RSM260 Final FN

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Leadership emergence

Who becomes a leader in the first place; can be formally assigned or emerge spontaneously.

Formally assigned leadership

A person is officially appointed to a leadership role by the organization.

Spontaneous leadership emergence

A person becomes a leader naturally through group dynamics rather than formal appointment.

First advocacy effect

The tendency for people who speak first and often to be seen as leaders and have others defer to them.

Leadership effectiveness

The degree to which a leader’s actions achieve unit goals and sustain employee commitment.

Trait theories of leadership

The view that certain stable personal traits make some people better leaders.

Situational theories of leadership

The view that effective leadership depends on behaviours that fit the situation, task, and follower needs.

Trait vs situational theories

Trait focuses on who leaders are; situational focuses on what leaders do and how they adapt to context.

Problem with trait view: low explanatory power

Leader traits explain only about 1–3% of the variance in leadership effectiveness.

Problem with trait view: fixed mindset fallacy

Assuming people are bound by traits is flawed; many can develop into good leaders.

Problem with trait view: bias

Trait judgments can be distorted by stereotypes related to gender, race, age, etc.

Autocratic leadership style

A leader acts as the sole expert, seeks little input, and discourages suggestions.

Autocratic leadership pros

Useful when high structure is needed or in urgent/high-stress contexts (e.g., military).

Autocratic leadership cons

Can reduce intrinsic motivation and pride in work.

Democratic leadership style

A leader consults the team, encourages participation, and treats subordinates as equals while keeping final say.

Democratic leadership pros

Increases intrinsic motivation and involvement.

Democratic leadership cons

Requires clear communication and can slow production, especially for startups.

Laissez-faire leadership style

A leader provides minimal instruction and limited contact, letting people do their job independently.

Laissez-faire leadership pros

Works well with experts who need autonomy.

Laissez-faire leadership cons

Can lead to low production, low satisfaction, and low motivation due to lack of guidance.

Transformational leadership style

A charismatic leader creates an inspirational vision, appeals to values, and motivates intrinsic performance.

Transformational leadership pros

Can shift beliefs and attitudes toward a new vision and inspire exceptional performance and satisfaction.

Transformational leadership cons

May create blind allegiance and encourage excessive risk-taking.

Decision-making blindspots

A set of common cognitive biases that distort judgment and lead to poor decisions.

Bounded rationality

Limits in our ability to acquire, process, and interpret information even when trying to be rational.

Confirmation bias

Seeking or favoring information that confirms what we already believe.

Anchoring bias

Overrelying on the first piece of information received when making judgments.

Availability heuristic

Judging likelihood based on how easily examples come to mind.

Deal maker’s curse

The desire to “win” a deal leads to overpaying or choosing poorly.

Status quo bias

A preference for keeping current conditions even when better alternatives exist.

Problem framing

The way choices are presented shapes decisions; often traps people in “this or that” thinking.

False dichotomy (black-or-white fallacy)

The mistaken belief that only two options exist when more are possible.

Vanishing options test

A reframing tool: ask what you would do if none of the current options were available.

Overconfidence bias

Overestimating the accuracy of our beliefs or our ability to predict outcomes.

Dunning-Kruger effect

People with low ability often overestimate their competence; highly skilled people may underestimate theirs.

Tunnel vision

Over-focusing on a goal while ignoring important contextual factors.

Sunk cost fallacy

Continuing a course of action because past investments feel wasted if you stop.

Escalation of commitment

Persisting with a failing decision due to prior investment, ego, or the desire to justify choices.

Decision bias solution: establish success criteria

Set benchmarks, create an action plan, make it public, and follow it.

Decision bias solution: enforce stopping rules

Predefine conditions for exiting to prevent escalation of commitment.

Decision bias solution: seek uninvolved views

Get input from people not tied to earlier decisions and from diverse perspectives.

Decision bias solution: check overconfidence

Use reality checks, data, and external feedback to calibrate judgment.

Decision bias solution: create an exit strategy

Plan how you will leave or pivot before starting.

Power

The ability to influence others’ behaviour and resist unwanted influence in return.

Formal organizational power

Power derived from one’s position in the organization.

Legitimate power

Influence based on formal authority within an organization.

Reward power

Influence based on control over resources or rewards others want.

Coercive power

Influence based on control over punishments or negative outcomes.

Informal personal power

Power derived from personal qualities rather than formal role.

Expert power

Influence gained from expertise, skills, or knowledge.

Referent power

Influence gained because others admire, like, or want to identify with the person.

Power vs status

Power is control over resources/others; status is respect and admiration.

Responses to influence

Common reactions to power attempts: internalization, compliance, or resistance.

Internalization

Accepting influence because you genuinely agree with it.

Compliance

Going along with influence to gain rewards or avoid punishment without internal agreement.

Resistance

Actively opposing or refusing influence attempts.

Milgram shock experiment

A study showing high levels of obedience to authority even when actions conflict with morals.

Milgram finding: legitimacy effect

Compliance increases when authority is perceived as legitimate.

Milgram finding: proximity effect

People are more likely to comply when harm is psychologically or physically distant.

Milgram finding: dissent effect

Obedience decreases when others express dissent.

Milgram ethical solutions

Reduce unethical compliance via grievance processes, strong culture, and autonomy/ownership.

Four-component model of ethics

A framework explaining ethical action via awareness, judgment, intent, and behaviour.

Moral awareness

Recognizing that a situation or act has ethical implications.

Moral judgment

Deciding which action is morally right or wrong.

Moral intent

Commitment to act ethically despite competing pressures.

Ethical behaviour

Carrying out the morally intended action.

Negotiation

A decision-making process among interdependent parties with non-identical preferences.

Distributive negotiation aspect

Win-lose, typically single-issue bargaining over a fixed pie.

Compatible negotiation aspect

Areas where parties have identical preferences.

Integrative negotiation aspect

Win-win potential across multiple issues by trading off priorities and expanding value.

Problem with midpoint approach

Splitting 50/50 can be flawed because parties value issues differently.

Create and capture value strategy

Prepare thoroughly, identify interests, leverage differences, and make package offers.

Identify interests

Uncover what the other party cares about and why, beyond positions and numbers.

Package offers

Multiple-issue proposals that allow trade-offs and help discover priorities.

Pareto-optimal solution

An agreement where no other deal can make one party better off without making the other worse off.

BATNA

Best alternative to a negotiated agreement; your fallback if no deal is reached.

Reservation price

Your bottom line or point of indifference beyond which you walk away.

Target price

The ideal outcome you would be thrilled to achieve.

MESOs

Multiple equivalent simultaneous offers presented together that are equally good for you but vary across issues.

How to create MESOs

List key issues, rank priorities, build 2–3 trade-off packages, ensure equal value to you.

Benefits of MESOs

Reveals the other side’s priorities, encourages integrative outcomes, reduces deadlock, and signals flexibility with preparation.

Theranos power example

Elizabeth Holmes had legitimate, reward, coercive, expert, and referent power in the case context.