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Organizational Behavior

VIEWS: 9 PAGES: 41

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    COMMERCE 2BA3
ORGANIZATIONAL BEHAVIOUR
                Class 8

          Decision-Making
       Power, politics, and ethics

           Dr. Christa Wilkin
       Brain Teasers
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       _it        pa per



      Bend       sleeping
    Backwards       job
                        Last Class
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       Communication is more than what you say



    THIS CLASS
     Decision Making

     Power, Politics and Ethics
                          Agenda
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       Rational decision making vs. Bounded rationality
       Individual vs. Group decision making
       Types of power
       Organizational politics
       Ethical behaviour
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CH 11: DECISION MAKING
                   Food for Thought
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       People usually make rational decisions. Agree?
        Disagree?
    A Rational Decision Making Model
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                      Identify a problem

                Search for relevant information

          Develop alternative solutions to the problem

                 Evaluate alternative solutions

                     Choose best solution

                   Implement chosen solution

             Monitor and evaluate chosen solution
                  Perfect Rationality
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       Perfect rationality is a decision strategy that is
        completely informed, perfectly logical, and
        oriented toward economic gain.
       The prototype is the Economic Person who is perfect,
        cool, calculating decision maker.
       These perfectly rational characteristics do not exist
        in real decision makers.
                       Bounded Rationality
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       Bounded rationality is a decision strategy that relies on
        limited information and that reflects time constraints
        and political considerations.
       Framing: How problems and decision alternatives are
        framed can have a powerful impact on decisions
         E.g.,   20% probability that will win vs. 80% that you will
          lose
       Cognitive biases: Tendencies to acquire and process
        info in a particular way that is prone to error
         E.g.,   anchoring
                         Satisficing
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        Decision maker establishes an adequate level of
         acceptability for a solution to a problem and then
         screens solutions until he or she finds one that
         exceeds this level
                   Risky Decision Making
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        When people view a problem as a choice between
         losses, they tend to make risky decisions
               Option A: 85% chance of losing $100 along with
          E.g.,
           a 15% chance of losing nothing. Option B:100%
           chance of losing $50
        When people frame the alternatives as a choice
         between gains, they tend to make conservative
         decisions
          E.g., Option A: bet $100 on the flip of a coin (50-50
           chance) if you stood to win $200. Option B: bet $100
           if there was a 90% chance that you win $150
                     Quiz Question
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     Jennifer has a choice: (A)100% chance of losing $5 or
     (B) 85% chance of losing $10 along with a 15%
     chance of losing nothing. What is she likely to do now?
       A) Ignore economic considerations
       B) Make a risky decision
       C) Make a conservative decision
       D) Ignore sunk costs
       E) Ignore sample sizes
                          Justification
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        Substantial dissonance can be aroused when a
         decision turns out to be faulty.
        To prevent such dissonance, decision makers
         sometimes avoid careful evaluations or devote their
         energy to trying to justify a faulty decision.
          E.g.,oh I didn’t give that much thought; I wasn’t feeling
           well that day
                   The Dollar Auction
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        You can participate or watch.
        Only bidders can talk (no extraneous conversation).
         Bidding will be in 5¢ or 10¢ increments.
        There is only one deviation from a conventional
         auction. Both the winner and the second highest
         bidder must pay the amount that each has bid. If you
         win at 30¢ and beat out a bid of 25¢, I get that 25¢
         and I owe you 70¢.
        Will someone give me 10¢ for this dollar?
                           Debrief
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        What was going through your mind during the
         auction?
                          Sunk Costs
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        The justification of faulty decisions is best seen in the
         irrational treatment of sunk costs
        Sunk costs are permanent losses of resources
         incurred as the result of a decision
        Since these resources have been lost due to a past
         decision, they should not enter into future decisions
          E.g.,Your used car breaks down again and because
           you’ve already spent $1000 fixing it, you decide to fix
           it again
             Escalation of Commitment
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        People often “throw good resources after bad,”
         acting as if they can recoup sunk costs
        This process is known as escalation of commitment
        Escalation of commitment refers to the tendency to
         invest additional resources in an apparently failing
         course of action
          E.g.,You are playing poker and you have bet so much
           of your chip stack on one hand that you will not fold
           even with new info that casts doubt on your decision
           Escalation of Commitment
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        Reasons for escalation of commitment:
          Dissonance  reduction.
          Social norm for consistent behaviour.

          Motivation to not appear wasteful.

          The way the problem is framed.

