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Mos 2181 Final Exam.docx

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Business Administration
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Business Administration 3301K
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Alex Mc Dougall

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Final Exam
Chapter 11: Decision Making
What is decision making?
Decision making: the process of developing a commitment to some course of action
Three things are important;
oInvolves making a choice among several action alternatives
oIs a process that involves more than simply the final choice among alternatives
oCommitment involves some commitment of resources (time, money and personnel)
We can also describe it as a process of problem solving
Problem: a perceived gap between an existing state and a desired state
oThe process involves the perception of the existing state, the conception of the desired state and the steps that
from one state to the other
Well-structured problems
Well-structured problems: a problem for which the existing state it clear, the desired state is clear and how to get from
one state to the other is fairly obvious
These are simple and their solutions arouse little problems because they are repetitive and familiar
Program: standardized way of solving problems, they short circuit the decision making process by enabling decision
makers to go directly from the problem identification to solution
oThey usually go under labels such as rules, routines, standard operation procedures or rules of thumb
Many of the problems encountered in orgs are well structured and programmed decision making provides a useful means
of solving these problems
Ill-structured problems
Ill-structured problems: a problem for which the existing and desired states are unclear and the method of getting to the
desired state is unknown
Generally they are unique, they are unusual and have not been encountered before, they tend to be complex and involve
high degree of uncertainty
They arouse controversy and conflict among the people who are interested in the decision
These problems cannot be solved with programmed decisions, the decision maker must resort to non-programmed
decision making
oThey are likely to try to gather more information and be more self-consciously analytical in their approach
oThey entail high risk and stimulate political considerations
Model: problem identified search for information info clarifies natures of problem, suggests alternatives carefully
evaluated over time to ensure its immediate and continued effectiveness if difficulties occur in the process, repeat
The Compleat Decision Maker—A Rational Decision-Making Model
Perfect vs Bounded Rationality
Perfect rationality: decision strategy that is completely informed, perfectly logical and oriented toward economic gain,
the Economic Person;
oCan gather info about problems and solutions without costs and is thus completely informed
oPerfectly logical—if solution A is preferred over B, and B is preferred over C, then A is necessarily preferable to C
oHas only one criterion for decision making—economic gain
The perfect economic person doest exist in real decision makers, instead Hebert Simon suggested that managers use
bounded rationality
oA decision strategy that relies on limited information and that reflects time constraints and political considerations
Framing: aspects of the presentation of information about a problem that are assumed by decision makers
oIncludes assumptions about the boundaries of a problem, the possible outcomes of a decisions or the reference
points used to decide if a decision is successful
Cognitive biases: tendencies to acquire and process information in a particular way that is prone to error
oThey constitute assumptions and shortcuts that can improve decision making efficiency
oFrequently lead to serious errors in judgement
Problem identification and Framing
Difficulties in problem identification:
oPerceptual defence: the perceptual system may act to defend the perceiver against unpleasant perceptions
oProblem defined in terms of functional specialty: selective perception can cause decision makers to view a
problem as being in the domain of their own specialty even when some other perspective might be warranted
oProblem defined in terms of solution: this form of jumping to conclusions effectively short-circuits the rational
decision-making process
oProblem diagnosed in terms of symptoms: a concentration on surface symptoms will provide the decision maker
with few clues about an adequate solution. The real problem here involves the cause of the morale problem
Rational decision makers should try to be very self-conscious about how they have framed problems, they should try out
alternative frames and show avoid overarching universal frames
Information Search
May clarify the nature or extent of the problem and begin to suggest alternative solutions.
Too little information:
People tend to be mentally lazy and use whatever information is most readily available to them
We tend to remember vivid recent events, although such events might prove irrelevant in the context of the current
problem, we curtail our information search and rely on familiar experience
The tendency for people to be overconfident in their decision making confirmation bias, the tendency to seek out
information that conforms to one’s own definition of or solution to a problem
Too much information:
Information overload is the reception of more information than is necessary to make effective decisions
oCan lead to errors, omissions, delays, and cutting corners
Often attempt to use all the information at hand, then get confused and permit low-quality information or irrelevant
information to influence their decisions
Decision makers seem to think that more is better
oEven if decisions do not improve with additional information, confidence in the decisions will increase
o Also, decision makers may fear being “kept in the dark” and associate the possession of information with power
One research review concludes that managers:
oGather much information that has little decision relevance;
oUse information that they collected and gathered after a decision to justify that decision;
oRequest information that they do not use;
oRequest more information, regardless of what is already available; and
oComplain that there is not enough information to make a decision even though they ignore available information
Research reveals that people have a cognitive bias to value advice for which they have paid over free advice of equal
quality
Alternative Development Evaluation, and Choice
The perfect, rational totally informed, ideal decision maker can easily find alternatives and choose the best one
oThe decision maker can exhibit maximization—that is, he or she can choose the alternative with the greatest
expected value
Unfortunately, things do not go so smoothly for the decision maker working under bounded rationality.
oMay not know all alternative solutions, and he may be ignorant of the ultimate values and probabilities of success
of those solutions that he knows.
People are especially weak intuitive statisticians, and they frequently violate standard statistical principles:
oPeople avoid incorporating known existing data about the likelihood of events into their decisions.
oLarge samples warrant more confidence than small samples
oDecision makers often overestimate the odds of complex chains of events occurring
It is possible to reduce some of these basic cognitive biases by making people more accountable for their decisions.
oCritical that this accountability be in place before a decision is reached
After-the-fact accountability often increases the probability of biases, as people try to protect their identity as good
decision makers.
The decision maker working under bounded rationality frequently “satisfices” rather than maximizes
Satisficing means that the decision maker establishes an adequate level of acceptability for a solution and then screens
solutions until he or she finds one that exceeds this level
Decision expert Paul Nutt found that the search for alternatives is often very limited in strategic decision making and that
firms invest very little money in exploring alternatives
Risky Business
Choosing between decision alternatives often involves an element of risk
Research by Daniel Kahneman and Amos Tversky shows that when people view a problem as a choice between losses,
they tend to make risky decisions, rolling the dice in the face of a sure loss.
When people frame the alternatives as a choice between gains they tend to make conservative decisions, protecting the
sure win.
It is not necessarily wrong to frame a problem as a choice between losses, but this can contribute to a foolish level of risk
taking.
Solution Implementation
The perfectly rational decision maker will have factored any possible implementation problems in to his or her choice of
solutions
The bounded decision maker will attempt to do the same when estimating probabilities of success
However, in organizations, decision makers are often dependent on others to implement their decisions, and it might be
difficult to anticipate their ability or motivation to do so
Solution Evaluation
Perfectly rational decision maker should be able to evaluate the effectiveness of the decision with calm, objective
detachment
The bounded decision maker might encounter problems at this stage of the process.
