Mhr 405- lecture 6 PDF

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Organizational learning and decision making Organizational behaviour modification → the systematic use of learning principles to influence organizational behaviour → based on principles derived from the operant learning theory Operant learning theory → bf skinner → behaviourism: “behaviour is a consequence of ones experiences with one's environment” Ivan pavlov, john watson Operant learning theory → the subject learns to operate to the environment to achieve certain consequences that follow it -people learn the connection bw a behavior and a consequence Law of effect People repeat behaviours that bring them satisfaction and pleasure, and stop those that bring them dissatisfaction and pain 4 learning processes Increase probability of behaviour: 2 ways to reinforce behaviour Decrease probability of behaviour: 2 ways 2 prevent behaviour

Pleasant Stimulus

Aversive (unpleasant) Stimulus

Adding/Presenting

Positive Reinforcement (to increase/maintain)

Punishment (to decrease/terminate)

Removing/Taking Away

Extinction (to decrease/terminate)

Negative Reinforcement (to increase/maintain)

Problem: u are responsible 4 managing the new coop student who is working, she is skilled but on her phone texting friends rather than working 4 diff ways to deal with this using 1 strategy from each category: → positive reinforcement: no texting 1 week = day off ( reward) →punishment: take your phone , fired , more workload → extinction:she was praised before she used phone , now she gets no praise ( taking praise away) → negative reinforcement:taking away the warnings and threats to get off phone, Increasing the probability of behaviour reinforcement → Sometimes behaviours are beneficial to the operation of an organization and they need to be reinforced

→ A reinforcer is a stimulus that follows some behavior and increases or maintains the probability of that behavior → Positive reinforcement: addition of a pleasant stimulus → Negative reinforcement: removal of an unpleasant stimulus → The reinforcer is contingent on the occurrence of some desired behaviour → If the behaviour occurs, then the reinforcer occurs Examples:

New puppy training I want a quiet dog Positive reinforcement: treat (adding pleasant stimulus) Negative reinforcement: dog is in crate bc it is in crate, so we take the crate away bc the dog showed the right behaviour (remove unpleasant stimulus) Effective reinforcement in organization Contingent on specific desired behavior Diverse individual preferences → Make it personally meaningful → Sources and forms of reinforcement ◦Performance feedback ◦Social recognition ◦Formal employee recognition program Reducing the probability of behaviour → Sometimes behaviours are detrimental to the organization and need to be reduced or eliminated (cwb) → Two strategies that can reduce the probability of learned behaviour:

•Punishment: Application of an aversive stimulus •Extinction: The gradual dissipation of behavior following the termination or removal of positive reinforcement ( take away positive reinforcement will stop behaviours) Works best when coupled with the reinforcement of some desired substitute behavior Examples:

Negative reinforcement;punishment → negative reinforcement: reinforces a behaviour → Punishment: reduces behaviour New puppy training I want a quiet dog. Extinction: if u previously reward dog for barking, once u stop the dog is more likely to engage in that behaviour Punishment: shock collar, put in crate (unpleasant stimulus) Combined approach: can give treat when dog is quiet and put it in crate when it barks Using punishment effectively → Limit the emotions involved in punishment. → Make sure the chosen punishment is truly aversive. → Provide an acceptable alternative response for the punished response. (“This is not appropriate. Then what?”) → Punish immediately or reinstate the circumstances surrounding the problem behavior at a more appropriate time. → Do not reward unwanted behaviors before or after punishment, and do not inadvertently punish desirable behavior. In the media.. “There's a reason telecom customers are often frustrated when they deal with a call centre— employees are penalized if they reduce or cancel a customer's services, so some try all kinds of tactics to avoid doing that. Harley [a call centre employee] said sales reps earn points toward commission for every product and service they sell, such as a home security system or extra TV channels.

But they lose points every time they cancel a customer's service. ‘I would do everything I could not to cancel a customer's services, even though that's what they wanted,’ says Harley. The system created ‘a culture of dishonesty,’ he says, where some sales reps used various tactics to avoid having to reduce a customer's services and see their commissions drop.” Summary

Reinforcement strategies → if u want someone to learn a behaviour quickly give the person an award right after that behaviour occurs → partial reinforcement behaviour becomes more persistent

Social cognitive theory (Bandura) → But we can also learn on our own… → SCT emphasizes the role of cognitive processes in regulating people’s behaviour. People: → Learn by observing the behaviour of others, and Can regulate their own behaviour by: ◦thinking about the consequences of their actions, ◦setting goals, ◦monitoring performance,

◦and rewarding themselves. Components of social cognitive theory → Observational learning (i.e., learning behaviour consequences) → Increasing self-efficacy via behaviour modelling (of others) → Self-regulation Observational learning

Self regulation → Employees use of learning principles to manage their own behavior Self-observation: collect objective data observe models Set a goal Rehearse Self-reinforcement Set a new (more challenging) goal Learning theory highlights:Two learning theories 1.Operant learning theory ◦Central mechanism ◦Four specific learning processes: how to use them in a more effective way? 2.Social cognitive theory ◦Central mechanism ◦Observational learning and self-regulation

Decision Making

Rational decision making Systematic,step by step process clearly defined problem Complete and accurate information Knowledge of all possible alternatives and their consequences Clear evaluation criterion:economic gain Choose the best alternative Relying on reflective, rational thinking

