UNIT-IWHAT IS ORGANIZATIONAL BEHAVIOUR1. Importance of Developing Managers Interpersonal Skills

Companies with reputations as a good place to worksuch as Hewlett-Packard, Lincoln Electric, Southwest Airlines, and Starbuckshave a big advantage when attracting high performing employees.

More important to workers is the job quality and the supportiveness of the work environments.

Managers good interpersonal skills are likely to make the workplace more pleasant, which in turn makes it easier to hire and retain high performing employees.

2. What Managers Do

Definitions:

Manager:Someone who gets things done through other people. They make decisions, allocate resources, and direct the activities of others to attain goals.

Organization:A consciously coordinated social unit composed of two or more people, that functions on a relatively continuous basis to achieve a common goal or set of goals.

Management Functions

French industrialist Henri Fayol wrote that all managers perform five management functions: plan, organize, command, coordinate, and control. Modern management scholars have condensed to four: planning, organizing, leading, and controlling.

Planning Define goals (organizational, departmental, worker levels)

Establish an overall strategy for achieving those goals

Develop a comprehensive hierarchy of plans to integrate and coordinate activities.

Organizing Determine what tasks are to be done

Who is to be assigned the tasks

How the tasks are to be grouped

Who reports to whom

Where decisions are to be made (centralized/decentralized)

Leading Motivate employees

Direct the activities of others

Select the most effective communication channels

Resolve conflicts among members

Controlling Monitor the organizations performance

Compare actual performance with the previously set goals

Correct significant deviations.

Management Roles

In the late 1960s, Henry Mintzberg studied five executives to determine what managers did on their jobs. He concluded that managers perform ten different, highly interrelated roles or sets of behaviours attributable to their jobs.

The ten roles can be grouped as being primarily concerned with interpersonal relationships, the transfer of information, and decision making. Interpersonal roles

All managers are required to perform duties that are ceremonial and symbolic in nature. Figureheadduties that are ceremonial and symbolic in nature

Leadershiphire, train, motivate, and discipline employees

Liaisoncontact outsiders who provide the manager with information. These may be individuals or groups inside or outside the organization.

Informational roles

All managers, to some degree, collect information from outside organizations and institutions. Monitorcollect information from organizations and institutions outside their own

Disseminatora conduit to transmit information to organizational members

Spokespersonrepresent the organization to outsiders

Decisional roles

Mintzberg identified four roles that revolve around making choices. Entrepreneurmanagers initiate and oversee new projects that will improve their organizations performance

Disturbance handlerstake corrective action in response to unforeseen problems

Resource allocatorsresponsible for allocating human, physical, and monetary resources

Negotiator rolediscuss issues and bargain with other units to gain advantages for their own unit

Management Skills

Robert Katz has identified three essential management skills: technical, human, and conceptual.

Technical skills

The ability to apply specialized knowledge or expertise. All jobs require some specialized expertise, and many people develop their technical skills on the job.

Human skills

The ability to work with, understand, and motivate other people, both individually and in groups, describes human skills.

Many people are technically proficient but interpersonally incompetent.

Conceptual skills

The managers must have the mental ability to analyze and diagnose complex situations

Decision making, for example, requires managers to spot problems, identify alternatives that can correct them, evaluate those alternatives, and select the best one.

Effective vs. Successful Managerial Activities

Luthans and his associates studied more than 450 managers. They found that all managers engage in four managerial activities.

Traditional managementDecision making, planning, and controlling. The average manager spent 32 percent of his or her time performing this activity.

Communication Exchanging routine information and processing paperwork. The average manager spent 29 percent of his or her time performing this activity.

Human resource managementMotivating, disciplining, managing conflict, staffing, and training. The average manager spent 20 percent of his or her time performing this activity.

NetworkingSocializing, politicking, and interacting with outsiders. The average manager spent 19 percent of his or her time performing this activity.

Successful managersdefined as those who were promoted the fastest

Networking made the largest relative contribution to success.

Human resource management activities made the least relative contribution.

Effective managersdefined as quality and quantity of performance, as well as, commitment to employees:

Communication made the largest relative contribution.

Networking made the least relative contribution.

Successful managers do not give the same emphasis to each of those activities as do effective managersit almost the opposite of effective managers.

This finding challenges the historical assumption that promotions are based on performance. A Review of the Managers Job

One common thread runs through the functions, roles, skills, and activities approaches to management: managers need to develop their people skills if they are going to be effective and successful.

3. Definition of OB Organizational Behaviour is a field of study that investigates the impact that individuals, groups, and structure have on behaviour within organizations for the purpose of applying such knowledge toward improving an organizations effectiveness.

OB studies three determinants of behaviour in organizations: individuals, groups, and structure.

OB applies the knowledge gained about individuals, groups, and the effect of structure on behaviour in order to make organizations work more effectively.

OB is concerned with the study of what people do in an organization and how that behaviour affects the performance of the organization.

4. Complementing Intuition with Systematic Study

You can improve your predictive ability by replacing your intuitive opinions with a more systematic approach.

The systematic approach used will uncover important facts and relationships and will provide a base from which more accurate predictions of behaviour can be made.

Behaviour generally is predictable if we know how the person perceived the situation and what is important to him or her. An approach that complements systematic study is evidence-based management. Evidence-based management (EBM) involves basing managerial decisions on the best available scientific evidence.

Systematic study replaces intuition, or those gut feelings about why I do what I do and what makes others tick. We want to move away from intuition to analysis when predicting behaviour.

5. Disciplines that Contribute to the OB Field

Organizational behaviour is an applied behavioural science that is built upon contributions from a number of behavioural disciplines.

The predominant areas are psychology, sociology, social psychology, anthropology, and political science.

Psychology

Psychology is the science that seeks to measure, explain, and sometimes change the behaviour of humans and other animals.

More recently, their contributions have been expanded to include learning, perception, personality, emotions, training, leadership effectiveness, needs and motivational forces, job satisfaction, decision making processes, performance appraisals, attitude measurement, employee selection techniques, work design, and job stress.

Sociology

Sociologists study the social system in which individuals fill their roles; that is, sociology studies people in relation to their fellow human beings.

Their greatest contribution to OB is through their study of group behaviour in organizations, particularly formal and complex organizations.

Social Psychology

Social psychology blends the concepts of psychology and sociology.

It focuses on the influence of people on one another.

Anthropology

Anthropology is the study of societies to learn about human beings and their activities.

Anthropologists work on cultures and environments, they have helped us understand differences in fundamental values, attitudes, and behaviour among people in different countries and within different organizations.

6. There Are Few Absolutes in OB

There are few, if any, simple and universal principles that explain OB. Human beings are complex. Because they are not alike, our ability to make simple, accurate, and sweeping generalizations is limited.

OB concepts must reflect situational, or contingency, conditions.

Contingency variablessituational factors are variables that moderate the relationship between the independent and dependent variables.

7. Challenges and Opportunities for OB

There are many challenges and opportunities today for managers to use OB concepts.