          Personality, moods, and emotions.
Preventing Escalation of Commitment
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        Encourage continuous experimentation with
         reframing the problem.
        Set specific goals for the project in advance that
         must be met if more resources are to be invested.
        Place more emphasis in evaluating managers on
         how they made decisions and less on decision
         outcomes.
        Separate initial and subsequent decision making.
                    Hindsight is 20/20
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        Decision evaluation is also inhibited by faulty
         hindsight
        Hindsight refers to the tendency to review the
         decision-making process that was used to find what
         was done right or wrong
        It is the tendency to assume, after the fact, that we
         knew all along what the outcome of a decision
         would be
          E.g.,See, I knew all along that I shouldn’t of fixed the
           car again
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QUESTIONS?
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CH 12: POWER, POLITICS, AND
          ETHICS
                      Types of Power
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        Coercive Power: Controlling people through fear
               You arrive to work 15 minutes early because you
          E.g.,
           know your boss will flip out if you’re late
        Reward Power: Controlling people because you can
         distribute or withhold something that they want
          E.g., You accept overtime because you want your boss
           to promote you
        Legitimate Power: Position or job in an organization
               President of your company asks you to do
          E.g.,
           something
                       Types of Power
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        Referent Power: Stems from being well liked by others
          E.g.,People will do a favour for you because you’re such
           a nice person
        Expert Power: Derived from having special information
         or expertise that is valued by an organization
          E.g.,You got your undergrad from Mac and because
           you’re super smart, everyone at work comes to you with
           questions
                       Quiz Question
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     Two army officers get into an argument, and one cites
     his rank in an attempt to settle the matter. To which
     power base is he resorting?
       A) Expert
       B) Legitimate
       C) Referent
       D) Coercive
       E) Reward
     Power
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                     Empowerment
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        Giving people the authority, opportunity, and
         motivation to take initiative and solve
         organizational problems
        Giving people the freedom and ability to make
         decisions and commitments
        Puts power where it is needed to make it effective
        People who are empowered have a strong sense of
         self-efficacy
                    Who Wants Power?
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        Those high on McClelland’s Need for Power
          (N-Pow)
        McClelland argues that the most effective managers
         (“Institutional Managers”):
          Have high N-Pow
          Use their power to achieve organizational goals

          Adopt a participative or “coaching” leadership style

          Are relatively unconcerned with how much others like them
                Organizational Politics
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        The pursuit of self-interest in an organization,
         whether or not this self-interest corresponds to
         organizational goals
                       Avoiding Actions
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        Stalling
          Move     slowly when someone asks for your cooperation.
        Overconforming
          Sticking   to the strict letter of your job description
        Passing the buck
          Having     someone else take action.
        Buffing
          Carefullydocumenting information showing that an
           appropriate course of action was followed.
        Scapegoating
          Blaming    others when things go wrong.
                     Machiavellianism
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        A set of cynical beliefs about human nature,
         morality, and the permissibility of using various
         tactics to achieve one’s ends.
        A stable personality trait.
        High Machs use their tactics best in the following
         kinds of situations:
          Face-to-face   encounters.
          Fairly emotional circumstances.

          The situation is fairly unstructured, with few guidelines
           for appropriate forms of interaction.
                          Question
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        How does the concept of machiavellianism relate to
         ethics?
               Ethics in Organizations
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        Systematic thinking about the moral consequences
         of decisions
        A substantial number of employees believe they
         have been pressured to compromise their own
         ethical standards when making organizational
         decisions.
         Causes of Unethical Behaviour
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        Gain: anticipation of healthy reinforcement for
         following an unethical course of action
        Role conflict: Employee vs. professional
        Competition for scarce resources: Stiff competition
         for scarce resources
        Personality: Personality types more prone to
         unethical behaviour (e.g., economic values)
        Org Industry and Culture: Corporate cultures that
         reward unethical behaviour
                         Question
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        You are the entire information technology
         department for a small firm with 20 employees.
         The president of the company believes some of
         the employees are spending far too much time on
         the Internet doing tasks not related to work. The
         president asks you to start monitoring employees'
         Internet usage without their knowledge,
         something you could easily do from a
         technological standpoint.
                         Question
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     What Do You Do?
     A. Start monitoring employees' email and Web
        usage, as the president has asked.
     B. Suggest that an acceptable Internet-use policy be
        developed.
     C. Talk to employees and tell them what the
        president has in mind so they'll change their habits.
          Difference between Ethics and
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                      Morals
        Ethics
          Something you choose to comply with
          An acceptable set of standards/behaviours
          Sometimes established by a body
          Standards of conduct
                E.g., It is ethical to recycle
        Morals
          Taught to you from an early age
          Deals with people
          Embedded and personal
            E.g., It is wrong to make promises you can’t keep
                       Ford Example
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        Pinto video
                        Ford Example
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        Pinto cars (1973) bursting into flames after rear
         collisions; could have possibly been avoided by
         adding an $11 part; execs ignored the principal
         design engineer’s spoken and written statements

        Proposed lawsuit cost to Ford:
          180 burn injuries @ $67,000
          180 burn deaths @ $200,000
          Total Cost: $48,100,000


        Pinto Repair Cost:
          12,454,545 cars @ $11 = $137,000,000
          (It was thus cheaper to pay the lawsuits)
                        Summary
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        People do not always make rational decisions
        Different types of power can lead to higher
         commitment
        Some people may behave for political gains and
         may behave unethically
                      For Next Class
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        Read Chapter 13 on conflict and stress

								
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