LEO Midterm Flashcards
1
Q
Common Knowledge Effect
A
Commonly held info is more influential on group decisions compared to unique info
2
Q
Stats about common knowledge
A
- Impacts initial preferences of more team members before meeting
- more likely to be introduced at meeting
- more likely to be repeated in convos
- as team converges, norm of not bringing up new facts
3
Q
Shortcomings in Teams
A
Unique / divergent opinions not shared (team didn’t encourage full participation and individuals withheld info to appear cooperative)
4
Q
Who has responsibility for ensuring teams reach full potential?
A
Both teams and individuals
5
Q
Outcomes of collaboration
A
- More informed decisions
2. More commitment to decision
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
7
Q
Two potential (negative) consequences in groups
A
- Everyone shares the same perspectives
2. Conflict arises
8
Q
Solution for narrow perspectives & overconfidence –> Shortcomings in teams
A
Broaden the frame of perspective at team and organizational level
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
10
Q
Fundamental Attribution Error (FAE)
A
Underestimating the power of the situation (thinking people/personalities make systems successful, not other way around)
11
Q
Categories for how people explain attribute behavior
A
Person - traits, abilities, personality
Situation - pressures, resources, incentives, oppty’s
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
13
Q
Implications of FAE
A
Focus on finding right people AND putting together right system
14
Q
How leaders make a difference
A
Influence system which influences individual behavior & performance
15
Q
Implications of narrow perspectives and overconfidence
A
At individual level, miss critical insights into solivng a problem
16
Q
How to overcome narrow perspectives & overconfidence
A
Teams and Orgs can bring together diverse knowledge and perspectives - success dependent upon system
17
Q
What does effective leadership depend on?
A
Deep appreciation for system
18
Q
Examples of overconfidence
A
Estimation quiz of market events;
19
Q
Examples of FAE
A
Good Samaritan study (helping homeless); Food drive study (donations)
20
Q
Compensation model
A
a (salary) + b(rate of contingent reward) x X(effort)
21
Q
Two key issues in evaluating compensation package
A
Base pay and slope
22
Q
Fundamental trade-off for determining how much a compensation package should be contingent on performance
A
Trade-off between motivation vs. risk
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)
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
25
Measurability of desired performance - when to rely more on CR and why
Desired output is measurable; rewards are tied to what you care about
26
Controllability - when to rely more on CR and why
Effort translates directly to measures; effort is less risky
27
Reliability - when to rely more on CR and why
Compensation is tied directly to measurement; effort is less risky
28
Additional considerations for CR
Intrinsic motivation and risk preference
29
Intrinsic motivation - rely less on CR when and why
There are other reasons for working hard; don't need CR undermining
30
Risk preferences - rely less on CR when and why
Employee more risk averse than management; optimal risk sharing
31
What does compensation slope (CR) affect?
employee selection and retention (beliefs about control matter)
32
Why does pay-for-performance work well at LE from individual's perspective?
Strong link between effort, performance, and compensation (independence, rate stability, transparent and egalitarian culture)
33
Why does pay-for-performance work well at LE from org's perspective?
Strong link between performance and outcomes; employee's are more productive (piece rate motivates effort)
34
Obstacles to contingent rewards
1 - inflated perceptions of contribution
2 - Process perceived unfair
3 - incentivizes wrong behavior
35
Examples of inflated perceptions of contribution
Marriage responsibilities; individual effort in team setting vs team members
36
Determinants of fairness perceptions
1 - distributive fairness
| 2 - process fairness
37
Distributive fairness
Were outcomes allocated fairly (pay) - can be based on contribution, need, or eqality
38
Obstacles of distributive fairness
Self serving interpretations of which rule should apply, level of contribution/needs, weight on different contributions
39
Example of distributive fairness
Monkey - cucumber/banana
40
Procedural Fairness
was allocation of process far
41
Characteristics of fair process
Participation/voice of those affected by decision; impartiality of decision maker; transparency of decision process
42
Why do people want fair procedures
Yields more accurate outcomes; signal of respect
43
Alternatives to CR
Social motivation & Intrinsic motivation
44
How to increase intrinsic motivation
Design of work
45
Job characteristics in task design (increases intrinsic motivation)
Skill variety, task identity, task significance, autonomy, feedback
46
Why does intrinsic motivation matter
"fill the gaps" when you can't measure & monitor
- creates enthusiasm, excitement for work and org
- predicts "extra role" behavior
47
Crafting jobs to increase intrinsic motivation - where to focus?
Tasks, relationships, perceptions
48
Examples of balancing extrinsic & intrinsic motivation (why it's tricky)
Paying adults to take IQ test; children drawings
49
How extrinsic can hurt intrinsic
Pay can affect the attributions or explanations people ust o understand their reason for working
50
Framing in balancing extrinsic & intrinsic motivation
Pay as a reflection of an employee's skills and contribution to society
51
What decreases the effectiveness of PFP
Imperfect links between effort, measurement, and compensation
52
How to cushion the blow of unfavorable distributions
fair procedures
53
What is crucial if things you desire can't be measured?
