Management Exam #2

rational decision making

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Terms in this set (208)

Rational decision making is a multi-step process, from problem identification through solution, for making logically sound decisions.

nonrational decision making

People frequently employ alternative, non-rational techniques in their decision making processes.

bounded rationality

-developed in the 1950's by economist herbert simon
-suggests that the ability of decision makers to be rational is limited by numerous constraints (complexity, time and money, cognitive capability)

satisficing model

-Because of constraints, managers do not make an exhaustive search for the best alternative
-Instead, managers seek alternatives until they find one that is satisfactory, not optimal

intuition

making a choice without the use of conscious thought or logical inference
-Steps from both:
o Expertise: a person's explicit and tacit knowledge about a person, a situation, an object, or a decision opportunity - is known as a holistic bunch
o Automated experience: the involuntary emotional response to those same matters
tips for improving your intuition:
· Trust your intuitive judgements
· Seek feedback
· Test your intuitive success rate
· Try visualizing solutions
· Challenge your intuition

ethical decision tree

ethics officer

someone trained about matters of ethics in the workplace, particularly about resolving ethical dilemmas

evidence-based management

translating principles based on best evidence into organizational practice, bringing rationality to the decision-making process

implementation principles of evidence based decision making

-Treat your organization as an unfinished prototype
-Don't brag, just use facts
-See yourself and your organization as outsiders do
- Evidence based management is not just for seniors executives
-Like everything else, 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

predictive modeling

a data-mining technique used to predict future behavior and anticipate the consequences of change

