Midterm 2 Study Guide PDF

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Study guide for BU288 midterm 2 with Daniel Brady....

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Chris Murray Page #1 Organizational Behavior Midterm 2 Study Guide

Groups and Teamwork A group is defined as two or more people interacting interdependently to achieve a common goal. Situations where you might want to use a group: ● Relatively uncertain or complex problem (hard to identify expertise) ● Problem requires intergroup cooperation ● Acceptance and or commitment to decision are critical for implementation Additive Tasks - sum total matters ● Tasks where group performance is dependent on the sum total of individual performances - Ex. adding up individual sales in different districts to come to a final sales for the firm sum - Ex. tug of war Disjunctive Tasks - best contributor matters ● Tasks where group performance is dependent on the performance of the best group member - Ex. letting one art project represent the entire school - Ex. weightlifting competition where 3 members lift, heaviest is used Conjunctive Tasks - worst contributor matters ● Tasks where group performance is limited by the performance of the worst performer - Ex. climbing a mountain There is a negative relationship between group size and satisfaction. ● Conflict ● Social inhibition about participating in larger groups ● Individual contributions harder to recognize ○ Can reduce identification with group

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Multiple perspectives Greater openness to new ideas Multiple interpretations Increased creativity Increased flexibility Increased problem-solving skills

Disadvantages ● ● ● ● ● ●

Ambiguity Complexity Confusion Miscommunication Difficulty in reaching a single agreement Difficulty in agreeing on specific actions

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Surface Diversity ○ Ex. age, gender, race ● Deep Diversity ○ Differences in attitudes toward work or how to accomplish a goal ● Rule of thumb ○ Include enough diversity to capitalize on different perspectives but not too much such that it hinders communication and performance Social Loafing ● Tendency to withhold effort when performing a group task ● Free riders ○ Lower effort to get a free ride at the expense of others ● Sucker effect ○ People lower effort because they feel others are free riding (think Equity Theory) Combating Social Loafing ● Make individual performance more visible ○ Easier with small groups ● Make sure work is interesting ● Increase feeling of indispensability ● Increase frequency/quality of performance feedback ● Reward group performance ● Change norms

Chris Murray Page #3 Brainstorming ● To improve the effectiveness of brainstorming ○ Identifiable contribution ○ No judgements during brainstorming session ○ Equal status ○ Using individual sessions to generate initial ideas ● Electronic brainstorming Motivation Motivation is the extent to which persistent effort is applied toward a goal. ● Effort ● Persistence ● Direction ● Goals

Motivation Theory Breakdown ● Intrinsic vs. Extrinsic motivation ○ Needs theories ■ WHAT motivates ● Self-determination theory, Maslow’s theory, Alderfer’s theory, McClelland’s Theory ○ Process theories ■ HOW motivation occurs ● Goal-setting theory, expectancy theory, equity theory and organizational justice theory

Chris Murray Page #4 Intrinsic vs. Extrinsic Motivation ● Intrinsic motivation ○ Wanting to do a task for its own sake (interested) ○ Usually self-applied, from inside ○ Strong and stable impacts ● Extrinsic motivation ○ Wanting to do a task to obtain external reward (money, recognition) ○ Usually applied by others (managers), from outside ○ Only work in certain situations, not long lasting Self-Determination Theory ● Focus on the degree to which behavior is self-motivated/self-determined ● Continuum of motivation - from autonomous to controlled ○ Autonomous motivation occurs when people are self-motivated by intrinsic factors ○ Controlled motivation occurs when people are motivated to obtain a desired consequence or extrinsic reward

3 fundamentals intrinsic needs in Self-Determination

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Autonomy (need to be in control of one’s own fate) Competence (need to grow and experience mastery) Relatedness (need to connect with others)

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What Can Managers Do? ● Boost expectancies: increase self-efficacy ○ Providing proper equipment ○ Training and mentoring ○ Developing correct work procedures ○ Listening to employee problems and providing feedback ● Boost instrumentality: clarify reward contingencies ○ Objective performance assessments ○ Fair rewarding system ● Bost valence of outcomes: design of rewards ○ Appreciate diversity needs: be aware of value differences Goal Setting Theory ● A process theory of motivation

