Management 300 Study Guide Test 2 CHAPTER 7 - Individual & Group Decision Making Rational decision making Non-rational decision making models Hindrances We also discuss several other topics like associationism definition
We also discuss several other topics like Where does new energy come from?
We also discuss several other topics like What is the mass spectrum for a Hydrocarbon?
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to making rational decisions Evidence-based decision making Business analytics Decision-making styles Common decision-making biases Advantages and disadvantages of group decision making ∙ Decision- choice made from among available alternatives ∙ Decision making - process of identifying and choosing alternative courses of action ∙ Rational Decision Making 1. Identify the problem or opportunity 2. Think up alternative solutions 3. Evaluate alternatives & select a solution 4. Implement & evaluate the solution chosen ∙ Rational Decision Making - explains how managers should make decisions. Assumes managers will make logical decisions that will be optimum in furthering the organization’s interest, also called the classical model o Assumptions: Should have complete information, no uncertainty No prejudices, just a logical, unemotional analysis You should make sure that is the best decision for the organization ∙ Nonrational Decision Making - assume that decision making is nearly always uncertain and risky, making it difficult for managers to make optimal decisions o Bounded Rationality- suggests that the ability of decision makers to be rational is limited by numerous constraints, complexity, time and money, cognitive capacity o Sacrificing Model - managers seek alternatives until they find one that is satisfactory, not optimal o Incremental Model - managers take small, short-term steps to alleviate a problem o Intuition - making a choice without the use of conscious thought or logical inference, sources are expertise and feelings ∙ Hindrances to making rational decisions o Complexity o Time and money constraints o Different cognitive capacity, values, skills, and habitso Imperfect information o Information overload o Different priorities o Conflicting goals ∙ Evidence-Based Decision Making - treat yours organization as an unfinished prototype. No brag, just fact, see yourself and your organization as outsiders do, evidence-based management is not just for senior executives o Implementation principles: like everything, you still need to sell it, if all else fails, slow the spread of bad practice, the best diagnostic question: What happens when people fail? o What makes it hard to be evidence-based: Too much, not good enough, doesn’t apply, people mislead, you mislead yourself, side effects outweigh cure, stories are more =persuasive anyway ∙ Business Analytics - sophisticated forms of business data analysis. Portfolio analysis, time-series forecast o EXAMPLE: Moneyball Movie. The A’s could not afford superstar free agents, so they looked for players that could contribute in other ways ∙ General Decision-Making Styles o Risk propensity - the willingness to gamble or to undertake risk for the possibility of gaining an increased payoff o Decision-making style - reflects the combination of how an individual perceives and responds to information, value orientation, tolerance for ambiguity Value orientation - the extent to which a person focuses on either task concerns or on people and social concerns when making a decision o The Four Styles Analytical (high tolerance for ambiguity, low value orientation) ∙ Considers more information and alternatives Conceptual (high tolerance for ambiguity, high value orientation) ∙ Takes a broad perspective to problem solving, likes to consider many options and future possibilities Directive (low tolerance for ambiguity, low value orientation) ∙ People are efficient, logical, practical, and systematic in their approach to problem solving. Action-orientated, like to focus on facts Behavioral (low tolerance for ambiguity, high value orientation) ∙ Supportive, receptive to suggestions, show warmth, prefer verbal to written information ∙ Three Effective Reactions to Decisions: 1. Importance - how high priority is this situation? 2. Credibility - how believable is the information about the situation? 3. Urgency - how quickly must I act on this information about the situation? ∙ Decision-Making Biases o Availability bias - use only available information o Representativeness bias - generalizing from a small sample o Confirmation bias - seek information confirming own point of view o Sunk-Cost bias - look at investment in project and conclude that it is too costly to abandon it o Anchoring & adjustment biases - decisions make on basis of an initial figure, big effect in negotiations o Overconfidence bias - belief that confidence is greater than accuracyo Hindsight bias - viewing events as more predictable than they were o Framing bias - influence by way situation is presented, glass half full o Escalation of commitment bias - commitment grows despite negative information, sticking with your guns vs. stupidity ∙ Advantages & Disadvantages of Group Decision Making o Advantages: Greater pool of knowledge, different perspectives, intellectual