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LEO Midterm > LEO Midterm > Flashcards

LEO Midterm Flashcards

1
Q

Common Knowledge Effect

A

Commonly held info is more influential on group decisions compared to unique info

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2
Q

Stats about common knowledge

A
  1. Impacts initial preferences of more team members before meeting
  2. more likely to be introduced at meeting
  3. more likely to be repeated in convos
  4. as team converges, norm of not bringing up new facts
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3
Q

Shortcomings in Teams

A

Unique / divergent opinions not shared (team didn’t encourage full participation and individuals withheld info to appear cooperative)

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4
Q

Who has responsibility for ensuring teams reach full potential?

A

Both teams and individuals

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5
Q

Outcomes of collaboration

A
  1. More informed decisions

2. More commitment to decision

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6
Q

Narrow perspectives

A

We often look at things from one perspective

  • we can miss something big
  • we are guided by our expertise / training
  • we build a case for our fav answer
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7
Q

Two potential (negative) consequences in groups

A
  1. Everyone shares the same perspectives

2. Conflict arises

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8
Q

Solution for narrow perspectives & overconfidence –> Shortcomings in teams

A

Broaden the frame of perspective at team and organizational level

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9
Q

System thinking

A

Way of thinking that considers how outcomes are produced by a complex whole (people, procedures, routines, environments) as opposed to single element

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10
Q

Fundamental Attribution Error (FAE)

A

Underestimating the power of the situation (thinking people/personalities make systems successful, not other way around)

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11
Q

Categories for how people explain attribute behavior

A

Person - traits, abilities, personality

Situation - pressures, resources, incentives, oppty’s

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12
Q

Robust error with how people explain attribute error?

A

FAE - people tend to focus on personality explanations and ignore role of situations/systems

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13
Q

Implications of FAE

A

Focus on finding right people AND putting together right system

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14
Q

How leaders make a difference

A

Influence system which influences individual behavior & performance

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15
Q

Implications of narrow perspectives and overconfidence

A

At individual level, miss critical insights into solivng a problem

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16
Q

How to overcome narrow perspectives & overconfidence

A

Teams and Orgs can bring together diverse knowledge and perspectives - success dependent upon system

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17
Q

What does effective leadership depend on?

A

Deep appreciation for system

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18
Q

Examples of overconfidence

A

Estimation quiz of market events;

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19
Q

Examples of FAE

A

Good Samaritan study (helping homeless); Food drive study (donations)

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20
Q

Compensation model

A

a (salary) + b(rate of contingent reward) x X(effort)

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21
Q

Two key issues in evaluating compensation package

A

Base pay and slope

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22
Q

Fundamental trade-off for determining how much a compensation package should be contingent on performance

A

Trade-off between motivation vs. risk

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23
Q

4 factors of contingent rewards

A

Observability of effort
Measurability of desired performance
Controllability (employee perception) of what is being measured
Reliability (employee’s perceptions of firm)

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24
Q

Observability of employee effort - when to rely more on CR and why

A

Effort is hard to observe; CR is substitute for direct monitoring

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25
Q

Measurability of desired performance - when to rely more on CR and why

A

Desired output is measurable; rewards are tied to what you care about

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26
Q

Controllability - when to rely more on CR and why

A

Effort translates directly to measures; effort is less risky

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27
Q

Reliability - when to rely more on CR and why

A

Compensation is tied directly to measurement; effort is less risky

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28
Q

Additional considerations for CR

A

Intrinsic motivation and risk preference

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29
Q

Intrinsic motivation - rely less on CR when and why

A

There are other reasons for working hard; don’t need CR undermining

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30
Q

Risk preferences - rely less on CR when and why

A

Employee more risk averse than management; optimal risk sharing

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31
Q

What does compensation slope (CR) affect?

A

employee selection and retention (beliefs about control matter)

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32
Q

Why does pay-for-performance work well at LE from individual’s perspective?

A

Strong link between effort, performance, and compensation (independence, rate stability, transparent and egalitarian culture)

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33
Q

Why does pay-for-performance work well at LE from org’s perspective?

A

Strong link between performance and outcomes; employee’s are more productive (piece rate motivates effort)

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34
Q

Obstacles to contingent rewards

A

1 - inflated perceptions of contribution
2 - Process perceived unfair
3 - incentivizes wrong behavior

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35
Q

Examples of inflated perceptions of contribution

A

Marriage responsibilities; individual effort in team setting vs team members

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36
Q

Determinants of fairness perceptions

A

1 - distributive fairness

2 - process fairness

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37
Q

Distributive fairness

A

Were outcomes allocated fairly (pay) - can be based on contribution, need, or eqality

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38
Q

Obstacles of distributive fairness

A

Self serving interpretations of which rule should apply, level of contribution/needs, weight on different contributions

