Seven Best Practices of Successful Organizations

The Employee-Employer Relationship Has Changed for the Worse

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By Nick Keppler

In one recent survey, 54 percent of hiring managers at technology companies said they expect layoffs in 2025 as more tasks are performed by AI. Although U.S. President Donald Trump’s tariff plans have been delayed and mitigated by a growing list of exemptions and ongoing negotiations between the U.S. and targeted countries, tariff-related price uncertainty and shipment delays have created a wave of stagflation anxiety and recession fears in the U.S., which could spur companies to slash jobs, which in turn would worsen the growing economic crisis.

Academy of Management Scholar Herman Aguinis of the George Washington University School of Business said that a few decades of mass layoffs and wages not keeping up with inflation have fundamentally changed the employee-employer relationship in the U.S. When looking to improve the bottom line, companies often eye trimming payroll because it is such a huge expense.

“For many organizations, the lion’s share of the operating budget is payroll, two-thirds or more,” Aguinis said. “It could be 80 percent or 85 percent.”

The cost-cutting approach that sees employees as expenses more than assets can be shortsighted, he said. Moreover, many companies lack an effective performance management system and, in mass layoffs, cut high-performing and low-performing employees alike.

Since the 1990s, when companies, particularly in the tech sector, regularly pruned their workforce as a cost-saving measure, despite a booming economy, much of the workforce has begrudgingly come to accept that they can lose their job in a corporate reshuffling, regardless of their job performance. Aguinis said this has damaged the psychological contract between employee and employer that engendered mutual loyalty.

“In the post-World War II era, it was understood that if you do your job, you will not be fired, and you will also not leave, even if they pay you a little more somewhere else,” he said. “We had this implicit loyalty in the old psychological contract.”

Under the new employment-at-will standard, there is no psychological contract, and most employees are always tabulating their value and waiting for the ax to fall.

“If you’re not adding value to your company, they can fire you at any time,” Aguinis said. “On the flip side of the coin, if you’re a star performer and adding a lot of value, you get offers, and you can just go to a new employer willing to pay you more overnight, and there’s no loyalty from you to the company.”

As economic anxiety causes people to rethink their employment, companies should do more to identify and retain their most valuable players, Aguinis said.

“You have to implement a very good performance-management system so you know who your highest-performing people are, because they can leave at any time—and if they leave, it will be tough to replace them,” he said. “For example, in May 2025, Google announced they are revamping the performance management and compensation system so that the total compensation pool will remain budget-neutral, but it will include larger rewards for top performers and smaller bonuses for lower-rated individuals.”

This awareness of the importance of adding value also cycles into the advice Aguinis gives MBA graduates. Instead of taking the job offer that pays the best, he said to look for career-development opportunities.

“Pick the employer that gives you the most amount of learning opportunities, because that is an investment in your future, not just in the short term,” Aguinis said.

Research Findings Are Not Reaching Business Leaders

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By Nick Keppler

There are now about 400 journals for management as an academic field, producing about 12,000 published articles a year in total. However, top decision-makers rarely learn anything from them, said Academy of Management Scholar Herman Aguinis of the George Washington University School of Business.

“Many of us are concerned that the research we do is not being used to the extent that we would like, and it’s called a research-practice gap,” Aguinis said. “Also, there’s a research-policy gap,” stemming from political leaders’ lack of familiarity with research produced in the field of management.

This gap is particularly frustrating, said Aguinis, because scholars on management and organizations have produced a wealth of scientifically sound research on issues that have dominated the news in 2025, including the downsizing of the federal government, the measurement of job performance, discrimination and diversity, equity, and inclusion policies, and the implementation of AI in workplaces.

“If you want to build a bridge, you will talk to the top engineers, but management scholars are not consulted with the same regularity,” said Aguinis.

This is not entirely the fault of those who could potentially benefit from our research, Aguinis added. Academic journals are often insular and publish articles that only make small contributions to our understanding of critical organizational phenomena. Also, the compensation and reward systems motivate academics to write mainly for other academics, not managers, business leaders, and decision-makers.

“For several reasons, much of our research is not aimed at affecting practice,” Aguinis said. “If you read the typical article of, let’s say, 20 pages, you may find one or two paragraphs at the end saying ‘implications for practice.’”