stimulation, better understanding of decision rationale, deeper commitment to decision o Disadvantages: a few people dominate or intimidate, groupthink, satisficing, goal displacement ∙ Groups & Decision Making o Less efficient (more people, more processing, more time) o Size affects decision quality o They may be too confident (groups more confident than individuals) o Knowledge counts - more experience and knowledge the better o Groups help: when it can increase quality, acceptance, and development CHAPTER 8 - Organizational Culture, Structure & Design What is organizational culture? Culture types in competing values framework Three levels of organizational culture How employees learn culture Process of cultural change Common elements of organizational structure Organizational structures - simple, functional, divisional, matrix, horizontal, hollow Mechanistic versus organic organizations ∙ Organizational culture - system of shared beliefs and values that develops within an organization and guides the behavior of its members (also called corporate culture) ∙ Four culture types o Clan culture - internal focused, values flexibility rather than stability, encourages collaboration among employees (Zappos, Southwest) o Adhocracy culture - creates innovative products by being adaptable, creative, and quick to respond to the market place (WL Gore, Google) o Market culture - focused on external environment, driven by competition and a strong desire to deliver results (Kia, financial firms) o Hierarchy culture - formalized structured work environment aimed at achieving effectiveness through a variety of control mechanisms, very regimented (GM, UPS)o HP Way - trust and respect for individuals, high level of achievement and contribution, uncompromising integrity in business, achieve common objectives through teamwork, encourage flexibility and innovation ∙ Three Levels of Organizational Culture 1. Observable artifacts - physical manifestations such as manner of dress, awards, myths and stories about the company (visible behavior exhibited by managers and employees) 2. Espoused values- stated values and norms preferred by an organization vs. enacted values - values and norms actually exhibited, reinforce or contradict 3. Basic Assumptions - represent the core values of the organization’s culture, those taken for granted and highly resistant to change, frequently hard to articulate ∙ How Employees Learn Culture o Symbol - an object, act, quality, or event that conveys meaning to others o Story - narrative based on true events, which is repeated to emphasize a particular value (i.e. Professor Henry’s story about booking a motel at night, taking a tire in return when Nordstrom didn’t sell tires) o Hero - person whose accomplishments embody the values of the organization o Rites and rituals - activities and ceremonies, planned and unplanned, that celebrate important occasions and accomplishments in the organization ∙ Importance of Organizational Culture - organizational identity, sense-making device, collective commitment, social system stability ∙ The Process of Cultural Change 1. Formal statements (mission, vision values) 2. Slogan & sayings 3. Stories, legends, & myths 4. Leader reaction to crises 5. Role modeling, training, and coaching 6. Physical design 7. Rewards, titles, promotions, & bonuses 8. Organizational goals & performance criteria 9. Measurable & controllable activities 10. Organizational structure 11. Organizational systems & procedures ∙ Organizational Structures - a system of consciously coordinated activities or forces of two or more people, for-profit, nonprofit, mutual-benefit ∙ Common Elements o Common purpose - unifies employees or members and gives everyone an understanding of the organization’s reason for being o Coordinated effort - the coordination of individual effort into group-wide effort o Division of labor - arrangement of having discrete parts of a task done by different peopleo Hierarchy of authority - control mechanism for making sure the right people do the right things at the right time (unity of command) o Span of control - refers to the number of people reporting directly to a given manager (narrow, wide, growing wider since 1980’s) o Authority, responsibility, & delegation Authority- rights inherent in a managerial position to make decisions Accountability - managers must report and justify work results to the managers above them Responsibility - obligation you have to perform the tasks assigned to you Delegation - process of assigning managerial authority and responsibility to managers and employees lower in the hierarchy o Centralization versus decentralization of authority Centralized authority - important decisions are made by higher level managers Decentralized authority - important decisions are made by middle level and supervisory-level managers Empowerment - pushes decision making authority and responsibility down to lowest level possible ∙ Basic Types of Organizational Structures o Simple structure - authority is centralized in a single person with few rules & low work specialization o Functional structure - people with similar occupational specialties are put together in formal groups o Divisional structure - people with