This Document Contains Chapters 10 to 12 CHAPTER 10 COMMUNICATION CHAPTER LEARNING OBJECTIVES After reading Chapter 10, students should be able to: LO10.1 Define communication and explain why communication by the strict chain of command is often ineffective. LO10.2 Explain the factors that contribute to voice versus silence. LO10.3 Explain the organizational grapevine and explain its main features. LO10.4 Review the role of both verbal and non-verbal communication at work. LO10.5 Discuss gender differences in communication and identify how a failure to recognize these differences can cause communication problems. LO10.6 Discuss the challenges relating to cross-cultural communication and identify useful strategies to deter miscommunication. LO10.7 Define computer-mediated communication and highlight its strengths and weaknesses. LO10.8 Review personal strategies and organizational initiatives aimed at enhancing communication. CHAPTER OUTLINE AND TEACHING NOTES What Is Communication? Communication is the process by which information is exchanged between a sender and a receiver. This chapter is concerned with interpersonal communications – the exchange of information between people. The sender encodes his or her thoughts into some form that can be transmitted to the receiver. The receiver must perceive the message and accurately decode it to achieve understanding. The receiver tells the sender that the message has been received and understood through feedback. There are a number of points in which errors can occur during the communication process. Effective communication occurs when the right people receive the right information in a timely manner. Violating any of these three conditions results in a communication episode that is ineffective. Basics of Organizational Communication There are a number of basic issues about organizational communication. Communication by Strict Chain of Command The chain of command refers to lines of authority and formal reporting relationships in an organization. It can handle three necessary forms of organizational communication. Downward communication is information that flows from the top of the organization toward the bottom. Upward communication is information that flows from the bottom of the organization toward the top. Horizontal communication is information that flows between departments or functional units, usually as a means of coordinating effort. While a lot of organizational communication follows the formal lines of authority, the reality of organizational communication is that the formal chain of command is an incomplete and sometimes ineffective path of communication. Deficiencies in the Chain of Command Strictly adhering to the chain of command is often ineffective for a number of reasons. Informal Communication. One problem with the chain of command is that it fails to account for informal communication between members. Not all informal communication benefits the organization. An informal grapevine might spread unsavoury, inaccurate rumours across the organization. Filtering. Filtering is the tendency for a message to be watered down or stopped altogether at some point during transmission. Filtering can be useful to ensure that the right information is available, but overzealous filtering will preclude the right people from getting the right information. Upward filtering often occurs because employees are afraid that their boss will use the information against them. Downward filtering is often caused by time pressures or simple lack of attention to detail, but more sinister motives may be a work. Some managers filter downward communication to maintain an edge on their subordinates. Slowness. Even when the chain of command relays information faithfully, it can be painfully slow especially for horizontal communication between departments. It is not a good mechanism for reacting quickly to customer problems. Voice, Silence, and the Mum Effect One aspect of the free flow is employee is voice which is the constructive expression of disagreement or concern about work unit or organizational practices. Voice refers to “speaking up” and can be contrasted with silence which means withholding relevant information. Voice might be directed horizontally, to teammates, or vertically, to the boss or to management in general. Voice can be considered a form of organizational citizenship behaviour that enables organizations to learn and change. Hence, it is in their interest to encourage voice. More satisfied employees who identify more strongly with their work unit or organization are most likely to speak up, as are those who are conscientious and extraverted. Direct supervisors and higher level managers play a critical role in creating a climate in which constructive dissent can emerge and contribute to an atmosphere of psychological safety in which there is a shared belief that it is safe to take social risks. Self-censorship will result in a climate of silence. Another factor that can contribute to silence and works against voice is the the mum effect which is the tendency to avoid communicating unfavourable news to others. The mum effect is especially likely when a sender is responsible for the bad news. The mum effect does not only apply to subordinates. One study found that managers were more likely to inform employees of their performance ratings when the ratings were good. The Grapevine A great deal of information travels quickly through organizations as a result of the grapevine. Characteristics of the Grapevine The grapevine is an organization’s informal communication network. The grapevine cuts across