big dataincludes not only data in corporate databases but also web-browsing data trails, social network communications, sensor data, and surveillance databig data analyticsthe process of examining large amounts of data of a variety of types to uncover hidden patterns, unknown correlations, and other useful informationUses of Big Data- Analyzing consumer behavior and spurring sales - Improving hiring and personnel management - Tracking movie, music, TV, and reading Data - Exploiting farm data - Advancing health and medicine - Aiding public policyFour General Decision Making Stylesdecision making bias: avaliabilityuses readily avaliable info bias: not a complete picturedecision making bias: representativenessgeneralize from small sample bias: not representative (1x)decision making bias: confirmationdiscount data not supporting their view bias: only listen to what we want to hear - ignore the restdecision making bias: sunk - costproject too costly to stop bias: concorde effectdecision making bias: anchoring and adjustmentdecisions based upon an initial figure bias: can be completely out of line (pay raises)decision making bias: overconfidencetoo self confident; lacking objectivity bias: blind to our blindness BP deepwater horizondecision making bias: hindsightevents not that predictable bias: "I knew it all along"decision making bias: framinghow a problem is presented bias: 85% lean beefdecision making bias: escalation of commitmentincrease commitment despite negative information bias: spending good $'s after bad - DEA spy planegroup decision making advantages· Greater pool of knowledge · Different perspectives · Intellectual stimulation · Better understanding of decision rationale · Deeper commitment to the decisionGroup Decision Making disadvantages· Few people dominate or intimidate · Satisficing: the "good enough" decision · Goal displacement: other issues may arise · Groupthink: agreeing for the sake of unanimity and thus avoid accurately assessing the decision situationsymptoms of group think· Sense of invulnerability · Rationalization · Illusion of unanimity and peer pressure · "the wisdom of crowds"group decision making· They are less efficient · Their size affects decision quality o Optimal group size may be 5 or 7 people o Odd group numbers are best · They may be too confident · Knowledge countsWhen can a group help in decision making?1. when it can increase quality 2. when it can increase acceptance 3. when it can increase developmentgoal displacementgoing off on tangents and getting away from the actual goalconsensusoccurs when members are able to express their opinions and reach agreement to support the final decisionbrainstormingtechnique used to help groups generate multiple ideas and alternatives for solving problems · Rules for brainstorming o Defer judgment o Build on the ideas of others o Encourage wild ideas o Go for quantity over quality o Be visual o One conversation at a timedevil's advocacyassigning someone the role of critic, uncovers and airs all possible objectivesdialectic method· Identify a truth, a thesis · Explore opposite positions, or antithesis · Structured dialogue or debateProject Post MortemReview of recent decisions to identify possible future improvements · Evaluate after the fact · What could have been done better? Differently? · Record insights for future decision makingorganizational culturethe set of shared, taken for granted implicit assumptions that a group holds and that determines how it perceives, thinks about, and reacts to its various environmentsWhat drives organizational culture?Founder's values Industry and business environment National culture Organization's vision and strategies Behavior of leadersFlow of organizational cultureorganizational structurea formal system of task and reporting relationships that coordinates and motivates an organizations members so that they can work together to achieve the organizations goals · Concerned with WHO reports to WHOM and WHO specializes in WHAT workimportance of cultureThree Levels of Organizational Culture1. observable artifacts: physical manifestations of culture 2. espoused values: explicitly stated in values and norms 3. basic assumptions: core values of the organizationCompeting Values Framework5 ways an employee learns culturesymbols, stories, heroes, rites and rituals, organizational socializationsymbolsan object, act, quality, or event that conveys meaning to othersstoriesnarrative based on true events, which is repeated - and sometimes embellished upon - to emphasize a particular valuehereosperson whos accomplishments embody the values of the organizationrites and ritualsactivities and ceremonies, planned and unplanned, that celebrate important occasions and accomplishments in the organization's lifeorganizational socializationthe process by which a person learns the values, norms, and required behaviors of the organization12 ways to change culture1. Formal statements: mission, vision, values 2. Language, slogans, sayings, acronym 3. Rites and rituals 4. Stories, legends and myths 5. Leader reactions to crises 6. Role modeling, training, and coaching 7. Through physical design 8. With rewards, titles, promotions, and bonuses 9. Establish goals and performance criteria 10. Through measurable and controllable activities 11. By changing organizational structure 12. Using organizational systems and proceduresFor-profit organizationsformed to make money, or profits, by offering products or servicesnon profit organizationformed to offer services to some clients, not to make a profit - hospitals, collegesmutual benefit organziationsvoluntary collectives whose purpose is to advance members interests - unions, trade associationsorganizational charts4 proposed common elements of organizations by Edgar Schiencommon purpose: gives everyone an understanding of the organizations reason for being coordinated effort: the coordination of