BUSI 405- Midterm 1

Petsko- Spring Semester 2025

Sunk Cost Fallacy (Escalation of commitment)

continuing with a course of action not because it’s good but because you already invested

What are the four main factors of Sunk Cost Fallacy?

Loss Aversion, Cognitive Dissonance, Optimism, Social Pressure

What is OB?

the study of how individuals think, feel, and act within organizational contexts (a science of averages)

Leader Characteristics

Leaders are charismatic and proactive; they take risks

Manager Characteristics

Managers like order and predictability, are efficient

What’s the issue with the Myers-Briggs Type Indicator?

Research shows that as many as 75 percent of personality test-takers receive a different result when tested again

How can managers ensure high levels of good behavior?

Training, Leadership, Selection

What is a personality trait?

A habitual pattern of how you think, feel, and behave (highly stable over time)

Two factors that shape our personality

heredity (separated twin studies) and environment (Polgar sisters)

What are The Big Five Personality Dimensions?

Openness, Conscientious, Extraversion, Agreeableness, Neuroticism

What is the top factor in employees’ job satisfaction?

Relationships with management

What are four practices for bosses that can help employees feel safe and be productive?

Empathy, Gratitude, Positivity, Awareness and self-care

What is the highest indicator of job performance?

Conscientiousness

What are attitudes?

the evaluations people harbor toward any object or thought

Attitudes are good predictors of what?

Future behavior

The three attitude components are

Cognitive (belief), Affective (feeling), Behavioral (action)

What are emotions?

conscious mental reactions (like anger or fear) that are subjectively experienced as strong feelings usually directed towards a specific object

Affect

a broad range of feelings that can be experienced in the form of emotions or mood

Emotions vs Moods Timeline

Emotions are very brief, action-oriented. Moods last for hours or days, less action-oriented.

What are the six basic emotions?

happiness, sadness, anger, disgust, surprise, and fear

Why pay attention to emotions?

Emotions can be helpful for decision-making and lie at the crux of motivation

Emotional intelligence

the ability to regulate your own emotions and recognize what others are experiencing

Self + Regulation (of emotions) =

Self Management

Emotional perception is the most accurate with access to

facial expression and body language

High emotional aperture

Being able to read the room

Emotional Labor

effort, panning, and control needed to express organizationally desired emotions

Emotional Display Rules

• Intergatrive: Positive

• Differentiating: Negative

• Suppression: Neutral, impartial

Surface acting

when an organization forces employees to display a certain emotion

Surface acting leads to

stress and burnout, worse task performance, negative job attitudes

The Three Hardest Words in the English Language

The words “I don’t know”

Perception

the process of acquiring, interpreting, selecting, and organizing sensory information

Selective attention

the tendency to sharpen our focus on some information at the expense of focusing on other information

Perceptual errors

patterns of thought that give rise to inaccurate judgments or decisions

Cognitive misers

Using mental shortcuts that we fail to scrutinize

Confirmation bias

the tendency to seek out information that confirms our initially held beliefs or assumptions

Primacy Effect

pieces of information that people encounter first are remembered especially well

Recency Effect

Pieces of information that people encounter last are remembered especially well

Stereotypes

generalized beliefs we have about social groups

Attributions

the explanations we make for others’ behaviors

Internal Attribution

when the behavior is thought to be caused by the person

External Attribution

when the behavior is thought to be caused by the situation

Fundamental attribution error

the tendency to attribute others’ actions to internal causes while largely overlooking external causes 

Self-serving bias

the tendency to attribute our own failures to external causes but our own success to internal causes

Halo Effects

The tendency for our general impression of someone to color our interpretation of their abilities or behaviors (can be positive or a negative halo, can be influenced by attractiveness)

Self-fulfilling prophecy (Pygmalion Effect)

The tendency for our expectations about others to shape how we treat them (and, in turn, how they behave)

Motivation

the psychological force that causes people to invest effort into action

Extrinsic Motivation

due to rewards that come from the organization, such as pay and promotion

Intrinsic Motivation

due to the nature of the work itself, such as its inherent interest or challenge

If I put in effort, will I succeed?

Expectancy or E → P

If I perform well, will I get rewarded?

Instrumentality or P → O

Do I value the outcome?

Valence or “O”

How to motivate/apply expectancy theory

Provide autonomy and give rewards in a timely manner

Stretch goals are usually deployed for two main reasons

1. Improved Organizational Effectiveness

2. Personal growth and professional development

Stretch goals

those you don’t know how to meet (very challenging)

Goal

a cognitive representation of a desired end state

Goal-Setting Theory

Goals that are specific and difficult mobilize action much more powerfully than goals that are vague or easy

Specific goals only work if individuals have

1. The confidence, knowledge, skills to achieve the goal, E→ P

2. High goal commitment, positive O

Employees who help with setting their goals are more likely to have

Increased Commitment, Higher Perceived Autonomy

What are SMART Goals?

Specific, measurable, achievable, relevant, time-bound

People are more likely to attain goals when they are linked to

action plans

Vertical Stretch Goals

goals aligned with current responsibilities (Raise annual sales in your department by 45%)

Horizontal Stretch Goals

taking on different responsibilities than before (The sales manager leads a new development project)

Management by Objectives (MBO)

Everyone at every level is simultaneously contributing to the main goal of the organization with their own smaller goals

Why do incentive plans not work?

The number one casualty of rewards is creativity. Rewards are the “enemies of exploration.”

Rewards come with four main risks

Threatening autonomy, Over-justification of effort, Incentivizing A, but hoping for B, Not all incentives seem fair to employees

Equity Theory

Inputs (me) / Outcomes (me) = inputs (referent) / outcomes (referent)

Most common response to being under-rewarded

 reduced effort or productivity, increased turnover, asking for more money

Two reactions to being over-rewarded

guilt and equity restoration or cognitive justification

Distributive justice

the distribution of outputs (rewards/punishments) is perceived to be fair

Procedural justice

when the processes and procedures used to distribute outputs (regards/punishments) are perceived to be fair

What increases intrinsic motivation? (JCM)

-Feedback: we like to know how we’re doing

-Skill variety: being challenged to develop a range of capabilities

-Autonomy: control over decisions

-Task identity: Being able to oversee a whole piece of work from start to finish

-Task significance: having work that positively impacts the well-being of others

Two modes of thinking

1. Intuitive, System I (fast and effortless)

2. Reflective, System II (slow and deliberate, learning to drive)

Framing

Tendency to evaluate outcomes differently depending on how the decision is presented

When framed as a choice between sure loss and a gamble, we are

 risk-seeking

When framed as a choice between sure gain and a gamble

we are risk-averse

Overcoming System I thinking requires

self-awareness and the creation of mechanisms for relying on System II processes

Five stages of team development

1. Forming: meet, establish rules, identify shared goals

2. Storming: identify and manage any differences that arise

3. Norming: develop norms, build trust, create relationship stability

4. Performing: actively working toward shared objectives

5. Adjourning: teams disband after completing their objectives

Constructive Dissent

Lack of psychological safety within the group

Encourage constructive dissent

Early in team development (forming and storming stages) and during transition phases rather than action phases

What can leaders do to create safety?

-Encourage questions and feedback

-Model vulnerability

-Respond positively to others' mistakes

-Reinforce inclusion

Why Do Big Teams Suck?

Many hands do not make lighter work and efficiency improves in smaller teams