7.1 Responding to Globalization

Organizations are no longer constrained by national borders.In the process, the managers job is changing. Increased Foreign Assignments If youre a manager, you are increasingly likely to find yourself in a foreign assignmenttransferred to your employers operating division or subsidiary in another country. Working with People from Different Cultures Even in your own country, youll find yourself working with bosses, peers, and other employees born and raised in different cultures. What motivates you may not motivate them. Or your communication style may be straight forward and open, which others may find uncomfortable and threatening. To work effectively with people from different cultures, you need to understand how their culture, geography, and religion have shaped them and how to adapt your management style to their differences. Overseeing Movement of Jobs to Countries with Low-Cost Labor In a global economy, jobs tend to flow where lower costs give businesses a comparative advantage, though labor groups, politicians, and local community leaders see the exporting of jobs as undermining the job market at home.

Managers face the difficult task of balancing the interests of their organization with their responsibilities to the communities in which they operate.

7.2 Managing Workforce Diversity

Workforce diversity is one of the most important and broad-based challenges currently facing organizations. Workforce diversity -means that organizations are becoming more heterogeneous in terms of gender, race, and ethnicity. It is an issue in Canada, Australia, South Africa, Japan, and Europe as well as the United States. Embracing Diversity-A melting-pot approach assumed people who were different would automatically assimilate. Employees do not set aside their cultural values and lifestyle preferences when they come to work.

The melting pot assumption is replaced by one that recognizes and values differences.

Members of diverse groups were a small percentage of the workforce and were, for the most part, ignored by large organizations (pe-1980s); now:

i. 47 percent of the U.S. labour force are women

ii. Minorities and immigrants make up 23 percent

iii. More workers than ever are unmarried with no children.

Implication-Workforce diversity has important implications for management practice.

i. Shift to recognizing differences and responding to those differencesii.Providing diversity training and revamping benefit programs to accommodate the different needs of employees

7.3 Improving Quality and Productivity

Every process is evaluated in terms of contribution to goals

Rather than make incremental changes, often old systems are eliminated entirely and replaced with new systems

To improve productivity and quality, managers must include employees.

7.4 Improving Customer Service and People Skills

The majority of employees in developed countries work in service jobsjobs that require substantive interaction with the firms customers. For example, 80 percent of U.S. workers are employed in service industries.

Employee attitudes and behaviour are directly related to customer satisfaction requiring management to create a customer responsive culture.

People skills are essential to managerial effectiveness.

OB provides the concepts and theories that allow managers to predict employee behaviour in given situations.

7.5 Empowering People

Today managers are being called coaches, advisers, sponsors, or facilitators, and in many organizations, employees are now called associates.

There is a blurring between the roles of managers and workers; decision making is being pushed down to the operating level, where workers are being given the freedom to make choices about schedules and procedures and to solve work-related problems.

Managers are empowering employees.

They are putting employees in charge of what they do.

Managers have to learn how to give up control.

Employees have to learn how to take responsibility for their work and make appropriate decisions.

7.6 Coping with Temporariness

Managers have always been concerned with change:

Change is an ongoing activity for most managers. The concept of continuous improvement, for instance, implies constant change

In the past, managing could be characterized by long periods of stability, interrupted occasionally by short periods of change.

Today, long periods of ongoing change are interrupted occasionally by short periods of stability!

Permanent temporariness:

Both managers and employees must learn to live with flexibility, spontaneity, and unpredictability

The jobs that workers perform are in a permanent state of flux, so workers need to continually update their knowledge and skills to perform new job requirements.

Work groups are also increasingly in a state of flux.

Predictability has been replaced by temporary work groups, teams that include members from different departments and whose members change all the time, and the increased use of employee rotation to fill constantly changing work assignments.

Organizations themselves are in a state of flux.

They reorganize their various divisions, sell off poor-performing businesses, downsize operations, subcontract non-critical services and operations to other organizations, and replace permanent employees with temporaries.

7.7 Stimulating Innovation and Change

Successful organizations must foster innovation and the art of change.

Companies that maintain flexibility, continually improve quality, and beat their competition to the marketplace with innovative products and services will be tomorrows winners.

Employees are critical to an organizations ability to change and innovate.

7.8 Helping Employees Balance Work-Life Conflicts

The creation of the global workforce means work no longer sleeps. Workers are on-call 24-hours a day or working non-traditional shifts.

Communication technology has provided a vehicle for working at any time or any place.

Employees are working longer hours per weekfrom 43 to 47 hours per week since 1977.

The lifestyles of families have changes creating conflict: more dual career couples and single parents find it hard to fulfill commitments to home, children, spouse, parents, and friends.

Employees want jobs that allow flexibility and provide time for a life.

7.9 Improving Ethical Behaviour

In an organizational world characterized by cutbacks, expectations of increasing worker productivity, and tough competition, many employees feel pressured to engage in questionable practices.

Members of organizations are increasingly finding themselves facing ethical dilemmas in which they are required to define right and wrong conduct.

Examples of decisions employees might have to make are:

Blowing the whistle on illegal activities

Following orders with which they do not personally agree

Possibly giving inflated performance evaluations that could save an employees job

Playing politics to help with career advancement, etc.

Organizations are responding to this issue by:

Writing and distributing codes of ethics

Providing in-house advisors

Creating protection mechanisms for employees who reveal internal unethical practices

Managers need to create an ethically healthy environment for employees where they confront a minimal degree of ambiguity regarding right or wrong behaviours.

8.Coming Attractions: Developing an OB Model

An Overview A model is an abstraction of reality, a simplified representation of some real-world phenomenon.

There are three levels of analysis in OB:

Individual

Group

Organizational Systems Level

Each level is constructed upon the previous level.

The Dependent Variables

Dependent variables are the key factors that you want to explain or predict and that are affected by some other factor.

Dependent variables in OB:

Productivity

Absenteeism

Turnover

Job satisfaction

A fifth variableorganizational citizenshiphas been added to this list.

Productivity

It is achieving goals by transferring inputs to outputs at the lowest cost. This must be done both effectiveness and efficiency.

An organization is effective when it successfully meets the needs of its clientele or customers

Example: When sales or market share goals are met, productivity also depends on achieving those goals efficiently

An organization is efficient when it can do so at a low cost.

Popular measures of efficiency include: ROI, profit per dollar of sales, and output per hour of labour.

Absenteeism

Absenteeism is the failure to report to work.

Estimated annual costover $40 billion for U.S. organizations; $12 billion for Canadian firms; more than 60 billion Deutsch Marks (U.S. $35.5 billion) each year in Germany

A one-day absence by a clerical worker can cost a U.S. employer up to $100 in reduced efficiency and increased supervisory workload.

The workflow is disrupted and often important decisions must be delayed.

All absences are not bad. For instance, illness, fatigue, or excess stress can decrease an employees productivityit may well be better to not report to work rather than perform poorly.

Turnover

Turnover is the voluntary and involuntary permanent withdrawal from an organization.

A high turnover rate results in increased recruiting, selection, and training costs; costs estimated at about $15,000 per employee.

All organizations have some turnover and the right people leavingunder-performing employeesthereby creating opportunity for promotions, and adding new/fresh ideas, and replacing marginal employees with higher skilled workers.