diverse occupational specialties are put together in formal groups by similar products, customers, or geographic regions o Matrix structure - an organization combines functional and divisional chains of command in a grid so that there are two command structures vertical and horizontal o Horizontal design or teams - teams or workgroups, either temporary or permanent, are used to improve collaboration and work on shared tasks by breaking down internal boundaries o Hollow structure - the organization has a central core of key functions and outsources other functions to vendors who an do them cheaper or faster o Modular structure - firm assembles product chunks or modules, provided by outside contractors ∙ Mechanistic Organizations v. Organic Organizations o Mechanistic: centralized hierarchy of authority, many rules and procedures, specialized tasks, formalized communication, few teams or task forces, narrow span of control, taller structures o Organic: decentralized hierarchy of authority, few rules and procedures, shared tasks, informal communication, many teams or task forces, wider span of control, flatter structureCHAPTER 9 - Human Resource Management HR Process Strategic human resource management Job analysis, description, and specification Labor relations EEO and workplace discrimination Recruitment and realistic job preview Selection and interviewing Orientation, training, and development Performance appraisal Compensation Rewards and discipline ∙ Human Resource Management - attract, develop, retain an effective workforce ∙ Establish mission & vision, establish grand strategy, formulate the strategic plan, plan human resources needed, recruit & select people, orient, train, and develop, perform appraisals of people ∙ Strategic human resource planning - consists of developing a systematic, comprehensive strategy for understanding current employee needs and predicting future employee needs, derived from goals and needs articulated in strategic plan ∙ Job analysis - determining the basic elements of a job by observation and analysis ∙ Job description - summarizes what the holder of a job does and why they do it ∙ Job specification - describes the minimum qualifications a person must have to perform a job successfully (QuickStop Oil Lube Example) ∙ Human resource inventory - report listing your organization’s employees by name, education, training, languages, and other important information, identifies strengths and gaps in your workforce ∙ Labor Relations o National Labor Relations Board - enforces procedures whereby employees may vote for a union and collective bargaining Collective bargaining - negotiations between management and employees about disputes over compensation, benefits, working conditions, and job security o Fair Labor Standards Act of 1938 - established minimum living standards for workers engaged in interstate commerce, including provision of a federal minimum wage o Equal Employment Opportunity Commission - job is to enforce antidiscrimination and other employment related laws o Discrimination - occurs when people are hired, promoted, or denied hiring or promotion for reasons not relevant to the jobo Affirmative action - focuses on achieving equality of opportunity within an organization including establishment of minority hiring goals o Adverse impact - occurs when an organization uses an employment practice or procedure that results in unfavorable outcomes to a protected class (i.e. the SAT,ACT) o Disparate treatment - results when employees from protected groups are intentionally treated differently o Sexual harassment - consists of unwanted sexual attention that creates an adverse work environment Quid pro quo - tangible economic injury Hostile environment - offensive work environment ∙ Recruitment - process of locating and attracting qualified applicants for jobs open in the organization, internal or external o Realistic job preview - gives a candidate a picture of both the positive and negative features of the job and the organization before he is hired, people tend to quit less frequently and be more satisfied o Selection - screening of job applicants to hire the best candidate, application forms, resumes, reference checks o Unstructured interview - no fixed set of questions and no systematic scoring procedure, involves asking probing questions to find out what the applicant is like o Structured interview - involves asking each applicant the same questions and comparing their responses to a standardized set of answers Situational - focuses on hypothetical situations (STAR - Situation, Task that you had to resolve, Action you took, Result) Behavioral - explore what applicants have done in the past o Employment tests - legally considered to consist of any procedures used in the employment selection decision process (ability, performance, personality, questioning the reliability and validity of the results) o Orientation - helping the newcomers fit smoothly into the job and the organization, designed to give employees the information they need to be successful (Scripps Example, the boring, long-winded video about what they do at Scripps) Following orientation, the employee should emerge with information about the job routine, the organization’s mission