Justification:
Substantial dissonance can be aroused when a decision turns out to be faulty
One way to prevent such dissonance is to avoid careful tests of the adequacy of the decision
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.
oSince these resources have been lost due to past decisions, they shouldn’t enter new ones
Escalation of commitment: the tendency to invest additional resources in an apparently failing course of action
oPeople often ‘throw good resources after bad’ acting as if they can recoup sunk costs
Changing one’s mind and reversing previous decisions might be perceived as a sign of weakness, a fate to be avoided at
all costs.
Escalation of commitment sometimes happens even when the current decision maker is not responsible for previous sunk
costs.
oDecision makers might be motivated to not appear wasteful
oMight be due to the way in which decision makers frame the problem once some resources have been sunk
They may frame the problem as a decision between a sure loss of x dollars and an uncertain loss of x + y
dollars
Escalation can occur in both competitive and non-competitive situations
oNon-competitive example can be seen in the overvaluation of stocks by Wall Street analysts in advance of a
market crash
oCompetitive, auction-like situations seem especially likely to prompt escalation because they often involve time
pressure, rivalry, interested audiences, and the desire to be the first mover
Ways to prevent the tendency to escalate commitment to a failing course of action:
oEncourage continuous experimentation with reframing the problem to avoid the decision trap of feeling that more
resources have to be invested.
oSet specific goals for the project in advance that must be met if more resources are to be invested.
oPlace more emphasis when evaluating managers on how they made decisions and less on decision outcomes.
oSeparate initial and subsequent decision making so that individuals who make the initial decision to embark on a
course of action are assisted or replaced by others who decide if a course of action should be continued
Hindsight:

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Description
Final Exam Chapter 11: Decision Making What is decision making? • Decision making: the process of developing a commitment to some course of action • Three things are important; o Involves making a choice among several action alternatives o Is a process that involves more than simply the final choice among alternatives o Commitment involves some commitment of resources (time, money and personnel) • We can also describe it as a process of problem solving • Problem: a perceived gap between an existing state and a desired state o The process involves the perception of the existing state, the conception of the desired state and the steps that from one state to the other Well-structured problems • Well-structured problems: a problem for which the existing state it clear, the desired state is clear and how to get from one state to the other is fairly obvious • These are simple and their solutions arouse little problems because they are repetitive and familiar • Program: standardized way of solving problems, they short circuit the decision making process by enabling decision makers to go directly from the problem identification to solution o They usually go under labels such as rules, routines, standard operation procedures or rules of thumb • Many of the problems encountered in orgs are well structured and programmed decision making provides a useful means of solving these problems Ill-structured problems • Ill-structured problems: a problem for which the existing and desired states are unclear and the method of getting to the desired state is unknown • Generally they are unique, they are unusual and have not been encountered before, they tend to be complex and involve high degree of uncertainty • They arouse controversy and conflict among the people who are interested in the decision • These problems cannot be solved with programmed decisions, the decision maker must resort to non-programmed decision making o They are likely to try to gather more information and be more self-consciously analytical in their approach o They entail high risk and stimulate political considerations • Model: problem identified search for information info clarifies natures of problem, suggests alternatives carefully evaluated over time to ensure its immediate and continued effectiveness if difficulties occur in the process, repeat The Compleat Decision Maker—A Rational Decision-Making Model Perfect vs Bounded Rationality • Perfect rationality: decision strategy that is completely informed, perfectly logical and oriented toward economic gain, the Economic Person; o Can gather info about problems and solutions without costs and is thus completely informed o Perfectly logical—if solution A is preferred over B, and B is preferred over C, then A is necessarily preferable to C o Has only one criterion for decision making—economic gain • The perfect economic person doest exist in real decision makers, instead Hebert Simon suggested that managers use bounded rationality o A decision strategy that relies on limited information and that reflects time constraints and political considerations • Framing: aspects of the presentation of information about a problem that are assumed by decision makers o Includes assumptions about the boundaries of a problem, the possible outcomes of a decisions or the reference points used to decide if a decision is successful • Cognitive biases: tendencies to acquire and process information in a particular way that is prone to error o They constitute assumptions and shortcuts that can improve decision making efficiency o Frequently lead to serious errors in judgement Problem identification and Framing • Difficulties in problem identification: o Perceptual defence: the perceptual system may act to defend the perceiver against unpleasant perceptions o Problem defined in terms of functional specialty: selective perception can cause decision makers to view a problem as being in the domain of their own specialty even when some other perspective might be warranted o Problem defined in terms of solution: this form of jumping to conclusions effectively short-circuits the rational decision-making process o Problem diagnosed in terms of symptoms: a concentration on surface symptoms will provide the decision maker with few clues about an adequate solution. The real problem here involves the cause of the morale problem • Rational decision makers should try to be very self-conscious about how they have framed problems, they should try out alternative frames and show avoid overarching universal frames Information Search • May clarify the nature or extent of the problem and begin to suggest alternative solutions. Too little information: • People tend to be mentally lazy and use whatever information is most readily available to them • We tend to remember vivid recent events, although such events might prove irrelevant in the context of the current problem, we curtail our information search and rely on familiar experience • The tendency for people to be overconfident in their decision making confirmation bias, the tendency to seek out information that conforms to one’s own definition of or solution to a problem Too much information: • Information overload is the reception of more information than is necessary to make effective decisions o Can lead to errors, omissions, delays, and cutting corners • Often attempt to use all the information at hand, then get confused and permit low-quality information or irrelevant information to influence their decisions • Decision makers seem to think that more is better o Even if decisions do not improve with additional information, confidence in the decisions will increase o Also, decision makers may fear being “kept in the dark” and associate the possession of information with power • One research review concludes that managers: o Gather much information that has little decision relevance; o Use information that they collected and gathered after a decision to justify that decision; o Request information that they do not use; o Request more information, regardless of what is already available; and o Complain that there is not enough information to make a decision even though they ignore available information • Research reveals that people have a cognitive bias to value advice for which they have paid over free advice of equal quality Alternative Development Evaluation, and Choice • The perfect, rational totally informed, ideal decision maker can easily find alternatives and choose the best one o The decision maker can exhibit maximization—that is, he or she can choose the alternative with the greatest expected value • Unfortunately, things do not go so smoothly for the decision maker working under bounded rationality. o May not know all alternative solutions, and he may be ignorant of the ultimate values and probabilities of success