Turnover often involves the loss of people the organization does not want to lose. Deviant Workplace Behavior Also called antisocial behaviour or workplace incivility Voluntary behaviour that violates significant organizational norms and, in so doing, threatens the well-being of the organization or its members.

Organizational citizenship Behavior (OCB) Organizational citizenship is discretionary behaviour that is not part of an employees formal job requirements, but that nevertheless promotes the effective functioning of the organization.

Desired citizenship behaviours include:

Constructive statements about work group and organization

Helping others on their team

Volunteering for extra job activities

Avoiding unnecessary conflicts

Showing care for organizational property

Respecting rules and regulations

Tolerating occasional work-related impositions.

Job satisfaction

Job satisfaction is the difference between the amount of rewards workers receive and the amount they believe they should receive.

Job satisfaction represents an attitude rather than a behavior.

It became a primary dependent variable for two reasons:

Demonstrated relationship to performance factors

The value preferences held by many OB researchers

Managers have believed for years that satisfied employees are more productive, however:

Much evidence questions that assumed causal relationship

It can be argued that advanced societies should be concerned not just with the quantity of life, but also with the quality of life

Ethically, organizations have a responsibility to provide employees with jobs that are challenging and intrinsically rewarding.

The Independent VariablesAn independent variable is the presumed cause of some change in a dependent variable. Individual-level variables:

People enter organizations with certain characteristics that will influence their behaviour at work.

The more obvious of these are personal or biographical characteristics such as age, gender, and marital status; personality characteristics; an inherent emotional framework; values and attitudes; and basic ability levels.

There is little management can do to alter them, yet they have a very real impact on employee behaviour.

There are four other individual-level variables that have been shown to affect employee behaviour:

Perception

Individual decision making

Learning

Motivation

Group-level variables:

The behaviour of people in groups is more than the sum total of all the individuals acting in their own way.

People behave differently in groups than they do when alone.

People in groups are influenced by:

Acceptable standards of behaviour by the group

Degree of attractiveness to each other

Communication patterns

Leadership and power

Levels of conflict

Organization System-Level Variables:

Organizational behaviour reaches its highest level of sophistication when we add formal structure.

The design of the formal organization, work processes, and jobs; the organizations human resource policies and practices, and the internal culture, all have an impact.

Toward a Contingency OB Model

The model does not explicitly identify the vast number of contingency variables because of the tremendous complexity. We will introduce important contingency variables that will improve the explanatory linkage between the independent and dependent variables in our OB model.

Acknowledging the dynamics of behaviour and the fact that work stress is an individual, group, and organizational issues.

FOUNDATIONS OF INDIVIDUAL BEHAVIOUR1. Ability

Ability refers to an individuals capacity to perform the various tasks in a job. It is a current assessment of what one can do.

Individual overall abilities are made up of two sets of factors: intellectual and physical.

2.Intellectual Abilities

Intellectual abilities are those needed to perform mental activities.

IQ tests are designed to ascertain ones general intellectual abilities. Examples of such tests are popular college admission tests such as the SAT, GMAT, and LSAT.

The seven most frequently cited dimensions making up intellectual abilities are: number aptitude, verbal comprehension, perceptual speed, inductive reasoning, deductive reasoning, spatial visualization, and memory.

Jobs differ in the demands they place on incumbents to use their intellectual abilities. A careful review of the evidence demonstrates that tests that assess verbal, numerical, spatial, and perceptual abilities are valid predictors of job proficiency at all levels of jobs.

The major dilemma faced by employers who use mental ability tests is that they may have a negative impact on racial and ethnic groups.

New research in this area focuses on multiple intelligences, which breaks down intelligence into its four sub-parts: cognitive, social, emotional, and cultural.

3.Physical Abilities

Specific physical abilities gain importance in doing less skilled and more standardized jobs.

Research has identified nine basic abilities involved in the performance of physical tasks.

Individuals differ in the extent to which they have each of these abilities.

High employee performance is likely to be achieved when management matches the extent to which a job requires each of the nine abilities and the employees abilities.

Finding and analyzing the variables that have an impact on employee productivity, absence, turnover, and satisfaction is often complicated.

Many of the conceptsmotivation, or power, politics or organizational cultureare hard to assess. Biographical Characteristics Other factors are more easily definable and readily availabledata that can be obtained from an employees personnel file and would include characteristics such as:

Age

Gender

Marital status

Length of service, etc.

Age

The relationship between age and job performance is increasing in importance.

First, there is a widespread belief that job performance declines with increasing age.

Second, the workforce is aging; workers over 55 are the fastest growing sector of the workforce.

Third, U.S. legislation largely outlaws mandatory retirement.

Employers perceptions are mixed.

They see a number of positive qualities that older workers bring to their jobs, specifically experience, judgment, a strong work ethic, and commitment to quality.

Older workers are also perceived as lacking flexibility and as being resistant to new technology.

Some believe that the older you get, the less likely you are to quit your job. That conclusion is based on studies of the age-turnover relationship.

It is tempting to assume that age is also inversely related to absenteeism.

Most studies do show an inverse relationship, but close examination finds that the age-absence relationship is partially a function of whether the absence is avoidable or unavoidable.

In general, older employees have lower rates of avoidable absence. However, they have higher rates of unavoidable absence, probably due to their poorer health associated with aging and longer recovery periods when injured.

There is a widespread belief that productivity declines with age and that individual skills decay over time.

Reviews of the research find that age and job performance are unrelated.

This seems to be true for almost all types of jobs, professional and nonprofessional.

The relationship between age and job satisfaction is mixed.

Most studies indicate a positive association between age and satisfaction, at least up to age 60.

Other studies, however, have found a U-shaped relationship. When professional and nonprofessional employees are separated, satisfaction tends to continually increase among professionals as they age, whereas it falls among non professionals during middle age and then rises again in the later years.

Gender

There are few, if any, important differences between men and women that will affect their job performance, including the areas of:

Problem-solving

Analytical skills

Competitive drive

Motivation

Sociability

Learning ability

Women are more willing to conform to authority, and men are more aggressive and more likely than women to have expectations of success, but those differences are minor.

There is no evidence indicating that an employees gender affects job satisfaction.

There is a difference between men and women in terms of preference for work schedules.

Mothers of preschool children are more likely to prefer part-time work, flexible work schedules, and telecommuting in order to accommodate their family responsibilities.

Absence and turnover rates

Womens quit rates are similar to mens.

The research on absence consistently indicates that women have higher rates of absenteeism.

The logical explanation: cultural expectation that has historically placed home and family responsibilities on the woman.

Marital Status There are not enough studies to draw any conclusions about the effect of marital status on job productivity.

Research consistently indicates that married employees have fewer absences, undergo less turnover, and are more satisfied with their jobs than are their unmarried coworkers More research needs to be done on the other statuses besides single or married, such as divorce, domestic partnering, etc.

Tenure

The issue of the impact of job seniority on job performance has been subject to misconceptions and speculations.

Extensive reviews of the seniority-productivity relationship have been conducted:

There is a positive relationship between tenure and job productivity.

There is a negative relationship between tenure to absence.

Tenure is also a potent variable in explaining turnover.