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39
Q

Example of distributive fairness

A

Monkey - cucumber/banana

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40
Q

Procedural Fairness

A

was allocation of process far

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41
Q

Characteristics of fair process

A

Participation/voice of those affected by decision; impartiality of decision maker; transparency of decision process

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42
Q

Why do people want fair procedures

A

Yields more accurate outcomes; signal of respect

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43
Q

Alternatives to CR

A

Social motivation & Intrinsic motivation

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44
Q

How to increase intrinsic motivation

A

Design of work

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45
Q

Job characteristics in task design (increases intrinsic motivation)

A

Skill variety, task identity, task significance, autonomy, feedback

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46
Q

Why does intrinsic motivation matter

A

“fill the gaps” when you can’t measure & monitor

  • creates enthusiasm, excitement for work and org
  • predicts “extra role” behavior
47
Q

Crafting jobs to increase intrinsic motivation - where to focus?

A

Tasks, relationships, perceptions

48
Q

Examples of balancing extrinsic & intrinsic motivation (why it’s tricky)

A

Paying adults to take IQ test; children drawings

49
Q

How extrinsic can hurt intrinsic

A

Pay can affect the attributions or explanations people ust o understand their reason for working

50
Q

Framing in balancing extrinsic & intrinsic motivation

A

Pay as a reflection of an employee’s skills and contribution to society

51
Q

What decreases the effectiveness of PFP

A

Imperfect links between effort, measurement, and compensation

52
Q

How to cushion the blow of unfavorable distributions

A

fair procedures

53
Q

What is crucial if things you desire can’t be measured?

A

Intrinsic motivation

54
Q

Lure of a good story

A

we tell stories based on available data; we’re confident it’s correct

55
Q

Confirmation bias

A

seek info that supports our favored narrative and don’t try to disprove

56
Q

Decision Trap: Available heuristic

A

In forming judgements, tend to rely on readily available info
- fail to ask about quality of info or consider whether it’s complete

57
Q

Decision trap: Judging goodness/badness

A

Depends on what it is compared to

- example = salaries; tv vs headphones saving money

58
Q

Decision trap: Risk taking depends on…

A

whether outcomes are framed as gains or losses

- example = firing employees vs saving employees

59
Q

Decision trap: we find tradeoffs difficult

A

So we use simple rules to decide

60
Q

Decision trap: poor intuitive statisticians (example)

A

Defect rates at identical small/large plants (extremes more likely when the data set is small); mutual funds example

61
Q

Two components to performance

A

Tendency/ability + Luck –> when we sample on extreme performance rely more on luck

62
Q

Decision Trap: we are overconfident (examples)

A

Sydney opera house; days required to finish honor’s thesis

63
Q

How to debias overconfidence

A

Outside view (use the data; rely on base rates to make predictions)

64
Q

Remedies for bias

A

1 - ask critical questions
2 - play devil’s advocate with yourself
3 - analogic exercises
4- use models of regression

65
Q

Real solution for bias

A

Teams - generate multiple perspecitves

66
Q

Major reason against PFP

A

Distributive fairness - leads to wage compression

67
Q

Prospect Theory Value Function

A

How people evaluate outcomes when they face a goal

  • goals divide space of possible outcomes into gains/losses
  • loss aversion
  • distance effect
68
Q

Loss aversion

A

Creating the possibility of losing is significant because people think about gains/losses differently

69
Q

Distance effect

A

people become less sensitive to incremental changes in performance when they are further from their goal

70
Q

Drawbacks to goals

A

1 - starting problem (subgoals help with this)
2 - Risky business (goals encourage risk taking but an lead to unethical behaviors)
3 - Emotion management (if fail to reach goal)

71
Q

LE Bonus System compenents

A

1 - Output (amount produced)
2- Quality
3 - Dependability (no absences)
4 - Ideas/Cooperation

72
Q

System 1 vs System 2 thinking

A

S1 = automatic judgements that stem from associations stored in memory
S2 = deliberate reasoning gone awry
* both common sources of bias

73
Q

How to look for risk/uncertainty and temper overconfidence

A

1 - Three estimates instead of a range (H/M/L)
2- Two forecats and take average
3 - Premortems
4 - Take outside view

74
Q

Four Cells Technique

A

With causal relationships, must look at both absence and presence of thing (when it’s successful and when it’s not )
- put data sets together

75
Q

How to organize organizations?