and operations, and the organization’s work rules and employee benefits o Training - educating technical and operational employees how to better do their current jobs (technical colleges and on-the-job training) o Development - educating professionals and managers in the skills they need to do their jobs in the future, professional societies and conferences ∙ Performance management - the continuous cycle of improving job performance through goal setting, feedback, and coaching, and rewards and positive reinforcemento Performance appraisal - consists of assessing an employer’s performance and providing him with feedback Objective appraisal - based on fact and often numerical, measure results, harder to challenge legally Subjective appraisal - based on a manager’s perceptions of an employees traits and behaviors BARS - rates employee gradations in performance according to scales of specific behaviors 360 Degree Performance Review - employee’s performance is reviewed by: immediate manager, coworkers, subordinates, customers and clients, and themselves Forced ranking - all employees within a business unit are ranked against one another and grades are distributed along some sort of bell curve (GE Example) Formal appraisal - conducted at specific times and based on established performance measures Informal appraisal - conducted on an unscheduled basis and consists of less rigorous indications of employee performance ∙ Compensation - wages or salaries, incentives, and benefits ∙ Base pay - basic wage or salary paid employees in exchange for doing their jobs ∙ Managing Promotions - promotion (moving upward), transfer (moving sideways), disciplining & demotion (the threat of moving downward), dismissal (moving out of the organization) ∙ Labor Unions - organizations of employees formed to protect and advance their members’ interests by bargaining with management over job-related issues o Union security clause - the part of the labor-management agreement that states that employees who receive union benefits must join the union, or at least pay dues to it Closed shop - employer may hire only workers for a job who are already in the union (illegal) Union shop - workers aren’t required to be union members when hired for a job but must join the union within a specified time (not allowed in right-to-work states) Agency shop - workers must pay equivalent of union dues, but aren’t required to join the union (applies to public-sector teachers) Open shop - workers may choose to join a union or not (applies in right-to-work states) ∙ Compensation o Two-tier wage contracts - new employees are paid less or receive lesser benefits than veteran employees have o Cost of living adjustments (COLA) - wage increase index to the cost of living o Givebacks - the union agrees to give up previous wage or benefit gains in return for something elseo Grievance - a complaint by an employee that management has violated the terms of the labor-management agreement ∙ Mediation vs. Arbitration o Mediation - process in which a neural third party, a mediator, listens to both sides in a dispute, makes suggestions, and encourages them to agree on a solution o Arbitration - process in which a neutral third party, an arbitrator, listens to both parties in a dispute and makes a decision that the parties have agree will be binding on them CHAPTER 10 - Organizational Change & Innovation Collin’s five stages of decline Fundamental change Force for change insight and outside the organization Commonly needed areas for change Resistance to change Lewin’s change model Organizational development The OD process ∙ Collins’ Five Stages of Decline 1. Hubris Born of Success - creates belief that success due to own superior qualities rather than other factors 2. Undisciplined Pursuit of More - overreaching, diversification or trophy properties 3. Denial of Risk and Peril - ignoring negative information, hyping positive information 4. Grasping for Salvation - desperate leaps for a silver-bullet solution 5. Capitulation to Irrelevance or Death - most companies fail at some point ∙ Fundamental Change o The marketplace is becoming more segmented & moving towards more niche products (Amazon can sell a large number of niche products) o There are more competitors offering targeted products, requiring faster speed-to-market o Some traditional companies may not survive radically innovative change (disruptive innovation, Nokia in the cell phone market) o China, India, and other offshore suppliers are changing the way we work (offshoring manufacturing, but also knowledge work) o Knowledge, not information, is becoming new competitive advantage - valuing analytic, problem solving, and abstract reasoning skills ∙ Two Types of Changeo Reactive change - making changes in response to problems or opportunities as they arrive o Proactive change - involves making carefully thought-out changes in anticipation of possible or expected problems or opportunities, also called planned change ∙ The Forces for Change o Outside the Organization Demographic characteristics ∙ Age, education, skill level, gender, immigration Market changes ∙ Mergers, international competition, recession Technological advancement ∙ Manufacturing automation Shareholder & customer