of those solutions that he knows. • People are especially weak intuitive statisticians, and they frequently violate standard statistical principles: o People avoid incorporating known existing data about the likelihood of events into their decisions. o Large samples warrant more confidence than small samples o Decision makers often overestimate the odds of complex chains of events occurring • It is possible to reduce some of these basic cognitive biases by making people more accountable for their decisions. o Critical that this accountability be in place before a decision is reached • After-the-fact accountability often increases the probability of biases, as people try to protect their identity as good decision makers. • The decision maker working under bounded rationality frequently “satisfices” rather than maximizes • Satisficing means that the decision maker establishes an adequate level of acceptability for a solution and then screens solutions until he or she finds one that exceeds this level • Decision expert Paul Nutt found that the search for alternatives is often very limited in strategic decision making and that firms invest very little money in exploring alternatives Risky Business • Choosing between decision alternatives often involves an element of risk • Research by Daniel Kahneman and Amos Tversky shows that when people view a problem as a choice between losses, they tend to make risky decisions, rolling the dice in the face of a sure loss. • When people frame the alternatives as a choice between gains they tend to make conservative decisions, protecting the sure win. • It is not necessarily wrong to frame a problem as a choice between losses, but this can contribute to a foolish level of risk taking. Solution Implementation • The perfectly rational decision maker will have factored any possible implementation problems in to his or her choice of solutions • The bounded decision maker will attempt to do the same when estimating probabilities of success • However, in organizations, decision makers are often dependent on others to implement their decisions, and it might be difficult to anticipate their ability or motivation to do so Solution Evaluation • Perfectly rational decision maker should be able to evaluate the effectiveness of the decision with calm, objective detachment • The bounded decision maker might encounter problems at this stage of the process. Justification: • Substantial dissonance can be aroused when a decision turns out to be faulty • One way to prevent such dissonance is to avoid careful tests of the adequacy of the decision • 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. o Since these resources have been lost due to past decisions, they shouldn’t enter new ones • Escalation of commitment: the tendency to invest additional resources in an apparently failing course of action o People often ‘throw good resources after bad’ acting as if they can recoup sunk costs • Changing one’s mind and reversing previous decisions might be perceived as a sign of weakness, a fate to be avoided at all costs. • Escalation of commitment sometimes happens even when the current decision maker is not responsible for previous sunk costs. o Decision makers might be motivated to not appear wasteful o Might be due to the way in which decision makers frame the problem once some resources have been sunk  They may frame the problem as a decision between a sure loss of x dollars and an uncertain loss of x + y dollars • Escalation can occur in both competitive and non-competitive situations o Non-competitive example can be seen in the overvaluation of stocks by Wall Street analysts in advance of a market crash o Competitive, auction-like situations seem especially likely to prompt escalation because they often involve time pressure, rivalry, interested audiences, and the desire to be the first mover • Ways to prevent the tendency to escalate commitment to a failing course of action: o Encourage continuous experimentation with reframing the problem to avoid the decision trap of feeling that more resources have to be invested. o Set specific goals for the project in advance that must be met if more resources are to be invested. o Place more emphasis when evaluating managers on how they made decisions and less on decision outcomes. o Separate initial and subsequent decision making so that individuals who make the initial decision to embark on a course of action are assisted or replaced by others who decide if a course of action should be continued Hindsight: • Hindsight refers to the tendency to review the decision-making process that was used to find out what was done right (in the case of success) or wrong (in the case of failure), often reflects a cognitive bias • This is the tendency to assume, after the fact that we knew all along what the outcome of a decision would be. • In effect, our faulty memory adjusts the probabilities that we estimated before making the decision to correspond to what actually happened. • Another form of faulty hindsight is the tendency to take personal responsibility for successful decision outcomes while denying responsibility for unsuccessful outcomes. How Emotion and Mood Affect Decision Making • Emotionless decision making would be poor decision making • Strong emotions frequently figure in the decision-making process that corrects ethical errors and so-called whistle- blowers often report that they were motivated by emotion to protest decision errors. • Strong (positive) emotion has also been implicated in creative decision making and the proper use of intuition to solve problems. • There are many cases in which strong emotions are a hindrance o People experiencing strong emotions are often self-focused and distracted from the actual demands of the problem at hand. o A common theme over the years has been how excessive emotional conflict between business partners or family business members provokes questionable business decisions. • The research on mood and decision making reveals some very interesting paradoxes. o For one thing, mood is a pretty low-key state, and you might be inclined to think it would not have much impact on decisions. o Plenty of evidence that mood affects what and how people think when making decisions. • Mood has its greatest impact on uncertain, ambiguous decisions of the type that are especially crucial for organizations • Research: o People in a positive mood tend to remember positive information, those in a negative mood remember negative information. o People in a positive mood tend to evaluate objects, people, and events more positively. Those in a negative mood provide more negative evaluations. o People in a good mood tend to overestimate the likelihood that good events will occur and underestimate the occurrence of bad events. People in a bad mood do the opposite. o People in a good mood adopt simplified, shortcut decision-making strategies, more likely violating the rational model. People in a negative mood are prone to approach decisions in a more deliberate, systematic, detailed way. o Positive mood promotes more creative, intuitive decision making. See chart on page 400 Group Decision Making Why Use Groups? Decision quality: • Groups or teams can make higher-quality decisions than individuals. This argument is based on the following three assumptions: o Groups are more vigilant than individuals are—more people are scanning the environment. o Groups can generate more ideas than individuals can. o Groups can evaluate ideas better than individuals can. • At the problem identification and information search stages, vigilance is especially advantageous • When it comes to developing alternative solutions, more people should literally have more ideas, if only because someone remembers something that others have forgotten. • Members with different backgrounds and experiences may bring different perspectives to the problem. Decision acceptance and commitment: • Groups are often used to make decisions on the premise that a decision made in this way will be more acceptable to those involved. Again, there are several assumptions underlying this premise: o People wish to be involved in decisions that will affect them. o People will better understand a decision in which they participated. o People will be more committed to a decision in which they invested personal time and energy. Diffusion of responsibility: • A less admirable reason to employ groups is to allow for diffusion of responsibility across the members in case the decision turns out poorly. o Each member of the group will share part of the burden of the negative consequences, and no one person will be singled out for punishment • When this happens, individual group members often “abandon ship” and exhibit biased hindsight—“I knew all along that the bid was too high to be accepted, but they made me go along with them” Do Groups Actually Make Higher-Quality Decisions than Individuals? • Groups should perform better than individuals when o