Tenure has consistently been found to be negatively related to turnover and has been suggested as one of the single best predictors of turnover.

The evidence indicates that tenure and satisfaction are positively related.

The Ability-Job Fit

Employee performance is enhanced when there is a high ability-job fit.

The specific intellectual or physical abilities required depend on the ability requirements of the job. For example, pilots need strong spatial-visualization abilities.

4.Learning All complex behaviour is learned.

If we want to explain and predict behaviour, we need to understand how people learn.

Definition of Learning

A generally accepted definition is any relatively permanent change in behaviour that occurs as a result of experience.

The definition has several components that deserve clarification:

First, learning involves change.

Second, the change must be relatively permanent.

Third, our definition is concerned with behaviour.

Finally, some form of experience is necessary for learning.

Theories of Learning

There are three theoriesclassical conditioning, operant conditioning, and social learning.

Classical Conditioning Classical conditioning grew out of experiments conducted at the turn of the century by a Russian physiologist, Ivan Pavlov, to teach dogs to salivate in response to the ringing of a bell.

Key concepts in classical conditioning [Pavlovs experiment]

The meat was an unconditioned stimulus; it invariably caused the dog to react in a specific way.

The bell was an artificial stimulus, or what we call the conditioned stimulus.

The conditioned response. This describes the behaviour of the dog; it salivated in reaction to the bell alone.

Learning a conditioned response involves building up an association between a conditioned stimulus and an unconditioned stimulus.

When the stimuli, one compelling and the other one neutral, are paired, the neutral one becomes a conditioned stimulus and, hence, takes on the properties of the unconditioned stimulus.

Classical conditioning is passivesomething happens, and we react in a specific way. It is elicited in response to a specific, identifiable event.

Operant Conditioning Operant conditioning argues that behaviour is a function of its consequences. People learn to behave to get something they want or to avoid something they do not want.

The tendency to repeat such behaviour is influenced by reinforcement or lack of reinforcement.

Harvard psychologist B.F. Skinners research on operant conditioning expanded our knowledge.

Tenets of Operant Conditioning are:

Behaviour is learned.

People are likely to engage in desired behaviours if they are positively reinforced for doing so.

Rewards are most effective if they immediately follow the desired response.

Any situation in which it is either explicitly stated or implicitly suggested that reinforcements are contingent on some action on your part involves the use of operant learning.

Social Learning Individuals can also learn by observing what happens to other people, by being told about something, as well as by direct experiences.

Learning by observing is an extension of operant conditioning; it also acknowledges the existence of observational learning and the importance of perception in learning.

The influence of models is central to social learning.

Four processes determine the influence that a model will have on an individual.

Attentional processes. People learn from a model only when they recognize and pay attention to its critical features.

Retention processes. A models influence will depend on how well the individual remembers the models action after the model is no longer readily available.

Motor reproduction processes. After a person has seen a new behaviour by observing the model, the watching must be converted to doing.

Reinforcement processes. Individuals will be motivated to exhibit the modeled behaviour if positive incentives or rewards are provided.

5. Shaping: A Managerial Tool

When we attempt to mold individuals by guiding their learning in graduated steps, we are shaping behaviour.

It is done by systematically reinforcing each successive step that moves the individual closer to the desired response.

Methods of Shaping Behaviour.

Positive reinforcementfollowing a response with something pleasant

Negative reinforcementfollowing a response by the termination or withdrawal of something unpleasant

Punishment-is causing an unpleasant condition in an attempt to eliminate an undesirable behaviour

Extinctioneliminating any reinforcement that is maintaining a behavior. When the behaviour is not reinforced, it tends to gradually be extinguished.

Both positive and negative reinforcement result in learning. They strengthen a response and increase the probability of repetition. Both punishment and extinction, however, weaken behaviour and tend to decrease its subsequent frequency.

Reinforcement, whether it is positive or negative, has an impressive record as a shaping tool.

Schedules of Reinforcement

The two major types of reinforcement schedules are: 1) continuous and 2) intermittent.

A continuous reinforcement schedule reinforces the desired behaviour each and every time it is demonstrated.

In an intermittent schedule, not every instance of the desirable behaviour is reinforced, but reinforcement is given often enough to make the behaviour worth repeating.

It can be compared to the workings of a slot machine.

The intermittent payoffs occur just often enough to reinforce behaviour.

Evidence indicates that the intermittent, or varied, form of reinforcement tends to promote more resistance to extinction than does the continuous form.

An intermittent reinforcement can be of a ratio or interval type.

Ratio schedules depend upon how many responses the subject makes; the individual is reinforced after giving a certain number of specific types of behaviour.

Interval schedules depend upon how much time has passed since the last reinforcement; the individual is reinforced on the first appropriate behaviour after a particular time has elapsed.

A reinforcement can also be classified as fixed or variable.

Intermittent techniques be placed into four categories. Fixed-interval reinforcement schedulerewards are spaced at uniform time intervals; the critical variable is time, and it is held constant. Some examples:

This is the predominant schedule for most salaried workers in North Americathe paycheck.

Variable-interval reinforcementsrewards are distributed in time so that reinforcements are unpredictable.

Pop quizzes

A series of randomly timed unannounced visits to a company office by the corporate audit staff

In a fixed-ratio schedule, after a fixed or constant number of responses are given, a reward is initiated.

A piece-rate incentive plan is a fixed-ratio schedule.

When the reward varies relative to the behavior of the individual, he or she is said to be reinforced on a variable-ratio schedule.

Salespeople on commission

Reinforcement Schedules and Behaviour

Continuous reinforcement schedules can lead to early satiation. Under this schedule, behaviour tends to weaken rapidly when reinforcers are withheld.

Continuous reinforcers are appropriate for newly emitted, unstable, or low-frequency responses.

Intermittent reinforcers preclude early satiation because they do not follow every response.

They are appropriate for stable or high-frequency responses.

In general, variable schedules tend to lead to higher performance than fixed schedules.

Variable-interval schedules generate high rates of response and more stable and consistent behaviour because of a high correlation between performance and reward. The employee tends to be more alert since there is a surprise factor.

Behaviour Modification

A classic was study conducted at Emery Air Freight (now part of Federal Express):

Emerys management wanted packers to use freight containers for shipments whenever possible.

Packers intuitively felt that 90 percent of shipments were containerized. An analysis showed that it was only 45 percent.

Management established a program of feedback and positive reinforcements by asking each packer to keep a checklist of his or her daily packings, both containerized and noncontainerized.

At the end of each day, the packer computed his or her container utilization rate.

Container utilization jumped to more than 90 percent on the first day of the program and held.

This simple program of feedback and positive reinforcements saved the company $2 million over a three-year period.

The typical OB Mod program follows a five-step problem-solving model:

Identifying critical behaviours

Developing baseline data

Identifying behaviour consequences

Developing and implementing an intervention strategy

Evaluating performance improvement

Critical behaviours make a significant impact on the employees job performance; these are those 510 percent of behaviours that may account for up to 70 or 80 percent of each employees performance.

Developing baseline data determines the number of times the identified behaviour is occurring under present conditions.

Identifying behavioural consequences tells the manager the antecedent cues that emit the behaviour and the consequences that are currently maintaining it.