demands Supplier practices Social & political pressures ∙ Leadership, values o Inside the Organization Employee problems ∙ Unmet needs, dissatisfaction, turnover, productivity Managers’ behavior ∙ Conflict, leadership, reward systems o Areas in which change is often needed Changing people (perceptions, attitudes, performance, skills) Changing technology (not just IT, but also processes) Changing structure (new strategies require changes in structure) Changing strategy (marketplace shifts requires strategic shifts o Model of Resistance to Change - employee characteristics, change agent characteristics, change agent-employee relationship ∙ Degree to which employees fear change o Least threatening - adaptive change (reintroduction of a familiar practice) o Somewhat threatening - innovative change (introduction of a practice that is new to the organization) o Very threatening - radically innovative change (involves introducing a practice that is new to the industry) ∙ Reasons Employees Resist Change o Individuals’ predisposing towards change o Surprise and fear of the unknown o Climate of mistrusts o Fear of failure o Loss of status or job security o Peer pressure o Disruption of cultural traditions or group relationshipso Personality conflicts o Lack of tact or poor timing o Non-reinforcing reward system ∙ Lewin’s Change Model o Unfreezing - creating the motivation to change o Freezing - learning new ways of doing things o Refreezing - making the new ways normal ∙ Kotter’s 8 Steps to Leading Organizational Change o Established a sense of urgency, create a guiding coalition, develop a vision and strategy, communicate the change vision, empower a broad-based action, generate short-term wins, consolidate gains and produce more change, anchor new approaches in the culture ∙ Two Myths about Innovation o Innovation happens in a Eureka moment o Innovation can be systematized ∙ Seeds of Innovation - hard work in specific direction, hard work with direction change, curiosity, wealth and money, necessity, combination of seeds ∙ Types of Innovation o Product innovation - change in the appearance or performance of a product or the creation of a new one, new and improved Tide laundry detergent o Process innovation - change in the way a product is conceived, manufactured, or disseminated (use of RFID tags in logistics, ie) o Incremental innovation - creation of products, services, or technologies that modify existing one (sequel or prequel movies - Iron Man) o Radical innovation - creation of products, services, or technologies that replace existing ones (iPod radically altering the MP3 market) ∙ Factors Encouraging Innovation o The right organizational culture, the appropriate resources, and the correct reward system (see Innovation at Google) o Culture: is innovation viewed as a benefit or a waste of time? o Resources: do managers put money where their mouths are? o Rewards: is experimentation reinforced in ways that matter? ∙ Four Steps for fostering innovation 1. Recognize problems & opportunities & devise solutions 2. Gain allies by communicating your vision 3. Overcome employee resistance, & empower & reward them to achieve progress 4. Execute well by effectively managing people, groups, and organizational processes and systems in the pursuit of innovation ∙ Gain allies by communicating your vision o Showing how the product or service will be made, showing how potential customers will be reached, demonstrating how you’ll beat your competitors, explaining when the innovation will take placeCHAPTER 11- Managing Individual Differences & Behavior Personality Five important traits in organizations Emotional intelligence Values and attitudes Perception and distortions Work-related attitudes Workforce diversity Stress ∙ Organizational Behavior - tries to help managers not only explain workplace behavior but also to predict it, so that they can better lead and motivate their employees to perform productively (individual, group behavior) ∙ Personality - the stable psychological traits and behavioral attributes that give a person his or her identity; managers need to understand the personalities of their people in order to manage and develop them into great employees ∙ Five Factor Model of Personality o Open to Experience Intelligence, imagination, curiosity, adventurousness o Conscientiousness Self-efficacy, dutifulness, achievement-striving, self-discipline, cautiousness o Extraversion Friendly, outgoing, assertive, excitement seeking o Agreeableness Empathy, interpersonal sensitivity, need for affiliation, trust, morality, cooperation, modesty o Neuroticism (Emotional Stability) Emotional stability, self-control, anxiety, anger, depression, vulnerability ∙ Five Traits Important in Organizations o Locus of control - indicates how much people believe they control their fate through their own efforts, internals have less anxiety, greater motivation and strong performance expectations than externals, internals do not need as much supervision, external crave structured jobs o Self-efficacy- belief in one’s ability to do a task, high self-efficacy leads to high performance, employees with low self-efficacy can be coached and nurtured so that they develop high self-efficacyo Self-esteem - the