individual effort into group - wide effort division of labor: having discrete parts of a task done by different people hierarchy of authority: making sure the right people do the right things at the right time (unity of command). Flat organization has few in any middle managersthree more elements of organizations that authorities agree onspan of control: the number of people reporting directly to a given manager, narrow or wide authority: accountability, responsibility, and delegation; line versus staff positions centralized vs. decentralized authority: who makes decisions, upper management or middlesimple organizational structureauthority is centralized in a single person with few rules and low work specialization, small firms all over the country are organized this way, an owner or administrative assistantfunctional organizational structurepeople with similar occupational specialties are put together in formal groupsdivisional organizational structurepeople with diverse occupational specialties are put together in formal groups by similar products, customers or geographic regionsmatrix organizational structurecombines functional and divisional chains of command in a grid so that there are two command structures: vertical and horizontalhorizontal organizational structureteams or workgroups, either temporary or permanent, are use to improve collaboration and work on shared tasks by breaking down internal boundariesHollow or network organizational structurethe organization has a central core of key functions and outsources other functions to vendors who can do them faster and cheaperthe modular organizational structurea firm assembles product chunks, or modules, provided by outside contractors -bombardiers continental business jet is built in Ireland and shipped to kansas to be assembledvirtual organizational structurecompany outside a company that is created "specifically to respond to an exceptional market opportunity" that is often temporaryvirtual organizationOrganization whose members are geographically apart, usually working with e-mail, collaborative computing, and other computer connectionsmechanistic organizationscentralized hierarchy of authority, many rules and procedures, specialized tasks, formalized communication, few teams or task forces, narrow span of control, taller structuresorganic organizationDecentralized hierarchy of authority, Few rules and procedures, Shared tasks, informal communication, Many teams or task forces. Wider span of control, flatter structuresdifferentiationthe tendency of the parts of an organization to disperse and fragment - different product divisions; possible forces that push organization apartintegrationtendency of the parts of an organization to draw together to achieve a common purpose -formal chain of command, standard rules and procedures, frequent communicationhuman resource managementconsists of the activities managers perform to plan for, attract, develop, and retain an effective workforcestrategic HRM processStrategic human resource planning consists of developing a systematic, comprehensive strategy for: Understanding current employee needs and Predicting future employee needs (make sure to also look at figure from notes)human capitalthe economic or productive potential of employee knowledge, experience, and actionsknowledge workeroccupation principally concerned with generating or interpreting information, NOT a manual laborersocial capitalthe economic or productive potential of strong, trusting, and cooperative relationshipsJob Analysisdetermining the basic elements of a job by observation and analysisjob descriptionsummarizes what the holder of the job does and how and why he or she does itjob specificationdescribes the minimum qualifications a person must have to perform the job successfullypredicting future employee needs-become knowledgable about the staffing the organization might need - know the likely source for staffinghuman resource inventorya report listing your organization's employees by name, education, training, languages, and other important informationrecruitmento Process of locating and attracting qualified applicants for jobs open in the organization o "5% of your workforce produces 26% of your output"most effective external recruiting methodsemployee referrals and e-recruitment tools (member directories, social media)realistic job previewgives a candidate a picture of both positive and negative features of the job and the organization before he or she joins the firmselection processthe screening of job applicants to hire the best candidate - involves 3 components: background information, interviews, employee testsemployee tests· Many jobs, such as those in warehousing and trucking, require that job applicants take a drug testinternal hiringhiring from the insideAdvantages of internal recruitment· Employees tend to be inspired to greater effort and loyalty. Morale is enhanced because they realize that working hard and staying put can result in many opportunities · The whole process of advertising, interviewing, and so on is cheaper · There are fewer risks. Internal candidates are already known and are familiar with the organizationDisadvantages of Internal Recruiting· Internal recruitment restricts the competition for positions and limits the pool of fresh talent and viewpoints · It may encourage employees to assume that longevity and seniority will automatically result in promotion · Whenever a job is filled, it creates vacancy somewhere else in the organizationexternal recruitinghiring from the outsideAdvantages of External Recruiting1. Applicants may have specialized knowledge and experience. 