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Locke & Latham’s Goal Setting Theory ○ Premise: goals are motivators of human action ○ Theory lays out how goals are translated into motivation

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How do goals affect behaviors? ○ Direct attention to a particular task ○ Mobilize on task effort ○ Encourage task persistence ○ Facilitate strategy development

Goal Setting Theory ● Goals are most motivational when: ○ They are specific

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They are challenging Organizational members accept them and commit to them Feedback about progress toward goal attainment is provided ■ Be specific, accurate, credible, and timely ■ Enables individuals to assess progress toward goals and adjust

Velocity Matters Beware: It’s not just discrepancy between current state and goal state that matters Velocity = rate of discrepancy change over time Velocity x Discrepancy interaction ● Affects task satisfaction ● Success expectancy ● Goal commitment The Role of Money ● Money is the most commonly used reward in organizations ○ Money helps some needs get met Money isn’t every employees’ top priority ● Many emphasize ○ Relationships in the workplace ○ Opportunities for development ● Relationship between pay level and… ○ Job satisfaction: Very weak positive relationship (r=.15) ○ Pay satisfaction: Weak positive relationship (r = .23) Reward Follies ● Reward follies occur when organizations “reward A while hoping for B” ○ E.g. want to encourage teamwork but reward the “best” individual team members ● Why do they happen? ○ Stuck in old patterns of rewards and recognition ○ Don’t look at the big picture ○ Focus on short-term results ○ Make assumptions

Cognitive Evaluation Theory ● Part of Self-determination theory ● Allocating extrinsic rewards for behavior that was previously intrinsically rewarded tends to decrease the overall level of motivation

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Why does this occur? ○ Loss of control over behavior ○ Internal changes to external explanation ■ “It was interesting” to “I did it for the money”

Some Key Points about Rewards ● Recognize Individual Differences ○ Employees have different needs ○ Don’t treat them all alike ○ Spend the time necessary to understand what’s important to each employee ● Link rewards to performance ○ That which gets measured/rewarded gets done. ○ Expectancy theory can provide insight into how to make rewards effective ○ Make sure rewards are “fair” ○ Provide feedback and allow employees to participate in decisions that affect them ● Formal rewards are not everything ○ Organizations should focus less on rewards, and more on creating motivating environments Job characteristics theory (JCT) ● Job design as intrinsic motivator ● Core job characteristics - have a strong potential to affect motivation ○ Skill variety: opportunity to do a variety of job activities using a variety of skills and talents ○ Task identity: the extent to which a job involves doing a complete piece of work ○ Task significance: impact that a job has on other people ○ Autonomy: freedom to schedule one’s work activities and decide work procedures ○ Feedback from job: information about one’s performance effectiveness

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Equity Theory (recap) ● Individuals are motivated to maintain an equitable exchange relationship ● When perceiving inequity… ○ Behavioral reactions ○ Cognitive reactions

If employees perceive an inequity, they are motivated to restore equity. This can be accomplished any one of the following: a) Try to get their own outcomes increased. b) Decrease their own inputs. c) Attempt to get comparison other’s outcomes decreased. d) Attempt to have comparison other’s inputs increased. e) Find another “relevant other” to use a comparison. f) Leave the situation. g) Rationalize the inequity (e.g., Harvey and Cathy are in a relationship)

Chris Murray Page #12 Decision Making Decision Making is the process of developing a commitment to some course of action ● Process ● Commitment ● Course of action based on a choice among alternatives Perfectly Rationality vs Bounded Rationality ● Perfect Rationality: A decision strategy that is completely informed, perfectly logical, and oriented toward economic gain ● Bounded Rationality: A decision strategy that relies on limited information and that reflects time constraints and political considerations Rational Decision Making

Assumptions of the Rational Model ● Problem is clear and unambiguous ● We know all options ● We have clear preferences (for weighting)

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Preferences are constant (weights are stable over time) No time or cost constraints Maximum payoff Rational model relies on rational thinking