The group members differ in relevant skills and abilities, as long as they do not dt differ so much that conflict occurs; o Some division of labour can occur; o Memory for facts is an important issue; and o Individual judgments can be combined by weighting them to reflect the expertise of the various members • Equal weighting of opinions and averaging is inappropriate when some group members have more expertise concerning a particular problem, and it is critical for decision success that such expertise is recognized by the group Disadvantages of Group Decision Making • Time: Groups seldom work quickly or efficiently compared with individuals. This is because of the process losses involved in discussion, debate, and coordination. • Conflict: Participants in group decisions may have their own personal axes to grind or their own resources to protect. When this occurs, decision quality may take a back seat to political wrangling and infighting. • Domination: The advantages of group decision making will seldom be realized if meetings are dominated by a single individual or a small coalition • Groupthink: group pressures lead to reduced mental efficiency, poor testing of reality, and lax moral judgment o Psychologist Irving Janis, who developed the groupthink concept, felt that high group cohesiveness was at its root • Groupthink symptoms: o Illusion of invulnerability: members are overconfident and willing to assume great risks. They ignore obvious danger signals. o Rationalization: problems and counter-arguments that members cannot ignore are “rationalized away.” o Illusion of morality: The decisions the group adopts are not only perceived as sensible, they are also perceived as morally correct. o Stereotypes of outsiders: The group constructs unfavourable stereotypes of those outside the group who are the targets of their decisions. o Pressure for conformity: Members pressure each other to fall in line and conform with the group’s views. o Self-censorship: Members convince themselves to avoid voicing opinions contrary to thegroup. o Illusion of unanimity: Members perceive that unanimous support exists for their chosen course of action. o Mindguards: Some group members may adopt the role of “protecting” the group from information that goes against its decisions. • Victims of groupthink are operating in an atmosphere of unreality that should lead to low-quality decisions. • Preventing groupthink leaders must be careful to avoid exerting undue pressure for a particular decision outcome and concentrate on good decision processes o Leaders should establish norms that encourage and even reward responsible dissent, and outside experts should be brought in from time to time to challenge the group’s views How Do Groups Handle Risk? • Risky shift: the tendency for groups to make riskier decisions than the average risk initially advocated by their individual members • Conservative shift: the tendency for groups to make less risky decisions than the average risk initially advocated by their individual members • Group discussion seems to polarize or exaggerate the initial position of the group • Two main reasons why risky and conservative shifts occur when groups make decisions: o Group discussion generates ideas and arguments that individual members have not considered before. This information naturally favours the members’ initial tendency toward risk or toward conservatism. o Group members try to present themselves as basically similar to other members but “even better.” Improving Decision Making in Organizations Training Discussion Leaders • Examples of the skills that people learn in discussion-leader training: o State the problem in a non-defensive, objective manner o Supply essential facts and clarify any constraints on solutions o Draw out all group members. Prevent domination by one person, and protect members from being attacked or severely criticized. o Wait out pauses. Do not make suggestions or ask leading questions. o Ask stimulating questions that move the discussion forward. o Summarize and clarify at several points to mark progress. Stimulating and Managing Controversy • Incorporating members with diverse ideas and backgrounds, forming subgroups to tear the problem apart,” and establishing norms that favour the open sharing of information • Devil’s advocate: a person appointed to identify and challenge the weaknesses of a proposed plan or strategy. Traditional and Electronic Brainstorming • Brainstorming: an attempt to increase the number of creative solution alternatives to problems by focusing on idea generation rather than evaluation • Electronic brainstorming uses computer-mediated communication to accomplish the same goal as traditional brainstorming: the generation of novel ideas without evaluation Nominal Group Technique • Nominal group technique: a structured group decision-making technique in which ideas are generated without group interaction and then systematically evaluated by the group. The Delphi Technique • The Delphi technique of decision making was developed at the Rand Corporation to forecast changes in technology. • Its name derives from the future-telling ability of the famous Greek Delphic Oracle • The Delphi process relies solely on a nominal group—participants do not engage in face-to-face interaction. Thus, it is possible to poll a large number of experts without assembling them in the same place at the same time • The heart of Delphi is a series of questionnaires sent to respondents. Minimally, there are two waves of questionnaires, but more is not unusual. Chapter 12 Power, Politics, and Ethics What is Power? • It is the capacity to influence others who are in a state of dependence • It is not always perceived or exercised; it is just the CAPACITY to influence others • The fact that the target of power is dependent on the power holder does not imply that a poor relationship exists between the two o Example: your friend can have the power to influence your behaviour/ attitudes because you are dependent on them for social support • Power can flow in any direction in an organization (usually higher up people have more power) • Power applies to individuals an groups The Bases of Individual Power • Power can be found in the position that you occupy in the organization or the resources that you are able to command Legitimate Power • Power derived from a persons position or job in an organization • It constitutes the organization’s judgment about who is formally permitted to influence whom, and it is often called authority • Organizational equals (all vice presidents) have equal legitimate power; some people are more likely to invoke their power • When legitimate power works, it often does so because people have been socialized to accept its influence • Employees consistently cite legitimate power as a major reason for following their boss’s directives, even across various cultures Reward Power • Power derived from the ability to provide positive outcomes and prevent negative outcomes • Reward power often backs up legitimate power • Managers = give raises, performance evaluations, assign preferred tasks Coercive Power • Power derived from the use of punishment and threat • Lower level organizational members can apply their share of coercion Referent Power • Power derived from being well liked by others (people we like influence us) • We are prone to consider their points of view, ignore their failures, seek their approval, and use them as role models • Potent for 2 reasons: o It stems from identification with the power holder; it represents a truer or deeper base of power than reward or coercion, which may stimulate mere compliance to achieve rewards or avoid punishment (Charismatic leaders have referent power) o Anyone in the organization may be well liked, irrespective of his or her other bases of power (readily available to anyone) Expert Power • Power derived from having special information or expertise that is valued by an organization • Expert power corresponds to difficulty of replacement • Expertise is most consistently associated with employee effectiveness o Employees perceived woman managers as more likely then male managers to be high in expert power o Woman lack easy access to more organizationally based forms of power so they try to be better then their male counterparts as a way to gain influence • Coercion = likely to produce resistance & lack of cooperation • Legitimate power & reward power = likely to produce compliance with boss’s wishes • Referent & expert power = likely to generate true commitment and enthusiasm for the managers agenda How Do People Obtain Power? • Doing the Right Things: Activities lead to power when they are extraordinary, highly visible, and especially relevant to the solution of organizational problems • Extraordinary Activities: Excellent performance in unusual or non-routine activities is what one needs • These activities include occupying new positions, managing substantial changes, and taking great