OAM 330 Midterm 1 (Melissa Williams)

Organizational behavior variables in organizational behavior

– Uses scientific methodologies to

understand and predict human behavior

– Aims to maximize individual and

organizational success

Individual Level Input variables in organizational behavior

•Demographics & social

identity

• Personality & values

• Decision-making tendencies

• Perception

• Motivation

Group- level input variables in organizational behavior

• Power & leadership

• Group structure

• Team composition

• Decision-making tendencies

System or cultural level input

•Organizational culture

• Global culture

• Human resource

practices

• Organization structure & design

Outcome (dependent) variables in organizational behavior

• Productivity & performance * (Deviant) workplace behavior

• Absence * Citizenship

• Turnover * Job satisfaction

Course themes

1. Common sense is necessary – but not sufficient – for predicting human behavior in organizations

2. Behavior is predictable.

3. Empirical evidence outperforms other types.

Empirical Evidence

In modern science – evidence arising from systematic testing or experimentation

• Most valuable when aggregated

• Empirical evidence outperforms other types bc…

  • N of 1 problem

  • correlation ≠ causation

Evidence Hierarchy

– The higher up you go on the pyramid, the more accurately you can predict the NEXT event

• Beware: Dramatic anecdotes are extremely powerful

– Richly detailed = memorable

– Negative = memorable

– First thing you see/hear = memorable

– Worked for our ancestors

N of 1 problem

– Can’t know all the reasons for one person’s (or one company’s) experience

– Low likelihood that your experience will be the same

—>Cannot generalize from an N of 1

– Small study /trial size = bad and not generalizable

Evidence-based management (extra)

• Pfeffer & Sutton – rank-and-yank at GE

They argue this 20-80-10 "vitality curve" method, which demanded annual firing of the bottom 10%, created fear and focused on short-term metrics rather than long-term performance.


• “Southwest Airlines is the most successful airline in thehistory of the industry. Herb Kelleher, its CEO from 1982 to 2001, drinks a lot of Wild Turkey bourbon.” —→ The Wild Turkey bourbon was the reason??

• Don’t overgeneralize from benchmarking

correlation ≠ causation (three reasons)

In short: Observed relationships… (1) may be spurious/coincidental, (2) go in the reverse causal direction, (3) caused by a third variable

1. Observed relationships may be spurious (merely coincidental)

2. Observed relationships may go in the reverse causal direction

   1. – Fewer highway deaths -> more lemons?

3. Observed relationships may be caused by a third variable

   1. – Road quality -> increased ability to import goods?

   2. – Road quality -> increased auto safety?

Extra Notes:

• The temptation to draw causal conclusions is strong

• We may over-interpret correlations at the lower levels of the evidence hierarchy, so we can only make causal conclusions at the top (true experiment: randomized controlled trial)

randomized controlled trial (a.k.a. experiment)

1. Experimenter has control over the input (independent) variable

   1. which group gets the treatment and how much

   2. YES: You tell the participating salespeople what to wear and track

      their sales

   3. NO: You write down what the participating salespeople chose to wear

      and track their sales

2. Random assignment of individuals to conditions (including a control or comparison condition)

Random Assignment (in randomized controlled trial)

Random assignment of individuals to conditions (including a control or comparison condition)

Each person* in the study has an equal chance of ending up in the experimental group or the control group

• Ex: Pulling names from a hat, Every other person, Random number generator

Result: Irrelevant variables will average out to be equal across conditions

• … except the one you are manipulating!

Therefore, the independent variable is the ONLY thing that differs between the experimental group and the control group

Obstacles to conducting an experiment

• It may be impractical, impossible, or unethical to assign people to different conditions

• (Ex) What if your independent variable is:

– Agreeableness

– Working in the East Coast vs. West Coast branches

– Salary

Quasi-experimental studies

(an Alternative study design)
– Taking advantage of a natural or existing division

– Different companies, branches, floors, classes, timing of a new policy
- Has control over Independ. var. (1) but not random assignment (2)

Correlational studies

(an Alternative study design)

– Measure the relationship between variables (instead of manipulating the variables)

– # of customers served per day and satisfaction of those customers?
- Neither control over Indep. Var. (1) or random assignment (2)

Control variable

A variable you measure in order to rule it out as an alternative explanation

• Ruling out those pesky “third variables” (correlation ≠ causation #3)

Ex: Reading to kids and kids reading for fun: What control variables might you measure?

• Kids’ reading skills … parents’ enjoyment of reading … # of books in the home … free time in kids’ day … distance to nearest library … parental income … etc.