The research is not lost on everyone. A small number of elite companies look to academia to improve performance. Google is well-known for hiring Ph.D. holders, not just for computer-science roles but also for management and creative jobs. Marriott is a sponsor of doctoral development programs.

These companies reap the benefit in reputation, said Aguinis, often appearing in lists such as Fortune Magazine’s “Best Companies to Work For” series.

“All of these companies, all of them, employ Ph.D.s who actually read the research, and they try to implement leadership strategies and management practices that are consistent with what research says aligns with best-practice evidence as published in scholarly journals,” he said.

Why CSR Is Still Vital for Companies

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By Nick Keppler

Any act of corporate wrongdoing—real or perceived—can be publicized worldwide instantly via the internet and social media. This has made ideas of sustainability and corporate social responsibility (CSR)—which includes organizations’ initiatives geared toward achieving environmental, ethical, philanthropic, and financial objectives—increasingly important and far-ranging, said Academy of Management Scholar Herman Aguinis of the George Washington School of Business.

“Because of information flow across the internet, now we know about sweatshops, we know about companies polluting the environment, and we know about companies that are abusing and taking advantage of farmers and not providing benefits,” he said.

Not coincidentally, measurements of CSR initiatives that make a positive societal impact have grown not just to consider the company’s adherence to laws and regulations but also its impact on globalization, technological developments, fair trade, workers’ rights, pay equity, pollution, habitat destruction, and climate change.

“The expectations have changed mostly because of pressure from the outside,” Aguinis said.

To manage an increasingly complex set of considerations related to CSR and sustainability, many companies have emphasized the three Ps, Aguinis said: people, the planet, and profit.

The “people” aspect does not only encompass employees and shareholders but also a wide span of stakeholders, including “the communities you serve, your customers, the communities around your business locations,” he said.

For example, Intel, a computer components manufacturer, holds town-hall meetings before finalizing plans to open new chip plants.

Small steps like these make operating the business easier and bolster its reputation, Aguinis said.

“The argument is that you can do good and do well at the same time, that those things go hand in hand, is replacing an older cynical argument that some economists have proposed, which is that your priority and loyalty group and number-one stakeholder is your shareholders,” he said. “‘You should just be making money for them, and anything else that you do that goes outside of that is not your mandate, not your responsibility.’”

That thinking—exemplified by American economist Milton Friedman—will not help companies stand up to increasing social pressure and could hurt their reputation, Aguinis said.

“The CSR movement has changed because customers, consumers, vendors, and partners want companies to do more to impact society positively.”

Why Success Can Be the Enemy of Innovation in the Age of AI

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By Jason Collins

A new Pew Research Center report reveals that public optimism remains low regarding the potential impact of AI in the workplace. However, refusing to work with new technologies can cause even the largest organizations to fail as this technology changes the game across many industries.

Academy of Management Scholar Wendy Smith of the University of Delaware reveals that it isn’t the small businesses that are most at risk, but rather larger organizations that choose to rely on what they know works. Smith calls this the paradox of success.

“The companies who are at the top of their market have the most to lose and therefore don’t want to take risks and thus are the most entrenched in what they already do,” Smith said. “Researchers call this the ‘paradox of success’ where successful companies are the ones that fail to adopt new technologies and innovation.”

Because smaller organizations don’t have this burden, they have nothing keeping them from trying new things and adopting new technologies such as AI and robotic process automation. History shows us that success can be an enemy of innovation. Smith draws parallels to brands such as Kodak and Polaroid, which failed to make the digital photography transition.

“BlackBerry was this amazing early force of the smartphone but could not compete when brands like Apple came into the market with updated technologies,” Smith said. “Blockbuster Video couldn’t make the transition from VHS tapes and DVDs to streaming when Netflix then took over.

“So, we see that story happen again and again and again,” she said.

If the past has taught us anything, it is that relying on past success without monitoring new technologies, tracking consumers’ preferences, and cultivating boldness in strategic planning prevents innovation.

“I think we’re going to see the same thing now,” Smith said. “And so there is wisdom in ‘Don’t throw out the baby with the bathwater.’

“It’s totally new technology, but leaders should be learning from history what it means to innovate within an existing company,” she said.