risks • Visible Activities: People who have an interest in power are especially good at identifying visible activities and publicizing them • Relevant Activities: if nobody sees the work as relevant to the solution of important organizational problems, it will not add to one’s influence Cultivating the Right People • Outsiders: Establishing good relationships with key people outside one’s organization can lead to increased power within the organization o Organizational members who are on the boards of directors of other companies might acquire critical information about business conditions that they can use in their own firms • Subordinates: an individual can gain influence if she is closely identified with certain up-and-coming subordinates o Cultivating subordinate interests can also provide power when a manager can demonstrate that he or she is backed by a cohesive team • Peers: cultivating good relationships is mainly a means of ensuring that nothing gets in the way of ones future acquisition of power • Superiors: often called mentors or sponsors o Useful to be identified as a protégé of someone higher in the organization o Mentors provide special information and useful introductions to other right people o Associated of people who have power sometimes develop an exaggerated and illusory sense of their own power, status, and influence  More prevalent among men then women Empowerment – Putting Power Where it is needed • Empowerment: giving people the authority, opportunity, and motivation to take initiative and solve organizational problems • Having authority to solve an organizational problem means having legitimate power • The motivation part of the empowerment equation suggest hiring people who will be intrinsically motivated by power and opportunity and aligning extrinsic rewards with successful performance • Leaders who express confidence in subordinates’ abilities and foster conditions that facilitate the sharing of power can contribute to empowerment o Managers have to be tolerant of occasional mistakes from empowered employees • People who are empowered have a strong sense of self-efficacy: the feeling that they are capable of doing their jobs well and making things happen • Empowering lower level employees is critical in service organizations, where providing customers with good initial encounter or correcting any problems that develop can be essential for repeat business • Empowerment doesn’t mean giving employees unrestricted power; it means putting power where it is needed to make the organization more effective • Empowerment = effective performance & sufficient power • Lack of power = ineffective performance & inadequate power • Abuse of power = ineffective performance & excessive power Influence Tactics – Putting Power to Work • Influence Tactics: tactics that are used to convert power into actual influence over others • These tactics include: o Assertiveness—ordering, nagging, setting deadlines, and verbally confronting others; o Ingratiation—using flattery and acting friendly, polite, or humble; o Rationality—using logic, reason, planning, and compromise; o Exchange—doing favours or offering to trade favours; o Upward appeal—making formal or informal appeals to organizational superiors for intervention; and o Coalition formation—seeking united support from other organizational members • Which tactic used depends on type of power you hold and whom you are trying to influence o Someone with coercive power might gravitate toward assertiveness, someone with referent power might gravitate toward ingratiation, and someone with expert power might try rationality o Rationality = highly prized in organizations = frequently used o Subordinates are more likely to be the recipients of assertiveness than peers or superiors o Exchange, ingratiation, and upward appeal are favoured tactics for influencing both peers and subordinates • Using rationality as an influence tactic for men, was associated with receiving better performance evaluations, earning more money, and experiencing less work stress • In this series of studies, women who used ingratiation as an influence tactic received the highest performance evaluations (from male managers) Who Wants Power? • Power can be a manifestation of evil: some power seekers feel weak and resort primarily to coercive power to cover up, compensate for, or substitute their weakness • nPow: the need to have strong influence over others o People with high nPow conform to the negative stereotype of power – rude, sexually exploitative, abuse alcohol, show concern with status symbol o When nPow is controlled these stereotypes are not observed • McClelland argues that the most effective managers: o Have high n Pow; o Use their power to achieve organizational goals; o Adopt a participative or “coaching” leadership style; and o Are relatively unconcerned with how much others like them • McClelland calls such managers institutional managers because they use their power for the good of the institution rather than for self-aggrandizement o They refrain from coercive leadership and do not play favourites o Institutional managers are more effective than personal power managers (who use their power for personal gain) and affiliative managers (who are more concerned with being liked than with exercising power) Controlling Strategic Contingencies – How Subunits Obtain Power • Subunit power: The degree of power held by various organizational subunits, such as departments • Strategic Contingencies: critical factors affecting organizational effectiveness that are controlled by a key subunit o If some subunits are dependent on others for smooth operations, they are susceptible to influence Scarcity • Differences in subunit power are magnified when resources are scarce • Subunits tend to acquire power when they are able to secure scarce resources that are important to the organization as a whole Uncertainty • The basic sources of uncertainty exist mainly in the organization’s environment—government policies might change, sources of supply and demand might dry up, or the economy might take an unanticipated turn • Subunits that are able to cop with uncertainty tend to acquire more power because they can protect themselves from serious problems Centrality • Other things being equal, subunits whose activities are most central to the mission or work flow of the organization should acquire more power than those whose activities are more peripheral • Subunit activities can be central in 3 senses o It may influence the work of most other subunits o Centrality also exists when a subunit has an especially crucial impact on the quantity or quality of the organization’s key product or service o Finally, a subunit’s activities are more central when their impact is more immediate Substitutability • If people inside or outside the organization can perform the subunits activities it will have little power • If a subunits staff is non-substitutable it can acquire substantial power • Crucial factor here is the labour market: a change in the market can result in a change in the subunits influence • If work can be contracted out, the power of the subunit that usually performs these activities is reduced Organizational Politics – Using and Abusing Power The Basics of Organizational Politics • Organizational politics: The pursuit of self interest in an organization whether or not this self-interest corresponds to organizational goals • I: Sanctioned means / sanctioned ends: power is used routinely to pursue agreed-on goals o Familiar, accepted means of influence are employed to achieve sanctioned outcomes o Example: a manager agrees to recommend a raise for an employee if — she increases her net sales by 30 percent in the next six months (there is nothing political about this) • II: Sanctioned means/ not sanctioned ends: acceptable means of influence are abused to pursue goals that the organization does not approveof o For instance, a head nurse agrees to assign a subordinate nurse to a more favourable job if the nurse agrees not to report the superior for stealing medical supplies o This is dysfunctional political behaviour • III: Not sanctioned means/ sanctioned ends: ends that are useful for the organization are pursued through questionable means o For example, although officials of the Salt Lake City Olympic Committee were pursuing a sanctioned end—the 2002 Winter Olympics—the use of bribery and vote-buying as a means of influence was not sanctioned by the committee • IV: Not sanctioned means/ not sanctioned ends: his quadrant may exemplify the most flagrant abuse of power, since disapproved tactics are used to pursue disapproved outcomes o For example, to increase his personal power, the head of an already overstaffed legal department wishes to increase its size o He intends to hire several of his friends in he process o To do this, he falsifies workload documents and promises special service to the accounting department in exchange for the support of its manager • Do political activities occur under particular conditions or in particular locations in organizations? Research suggests the following: o Managers report that most political maneuvering occurs at middle and upper management levels rather than at lower levels. o Some subunits are more prone to politicking than others. Clear goals and routine tasks (e.g., production) might provoke less political activity than vague goals and complex tasks (e.g., research and development). o Some issues are more likely than others to stimulate political activity. Budget allocation, reorganization, and personnel changes are likely to be the subjects of politicking. Setting performance standards and purchasing equipment are not. o In general, scarce resources, uncertainty, and important issues provoke political behaviour. The Facets of Political Skill • Political Skill: the ability to understand others at work and to use that knowledge to influence others to act in ways that enhance ones personal or organizational objectives • Four facets to political skill: o Social astuteness: Good politicians are careful observers who are tuned in to others’ needs and motives (ability to read people) o Interpersonal influence: The politically skilled have a convincing and persuasive interpersonal style but employ it flexibly to meet the needs of the situation (they put others at ease) o Apparent sincerity: a good politician comes across as genuine and exhibits high integrity o Networking Ability: networking involves establishing good relations with key organizational members and outsiders to accomplish ones goals • There are several aspects of networking: o Maintaining contacts—giving out business cards, sending gifts and thank you notes; o Socializing—playing golf, participating in company sports leagues, having g drinks after work; o Engaging in professional activities—giving a workshop, accepting a speaking engagement, teaching, publishing, appearing in the media; o Participating in community activities—being active in civic groups, clubs, church events; and o Increasing internal visibility—accepting high-profile work projects, sitting on important committees and task forces • High in extraversion & self esteem = more likely to engage in networking behaviours • Networking has increased in importance as people become more self-reliant and less reliant on organizations to plot their career futures • Being central in a large network provides power because you have access to considerable resources, such as knowledge Machiavellianism—The Harder Side of Politics • A set of cynical beliefs about human nature, morality, and the permissibility of using various tactics to achieve one’s ends • It is a stable personality trait • Compared with “low Machs,” “high Machs” are more likely to advocate the use of lying and deceit to achieve desired goals and to argue that morality can be compromised to fit the situation in question o They are convincing liars and are god at psyching out competitors • In interpersonal situations high Machs act in a practical manner assuming the ends justify the means • High Machs are likely to be enthusiastic organizational politicians • High Machs seem to be able to insulate themselves from the negative social consequences of their tactics • High Machs are able to accurately identify situations in which their favoured tactics will work. Such situations have the following characteristics: o The high Mach can deal face to face with those he or she is trying to influence; o The interaction occurs under fairlv emotional circumstances; and o The situation is fairly unstructured, with few guidelines for appropriate forms of interaction; • High Machs, by remaining calm and rational, can create a social structure that facilitates their personal goals at the expense of others • They are unlikely to be high performers and are inclined to counterproductive behaviours such as theft & sabotage Defensiveness – Reactive Politics • The goal here is to reduce threats to one’s own power by avoiding actions that do not suit one’s own political agenda or avoiding blame for events that might threaten one’s political capital • Sometimes the best action to take is no action at all: a # of defensive behaviours can accomplish this mission: o Stalling: Moving slowly when someone asks for your cooperation is the most obvious way of avoiding taking action without actually saying no o Ocerconforming: Sticking to the strict letter of your job description or to organizational regulations is a common way to avoid action o Buck Passing: Having someone else take action is an effective way to avoid doing it yourself  Buck passing is especially dysfunctional politics when the politician is best equipped to do the job but worries that it might not turn out successfully • Another set of defensive behaviours is oriented around the motto “If you can’t avoid action, avoid blame for its consequences.” These behaviours include o Buffing: the tactic of carefully documenting information showing that an appropriate course of action was followed o Scapegoating: blaming others when things go wrong  Works when you have some power behind you Ethics in Organizations • Ethics: systematic thinking about the moral consequences of decisions • Moral consequences can be framed in terms of potential for harm to any stakeholders in the decision • Stakeholders: people inside or outside of an organization who have the potential to be affected by organizational decisions • Between 40-90% of managers have been pressured to compromise their own ethical standards when making decisions • Managers tend to see themselves as having higher ethical standards than their peers and sometimes their superiors • Top managers see their organizations as being more ethical then do those lower in the hierarchy The Nature of Ethical Dilemmas • Ethical issues are often occupationally specific • Manager discovered 7 themes that defined moral standards for decision making: o Honest communication: evaluate subordinates candidly; advertise and label honestly, do not slant proposals to senior management. o Fair treatment: pay equitably; respect the sealed bid process; do not give preference to suppliers with political connections; do not use lower-level people as scapegoat o Special consideration: The “fair treatment” standard can be modified for special cases, such as helping out a long-time employee, giving preference to hiring the disabled, or giving business to a loyal but troubled supplier. o Fair competition: Avoid bribes and kickbacks to obtain business; do not fix prices with competitors. o Responsibility to organization: Act for the good of the organization as a whole, not tor self-interest; avoid waste and inefficiency. o Corporate social responsibility: Do not pollute; think about the community impact of plant closures; show concern for employee health and safety. o Respect for law: Legally avoid taxes, do not evade them; do not bribe government inspectors; follow the letter and spirit of labour laws Causes of Unethical Behaviour: knowing causes helps companies to aid in prevention Gain • The anticipation of healthy reinforcement for following an unethical course of action, especially if no punishment is expected, should promote unethical decisions Role Conflict • Many ethical dilemmas are role conflict resolved in unethical ways • A common form of role conflict that provokes unethical behaviour occurs when our bureaucratic role as an organizational employee is at odds with our role as a member of a profession o Example: agents/brokers being pressured as employees to push products that are not in the best interest of their client Strong Organizational Identification • By strongly associating with the organization, people see their membership as an integral part of their identity which can lead them to engage in unethical activates to help the organization Competition • Stiff competition for scarce resources can lead to unethical behaviour • Trade offences (such as price fixing) have been shown to increase with industry decline Personality • Cynical and those with external locus of control = less prone to turn to ethical matters • People with a high need for personal power (especially Machiavellians) may be prone to make unethical decisions, using this power to further self interest rather then got the good of the organization as a whole • People with strong economic values are more likely to behave unethically than those with weaker economic values • There are marked individual differences in the degree of sophistication that people use in thinking about moral issues o Some people are morally disengaged, rejecting responsibility for their actions and using euphemistic labeling to obscure moral issues o Research shows that less disengagement and more attentiveness is associated with more ethical behaviour Organizational and Industry Culture • The presence of role models helps to shape the culture; if models are rewarded for unethical behaviour the development