2. Applicants may have fresh viewpoints.disadvantages of external recruitment· The recruitment process is more expensive and takes longer · The risks are higher because the persons hired are less well known `unstructured interviewno fixed set of questions and no systematic scoring procedure involves asking probing questions to find out what the applicant is likestructured interviewinvolves asking each applicant the same questions and comparing their responses to a standardized set of answers type 1 situational: focuses on hypothetical situations type 2 behavioral: explore what applicants have actually done in the pastcompensationwages or salaries, incentives, and benefitsbase paybasic wage or salary paid employees in exchange for doing their jobsincentivesCommissions, bonuses, profit-sharing plans, and stock optionsbenefitshealth insurance, dental insurance, life insurance, disability protection, retirement plans, holidays off, sick days and vacation days, recreation options, health club memberships, family leave, discountsonboardingprograms that help employees to integrate and transition to new jobs by making them familiar with corporate policies, procedures, culture, and politics by clarifying work-role expectations and responsibilities5 step learning and development processlook at diagram in notesperformance management 4 step processlook at notesPerformance Managementset of processes and managerial behaviors that involve defining, monitoring, measuring, evaluating, and providing consequences for performance expectationsobjective appraisalbased on fact and often numerical measure results harder to challenge legally also called results appraisalsubjective appraisal· based on managers perceptions of an employee's traits and behaviors · trait appraisals are easy to create and use, but validity is questionable · behavioral appraisals measure specific, observable aspects of performance · one type is behaviorally anchored rating scale (BARS)Behaviorally Anchored Rating Scale (BARS)rates employee gradations in performance according to scales of specific behaviors360 feedbackincludes superiors, subordinates, peers, and even customers in the appraisal processforced rankingo all employees within a business unit ranked against one another and grades are distributed along a bell curve o top performance rewarded with bonuses and promotions o the worst performers given warnings or dismissed o rapidly losing favor o may not be the most appropriate methodology in todays talent intensive companiespromotionmoving upward to a higher level positiontransfermoving sideways with similar responsibilitiesdiscipline and demotionthe threat of moving downwarddismissalmoving out of the organization through layoffs, downsizing, and firingsexit interviewA formal conversation to find out why an employee is leaving and to learn about potential problems in the organizationnondisparagement agreementIs a contract between two parties that prohibits one party from criticizing the other; it is often used in severance agreements to prohibit former employees from criticizing their former employersprivacy act (1974)· gives employees legal right to examine letter of reference concerning themimmigration reform and control act (1986)requires employers to verify the eligibility for employment for all their new hires (including US citizens)sarbanes-oxley act (2003)prohibits employers from demoting or firing employees who raise accusations of fraud to a federal agencyoccupational safety and health act (OSHA) (1970)Establishes minimum health and safety standards in organizationscivil rights act, title VII (1964 amended 1972)Prohibits discrimination on basis of race, color, religion, national origin, or sex or sexual orientationage discrimination in employment act (ADEA) (1967 amended 1986)· prohibits discrimination in employees over 40 years old; restricts mandatory retirementequal pay act (1963)Requires that men and women be paid the same amount for doing the same jobdiscriminationpeople are hired or promoted - or denied hiring or promotion - for reasons not relevant to the jobadverse impactan organization uses an employment practice that results in unfavorable outcomes to a protected classdisparate treatmentemployees from protected groups are intentionally treated differentlyaffirmative action· steps include: o active recruitment from groups traditionally discriminated against o elimination of prejudicial questions in interviews o establishment of minority hiring goals · importantly, EEO laws do not allow the use of hiring quotassexual harrassmentconsists of unwanted sexual attention that creates an adverse work environment, violates Title VII of the 1964 civil rights actquid pro quo sexual harassmentjeopardizes being hired or obtaining job benefits or opportunities unless he or she implicitly or explicitly acquiesceshostile environment sexual harassmentdoes not risk economic harm but experiences an offensive or intimidating work environmentbullying· abusive physical, psychological, verbal, or nonverbal behavior that is threatening, humiliating, or intimidatingbeating back the bully- recognize the mistreatment as bullying - stay calm and confident - do not strike back - avoid being alone with the bully - document what is happening - know your next stepsnational labor relations boardenforces procedures whereby employees may vote to have a union and for collective bargainingcollective bargainingnegotiations between management and employees about disputes overcompensation, benefits, working conditions, and job securitylabor unionsorganizations of employees formed to protect and advance their members interests by bargaining with management over job related issuesgrievance· a complaint by an employee that management has violated the terms of the labor management agreementmediation· process in which a neutral third party, a mediator, listens to both sides in a dispute, makes suggestions, and encourages them to agree on a solutionarbitration· process in which a neutral third party, an arbitrator, listens to both parties in a dispute and makes a decision that the parties have agreed will be binding5 fundamental future forces