A

Based on goals

76
Q

3 design options for organizations

A

Functional; Divisional; Matrix

77
Q

Functional Org Design

A

Aligned by function

  • Allows for deep EoS and specialization
  • Valuable as firms grow
  • Create sense of identity within functions
  • Problems with coordination (slow response)
78
Q

Divisional Org Design

A

Organize around product line, geography, customer

  • Good for large orgs
  • Division head close to relevant info and can make decisions that max profits for products
  • Introduces redundant effort and sacrifices EoS
  • Reduce coordination between products
79
Q

Hybrid Org Design

A

Mix of Functional + Divisional

80
Q

Matrix Org Design

A

Layer product focus on top of functions

  • Two lines of authority –> conflicting demands
  • Lots of meetings
81
Q

How to coordinate in organizations

A
  1. Hierarchy (command and control)
  2. Formal processes - incentives, policies, teams
  3. Informal processes - culture
82
Q

Degrees of centralization and decision rights

A 
Centralized = decisions high up
Decentralized = decisions lower
83
Q

How to preserve culture

A
  1. Self-selection (company selects for it)

2. Socialize it

84
Q

How to socialize culture

A
  1. Employees need to act in effortful way
  2. Action should be public
  3. Acton should feel voluntary
  4. Action can’t have obvious large reward
85
Q

Ideological control vs operational autonomy

A

Ideological control preserves the core; operational autonomy stimulates progress

86
Q

Problems with groups

A

1 - debating society (no conclusion)

2 - group think (too much conformity)

87
Q

What kind of conflict can drive innovation (and what can’t)

A

Task / Relationship

- Ideal = moderate task & low r’ship

88
Q

When does group think happen and what can help against it?

A

Strong team spirit, high cohesiveness, limited outside ideas, high stress, directive leadership
- broad framing helps

89
Q

Symptoms of group think

A

1 - self-censorship / illusion of unanimity
2 - pressure on dissenters
3 - illusions of invulnerability
4 - stereotypes

90
Q

How to engage divergent views

A
  1. invite dissenters
  2. don’t take sides too soon (management)
  3. Reduce pressure to conform
  4. Establish norms supporting conflict
91
Q

Framing decisions in terms of gains will lead to

A

Risk averse behavior

92
Q

Framing decisions in terms of losses will lead to

A

Risk taking behavior

93
Q

Random Error (Groups vs. Individuals)

A

Random error is generally high in individuals but tends to smooth out in groups - “Wisdom of Crowds”
- Bottle of nickles example

94
Q

Groups: Factors that favor combining knowledge

A
  • Knowledge is distributed across people (cognitive diversity)
  • If you chase, you may chase the wrong person
  • Many people chase theselves
95
Q

Groups: Factors that favor chasing

A

“Expert” is much better than others and can be identified

96
Q

What predicts being a high-performing team?

A

Diversity (age, gender), Norms of equal participation, perspective-taking ability

97
Q

Cognitive diversity (and what is required for this)

A

Diverse, independent perspectives (must have good process to KEEP people diverse)

98
Q

Barriers to Cognitive diversity: Independence and the anchoring bias

A

Early opinions anchor/bias other’s opinions

99
Q

Problem: Early public opinions anchor others - Solution?

A

Ask people to think for themselves before discussing

100
Q

Problem: People love consensus - Solution?

A

Ask for all info to come out before sharing outcome preferences

  • frame the task as problem-solving, not agreement
  • aim for culture of friendly disagreement
101
Q

Problem: People don’t like to be wrong - Solution?

A

Develop culture in which people feel comfortable being wrong and there isn’t embarrassment / punishment

102
Q

Problem: Some people dominate discussion - Solution?

A

Ensure you give equal air time to unique judgements

103
Q

Downsides of diversity

A

Coalition building and conflict

104
Q

Why do diversity and cohesion conflict

A

Diversity reduces cohesion; cohesion reduces independent thought

105
Q

What leads to cohesion?

A
  • Share enemy
  • Shared success
  • Shared activities
  • Rules & Norms
  • Shared goals
  • Psychological safety
106
Q

What does good group decision making require?

A

Both cognitive diversity (for decision making) and team cohesion (for implementation)

107
Q

How to both preserve independence of teams and maximize cohesion?

A

team composition and good processes

108
Q

3 elements of culture

A
  1. Artifacts (observable products that reflect values and assumptions)
  2. Values (overarching rationale for actions)
  3. Assumptions (taken-for-granted beliefs)
109
Q

What objectives does culture serve?

A

Motivation, Coordination, Identity, Pride, Enjoyment, Selection

110
Q

How is culture propagated and maintained?

A
  1. Formal rules and policies, explicit socialization
  2. Conformity (behavior)
  3. Internalization of values via dissonance reduction
111
Q

Cognitive Dissonance

A

Mental conflict that occurs when thoughts/beliefs and actions don’t align

112
Q

Ways to strengthen internalization

A

Actions that are: effortful, public, voluntary, little reward

113
Q

Why is culture poorly managed

A

Wrong, inconsistent, or insincere steps; actions matter not just words

114
Q

Key levers for maintaining culture

A

Selection (leads potential hires to select in or out) & socialization

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