Developing and implementing an intervention strategy will entail changing some elements of the performance-reward linkage-structure, processes, technology, groups, or the taskwith the goal of making high-level performance more rewarding.

Evaluating performance improvement is important to demonstrate that a change took place as a result of the intervention strategy.

OB Mod has been used by a number of organizations to improve employee productivity and to reduce errors, absenteeism, tardiness, accident rates, and improve friendliness toward customers.

ATTITUDES AND JOB SATISFACTION

ATTITUDES

Attitudes are evaluative statements that are either favourable or unfavourable concerning objects, people, or events.

Attitudes are not the same as values, but the two are interrelated.

Three components of an attitude Cognition

Affect

Behaviour

The belief that discrimination is wrong is a value statement and an example of the cognitive component of an attitude.

Value statements set the stage for the more critical part of an attitudeits affective component. Affect is the emotional or feeling segment of an attitude. Example: I dont like Jon because he discriminates again minorities.

The behavioural component of an attitude refers to an intention to behave in a certain way toward someone or something. Example: I chose to avoid Jon because he discriminates.

Viewing attitudes as made up of three components helps with understanding of the potential relationship between attitudes and behaviour, however, when we refer to attitude essentially we mean they affect part of the three components.

In contrast to values, your attitudes are less stable. Advertisements are directed at changing your attitudes and are often successful.

In organizations, attitudes are important because they affect job behaviour.

Types of Attitudes

OB focuses our attention on a very limited number of job-related attitudes. Most of the research in OB has been concerned with three attitudes: job satisfaction, job involvement, and organizational commitment.

Job satisfaction

It is an individuals general attitude toward his/her job.

A high level of job satisfaction equals positive attitudes toward the job and vice versa.

Employee attitudes and job satisfaction are frequently used interchangeably.

Often when people speak of employee attitudes they mean employee job satisfaction.

Job involvement

A workable definition: the measure of the degree to which a person identifies psychologically with his/her job and considers his/her perceived performance level important to self-worth.

High levels of job involvement is thought to result in fewer absences and lower resignation rates.

Job involvement more consistently predicts turnover than absenteeism.

Organizational commitment

A state in which an employee identifies with a particular organization and its goals, and wishes to maintain membership in the organization.

Research evidence demonstrates negative relationships between organizational commitment and both absenteeism and turnover.

An individuals level of organizational commitment is a better indicator of turnover than the far more frequently used job satisfaction predictor because it is a more global and enduring response to the organization as a whole than is job satisfaction.

This evidence, most of which is more than two decades old, needs to be qualified to reflect the changing employee-employer relationship.

Organizational commitment is probably less important as a job-related attitude than it once was because the unwritten loyalty contract in place when this research was conducted is no longer in place.

Attitudes and Consistency

People sometimes change what they say so it does not contradict what they do.

Research has generally concluded that people seek consistency among their attitudes and between their attitudes and their behaviour.

Individuals seek to reconcile divergent attitudes and align their attitudes and behaviour so they appear rational and consistent.

When there is an inconsistency, forces are initiated to return the individual to an equilibrium state where attitudes and behaviour are again consistent, by altering either the attitudes or the behaviour, or by developing a rationalization for the discrepancy.

Cognitive Dissonance Theory

Leon Festinger, in the late 1950s, proposed the theory of cognitive dissonance, seeking to explain the linkage between attitudes and behaviour. He argued that any form of inconsistency is uncomfortable and that individuals will attempt to reduce the dissonance.

Dissonance means an inconsistency.

Cognitive dissonance refers to any incompatibility that an individual might perceive between two or more of his/her attitudes, or between his/her behaviour and attitudes.

No individual can completely avoid dissonance.

The desire to reduce dissonance would be determined by:

The importance of the elements creating the dissonance.

The degree of influence the individual believes he/she has over the elements.

The rewards that may be involved in dissonance.

Importance: If the elements creating the dissonance are relatively unimportant, the pressure to correct this imbalance will be low.

Influence: If the dissonance is perceived as an uncontrollable result, they are less likely to be receptive to attitude change. While dissonance exists, it can be rationalized and justified.

Rewards: The inherent tension in high dissonance tends to be reduced with high rewards.

Moderating factors suggest that individuals will not necessarily move to reduce dissonanceor consistency.

Organizational implications

Greater predictability of the propensity to engage in attitude and behavioural change

The greater the dissonanceafter it has been moderated by importance, choice, and rewards factorsthe greater the pressures to reduce it.

Measuring the A-B Relationship

Early research on attitudes and common sense assumed a causal relationship to behaviour. In the late 1960s, this assumed relationship between attitudes and behaviour (A-B) was challenged. Recent research has demonstrated that attitudes significantly predict future behaviour.

The most powerful moderators:

Importance

Specificity

Accessibility

Social pressures

Direct experience

Importance: Reflects fundamental values, self-interest, or identification with individuals or groups that a person values.

Specificity: The more specific the attitude and the more specific the behaviour, the stronger the link between the two.

Accessibility: Attitudes that are easily remembered are more likely to predict behaviour than attitudes that are not accessible in memory.

Social pressures: Discrepancies between attitudes and behaviour are more likely to occur where social pressures to behave in certain ways hold exceptional power.

Direct experience: The attitude-behaviour relationship is likely to be much stronger if an attitude refers to an individuals direct personal experience.

Self-perception theory

Researchers have achieved still higher correlations by pursuing whether or not behaviour influences attitudes.

Self-perception theory argues that attitudes are used to make sense out of an action that has already occurred rather than devices that precede and guide action. Example: Ive had this job for 10 years, no one has forced me to stay, so I must like it!

Contrary to cognitive dissonance theory, attitudes are just casual verbal statements; they tend to create plausible answers for what has already occurred.

While the traditional attitude-behaviour relationship is generally positive, the behaviour-attitude relationship is stronger particularly when attitudes are vague and ambiguous or little thought has been given to it previously.

An Application: Attitude Surveys

The most popular method for getting information about employee attitudes is through attitude surveys.

Using attitude surveys on a regular basis provides managers with valuable feedback on how employees perceive their working conditions. Managers present the employee with set statements or questions to obtain specific information.

Policies and practices that management views as objective and fair may be seen as inequitable by employees in general or by certain groups of employees and can lead to negative attitudes about the job and the organization.

Employee behaviours are often based on perceptions, not reality. Often employees do not have objective data from which to base their perceptions.

The use of regular attitude surveys can alert management to potential problems and employees intentions early so that action can be taken to prevent repercussions.

Attitudes and Workforce Diversity

A survey of U.S. organizations with 100 or more employees found that 47 percent or so of them sponsored some sort of diversity training.

These diversity programs include a self-evaluation phase where people are pressed to examine themselves and to confront ethnic and cultural stereotypes they might hold. This is followed by discussion with people from diverse groups.

Additional activities designed to change attitudes include arranging for people to do volunteer work in community or social service centers in order to meet face to face with individuals and groups from diverse backgrounds, and using exercises that let participants feel what it is like to be different.

JOB SATISFACTION

Measuring Job Satisfaction

Job satisfaction is an individuals general attitude toward his/her job.