for changereactive changemaking changes in response to problems or opportunities as they ariseproactive (or planned) changeinvolves making carefully thought-out changes in anticipation of possible or expected problemsforces for change modellook at notesleast threatening model for changeADAPTIVE CHANGE - reintroduction of a familiar practicesomewhat threatening model for changeINNOVATIVE CHANGE - introduction of a practice that is new to the organizationvery threatening model of changeRADICALLY INNOVATIVE CHANGE - involves introducing practice that is new to the industrylewins change model1. unfreezing: create the motivation to change 2. changing: new information, models, and procedures 3. refreezing: support and reinforce the changesystems approach to changelook at notesorganizational developmentset of techniques for implementing planned change to make people and organizations more effectivechange agentA consultant (an outsider) with a background in behavioral sciences who can be a catalyst in helping organizations deal with old problems in new wayswhat can OD be used for1. managing conflict 2. revitalizing organizations 3. adapting to mergersmanaging conflictan OD expert "executive coach" can help advise on how to improve relationships within the organizationrevitalizing organizationsOD experts can help by opening communication, fostering innovation, and dealing with stressadapting to mergersOD experts can help integrate two firms with varying cultures, products, and proceduresThe OD process1. Diagnosis: what is the problem? 2. Intervention: what shall we do about it? 3. Evaluation: how well has the intervention worked? 4. Feedback: how can the diagnosis be further refined?product innovationa change in the appearance or the performance of a product or a service or the creation of a new oneprocess innovationa change in the way a product or service is conceived, manufactured, or disseminatedimprovement innovationsenhance or upgrade an existing product, service, or process - these types of innovations are often incremental and are less likely to generate significant amounts of new revenuenew direction innovationstake a totally new or different approach to a product, service, process, or industry - the invention of breakthrough products or services that are aimed at creating brand new markets and customersapproaches towards innovationcomponents of innovation systemlook at notes10 reasons employees resist change1. Individual's Predisposition Toward Change 2. Surprise and Fear of the Unknown 3. Climate of Mistrust 4. Fear of Failure 5. Loss of Status or Job Security 6. Peer Pressure 7. Disruption of Cultural Traditions or Group Relationships 8. Personality Conflicts 9. Lack of Tact or Poor Timing 10. Nonreinforcing Reward Systemspersonalitythe stable psychological traits and behavioral attributes that give a person his or her identityBig 5 Personality Dimensions1. extroversion 2. agreeableness 3. conscientiousness 4. emotional stability 5. openness to experiencecore self-evaluationRepresents a broad personality trait comprising four positive individual traits: (1) self-efficacy, (2) self-esteem, (3) locus of control, and (4) emotional stabilityemotional intelligenceo Ability to monitor your and others' feelings and use this information to guide your thinking and actions o First introduced in 1909, some claim it to be the "secret elixir" to happiness and higher performanceEI is associated witho Better social relations, well-being, and satisfaction o Job satisfaction o Better emotional control o Conscientiousness and self- efficacy o Organizational citizenship behavior o Self-rated performanceorganizational behavior (OB)o Dedicated to better understanding and managing people at work o Tries to help managers explain and predict work behavior, so they can better lead and motivate their employees to perform productively.valuesabstract ideals that guide one's thinking and behavior across all situationsattitudeslearned predispositions to respond to a person, object, or idea in a favorable or unfavorable way - directly influences our behaviorThree components of attitudeaffective, behavioral, cognitiveaffective attitude"I feel" feels or emotions one has about a situationcognitive attitude"I believe" Beliefs and knowledge one has about a situationbehavioral attitude"I Intend" how one intends or expects to behave toward a situation4 step perception process1. selective attention: "Did I notice something?" 2. interpretation and evaluation: "What was it I noticed and what does it mean?" 3. storing in memory: " remember it as an event, concept, personn or all 3?" 4. retrieving from memory to make judgments and decisions: " what do I recall about that?"stereotypingthe tendency to attribute to an individual the characteristics one believes are typical of the group to which that individual belongsSex-role stereotypesResearch revealed that men were preferred for male-dominated jobs, women have harder time being perceived as effective leadersage stereotypesInaccurately believing that older workers are less motivated, resistant to change, less trusting, and less healthy (research refuted all of these)Race stereotypesStudies demonstrated that people of color experienced more perceived discrimination and less psychological support than whitesimplicit biasattitudes or beliefs that affect our understanding, actions, and decisions in an unconscious manner - "I really do not think I am bias, but I just have feelings about some people." - implicit bias affects employment - related decisions: a recent study showed that both racism and ageism has impacted hiring decisionshow to take steps moving forward from implicit bias ?requiring intergroup contract, positive feedback, clear norms of behaviorhalo effectforming an impression of an individual based on a single traitthe recency effecttendency to remember words at the end of a list especially wellcasual