System 1 – limbic system

– Operates automatically, quickly, effortlessly

– Not under your conscious control

– Snap judgments

– Practiced routines

– Ex: Running from a wild animal, driving home the same way for years

System 2 – prefrontal cortex

– Requires your conscious attention, control, and concentration

– Effortful and complex mental activities

– Allows looking deeper for non-obvious cues

– Ex: Doing calculations, learning to drive for the first time

Systems 1 and 2 in conflict

– System 2 (conscious thought) doesn’t always know when System 1 (nonconscious) is operating

– We frequently think we are making a more rational, data-driven decision than we are

Perception

Perception: organizing, interpreting, and making meaning from what your senses tell you

• 1st decision-making step – perceiving the situation, gathering information

• Perception ≠ reality

Motivated perception

We see what we expect or want to see

Ex: 70% “saw” the animal that led to a better outcome (orange juice vs. nasty smoothie)

Self-fulfilling prophecies

Expectancies influence others’ actions

Availability heuristic (Availability bias)

• Conclusions based on what information comes easily to mind

• Easily available information may not be representative of all information

Ex:

• More people choose to drive after a widely publicized plane crash

  • Increased driving after 9/11 led to 2,170 more fatal car accidents – almost as many as the number of people who died in the Twin Towers (2,606)

Make sure you are making a decision based on all the evidence, not vivid examples that come to mind

Confirmation bias

– We tend to seek and gather information that confirms our existing theories

– A better test would be to look for anything that might disconfirm it

Halo effects

Things (and especially people) that are “good” in one area tend to be seen as “good” in other areas

– “Exaggerated emotional coherence”

Ex: Attractiveness – people (inappropriately) see it as indicating intelligence and competence

Attribution (extra)

Attribution – how we explain behavior

– Internal cause – stable aspect of a person (they’ll do it again)

– External cause – changeable aspect of the situation (a one-time occurrence)

Systematic errors in attribution

• Fundamental attribution error –others’ behavior is over-attributed to internal causes

• Self-serving bias – own negative behavior over-attributed to external causes

Overconfidence

We are often wildly overconfident in predicting our own outcomes

Dunning-Kruger effect: We are more overconfident in domains in which we have less experience/skill

Planning fallacy:

• We make predictions based on best-case scenarios, not likely scenarios

• We make predictions based on this specific task, not the average of past tasks of this type

Hindsight bias

Overconfidence that we could have predicted an event in advance

Curse of knowledge – difficult to put ourselves in the perspective of not knowing what we now know

Anchoring bias

Over-weighting initial information

• Bias in numeric decision-making

  • Even when the information is not relevant, random

• Anchoring bias plays a role in all price & salary negotiations

• Very difficult to avoid the influence of anchors so it’s better to avoid seeing it when possible

Ex: “We’re not going to price it at $999. The iPad will start at just $499.”

Framing and risk

Would you prefer a smaller “sure thing” … or a chance for something better?

• Bias in numeric decision making

• We are risk averse for gains, but risk seeking for losses– Even when the net change is the same

Sunk cost fallacy

Over-weighting what you have already invested when choosing a next step

• Bias in numeric decision making

• Sometimes: escalation of commitment

• Sticking with your original plan because you’ve already worked on it, even if it’s not a great plan

• Ex: Staying in a long line or on hold

How to reduce impact of decision-making biases

“Because the brain cannot see itself fooling itself, the only reliable method for avoiding bias is to avoid the situations that produce it.” - Gilbert, 2006
• Be aware

• Allow enough time to evaluate information thoroughly

• Focus on broad samples of data (not just single experiences)

• Present information in multiple ways – avoid framing effects

• Minimize situations in which people’s egos are at stake

Personality testing – why companies use it and whether it typically works

Why is personality testing so common?

1. Hiring is hard

2. Interviews don’t really work (“interview illusion”)

   1. interviewers overrate their ability to judge a candidate's potential

3. Personality testing is intuitively appealing

   1. Barnum effect

Does personality testing work?

• Results are mixed here too

• Widely used ≠ most reliable (Myers-Briggs)

• For the Big 5: Personality-performance relationships are reliable but small

• For the Big 5: Strongest relationships are contingent rather than direct

• For the Big 5: We can’t (easily) change our traits, but we CAN find an environment where

  we’ll thrive

  • People whose personality matches the job demands earn ~15% more and are more satisfied (vs. those who don’t match)

Barnum effect

– Most personality results seem accurate

– Yields an illusion of deep insight

Myers-Briggs

• 16 personalties:

  • Extraversion (E) vs. Introversion (I) (energy source), Sensing (S) vs. Intuition (N) (information gathering), Thinking (T) vs. Feeling (F) (decision-making), and Judging (J) vs. Perceiving (P) (lifestyle/structure).