Intrinsic motivation
54
Lure of a good story
we tell stories based on available data; we're confident it's correct
55
Confirmation bias
seek info that supports our favored narrative and don't try to disprove
56
Decision Trap: Available heuristic
In forming judgements, tend to rely on readily available info
- fail to ask about quality of info or consider whether it's complete
57
Decision trap: Judging goodness/badness
Depends on what it is compared to
| - example = salaries; tv vs headphones saving money
58
Decision trap: Risk taking depends on...
whether outcomes are framed as gains or losses
| - example = firing employees vs saving employees
59
Decision trap: we find tradeoffs difficult
So we use simple rules to decide
60
Decision trap: poor intuitive statisticians (example)
Defect rates at identical small/large plants (extremes more likely when the data set is small); mutual funds example
61
Two components to performance
Tendency/ability + Luck --> when we sample on extreme performance rely more on luck
62
Decision Trap: we are overconfident (examples)
Sydney opera house; days required to finish honor's thesis
63
How to debias overconfidence
Outside view (use the data; rely on base rates to make predictions)
64
Remedies for bias
1 - ask critical questions
2 - play devil's advocate with yourself
3 - analogic exercises
4- use models of regression
65
Real solution for bias
Teams - generate multiple perspecitves
66
Major reason against PFP
Distributive fairness - leads to wage compression
67
Prospect Theory Value Function
How people evaluate outcomes when they face a goal
- goals divide space of possible outcomes into gains/losses
- loss aversion
- distance effect
68
Loss aversion
Creating the possibility of losing is significant because people think about gains/losses differently
69
Distance effect
people become less sensitive to incremental changes in performance when they are further from their goal
70
Drawbacks to goals
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
LE Bonus System compenents
1 - Output (amount produced)
2- Quality
3 - Dependability (no absences)
4 - Ideas/Cooperation
72
System 1 vs System 2 thinking
S1 = automatic judgements that stem from associations stored in memory
S2 = deliberate reasoning gone awry
* both common sources of bias
73
How to look for risk/uncertainty and temper overconfidence
1 - Three estimates instead of a range (H/M/L)
2- Two forecats and take average
3 - Premortems
4 - Take outside view
74
Four Cells Technique
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
How to organize organizations?
Based on goals
76
3 design options for organizations
Functional; Divisional; Matrix
77
Functional Org Design
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
Divisional Org Design
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
Hybrid Org Design
Mix of Functional + Divisional
80
Matrix Org Design
Layer product focus on top of functions
- Two lines of authority --> conflicting demands
- Lots of meetings
81
How to coordinate in organizations
1. Hierarchy (command and control)
2. Formal processes - incentives, policies, teams
3. Informal processes - culture
82
Degrees of centralization and decision rights
```
Centralized = decisions high up
Decentralized = decisions lower
```
83
How to preserve culture
1. Self-selection (company selects for it)
| 2. Socialize it
84
How to socialize culture
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
Ideological control vs operational autonomy
Ideological control preserves the core; operational autonomy stimulates progress
86
Problems with groups
1 - debating society (no conclusion)
| 2 - group think (too much conformity)
87
What kind of conflict can drive innovation (and what can't)
Task / Relationship
| - Ideal = moderate task & low r'ship
88
When does group think happen and what can help against it?
Strong team spirit, high cohesiveness, limited outside ideas, high stress, directive leadership
- broad framing helps
89
Symptoms of group think
1 - self-censorship / illusion of unanimity
2 - pressure on dissenters
3 - illusions of invulnerability
4 - stereotypes
90
How to engage divergent views
1. invite dissenters
2. don't take sides too soon (management)
3. Reduce pressure to conform
4. Establish norms supporting conflict
91
Framing decisions in terms of gains will lead to
Risk averse behavior
92
Framing decisions in terms of losses will lead to
Risk taking behavior
93
Random Error (Groups vs. Individuals)
Random error is generally high in individuals but tends to smooth out in groups - "Wisdom of Crowds"
- Bottle of nickles example
94
Groups: Factors that favor combining knowledge
- Knowledge is distributed across people (cognitive diversity)
- If you chase, you may chase the wrong person
- Many people chase theselves
95
Groups: Factors that favor chasing
"Expert" is much better than others and can be identified
96
What predicts being a high-performing team?
Diversity (age, gender), Norms of equal participation, perspective-taking ability
97
Cognitive diversity (and what is required for this)
Diverse, independent perspectives (must have good process to KEEP people diverse)
98
Barriers to Cognitive diversity: Independence and the anchoring bias
Early opinions anchor/bias other's opinions
99
Problem: Early public opinions anchor others - Solution?
Ask people to think for themselves before discussing
100
Problem: People love consensus - Solution?
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
Problem: People don't like to be wrong - Solution?
Develop culture in which people feel comfortable being wrong and there isn't embarrassment / punishment
102
Problem: Some people dominate discussion - Solution?
Ensure you give equal air time to unique judgements
103
Downsides of diversity
Coalition building and conflict
104
Why do diversity and cohesion conflict
Diversity reduces cohesion; cohesion reduces independent thought
105
What leads to cohesion?
- Share enemy
- Shared success
- Shared activities
- Rules & Norms
- Shared goals
- Psychological safety
106
What does good group decision making require?
Both cognitive diversity (for decision making) and team cohesion (for implementation)
107
How to both preserve independence of teams and maximize cohesion?
team composition and good processes
108
3 elements of culture
1. Artifacts (observable products that reflect values and assumptions)
2. Values (overarching rationale for actions)
3. Assumptions (taken-for-granted beliefs)
109
What objectives does culture serve?
Motivation, Coordination, Identity, Pride, Enjoyment, Selection
110
How is culture propagated and maintained?
1. Formal rules and policies, explicit socialization
2. Conformity (behavior)
3. Internalization of values via dissonance reduction
111
Cognitive Dissonance
Mental conflict that occurs when thoughts/beliefs and actions don't align
112
Ways to strengthen internalization
Actions that are: effortful, public, voluntary, little reward
113
Why is culture poorly managed
Wrong, inconsistent, or insincere steps; actions matter not just words
114
Key levers for maintaining culture
Selection (leads potential hires to select in or out) & socialization