attributionsinferring causes for observed behaviorfundamental attribution biaspeople attribute another person's behavior to his or her personal characteristics rather than to situational factorsself-serving biaspeople tend to take more personal responsibility for success than for failureself-fulfilling prophecyo is a phenomenon by which people's expectations of themselves or others lead them to behave in ways that make those exceptions come true o also known as Pygmalion effect o managerial expectations powerfully influence employee behavior and performancewhat can managers do to help the self - fulling prophecy?o Create positive performance expectations o Recognize that everyone has the potential to increase performance o Introduce new employees as if they have outstanding potential o Encourage employees to visualize successful execution tasks o Help employees master key skillsemployee engagemento An individual's involvement, satisfaction, and enthusiasm for work o A "mental state in which a person performing a work activity is full immersed in the activity, feeling full of energy and enthusiasm for work." o Employees more likely to become engaged when a culture promotes employee development, recognition, and trust o Managers can increase employee engagement with personal resource building, job resource building, leadership training, and health promotion interventionsjob satisfactiono Extent to which you feel positively or negatively about various aspects of your work o Depends on how you feel about several components, such as work, pay, promotions, coworkers, and supervision o Key correlates: § Stronger motivation, job involvement, and life satisfaction § Less absenteeism, tardiness, turnover, and stressorganizational commitmento Reflects the extent to which an employee identifies with an organization and is committed to its goals o Research shows a significant positive relationship between organizational commitment and job satisfaction, performance, turnover, and organizational citizenship behavior4 important workplace behaviors1. performance and productivity 2. absenteeism and turnover 3. organizational citizenship behaviors 4. counterproductive work behaviorsWhy, as a manager, do you need to learn how to manage individual differences?So that you can influence employees to do their best work. · Evaluating performance of employees should include: o Performance and productivity o Absenteeism and turnover o Organizational citizenship behaviors o Counterproductive work behaviorsDiversity Wheelpersonality, internal dimensions, external dimensions, organizational dimensions6 barriers to diversity1. Stereotypes & Prejudices 2. Fear of Reverse Discrimination 3. Resistance to Diversity Program Priorities 4. Unsupportive Social Atmosphere 5. Lack of Support for Family Demands 6. Lack of Support for Career-Building Stepsstressthe tension people feel when they are facing or enduring extraordinary demands, constraints, or opportunities and are uncertain about their ability to handle them effectivelysource fo job related stress: individual differencesA "type A" personalitysource fo job related stress: individual task demandsthe job itselfsource fo job related stress: individual role demandsrole overload, role conflict, role ambiguitysource fo job related stress: work - family conflictcreated when pressure or demands from work and family are not compatiblesource fo job related stress: group demandsstress created by coworkers and managerssource fo job related stress: organizational demandscreated by environment and organizational culture6 stress bufferso Build resilience o Roll out employee assistance programs o Recommend a holistic wellness approach o Create a supportive environment o Make jobs interesting o Mae career counseling availableEntrepreneurcreates and runs business(es), while taking on financial risk to do soIntrapreneursomeone who works inside an existing organization who sees an opportunity for a product or service and mobilizes the organization's resources to try to realize itentrepreneuro hire people to work with them. Employees work together as a team to accomplish the entrepreneur's vision o global thinkers who take and manage risk o delegate responsibilities o broader set of legal requirements and insurance and tax considerations o broader aspirations: influences industries, markets, and greater numbers of peopleself-employedo work for themselves and might hire others to work for them o tend to stay in one area and prefer to avoid taking risks o do much of the work themselves. Often, they are experts, as well as wanting to save costs o can incorporate or file as sole proprietors o narrower focus: operating a business in a specific area or marketEntrepreneur traits4 reasons entrepreneurship matters across the globe· startups generate wealth and economic development · entrepreneurship drives innovation · entrepreneurship drives job creation · entrepreneurship improves the worlds standard of livingsources for an idea for a start up business1. Identify your passions, skills, and talents 2. Identify a problem or frustration 3. Identify an opportunity or an unmet need 4. Study customer complaints7 business plan sections· Executive summary · Business description · Market analysis · Organization and management · Sales strategies · Funding requirements · Financial projectionsSole Proprietorshipa business owned and managed by a single individualpartnershipA business in which two or more persons combine their assets and skillsCorporationA business owned by stockholders who share in its profits but are not personally responsible for its debtsLimited Liability CompanyA business organization in which the business (not the owner) is liable for the company's debtsfinancing options for start ups· Personal funding · Family and friends · Bank loans · The small business association · Venture capital · Angel investors Crowd investing