• Dimensions not empirically based

• Categorical rather than continuous

• Most widely used in organizations – but not proven valid

• Not so stable over lifetime (hw article critiqued this aspect)

The Big 5 (OCEAN)

• Individual differences can be described in most cultures by 5 trait dimensions (not types)

History:

• Convergence from multiple independent research teams

• Millions of research participants around the world

Methods:

• Linguistic analysis, trait taxonomies

• Comparisons between self-ratings and other-ratings

• Relationships with behavior

Properties:

• Mostly stable over lifetime

• Partially hereditary

• Predicts behavior
  

O: Openness to Experience

C: Conscientiousness (strongest relationship with job performance, but still small: ~2%)

E: Extraversion

A: Agreeableness

N: Neuroticism


- Personality-performance relationships are reliable but small

Openness to experience

– Predicts creativity, flexibility, adaptation to change

– May be better leaders – better with ambiguity and change

– Overall relationship with job performance is minimal

Conscientiousness

Conscientiousness: the quality of wishing to do one's work or duty well and thoroughly.

– Strongest direct relationship with job performance

– Predicts persistence, organization, planning

– Fewer errors

– Overall greater performance

– Not related to job type or rank

Extraversion

– Associated with better performance only in jobs requiring lots of interpersonal contact or teamwork

– May be better leaders

Agreeableness

– Associated with more liking by co-workers, less deviant behavior

– Associated with better performance only in jobs requiring lots of interpersonal contact, teamwork

Neuroticism

– Also called emotional (in)stability or negative emotionality

– Predicts less satisfaction with job and life, more stress, negativity

– More difficulty managing workplace stress or uncertainty

Narcissism

Narcissism – grandiose sense of self-importance

– I am more capable than other people.

– I really like to be the center of attention.

• Extreme values seen as clinical pathology

• More common among those seen as business

  visionaries

What leads to narcissism?

• Biological factors (NPD)

• Age (being younger)

• Wealth

  • Being richer

  • Coming of age in a good economy

• Family type (being an only child)

• Geography

• Individualistic culture (vs. collectivist)

• Urban (vs. rural)

Potential Strengths:

– Strong vision

– Charismatic

– Highly motivated

– Swift decision making

– More likely to emerge as leaders

– Can energize followers, lead to breakthrough transformations

Risks:

– Lack of empathy

– Poor at taking others’ advice, accepting criticism

– Low impulse control

– Can lead to follower resentment and discontent, decision making failures

– Involved in more lawsuits

Values

– Beliefs about which ways of being or behaving are better than others

– The “should” component of personality and behavior

– personal values vs. cultural values

Sources:

– Personality & genetics

– Cultural and personal experiences

Personal values

”I want to have an exciting, adventurous life.”

Cultural values

“Around here, we all pitch in and help each other.”

Cultures vary systematically in what they value (on average)

– Geography (land per person)

– Economics (degree of wealth)

– Disease exposure

– Harshness of climate

– Spread of religious beliefs

– Type of crop farmed

Hofstede studies

– >100,000 IBM employees around the world

– Systematic variation in what was important to people in different countries

Identified 5 value dimensions:

– Uncertainty avoidance

– Long- vs. short-term orientation

– Masculinity vs. femininity

– Power distance

– Individualism-collectivism

Individualism & collectivism

Degree of priority placed on individuals vs. groups

Individualistic cultural contexts:

– Value independence, uniqueness, self-expression, authenticity, initiative, personal achievement

– North America, Western Europe

Collectivistic cultural contexts:

– Value connections to others, belonging, harmony, group identity, group achievement

– Rest of the world

Rice vs. Wheat farming

• Example of the impacts of the nature of farming crops with different farming needs in different geographic regions in China, resulting in psychological differences between people living in those regions

Rice Farming (Collectivist):

• Shared system of water management to coordinate irrigation timing

• Communal infrastructure (e.g., canals)

• Seedlings grown in sharednurseries

Wheat Farming (Individualistic):

• Farmers till & plow individual fields

• Irrigation primarily from rain

• Equipment owned by each farming family

• Mechanized harvesting by each farmer

Role of culture in responding to moral dilemmas, workplace motivation

Effects: Obligations to ingroup members vs. strangers

Ex: Support a friend despite an obligation to out-group strangers

• USA = No, I couldn’t do it. The same rules should apply to everyone.