of an unethical culture is likely • No one thing creates a culture of corruption in organizations  it is a combination of factors, such as evaluating managers solely “by the numbers,” denying responsibility, denying injury to others, and teaching (low power) newcomers corrupt practices that lead to unethical corporate cultures • Research shows that upper-level managers generally tend to be naïve about the extent of ethical lapses in those below them • A consideration of culture suggests the conditions under which corporate codes of ethics might actually have an impact on decision making o If such codes are specific, tied to the actual business being done, correspond to the reward system, and are rigorously enforced, they should bolster an ethical culture o If vague codes that do not correspond to other cultural elements exist, the negative symbolism might actually damage the ethical culture Whistle-Blowing • Whistle-blowing: disclosure of illegitimate practices by a current or former organizational member to come person or organization that may be able to take action to correct these practices • It may be blown inside or outside the organization, depending on the circumstance Sexual Harassment – When power and Ethics Collide • Sexual harassment is a form of unethical behaviour that stems, in part, from the abuse of power and the perpetuation of a gender power imbalance • Managers who use their position, reward, or coercive power to request sexual favours or demonstrate verbal or physical conduct of a sexual nature as a condition of employment or as a basis for employment decisions toward those in less powerful positions are abusing their power and acting in an unethical manner • Sexual harassment is also prevalent in hostile work environments that perpetuate the societal power imbalance between men and women • In a web-based survey of professional women, 86 percent reported having experienced sexist hostility, 40 percent reported unwanted sexual attention, and 8 percent reported sexual coercion • Harassment increased when the proportion of men in the client base increased and when the clients were perceived as holding at lot of power • Harassment was more likely to be experienced by women who exhibited traditionally masculine personality traits (such as independence, assertiveness, and dominance) • Deaf ear syndrome: organizations are slow to react to complaints of sexual harassment • Organizations can deal with allegations of sexual harassment & increase responsiveness by taking a number of important measures o Examine the characteristics of deaf ear organizations: determine if they have any of the characteristics that would make them susceptible to the deaf ear syndrome o Foster management support and education: Sexual harassment training programs are necessary to educate managers on how to respond to complaints in a sensitive and respectful manner o Stay vigilant: Managers must monitor the work environment and remove displays of a sexual nature and factors that can contribute to a hostile work environment o Take immediate action o Create a state of the art policy o Establish clear reporting procedures Employing Ethical Guidelines • Identify the stakeholders that will be affected by any decision. • Identify the costs and benefits of various decision alternatives to these stakeholders. • Consider the relevant moral expectations that surround a particular decision • Be familiar with the common ethical dilemmas that decision makers face in your specific organizational role or profession • Discuss ethical matters with decision stakeholders and others. Do not think ethics without talking about ethics. • Convert your ethical judgments into appropriate action. Chapter 13: Conflict and Stress What is Conflict? • Interpersonal conflict: process that occurs when one person, group or organizational subunit frustrates the goal attainment of another • Often involves antagonist attitudes and behaviours o Attitudes might include dislike, see others as unreasonable, and develop negative stereotypes o Behaviours might include name calling, sabotage, even physical aggression Causes of Organizational Conflict Group Identification and Intergroup Bias • Even without interaction or cohesion, people have a tendency to develop a more positive view of their own “in-group” and a less positive view of the “out-group,” of which they are not a member • Self-esteem is a critical factor; identifying with the successes of one’s own group and disassociating oneself from out- group failures boosts self-esteem and provides comforting feelings of social solidarity • There are a number of groups or classes with which people might identify. These might be based on personal characteristics (e.g., race or gender), job function (e.g. sales or production), or job level (e.g., manager or non-manager) • Differences between groups might be accentuated by real differences in power, opportunity, clients serviced, and so on. • The increased emphasis on teams in organizations generally places a high premium on getting employees to identify strongly with their team. Interdependence • When individuals or subunits are mutually dependent on each other to accomplish their own goals, the potential for conflict exists • Conflict in this context occurs for two reasons: o It necessitates interaction between the parties so that they can coordinate their interests. Conflict will not develop if the parties can “go it alone” o Each party has some power over the other. It is relatively easy for one side or the other to abuse its power and create antagonism. • Interdependence doesn’t always lead to conflict provides a good basis for collaboration through mutual assistance Differences in Power, Status, and Culture • Power: If party A needs the collaboration of party B to accomplish its goals but B does not need A’s assistance, antagonism may develop. B has power over A, and A has nothing with which to bargain. • Status: Status differences provide little impetus for conflict when people of lower status are dependent on those of higher status. • Culture: the clash in beliefs and values can result in overt conflict. Ambiguity • Ambiguous goals, jurisdictions, or performance criteria can lead to conflict. • The formal and informal rules that govern interaction break down. • Might be difficult to accurately assign praise for good outcomes or blame for bad outcomes • Ambiguous performance criteria are a frequent cause of conflict between managers and employees. Scarce Resources • Limited budget money, secretarial support, or lab space can contribute to conflict. • Scarcity has a way of turning latent or disguised conflict into overt conflict Types of Conflict • Relationship conflict concerns interpersonal tensions among individuals that have to do with their relationship per se, not the task at hand (ex. personality clashes) • Task conflict concerns disagreements about the nature of the work to be done (ex. Diff in opinion about goals) • Process conflict involves disagreements about how work should be organized and accomplished (ex. Disagreements about responsibility, authority, resource allocation) • In the context of work groups and teams, relationship and process conflict tend to be detrimental to member satisfaction and team performance o Prevents the development of cohesiveness • Some degree of task conflict is actually beneficial for team performance, especially when the task is non-routine and requires a variety of perspectives to be considered and when it goes not degenerate into relationship conflict Conflict Dynamics • When conflict begins, we often see the following events transpire: o “Winning” the conflict becomes more important than developing a good solution to the problem at hand. o The parties begin to conceal information from each other or to pass on distorted information. o Each side becomes more cohesive. Deviants who speak of conciliation are punished, and strict conformity is expected. o Contact with the opposite party is discouraged except under formalized, restricted conditions. o While the opposite party is negatively stereotyped, the image of one’s own position is boosted. o On each side, more aggressive people who are skilled at engaging in conflict may emerge as leaders Modes of Managing Conflict • Conflict expert Kenneth Thomas notes, there are several basic reactions that can be thought of as styles, strategies, or intentions for dealing with conflict o Function of both how assertive you are and how cooperative you are Avoiding • Avoiding is characterized by low assertiveness of one’s own interests and low q cooperation with the other party • “Hiding one’s head in the sand” response. • Can provide some short-term stress reduction from the rigours of conflict, it does not really change the situation its effectiveness is often limited. Accommodating • Accommodating: a conflict management style in which one cooperates with the other party while not asserting one’s own interests • Can be an effective reaction