Jobs require interaction with co-workers and bosses, following organizational rules and policies, meeting performance standards, living with working conditions that are often less than ideal, and the like. This means that an employees assessment of how satisfied or dissatisfied he or she is with his/her job is a complex summation of a number of discrete job elements.

The two most widely used approaches are a single global rating and a summation score made up of a number of job facets.

The single global rating method is nothing more than asking individuals to respond to one question, such as All things considered, how satisfied are you with your job?

A summation of job facets is more sophisticated:

It identifies key elements in a job and asks for the employees feelings about each one ranked on a standardized scale.

Typical factors that would be included are the nature of the work, supervision, present pay, promotion opportunities, and relations with co-workers.

Comparing these approaches, simplicity seems to work as well as complexity. Comparisons of one-question global ratings with the summation-of-job-factors method indicate both are valid.

How Satisfied Are People in Their Jobs?

Most people are satisfied with their jobs in the developed countries surveyed.

However, there has been a decline in job satisfaction since the early 1990s. In the US nearly an eight percent drop in the 90s. Surprisingly those last years were ones of growth and economic expansion.

What factors might explain the decline despite growth:

Increased productivity through heavier employee workloads and tighter deadlines

Employees feeling they have less control over their work

While some segments of the market are more satisfied than others, they tend to be higher paid, higher skilled jobs which gives workers more control and challenges.

The impact of satisfied and Dissatisfied Employees on the workplace

There are a number of ways employees can express dissatisfaction

Exit

Voice

Loyalty

Neglect

Exit: Behaviour directed toward leaving the organization, including looking for a new position as well as resigning.

Voice: Actively and constructively attempting to improve conditions, including suggesting improvements, discussing problems with superiors, and some forms of union activity.

Loyalty: Passively but optimistically waiting for conditions to improve, including speaking up for the organization in the face of external criticism, and trusting the organization and its management to do the right thing.

Neglect: Passively allowing conditions to worsen, including chronic absenteeism or lateness, reduced effort, and increased error rate.

Exit and neglect behaviours encompass our performance variablesproductivity, absenteeism, and turnover.

Voice and loyalty are constructive behaviours allow individuals to tolerate unpleasant situations or to revive satisfactory working conditions. It helps us to understand situations, such as those sometimes found among unionized workers, where low job satisfaction is coupled with low turnover.

Managers interest in job satisfaction tends to center on its effect on employee performance. Much research has been done on the impact of job satisfaction on employee productivity, absenteeism, and turnover. Job Satisfaction and OCB

It seems logical to assume that job satisfaction should be a major determinant of an employees organizational citizenship behaviour. More recent evidence, however, suggests that satisfaction influences OCB, but through perceptions of fairness.

There is a modest overall relationship between job satisfaction and OCB.

Basically, job satisfaction comes down to conceptions of fair outcomes, treatment, and procedures. When you trust your employer, you are more likely to engage in behaviours that go beyond your formal job requirements.

Job Satisfaction and Customer Satisfaction

Evidence indicates that satisfied employees increase customer satisfaction and loyalty.

Customer retention and defection are highly dependent on how front-line employees deal with customers. Satisfied employees are more likely to be friendly, upbeat, and responsive. Customers appreciate that.

Dissatisfied customers can also increase an employees dissatisfaction. The more employees work with rude and thoughtless customers, the more likely they are to be dissatisfied.

Job Satisfaction and productivity Happy workers are not necessarily productive workersthe evidence suggests that productivity is likely to lead to satisfaction.

At the organization level, there is renewed support for the original satisfaction-performance relationship. It seems organizations with more satisfied workers as a whole are more productive organizations.

Job Satisfaction and absenteeism

We find a consistent negative relationship between satisfaction and absenteeism. The more satisfied you are, the less likely you are to miss work.

It makes sense that dissatisfied employees are more likely to miss work, but other factors have an impact on the relationship and reduce the correlation coefficient. For example, you might be a satisfied worker, yet still take a mental health day to head for the beach now and again.

Job Satisfaction and turnover

Satisfaction is also negatively related to turnover, but the correlation is stronger than what we found for absenteeism.

Other factors such as labour market conditions, expectations about alternative job opportunities, and length of tenure with the organization are important constraints on the actual decision to leave ones current job.

Evidence indicates that an important moderator of the satisfaction-turnover relationship is the employees level of performance. Job Satisfaction and Workplace Deviance Job dissatisfaction predicts a lot of specific behaviours, including unionization attempts, substance abuse, stealing at work, undue socializing, and tardiness. Researchers argue that these behaviours are indicators of a broader syndrome that we would term deviant behaviour in the workplace.PERCEPTION AND INDIVIDUAL DECISION MAKING

Perception is a process by which individuals organize and interpret their sensory impressions in order to give meaning to their environment.

Why is this important to the study of OB?

Because peoples behaviour is based on their perception of what reality is, not on reality itself Factors Influencing Perception

Factors that shape (and can distort perception):

Perceiver

Target

Situation

When an individual looks at a target and attempts to interpret what he or she sees, that interpretation is heavily influenced by personal characteristics of the individual perceiver.

The more relevant personal characteristics affecting perception of the perceiver are attitudes, motives, interests, past experiences, and expectations.

Characteristics of the target can also affect what is being perceived. This would include attractiveness, gregariousness, and our tendency to group similar things together. For example, members of a group with clearly distinguishable features or color are often perceived as alike in other, unrelated characteristics as well.

The context in which we see objects or events also influences our attention. This could include time, heat, light, or other situational factors.

Person Perception: Making Judgments about Others

Attribution Theory Our perceptions of people differ from our perceptions of inanimate objects.

We make inferences about the actions of people that we do not make about inanimate objects.

Nonliving objects are subject to the laws of nature.

People have beliefs, motives, or intentions.

Our perception and judgment of a persons actions are influenced by these assumptions.

Attribution theory suggests that when we observe an individuals behaviour, we attempt to determine whether it was internally or externally caused. That determination depends largely on three factors:

Distinctiveness

Consensus

Consistency

Clarification of the differences between internal and external causation:

Internally caused behaviours are those that are believed to be under the personal control of the individual.

Externally caused behaviour is seen as resulting from outside causes; that is, the person is seen as having been forced into the behaviour by the situation.

Distinctiveness refers to whether an individual displays different behaviours in different situations. What we want to know is whether the observed behaviour is unusual.

If it is, the observer is likely to give the behaviour an external attribution.

If this action is not unusual, it will probably be judged as internal.

Consensus occurs if everyone who is faced with a similar situation responds in the same way. If consensus is high, you would be expected to give an external attribution to the employees tardiness, whereas if other employees who took the same route made it to work on time, your conclusion as to causation would be internal.

Consistency in a persons actions. Does the person respond the same way over time? The more consistent the behaviour, the more the observer is inclined to attribute it to internal causes.

Fundamental Attribution Error

There is substantial evidence that we have a tendency to underestimate the influence of external factors and overestimate the influence of internal or personal factors.

There is also a tendency for individuals to attribute their own successes to internal factors such as ability or effort while putting the blame for failure on external factors such as luck. This is called the self-serving bias and suggests that feedback provided to employees will be distorted by recipients.