Bounded Rationality ● Managers try to act rationally, but they are limited by: ○ Capacity to acquire and process information ○ Time constraints - Reliance on flawed memory; Obtain too little or irrelevant information; Potential ignorance of or miscalculation of values and probabilities; etc. ○ Political considerations ○ Self-interest - Criteria for solution evaluation involves political factors to please others and factors that protect self-image - We rely on automatic thinking How are decisions actually made? ● Full bias and heuristics ● We tend to only focus on visible problems ● We satisfice ○ Identifying a solution that is “good enough” ○ Bounded Rationality places limits on our ability to interpret, process, and act on info ● We use intuition ○ A subconscious process created out of distilled experience 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 plans. ○ Plan A: This plan will save 1 of the 3 plants for sure ○ Plan B: This plan has a ⅓ probability of saving all 3 plants and ⅔ 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 plans. ○ Plan C: This plan will result in the loss of 2 of the 3 plants for sure ○ Plan D: This plan has a ⅔ probability of resulting in the loss of all 3 plants and a ⅓ probability of losing nothing Problem Framing

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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 of gaining more. If information is framed negatively (loss frame), it encourages risk. We take a chance at losing less rather than accepting a sure loss. ○ NASA asked Morton Thiokol to put on their management hats before the Challenger launch ○ They changed their mind when thinking about financial losses instead of safety

Problem Framing (example) Gain Frame

Plan A: The plan will save 1 of the 3 plants Plant B: This plan has ⅓ probability of saving all 3 plants

Loss Frame

Plan C: This plan will result in the loss of 2 of the 3 plants Plan D: This plan has a ⅔ probability of resulting in the loss of all 3 plants

Prospect Theory - Loss Aversion

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value of gain < value of loss A loss of x hurts about twice as much as a gain of x pleases. ●

Kahneman and Tversky ○ We can’t assume our judgements are good building blocks for decisions because the judgements themselves may be flawed

Groupthink ● The capacity for group pressure to damage the mental efficiency, reality testing, and moral judgement of decision-making groups ●

Why does it happen? ○ Strong identification with the group ○ Concern for group’s approval ○ Isolation of the group from other sources of information

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Some groupthink symptoms: ○ Illusion of invulnerability (members overconfident - ignore danger signals) ○ Rationalization (problems are rationalized away) ○ Illusion of morality (decisions are perceived as morally correct) ○ Stereotypes of outsiders (unfavorable stereotypes of those outside the group) ○ Pressure to conform (members pressure each other to conform with group’s views) ○ Self-censorship (members convince themselves to avoid voicing opinions contrary to group) ○ Illusion of unanimity (members perceive unanimous support) ○ Mindguards (some members “protect” the group from information that goes against decisions)

Chris Murray Page #16 Risks and Groups ● Risky Shift: the tendency for groups to make riskier decisions than the average risk initially advocated by individual team members ● Conservative Shift: the tendency for groups to make less risky decisions than the average risk initially advocated by their individual members. ● Group discussion polarizes or exaggerates the initial positions of group members

Devil’s Advocate Role ● A person appointed to identify and challenge the weakness of a proposed plan or strategy ○ Introduces controversy ○ Brings in extra information ○ Illuminates full pros and cons of decision ● Can be used to challenge groupthink Escalation of Commitment ● Escalation of commitment refers to the tendency to invest additional resources in an apparently failing course of action. ○ Throw good resources after bad, acting as if one can recoup sunk costs ● ●

Sunk costs are permanent losses of resources incurred as the result of a decision. Since these resources have been lost due to a past decision, they should not enter into future decisions.