when you are wrong, the issue is more important to the other party, or you want to build good will Competing • Competing tends to maximize assertiveness for your own position and minimize cooperative responses • Full priority is given to your own goals, facts, or procedures Compromise • Compromise combines intermediate levels of assertiveness and cooperation • You attempt to satisfice rather than maximize your outcomes and hope that the same occurs for the other party • Compromise places a premium on determining rules of exchange between the two parties o Contains the seeds for procedural conflict in addition to whatever else is being negotiated • Does not always result in the most creative response to conflict • Not so useful for resolving conflicts that stem from power asymmetry, because the weaker party may have little to offer the stronger party • Sensible reaction to conflict stemming from scarce resources. Collaborating • Collaborating: both assertiveness and cooperation are maximized in the hope that an integrative agreement occurs that fully satisfies the interests of both parties • Emphasis is put on a win-win resolution, in which there is no assumption that someone must lose something. • The solution to the conflict can leave both parties in a better condition • Works best when the conflict is not intense and when each party has information that is useful to the other • Frequently enhances productivity and achievement • Research shows that it is particularly important inside organizations for providing good customer service. Managing Conflict with Negotiation • Negotiation: a decision-making process among interdependent parties who do not share identical preferences • Negotiation is an attempt to reach a satisfactory exchange among or between the parties • Can be very implicit and also very explicit • Distributive negotiation assumes a zero-sum, win-lose situation in which a fixed pie is divided up between the parties • Integrative negotiation assumes that mutual problem solving can result in a win-win situation in which the pie is actually enlarged before distribution Distributive Negotiation Tactics • Distributive negotiation is essentially single-issue negotiation. Threats and promises: • Threat consists of implying that you will punish the other party if he or she does not concede to your position • Promises are pledges that concessions will lead to rewards in the future • Threat has merit as a bargaining tactic if one party has power over the other that corresponds to the nature of the threat • Promises have merit when your side lacks power and anticipates future negotiations with the other side • Both threats and promises work best when they send interpretable signals to the other side about your true position, what really matters to you Firmness vs concessions: • Research shows that intransigence yields superior economic results especially in face-to-face negotiations • When some concessions are thought to be appropriate, good negotiators use face-saving techniques to explain them Persuasion: • Two-pronged attack: o One prong asserts the technical merits of the party’s position o Other prong asserts the fairness of the target position. • Verbal persuasion is an attempt to change the attitudes of the other party toward your target position • Most effective when they are perceived as expert, likable, and unbiased • The obvious problem in distributive negotiations is bias—each party knows the other is self-interested. o One way to deal with this is to introduce some unbiased parties. • A review of studies on gender differences in negotiation outcomes found that although men negotiated significantly better outcomes than women, the overall difference between men and women was small (salary negotiation) o Training programs that enable women to negotiate better starting salaries comparable with men can have short- and long-term benefits o Negotiation is worth doing, as a recent study showed that new hires who negotiated received a $5000 salary premium. • Collaborating and competing strategies were superior to compromising and accommodating. Integrative Negotiation Tactics • Integrative negotiation requires a degree creativity, most people are not so creative and therefore more likely to use distributive tactics Copious information exchange: • A freer flow of information is critical to finding an integrative settlement. • Trust must be built slowly • One way to proceed is to give away some non-critical information to o the other party to get the ball rolling, much negotiation behaviour tends to be reciprocated • Also, ask the other party a lot of questions, and listen to their responses, parties will being to reveal their true interests nt just their current positions Framing difference as opportunities: • Differences are usually framed as barriers to negotiation, however, they can often serve as a basis for integrative agreements o Contain information that can telegraph each party’s real interest Cutting costs: • If you can somehow cut the costs that the other party associates with an agreement, the chance of an integrative settlement increases. • Integrative solutions are especially attractive when they reduce costs for all parties in a dispute Increasing resources: • Increasing available resources is a very literal way of getting around the fixed-pie syndrome. Introducing superordinate goals: • Superordinate goals are attractive outcomes that can be achieved only by collaboration • Neither party can attain the goal on its own. • Represent the best example of creativity in integrative negotiation because they change the entire landscape of the negotiation episode. Third Party Involvement (often happens when parties reach an impasse) Mediation: • The process of mediation occurs when a neutral third party helps to facilitate a negotiated agreement • Formal mediation has a long history in labour disputes, international relations, and marital counselling. • What do mediators do? o Almost anything that aids the process or atmosphere of negotiation can be helpful.  If there's tension they may serve as a lightening rod for anger or try to introduce anger o Might try to help the parties clarify their underlying interests, both to themselves and to each other. o Imposing a deadline or helping the parties deal with their own constituents might be useful o Introducing a problem-solving orientation to move toward more integrative bargaining Arbitration: • The process of arbitration occurs when a third party is given the authority to dictate the terms of settlement of a conflict • Although disputing parties sometimes agree to arbitration, it can also be mandated formally by law or informally by upper management or parents • Key point is that negotiation has broken down, and the arbitrator has to make a final distributive allocation. o This is not the way to integrative solutions. • In conventional arbitration, the arbitrator can choose any outcome • In final offer arbitration, each party makes a final offer, and the arbitrator chooses one of them o Devised to motivate the two parties to make sensible offers that have a chance of being upheld • One of the most commonly arbitrated disputes between employers and employees is dismissal for excessive absenteeism o Arbitrators sided with the company in over half of such cases Is All Conflict Bad? • There is growing awareness of some potential benefits of organizational conflict • The argument that conflict can be functional rests mainly on the idea that it promotes necessary organizational change: o CONFLICT  CHANGE  ADAPTATION  SURVIVAL o For organizations to survive, they must adapt to their environments o Requires changes in strategy that may be stimulated through conflict. • How conflict promotes change: o It might bring into consideration new ideas that would not be offered without conflict. o Might promote change because each party begins to monitor the others performance more carefully. o May promote useful change by signalling that a redistribution of power is necessary. • Conflict stimulation: a strategy of increasing conflict to motivate change • When some conflict may be good; o The existence of a “friendly rut,” in which peaceful relationship take precedence over organizational goals. o When parties that should be interacting closely have chosen to withdraw from each other to avoid overt conflict o When conflict is suppressed or downplayed by denying differences, ignoring controversy, and exaggerating points of agreement. A Model of Stress in Organizations • A U.S. National Institute for Occupational Safety and Health survey found that 40 percent of workers found their jobs extremely or very stressful, and the U.S. Bureau of Labour Statistics determined that stress is a leading cause of worker disability Stressors • Stressors are environmental events or conditions that have the potential to induce stress • Some conditions prove to be stressful for everyone: ex
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