extent to which people like or dislike themselves, their overall self-evaluation; high self-esteem handle failure better, emphasize the positive, and take risks; low self-esteem focus on weaknesses and negative thoughts; develop esteem through reinforcement of positive attributes and coaching/mentoring o Self-monitoring - the extent to which people are able to observe their own behavior and adapt it to external situations, high self-monitors adapt to social cues and can be seen as either sensitive or as social chameleons, low self-monitors ignore social cues and can be seen as insensitive to others o Emotional intelligence - self-awareness, self management, social awareness, relationship management Emotional intelligence is the new thing, if you have IQ over 115, the only thing that differentiates you is your EI ∙ Values - abstract ideals that guide one’s thinking and behavior across all situations ∙ Attitude - a learned predisposition toward a given object. Three components of attitude: o Affective - consists of feelings or emotions one has about a situation o Cognitive - beliefs and knowledge one has about a situation o Behavioral - refers to how one intends or expects to behave toward a situation ∙ Cognitive dissonance - the psychological discomfort a person experiences between his or her cognitive attitude and incompatible behavior (externally it looks like hypocrisy, internally people change attitude or behavior, reduce its importance, or rationalize) ∙ Perception - process of interpreting and understanding one’s environment, particularly important during performance evaluations o Four Steps in Perceptual Process: 1. Selective attention - Did I notice something? 2. Interpretation & evaluation - What was it I noticed? 3. Storing in memory 4. Retrieving from memory to makes judgments & decisions ∙ Distortions in Perception: o Stereotyping - tendency to attribute to an individual the characteristics on believes are typical of the group to which that individual belongs (gender, age, race/ethnicity, values) o Halo effect - forming an impression of an individual based on a single trait, liking/disliking translated into good/bad evaluationo Recency effect - tendency to remember recent information better than earlier information, more recent performance easier to remember than more distant performance Fundamental attribution bias - occurs when people attribute another person’s behavior to his or her personal characteristics rather than situational factors Self-serving bias - occurs when people take more personal responsibility for success than for failure o Casual attributions - activity of inferring causes for observed behaviors o Self-fulfilling prophecy - the phenomenon in which people’s expectations of themselves or others lead them to behave in ways that make those expectations come true (also called the Pygmalion effect) ∙ Work-Related Attitudes o Employee engagement - an individual’s involvement, satisfaction, and enthusiasm for work, difference in engagement between countries and sectors Job involvement - extent to which you identify or are personally involved with your job Job satisfaction - extent tow which you feel positively or negatively about various aspects of your work o Organizational commitment - reflects the extent to which an employee identifies with an organizational and is committed to its goals, strong positive relationship between organizational commitment and job satisfaction ∙ Important Workplace Behaviors o Performance and productivity o Absenteeism and turnover o Organizational citizenship behaviors (performance outside of work duties, good citizen; show new workers the ropes o Counterproductive work behaviors - harmful work behaviors, stealing, drug abuse, harassment o Organizational citizenship behaviors are those employee behaviors that are not directly part of employees’ job descriptions- that exceed their work-role requirements ∙ Diversity - represents all the ways people are unlike and alike - the differences and similarities in age, gender, race, religion, ethnicity, sexual orientation, capabilities, and socioeconomic o Age: more older people in the workforce o Gender: more women working o Race & ethnicity: more people of color in the workforce o Sexual orientation: gays & lesbians become more visible o People with differing physical & mental abilities o Educational levels: mismatches between education & workforce needs∙ Stress- the tension people feel when they are facing or enduring extraordinary demands, constraints, or opportunities are uncertain about their ability to handle them effectively. Sources of Stress: o Demands created by individual differences o Individual task demands o Individual role demands o Group demands o Organizational demands o Nonwork demands ∙ Symptoms of Stress: o Physiological- backaches, headaches, sweaty palms o Psychological- boredom, irritability, nervousness, depression o Behavioral- sleeplessness, changes in eating habits, drug abuse ∙ Burnout- state of emotional mental, and even physical exhaustion ∙ Reducing Stressors in Organizations o Roll out employee assistance programs o Recommend a holistic wellness approach o Create a supportive environment o Make jobs interesting o Make career counseling available