Escalation of Commitment: Why? ● People want to reduce dissonance by recouping the “sunk cost” (self-justification theory) ● Overconfidence (confirmation bias)

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○ Irrational belief that the additional investment will succeed Problem framing after a sunk cost (loss aversion based on prospect theory) ○ A decision between a sure loss of x dollars and an uncertain loss of x+y dollars Social norms favor consistent behavior (impression management)

Escalation of Commitment: What can we do? ● Actively seek disconfirming information about a chosen alternative ● Reframe losses as gains to prevent risk-seeking behavior ● Structure incentives about whether to commit more resources to an investment to new decision makers ● Be careful not to consider expended resources when making decisions ● Make sure decision makers are frequently reminded of the goals of the investment Emotions & Decision Making ● People in a good mood tend to overestimate the likelihood that good events will occur and underestimate the occurrence of bad events. People in a bad mood do the opposite. ● People in a good mood adopt simplified, shortcut decision-making strategies, more likely violating the rational model. ● People in a negative mood are prone to approach decisions in a more deliberate, systematic, detailed way. Politics & Decision Making ● Political Defensiveness concerns the defense or protection of self-interest. ○ The goal is to reduce threats to one’s own power by avoiding actions that do not suit one’s own political agenda or avoiding blame for events that might threaten one’s political agenda. ● Think back to the video clip… what politics were involved? Take Home Points from the Case ● Managers face problems when making decisions under uncertainty ● Decisions that occur in a behavioral context are often ambiguous; critical pieces of information are either unavailable or are suppressed ○ Whose opinion should you believe? ● Importance of gathering all relevant data ● Perceptions bias the use of information ● Quantitative calculations are only as solid as the data that are input (rational model can be flawed) ● How you frame a problem influences the decision ○ Initial choices influence next decisions

Chris Murray Page #18 Time to Use More Structure ● No history of past interaction (structure compensates for lack of norms) ● History of conflict (structure controls interaction) ● Lots of people ○ Structure makes it manageable ● Participants of unequal status ○ Structure helps low status views get heard ● Scarce on time ○ Structure forces more efficient use of time and more preparation ● Heterogeneous group ○ Structure helps with different norms ● High needs to get acceptance and commitment ○ Structure helps with procedural justice Negotiation Negotiation: a decision-making process among interdependent parties who do not share identical preferences. ● We negotiate all the time: ○ Pricing a new product ○ Dealing with job recruiters ○ Mergers and acquisitions ○ Buying a house ○ Going to a movie Negotiation Strategies ● Distributive bargaining ○ Win-lose negotiation that seeks to divide up a fixed amount of resources ● Integrative bargaining ○ Win-win negotiation that assumes mutual problem-solving can enlarge the assets to be divided

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How to Negotiate ● Assess personal goals, consider other’s goals, develop strategy ● Identify target and resistance points ○ Target: what one would like to achieve ○ Resistance: lowest outcome acceptable ● Identify BATNA ○ Best Alternative To a Negotiated Agreement

Chris Murray Page #20 Integrative Strategies ● Build trust and share information ● Emphasize commonalities and minimize differences ● Ask lots (and lots) of questions (try to get a good understanding of the other’s real needs and objectives) ● Give away some information ● Make multiple offers simultaneously ● Search for a novel solution that meets goals of both sides BATNA (Best Alternative To the Negotiated Agreement) ● Know your BATNA ○ You should not be accepting less than your BATNA ○ Find out as much as you can about your opponent’s BATNA ○ In this exercise what was the BATNA? ■ BATNA in this exercise is not “splitting the difference” ■ BATNA was zero (not accepting or offering the job) The Importance of Planning in Negotiation ● Planning is Critical ○ Must walk into the negotiation prepared ○ Define your negotiating zone ○ Set resistance and target points ○ Insufficient planning = failure ○ Planning will tell you when to walk away from the table and when an agreement is acceptable Common Mistakes in Negotiation ● #1: Irrational Escalation of Commitment ○ Continuing a previously chosen course of action beyond what a rational analysis would recommend ● “If at first you don’t succeed, then try, try again. Then quit. There is no point being a fool about it” ○ W.C. Fields ●

#2: Belief in the Mythical Fixed-Pie ○ The assumption that your own interests directly conflict with the other party ■ Leads to “win-lose” thinking

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#3: Anchoring and Adjustment ○ An anchor is a standard against which future adjustments are measured ○ Very often, the choice of an anchor is based on faulty or incomplete information ○ The best way to solve the problem is to do your homework

Improving Your Bargaining Position ● Begin with a positive overture

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Address problems, not personalities Pay little attention to initial offers Emphasize win-w...