Frequently Used Shortcuts in Judging Others We use a number of shortcuts when we judge others. An understanding of these shortcuts can be helpful toward recognizing when they can result in significant distortions.

Selective Perception

Any characteristic that makes a person, object, or event stand out will increase the probability that it will be perceived.

It is impossible for us to assimilate everything we seeonly certain stimuli can be taken in. Selectivity works as a shortcut in judging other people by allowing us to speed-read others, but not without the risk of drawing an inaccurate picture.

Halo Effect

The halo effect occurs when we draw a general impression on the basis of a single characteristic:

This phenomenon frequently occurs when students appraise their classroom instructor.

Students may give prominence to a single trait such as enthusiasm and allow their entire evaluation to be tainted by how they judge the instructor on that one trait.

The reality of the halo effect was confirmed in a classic study.

Subjects were given a list of traits such as intelligent, skillful, practical, industrious, determined, and warm, and were asked to evaluate the person to whom those traits applied. When the word warm was substituted with cold the subjects changed their evaluation of the person.

Contrast Effects

We do not evaluate a person in isolation. Our reaction to one person is influenced by other persons we have recently encountered.

For example, an interview situation in which one sees a pool of job applicants can distort perception. Distortions in any given candidates evaluation can occur as a result of his or her place in the interview schedule.

Projection

This tendency to attribute ones own characteristics to other peoplewhich is called projectioncan distort perceptions made about others.

When managers engage in projection, they compromise their ability to respond to individual differences. They tend to see people as more homogeneous than they really are.

Stereotyping

Stereotypingjudging someone on the basis of our perception of the group to which he or she belongs

Generalization is not without advantages. It is a means of simplifying a complex world, and it permits us to maintain consistency. The problem, of course, is when we inaccurately stereotype.

In organizations, we frequently hear comments that represent stereotypes based on gender, age, race, ethnicity, and even weight.

Specific Applications of shortcuts in Organizations

We evaluate how much effort our co-workers are putting into their jobs.

Employment Interview

Evidence indicates that interviewers make perceptual judgments that are often inaccurate.

Agreement among interviewers is often poor. Different interviewers see different things in the same candidate and thus arrive at different conclusions about the applicant.

Interviewers generally draw early impressions that become very quickly entrenched. Studies indicate that most interviewers decisions change very little after the first four or five minutes of the interview.

Because interviews usually have so little consistent structure and interviewers vary in terms of what they are looking for in a candidate, judgments of the same candidate can vary widely.

Performance Expectations

Evidence demonstrates that people will attempt to validate their perceptions of reality, even when those perceptions are faulty.

Self-fulfilling prophecy or Pygmalion effect characterizes the fact that peoples expectations determine their behaviour. Expectations become reality.

Performance Evaluation

An employees performance appraisal is very much dependent on the perceptual process.

Although the appraisal can be objective, many jobs are evaluated in subjective terms. Subjective measures are, by definition, judgmental.

To the degree that managers use subjective measures in appraising employees, what the evaluator perceives to be good or bad employee characteristics or behaviours will significantly influence the outcome of the appraisal.

The Link between Perception and Individual Decision Making

Individuals in organizations make decisions; they make choices from among two or more alternatives.

Top managers determine their organizations goals, what products or services to offer, how best to finance operations, or where to locate a new manufacturing plant.

Middle- and lower-level managers determine production schedules, select new employees, and decide how pay raises are to be allocated.

Non-managerial employees also make decisions including whether or not to come to work on any given day, how much effort to put forward once at work, and whether or not to comply with a request made by the boss.

A number of organizations in recent years have been empowering their non-managerial employees with job-related decision-making authority that historically was reserved for managers.

Decision-making occurs as a reaction to a problem.

There is a discrepancy between some current state of affairs and some desired state, requiring consideration of alternative courses of action.

The awareness that a problem exists and that a decision needs to be made is a perceptual issue.

Every decision requires interpretation and evaluation of information. The perceptions of the decision maker will address these two issues.

Data are typically received from multiple sources.

Which data are relevant to the decision and which are not?

Alternatives will be developed, and the strengths and weaknesses of each will need to be evaluated.

Decision Making in Organizations The Rational Decision-Making Process The optimizing decision maker is rational. He or she makes consistent, value-maximizing choices within specified constraints.

These decisions follow a six-step rational decision-making model.Step 1: Define the problem

Step 2: Identify the decision criteria Step 3: Allocate weights to the criteria.Step 4: Develop the alternativesStep 5: Evaluate the alternativesStep 6: Select the best alternative. How Are Decisions Actually Made in Organizations?

Are decision makers in organizations rational?

When decision makers are faced with a simple problem having few alternative courses of action, and when the cost of searching out and evaluating alternatives is low, the rational model is fairly accurate.

Most decisions in the real world do not follow the rational model.

Decision makers generally make limited use of their creativity.

Choices tend to be confined to the neighbourhood of the problem symptom and to the neighbourhood of the current alternative.

Bounded Rationality

When faced with a complex problem, most people respond by reducing the problem to a level at which it can be readily understood.

This is because the limited information-processing capability of human beings makes it impossible to assimilate and understand all the information necessary to optimize.

People satisfiesthey seek solutions that are satisfactory and sufficient.

Individuals operate within the confines of bounded rationality. They construct simplified models that extract the essential features.

How does bounded rationality work?

Once a problem is identified, the search for criteria and alternatives begins.

The decision maker will identify a limited list made up of the more conspicuous choices, which are easy to find, tend to be highly visible, and they will represent familiar criteria and previously tried-and-true solutions.

Once this limited set of alternatives is identified, the decision maker will begin reviewing it.

The decision maker will begin with alternatives that differ only in a relatively small degree from the choice currently in effect. The first alternative that meets the good enough criterion ends the search.

The order in which alternatives are considered is critical in determining which alternative is selected.

Assuming that a problem has more than one potential solution, the satisfying choice will be the first acceptable one the decision maker encounters.

Intuition

Intuitive decision-making has recently come out of the closet and into some respectability.

What is intuitive decision making?

It is an unconscious process created out of distilled experience. It operates in complement with rational analysis.

Some consider it a form of extrasensory power or sixth sense.

Some believe it is a personality trait that a limited number of people are born with.

Research on chess playing provides an excellent example of how intuition works.

The experts experience allows him or her to recognize the pattern in a situation and draw upon previously learned information associated with that pattern to quickly arrive at a decision choice.

The result is that the intuitive decision maker can decide rapidly with what appears to be very limited information.

Although intuitive decision making has gained in respectability, dont expect peopleespecially in North America, Great Britain, and other cultures where rational analysis is the approved way of making decisionsto acknowledge they are using it. Rational analysis is considered more socially desirable in these cultures.

Problem Identification

Problems that are visible tend to have a higher probability of being selected than ones that are important. Why?

Visible problems are more likely to catch a decision makers attention.

Second, remember we are concerned with decision making in organizations. If a decision maker faces a conflict between selecting a problem that is important to the organization and one that is important to the decision maker, self-interest tends to win out.

