reality. If

HRD are to become strategic agents for the organization in the new global environment, HRD

will need to recognize potentially disruptive dysfunctional organizational behavior antecedents,

implement interventions aimed at minimizing the impact on the individual, organization &

society and build organizational trust and credibility by adopting a new Organizational

Governance & Agency Mediation Control mandate. HRD will need to become more than

strategic in thought and rhetoric; HRD will have to become strategic in its delivery. The

requirement for the organization to conform to societal and legal norms should not result in a

“check-list” approach to adherence, the development of an embedded organizational culture that

is risk-aware and cognizant of the potential for negative societal impact from dysfunctional

organizational behavior should not be “window dressing” but should be interwoven into the very

fabric of how the organization operates (Ashforth et al. 2008). As HRD scholars and practitioners

it is our responsibility to ensure socially responsible behavior is the outcome of our interventions

and not dysfunctional organizational behavior. Trust and credibility should be the mantra and

guiding principle of HRD interventions is the new post-crisis economic landscape.

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