We're not rational decision makers We encounter problems and biases at every decision making stage: → Identifying Problems and Opportunities → Searching for, Evaluating, and Choosing Alternatives → Evaluating Decision Outcomes Problems with problem identification → Stakeholder Framing •Employees, customers, etc. may present or hide information in ways that change decision makers’ evaluations of the situation – they may not even recognize there is a problem → Decisive Leadership •Problems are often poorly defined because decision makers perceive pressure to provide quick evaluations and solutions → Solution-Focused Problems •Decision makers may focus on solutions that have worked in the past rather than identifying the actual problem → Perceptual Defense •People sometimes fail to become aware of problems because they block out bad news Bounded rationality (Simon) People try to act rationally, but they are limited by: → Capacity to acquire and process information → Time constraints → Political considerations → Self-interest We rely on automatic thinking Problems with information processing We will consider a number of problems and biases in information processing: → Using an Implicit Favourite

→ Biased Decision Heuristics (i.e., mental shortcuts that allow us to make quick and efficient decisions – but are not necessarily optimal or rational) → Anchoring and Adjustment → Availability Heuristic → Representativeness Heuristic → Gambler’s Fallacy → Maximizing versus Satisficing → Emotions → Framing Effects Using an implicit favourite → The rational choice paradigm suggests that people can process information about all alternatives and their consequences → In reality, people are only able to evaluate several alternatives and they are often not all evaluated at the same time – we tend to engage in sequential evaluation → When a new alternative comes along, it is often compared to an implicit favourite –a preferred alternative that is used as a comparison standard Problems: •People tend to favour their implicit favourite – they overweight the advantages of the implicit favourite and ignore its shortcomings •People are often not aware that they are doing this Example: A newly hired engineer for a computer firm in Vancouver has 4 years of experience and good qualifications.

When asked to estimate the starting salary for this employee, my administrative assistant guessed an annual salary of $86,000. What is your estimate? When asked to estimate the starting salary for this employee, my administrative assistant guessed an annual salary of $150,000. What is your estimate? ◦People report significantly higher salary in the latter condition Anchoring and adjustment → The common human tendency to rely too heavily, or "anchor," on one trait or piece of information when making decisions → People develop estimates by starting from an initial anchor, based upon whatever information is provided, and adjusting from there to yield a final answer. → Implications: salary negotiations; pricing Example: which is more likely to occur in us?Death by homicide OR Death by stomach cancer

Death by plane crash OR Death by car crash Availability heuristic → Availability heuristic: people predict the frequency of an event, or a proportion within a population, based on how easily or how readily available an example can be brought to mind. → Decision makers tend to remember and incorporate vivid, recent events into their decisions. → Implications: performance appraisals example:“Tom W. is of high intelligence, although lacking in true creativity. He has a need for order and clarity, and for neat and tidy systems in which every detail finds its appropriate place. His writing is rather dull and mechanical, occasionally enlivened by somewhat corny puns and by flashes of imagination of the sci-fi type. He has a strong drive for competence. He seems to feel little sympathy for other people and does not enjoy interacting with others. Self-centered, he nonetheless has a deep moral sense.” Example continued: Estimate the probability that Tom W. is a student in each of the nine majors: ◦business administration, ◦computer science, ◦engineering, ◦humanities/education, ◦law, ◦library science, ◦medicine, ◦physical/life sciences, or ◦social science/social work Estimate the proportion of students there are in each of the nine majors. Representativeness heuristic → People judge the probability or frequency of a hypothesis by considering how much the hypothesis resembles available data as opposed to using a Bayesian calculation → A rule for categorization based on how similar the person or object is to our prototypes for that category → Neglecting base rate Implications: new business ventures; sales projections; hiring decisions example:You are about to hire a new central-region sales director for the fifth time this year. You predict that the next director should work out well, given that the last four were “lemons” and the odds favour hiring at least one good sales director in five tries. This thinking is:

A. Incorrect B. Correct Gambler’s fallacy Mistaken notion that the odds for something with a fixed probability increase or decrease depending upon recent occurrences. Maximizing versus satisficing According to the rational choice paradigm, people aim to maximize– to choose the alternative with the highest payoff In reality, people tend to satisfice – they choose the first option that is “good enough” Reasons: •Alternatives don’t present themselves all at once; you don’t always know if a better option will come along if you wait longer •People may lack the ability and motivation to process all the information required to select the best option •When there are too many options available, people sometimes decide to choose none of them at all Emotions → Emotions form early preference -We tend to have preferences for certain alternatives before we have even consciously evaluated the alternatives → Emotions and moods change the decision evaluation process - We pay more attention to details (“deep processing”) when we’re in a bad mood - Anger makes us more optimistic that a risky alternative will pay off; fear makes us less optimistic → Emotions can serve as information when we evaluate alternatives -We use “Emotions as Information” – the how-do-I-feel-about-it effect -Especially when the decision is complex Problem framing Problem 1 A large car manufacturer has recently been hit with a number of economic difficulties, and it appears as if three plants need to be closed. The VP of production has been exploring alternative ways to avoid the crisis and has developed 2 alternative solutions. → Alternative A: This plan will save 1 of the 3 plants → Alternative B: This plan has a 1/3 probability of saving all 3 plants and a 2/3 probability of saving nothing Problem 2

A large car manufacturer has recently been hit with a number of economic difficulties, and it appears as if three plants need to be closed. The VP of production has been exploring alternative ways to avoid the crisis and has developed 2 alternative solutions. → Alternative C: This plan will result in the loss of 2 of the 3 plants → Alternative D: This plan has a 2/3 probability of resulting in the loss of all 3 plants and a 1/3 probability of losing nothing Answers Problem 1: alternative a: this plan will save ⅓ plants Problem 2: alternative D: this plan has a ⅔ probability of resulting in the loss of all 3 plants and a ⅓ probability of losing nothing Framing

Framing Framing refers to the manner in which objectively equivalent alternatives are presented If information is framed positively (gain frame), it encourages conservative decisions. We take the sure thing over a chance at gaining more Prospect theory-loss aversion

→ Value of gain...