The decision makers self interest also plays a part. When faced with selecting a problem important to the decision maker or important to the organization, self interest tends to win out.

Alternative Development

Since decision makers seek a satisfying solution, there is a minimal use of creativity in the search for alternatives. Efforts tend to be confined to the neighbourhood of the current alternative.

Evidence indicates that decision-making is incremental rather than comprehensive. Decision makers make successive limited comparisons. The picture that emerges is one of a decision maker who takes small steps toward his or her objective.

Making Choices In order to avoid information overload, decision makers rely on heuristics or judgmental shortcuts in decision making.

There are two common categories of heuristicsavailability and representativeness. Each creates biases in judgment.

Another bias is the tendency to escalate commitment to a failing course of action.

Availability heuristic

The availability heuristic is the tendency for people to base their judgments on information that is readily available to them.

Events that evoke emotions, that are particularly vivid, or that have occurred more recently tend to be more available in our memory. Fore example, many more people suffer from fear of flying than fear of driving in a car.

Representative heuristic

To assess the likelihood of an occurrence by trying to match it with a preexisting category, managers frequently predict the performance of a new product by relating it to a previous products success.

Escalation of commitment

Escalation of commitment is an increased commitment to a previous decision in spite of negative information.

It has been well documented that individuals escalate commitment to a failing course of action when they view themselves as responsible for the failure.

Implications for the organizations:

An organization can suffer large losses when a manager continues to invest in a failed plan just to prove his or her original decision was correct.

Consistency is a characteristic often associated with effective leaders. Managers might be reluctant to change a failed course of action to appear consistent.

Common Biases and Errors in Decision making Decision makers engage in bounded rationality, but an accumulating body of research tells us that decision makers also allow systematic biases and errors to creep into their judgements.

Overconfidence Bias Those individuals whose intellectual and interpersonal abilities, are weakest are likely to overestimate their performance and ability.

Anchoring Bias

A tendency to fixate on initial information, from which one then fails to adequately adjust for subsequent information.

Confirmation Bias

The tendency to seek out information that reaffirms past choices and to discount information that contradicts past judgements.

Availability Bias

The tendency for people to base their judgements on information that is readily available to them.

Escalation of Commitment

An increased commitment to a previous decision in spite of negative information.

Randomness Error

The tendency of individuals to believe that they can predict the outcome of random events.

Winners curse

A decision-making dictum which argues that the winning participants in an auction typically pay too much for the winning item.

Hindsight Bias

The tendency to believe falsely, after an outcome of an event is actually known, that one would have accurately predicted that outcome.

Individual Differences: Decision-Making Styles

Individual differences create deviations from the rational model. Here, we look at two differences: Personality and gender.

Personality There hasnt been much research on personality and decision making.

Research has considered conscientiousness and self-esteem.

Some research has shown that specific facets of conscientiousness-rather than the broad trait itself affect escalation of commitment.

Two facets of conscientiousness-Achievement striving and Dutifulness.

Achievement striving people were more likely to escalate their commitment, whereas dutiful people were less likely.

Dutiful people are more inclined to do what they see as best for the organization.

Achievement-striving individuals appear to be more susceptible to the hindsight bias.

People with high self-esteem appear to be especially susceptible to the self-serving bias. That is, they blame others for their failures while taking credit for successes.

Gender Recent research on rumination offers insights into gender differences in decision making.

Rumination refers to reflecting at length.

In terms of decision making, it means over thinking problems.

Women are more likely than men to engage in rumination.

Twenty years of study find that women spend much more time than men analyzing the past, present, and future.

Theyre more likely to overanalyze problems before making a decision and to rehash a decision once it has been made. A theory is that women are more empathetic and more affected be events in others lives, so they have more to ruminate about.

Organizational Constraints

The organization itself constrains decision makers. This happens due to policies, regulations, time constraints, etc.

Performance evaluation

Managers are strongly influenced in their decision making by the criteria by which they are evaluated. Their performance in decision making will reflect expectation.

Reward systems

The organizations reward system influences decision makers by suggesting to them what choices are preferable in terms of personal payoff.

Programmed routines

All but the smallest of organizations create rules, policies, procedures, and other formalized regulations in order to standardize the behavior of their members.

By programming decisions, organizations are able to get individuals to achieve high levels of performance without paying for the years of experience.

System-imposed time constraints

Organizations impose deadlines on decisions.

Decisions must be made quickly in order to stay ahead of the competition and keep customers satisfied.

Almost all important decisions come with explicit deadlines.

Historical Precedents

Decisions have a context. Individual decisions are more accurately characterized as points in a stream of decisions.

Decisions made in the past are ghosts which continually haunt current choices. It is common knowledge that the largest determining factor of the size of any given years budget is last years budget.

What about Ethics in Decision Making?

Ethical considerations should be an important criterion in organizational decision making.

Three Ethical Decision Criteria

Utilitariandecisions are made solely on the basis of their outcomes or consequences. The goal of utilitarianism is to provide the greatest good for the greatest number. This view tends to dominate business decision making.

Rightscalls on individuals to make decisions consistent with fundamental liberties and privileges as set forth in documents such as the Bill of Rights.

An emphasis on rights means respecting and protecting the basic rights of individuals, such as the right to privacy, to free speech, and to due process.

Justicerequires individuals to impose and enforce rules fairly and impartially. There is an equitable distribution of benefits and costs.

Advantages and liabilities of these three criteria:

Utilitarianism

Promotes efficiency and productivity

It can result in ignoring the rights of some individuals, particularly those with minority representation in the organization.

Rights

Protects individuals from injury and is consistent with freedom and privacy

It can create an overly legalistic work environment that hinders productivity and efficiency.

Justice

Protects the interests of the underrepresented and less powerful

It can encourage a sense of entitlement that reduces risk taking, innovation, and productivity.

Decision makers tend to feel safe and comfortable when they use utilitarianism. Many critics of business decision makers argue that this perspective needs to change.

Increased concern in society about individual rights and social justice suggests the need for managers to develop ethical standards based solely on non-utilitarian criteria.

Improving Creativity in Decision Making

Creativity is the ability to produce novel and useful ideas. These are ideas that are different from what has been done before, but that are also appropriate to the problem or opportunity presented.

Creative Potential

Most people have creative potential.

People have to get out of the psychological ruts most of us get into and learn how to think about a problem in divergent ways.

People differ in their inherent creativity.

A study of lifetime creativity of 461 men and women found that fewer than one percent were exceptionally creative.

Ten percent were highly creative, and about sixty percent were somewhat creative.

Three-component model of creativityThis model proposes that individual creativity essentially requires expertise, creative-thinking skills, and intrinsic task motivation. Expertise. is the foundation for all creative work. The potential for creativity is enhanced when individuals have abilities, knowledge, proficiencies, and similar expertise in their field of endeavour.

Creative thinking skills. This encompasses personality characteristics associated with creativity, the ability to use analogies, as well as the talent to see the familiar in a different light.

Intrinsic task motivation. The desire to work on something because its interesting, involving, exciting, satisfying, or personally challenging. This turns creativity potential into actual creative ideas. It determines the extent to which individuals fully engage their expertise and creative skills.

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