Rethinking Management in the Age of AI

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By Jason Collins

More than one in four workers are worried that AI will lead to job losses, according to a recent poll from the conciliation service Acas. Currently, leaders and management have a key role in shaping how employees use AI during this technological transition.

Instead of viewing AI as a potential replacement for human workers, management can be more effective by considering how people can interact with technology to boost productivity and efficiency. Academy of Management Scholar Wendy Smith of the University of Delaware said that doing so requires that senior management shift their mindsets to frame the relationship between humans and AI in the context of what works in their organization.

“One of the roles of leaders is to understand how AI and humans work together,” Smith said. “We tend to think of how technology will replace human, which is an either/or mindset.”

Instead, she urged leaders to frame technology as a complement to, not a replacement for, employees.

“Leaders can adopt a both/and approach, exploring how AI and employees work together to lead to even better outcomes,” Smith said.

Smith advised management to adopt the mindset of using AI to make their team members’ jobs easier and free up time for them to focus on strategic planning and other tasks that require higher-order thinking.

“AI works better because the person and the technology are in a relationship with one another,” Smith said. “We can do better when we ask ourselves, ‘What is this technology good for? What is my level of understanding of it? What am I good for, what do I do well, and how could I work effectively and interdependently with this technology?’”

Smith said that she believes that while AI can perform certain tasks more efficiently than humans, it ultimately comes down to collaboration. For example, the better the prompts that humans give to a generative AI platform, the better the outputs of the gen AI software. Human expertise can help evaluate and assess the quality of the AI responses.

“If AI is going to work to the best of its capabilities, it’s because I bring real and important contributions to the table,” Smith said.

For managers, the question is no longer whether to use AI but how to grow with it and encourage rank-and-file employees to do the same. Smith said this will require “growth and thoughtfulness.” Smith also underscored the advice for people to “recognize that AI and humans work better together, and to be in learning and growth mode.”

Human-Centered Leaders Steer Through the AI Anxiety Curve

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By Jason Collins

Established generative AI platforms such as OpenAI’s ChatGPT, Google’s Gemini (formerly Bard), Anthropic’s Claude, and Jasper (formerly Jarvis) have been competing for users and market share, and the level of competition in the space will continue to grow with the rise of non-U.S. AI startups, including Chinese company DeepSeek. The impact of this new technology in the workplace is far-reaching, and leaders need to guide their organizations’ employees through their psychological resistance with an approach that embraces innovation while acknowledging the potential positive and negatives effects on humans and our emotions.

Academy of Management Scholar Wendy Smith of the University of Delaware noted that history has shown us that when a new generation of technology is introduced, such as generative AI, we resist it psychologically. Smith explained that AI is a great example of this.

“AI introduces all kinds of uncertainty and possibilities, some exciting, others anxiety-inducing,” Smith said.

“It’s a wide range of possibilities, which includes automation of manual tasks, role changes, and job losses, and that type of uncertainty leads us to psychologically fill in the gaps with all kinds of things that we’re afraid of,” she said.

It introduces the question, “What happens with the people who had been doing the work but whose skills are no longer relevant or up to date?”

This AI anxiety curve is not a new concept. Smith cited the introduction of once-disruptive technologies that we now take for granted.

“We’ve seen that story play out in every industry,” Smith said. “For example, we’ve seen how the introduction of the personal computer overtook the mainframe, and the introduction of cloud computing overtook the personal computer.

“We’ve seen it in the past, and when it comes to technology in general is, as a result of this anxiety, there’s this curve of people adopting the anxiety,” she said.

Smith noted that this spread of emotional reactions results in a wave of people, especially in the workplace, feeling this anxiety and thus holding out for the new technology to become more established before gauging its implications, or dismissing its potential to create positive outcomes. Leaders cannot afford to ignore this anxiety. If they are to continually innovate, they need to take into account employees’ emotional responses.

“Effective innovation requires attention to, not rejection of, employees’ emotional experiences,” Smith said.

“The best leaders navigate this learning and adoption curve across the organization with empathy for their workers and clarity on the objectives for deploying the technology with a human-centered approach to leadership that also embraces innovation,” she said.