India, China = Yes, of course. My friend is counting on my loyalty.

Factors predicting job satisfaction

Ordered by strongest to weakest relationship with job performance:

1. Nature of the work

2. Co-workers

3. Supervision

4. Promotion

5. Pay

Flow state

– Total immersion in a task

– “In the zone”

– Lack of awareness of time, self,bodily states

One of life’s most pleasurable states

– More flow experiences reported at work (vs. leisure time)

Image: Flow = High Skill + High Difficulty

Predicting job performance from job attitudes

Employee satisfaction moderately to strongly predicts:

– Job performance

– Organizational citizenship behaviors

– (Less) turnover, absenteeism, deviance

Motivating Workplace Environments

What kinds of environments are most motivating?

• Clear paths from inputs to outputs (expectancy theory)

• Fair procedures and outcome (Equity theory and Distributive/Procedural justice)

• Meaningful work that affects others (next time)

Expectancy Theory

Maximum motivation when input-to-output relationships are highest

Clear paths from inputs to outputs

Employee expectancies:

1. If I work hard, will I perform well?

2. If I perform well, will I be rewarded?

3. If I am rewarded, will the rewards help me fulfill my goals?

Equity theory

How does my ratio of inputs-to-outputs compare to that of relevant others?

• Fair procedures and outcome

Equity theory bottom line: Employees evaluate job rewards based on their relative value, not their absolute value

Example:

– A comparable colleague works pretty hardand gets an OK salary.

– I work pretty hard and get an OK salary.

– OR: I work REALLY hard and get a higher salary

– Result: I feel fairly rewarded (equity).

– I work REALLY hard and get an OK salary.

– A comparable colleague works pretty hard and gets and gets an OK salary.

– Result: I feel under-rewarded.

Ex:

• Veteran example from WSJ reading

• Baseball team performance negatively related to pay inequity among players

Distributive Justice

(what I get)
Did I get the rewards I expected and deserved?

Procedural Justice

(how I get it)

– Are decisions made in a fair and transparent manner?

– Did I have an opportunity to make my voice heard?

– Am I treated with dignity and respect at this organization?

– Are people with my identity (e.g., race, gender, social class) treated the same as others?

Procedural justice: strongest predictor of job performance

Cultural differences in perceptions of workplace fairness

Judgments of organizational fairness may differ across cultures:

– Merit vs. equality vs. need: Employees in some cultures may expect employers to meet all needs

– What counts as input? Employees in collectivist contexts may include efforts that contribute to ingroup solidarity (not just task work)

What all employees want (across cultures):

– Interesting work they can perform with some autonomy

– Fair, transparent procedures

What makes work meaningful (?)

-motivated by the opportunity to make an impact on real people (Especially end users)

Ex: University fundraising callers: a 10-minute intervention with fund-receivers

Money and happiness relationship

Does money buy happiness?

Yes … with caveats

1. Positive relationship but not linear

2. Correlation ≠ causation

3. People predict that money will increase their happiness more than it actually does

4. Believing that money is important for happiness predicts less happiness!

Why do we work?

– To pay the bills, yes – but college grads will typically make more than they need to just survive

– To have an identity (“I’m a …”)

– To achieve and accomplish

– To have “flow” experiences


Conflict:

– Many incentive structures are built on the assumption of boring, unlikeable work

– But people actually like a lot of their work

The myth of the unhappy worker

“Very”/ “Somewhat” satisfied: ~90%
“Not at all” satisfied: <5%

Intrinsic motivation

I like doing this

Extrinsic motivation

I like what doing this brings me

But using incentives to increase extrinsic motivation can undermine intrinsic motivation

Upsides and downsides of motivating others via financial incentives

Upside of financial incentives

– Gets people to do the work

Downsides of financial incentives

– Less creativity

– Less teamwork and cooperation (more competition)

– Unethical behavior

– Sense of unfairness

– Focus on short-term rewards vs. long-term planning

– Effort that is contingent on continued rewards

What managers should do

Pay above industry standards

– “Take the issue off the table”

– Likely cost-effective

Provide good benefits and flexibility

– Helps keep life from getting in the way of work

• Give unexpected (vs. expected) rewards

• Use non-tangible rewards like status, recognition, and thanks

• Money does matter – but it’s complicated

– We overestimate its importance to our future happiness

– We overestimate its importance to others

– It can undermine our intrinsic motivation

– It can foster unethical behavior or a sense of inequity

• Non-monetary incentives: highly valued by employees and often low-cost

What we all want (across cultures):

– Autonomy, mastery, purpose

– Meaningful work that connects to end users