The New Reality: Leaders Have Less Control, Need More Courage

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By Jason Collins

For decades, the prevailing wisdom for business leaders was to stay out of politics. Neutrality was considered the safest, most responsible stance for corporate executives and board members to take. But today that approach is increasingly untenable. From the COIVID-19 pandemic to intensifying political polarization and controversy, leaders now find themselves at the center of public debates whether they choose to engage with them or not.

For leaders, silence is a statement, and political neutrality is no longer a viable option, according to Academy of Management Scholar Wendy Smith of the University of Delaware.

“It used to be that there were checks and balances in the U.S. government,” Smith said. “The market was separate from the state, or companies were separate from the government, and that is no longer the case.”

To survive and thrive in this era when economics and politics collide to sow chaos, Smith said that leaders should “talk about strategizing as a verb rather than having a strategy.” For Smith, this means considering “the conditions that we need to bring a team together to be agile and moving, even as we need to communicate out to our people some sense of security.”

Strategic decisions from supply-chain choices to remote, hybrid, or return-to-office work policies have become flashpoints in boardroom and C-suite conversations and political discourse. Leaders now must navigate complex social, economic, and political terrains, speak out on pressing issues, and align their actions with values that resonate with stakeholders—employees, shareholders, customers, and communities alike.

Companies’ leaders have had to deal with uncertainties for a long time, but Smith said many of their strategies and their organization’s systems are antiquated. According to Smith, nowadays leaders are learning that they need to “communicate to their people, optimize their processes, and cultivate openness in their conversations, but not pretend that there’s certainty of what the future will bring, because that’s just false hope.”

Smith acknowledged that leaders are faced with unique challenges in this current political landscape characterized by dissention, frustration, anger, and unpredictability, making it difficult to navigate socioeconomic volatility.

“One of the consequences of this highly polarized world is that leaders, because of the polarization, are being attacked for polarizing positions,” Smith said.

In this current era, leadership is less about having definitive answers and more about asking incisive questions, listening to a range of perspectives, evaluating various responses to difficult circumstances and controversial issues through an ethical lens, and having the courage of one’s convictions.

“We want leaders who are competent and courageous, not stepping away from that responsibility to take a stand and speak up for what’s right because it is so risky,” Smith said.

How Looming Stagflation May Affect Pay

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By Paul Friedman

At a time when some forecasts predict continuing or worsening inflation or stagflation and possibly a recession, pay transparency adds to the pressure on organizations’ decision-makers.

Peter Bamberger of Tel Aviv University, an Academy of Management scholar who published a book based on his research on pay transparency, said managers will need to build systems of compensation that are more justifiable and understandable to employees.

“The first step with pay transparency is not necessarily to disclose pay levels of one employee or another employee, but rather to disclose how pay is determined in the organization,” Bamberger said. “Most employees have no understanding whatsoever how their pay is determined in the organization and how other people’s pay is determined in the organization.

“Simply understanding pay processes and procedures, all the evidence suggests, has beneficial effects for both employees and employers with very few, if any, side effects—except that employers have to work harder to build these equitable and fair systems.”

Bamberger said pay transparency is always problematic for decision-makers.

“No one wants their decisions to be transparent to other people—transparency is great when we are the observers, but when we’re the observed, it’s a terrible thing,” Bamberger said. “It comes with potentially unintended negative consequences, especially when you have to think about what happens when people see that they are paid less than other people.

“It becomes problematic for the ones making the decisions, and it can be problematic for the organization,” he said. “So there are complications with pay transparency; there’s no question about it.”

Still, Bamberger said he believes that “sunshine is the best antiseptic,” and pay transparency can produce surprising positive results.

“What the evidence shows is that most employees underestimate how much their superiors are making, and when you think about that, it generates a tendency of individuals to think that they’ll do better by leaving their current organization,”

Bamberger said. “The grass is always greener; if I want a pay increase, I have to go outside, and that movement has costs to the current employer.

“So there’s merit, potentially, in letting people see what the potential income might be for moving up within the organization,” he said.

“I think organizations that are forced to be more accountable and hence build more effective pay systems—more explainable and justifiable pay systems—ultimately enhance the quality of the human capital they can bring in and hold to enhance their competitiveness, which becomes really important in a period of stagflation.”

Everyone Will Suffer in the Wake of Trump Administration’s Research Cuts

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By Paul Friedman

This year, the Trump administration has fired many government researchers, canceled scientific and medical research grants, and targeted leading universities, including Harvard, with debilitating funding freezes. Fear of reprisal has caused many scientists, doctors, professors, and university administrators to opt for silence instead of speaking up to defend the research that is getting the ox.

Academy of Management (AOM) Scholar Peter Bamberger of Tel Aviv University says much of the research produced by him and his colleagues, including many AOM members, has a day-to-day impact on industry practitioners, including organizational leaders and managers. Cuts in federal funding for research will have a negative impact on industry, as well as researchers, colleges and universities, and other research institutions.

“What we publish in our primary journals have to be both theoretically important and have practical relevance,” Bamberger said. “It’s got to be interesting from a theoretical perspective and intellectual perspective, and it’s got to have some sort of surprising element—going against conventional wisdom—but it also has to translate that surprising finding into something that managers can do something about.

“And there are thousands of organizational consultants who read the findings published in our journals and then translate that into actual practice in organizations,” he said.

Bamberger points out that a great deal of research is specifically aimed at examining current practices by managers and their efficacy. Recently, he published a study of the managerial approach called design thinking, which focuses on understanding clients’ needs and designing innovative solutions.

“Design thinking has been around for about 10 years,” Bamberger said. “It’s an approach to create more innovative ways of boosting learning and finding innovative solutions to common problems or sometimes even really wicked problems.

“It became a fad and a lot of organizations adopted it, but no one ever bothered to actually assess whether or not it has an impact and whether this impact is any greater than other types of learning-oriented interventions, like team building,” he said.

Bamberger and research colleagues designed a field experiment to test the impact of design thinking as a team learning intervention. They compared over time what happens in terms of the efficiency and productivity of teams using different interventions.

“Is design thinking more efficacious than an alternative?” Bamberger said. “And we found out that in fact it is, and we actually demonstrate the mechanism by which it operates and why it’s more effective than other mechanisms.

“So these types of practical implications are useful to managers and to the extent that we don’t have funding necessary to do this type of research, everybody suffers,” he said.

Why We Love Time-Travel Tales

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By Daniel Butcher

People love stories that involve time travel, from books such as The Time Machine by H.G. Wells, A Wrinkle in Time by Madeleine L’Engle, and the Outlander series by Diana Gabaldon (adapted into a TV series) and shows such as Doctor Who and Quantum Leap to comedy movies such as Groundhog Day, Bill & Ted’s Excellent Adventure, and Hot Tub Time Machine and action/adventure films such as the Back to the Future and Terminator series.

What’s so universally compelling about the concept?

Academy of Management Scholar Abbie Shipp of Texas Christian University said that the appeal of time-travel stories is that people often imagine what it would be like to travel backward and forward in time.

“We live in any given moment, but in those moments as we mentally time travel, we can remember select things, we can forecast things, and so we can create whatever story we want,” Shipp said. “When we see it in movie or show form, it fascinates us to be able to move into the future and see, ‘How did that play out?’—there’s a little bit of certainty that comes with that, so that’s one element.

“Another part of that is that we forget how things change,” she said. “For example, we assume, ‘If I am in an accident and suffer an injury and I lose the use of my legs, I would be so unhappy,’ and there’s a lot of research on this; yet we know that people have happiness set points.

“We forget the resilience that we have over time.”

Popular fantasy

“I was just thinking about this today in terms of the weather,” Shipp said. “We’re having this really weird cold snap in Texas, and so, of course, my brain is thinking, ‘Well, if this is what the weather is going to be from now on, I’m going to move someplace else.’

“But that thought assumes this experience would be the same in another 10 years, rather than be temporary or change in another way,” she said. “What do I know about what the future holds?

“Some of those time-travel films get us thinking about the elements we’ve forgotten about the past or what might be in the future, so it’s as much a fantasy as it gives us something to sink our teeth into when we think about what’s continuous versus what’s changing.”

A sample of Shipp’s AOM research findings:

• Subjective Time: What It Is and Why It Matters at Work
• Paths to Retaining Employees Who Go the Extra Mile