formal lines of communication. There are several distinguishing characteristics of the grapevine. First, although the grapevine is generally thought of as involving word of mouth, written notes, e-mail, and fax messages, may also be involved. Second, organizations may have several loosely coordinated grapevine systems. Third, the grapevine may transmit information that is relevant to the performance of the organization as well as personal gossip. At least 75 percent of the non-controversial organization-related information carried by the grapevine is correct. Personal information and emotionally charged information is likely to be distorted. Who Participates in the Grapevine? Personality characteristics play a role in the grapevine. Extraverts are more likely to pass on information than introverts and those who lack self-esteem might pass on information that gives them a personal advantage. The nature of the information might also influence who chooses to pass it on. The physical location and task elements of members are also related to their opportunities to participate in the grapevine. Locations that receive a lot of traffic or employees that must travel through the organization in the course of their jobs will have more opportunities to serve as grapevine transmitters. Pros and Cons of the Grapevine From an organization’s point of view, the grapevine serves a number of useful functions. First, it keeps employees informed about important organizational matters. Second, it provides a test of employee reactions to proposed changes without making formal commitments. Third, when it extends outside the organization it can serve as a potent informal recruiting source. A problem can occur with the grapevine when it becomes a pipeline for rumours. A rumour is an unverified belief that is in general circulation. Because the information cannot be verified as accurate, rumors are susceptible to severe distortion. Rumors spread fastest and farthest when the information is ambiguous, when the content of the rumor is important to those involved, and when the recipient is anxious. The Verbal Language of Work Jargon is the specialized language used by job holders or members of particular occupations or organizations to communicate with each other. Jargon can be an efficient means of communicating with peers, but it can also serve as a barrier to communicating with others, especially to those outside of the organization or profession. The Non-Verbal Language of Work Non-verbal communication refers to the transmission of messages by some medium other than speech or writing. Two basic forms of non-verbal communication are body language and the manipulation of objects. Body Language Body language is non-verbal communication that occurs by means of a sender’s bodily motions, facial expressions, or the sender’s physical location in relation to a receiver. Two important messages a sender can communicate through body language are the extent to which he/she likes or is interested in a receiver and his/her views concerning the relative status of the sender and the receiver. Senders communicate liking and interest in the receiver in various ways such as by positioning themselves physically close to the receiver. Senders who feel themselves to be of higher status than a receiver act more relaxed than one who feels of lower status. The greater the difference in relaxation between two parties, the more they communicate a status differential to each other. One area in which body language has an impact is on the outcome of employment interview decisions. Positive body language might give the edge to applicants who are otherwise equally well qualified. Props, Artifacts, and Costumes Non-verbal communication can also occur through the use of various objects such as props, artifacts, and costumes. Office Decor and Arrangement. The decor and arrangement of an office communicates something about the personality and motives of the occupant. Students feel more welcome and comfortable in professors’ offices when the office is (1) tidy, (2) decorated with posters and plants, and (3) the desk was against the wall instead of between the student and the professor. A neat office evidently signals that the professor was well organized and had time to talk to them. Another study found that strangers could assess how conscientious and how open to experience a person was simply by seeing his or her office. Neatness was a typical cue for conscientiousness and distinctive decor for openness Does Clothing Communicate? Research has also shown that the clothes we wear are indeed forms of non-verbal communication. The clothing organizational members wear sends signals about their competence, seriousness, and promotability. Proper clothing can enhance self-esteem and self-confidence. Gender Differences in Communication According to Deborah Tannen, there are gender differences in communication styles and these differences influence the way that men and women are perceived and treated in the workplace. Gender differences in communication revolve around what Tannen refers to as the “One Up, One Down” position. Men tend to be more sensitive to power dynamics and will use communication as a way to position themselves in a one up situation and avoid a one-down position. Women are more concerned with rapport building, and they communicate in ways that avoid putting others down. As a result, women often find themselves in a one-down position, which can have a negative effect on the rewards they receive and their careers. There are a number of key differences in male and female communication styles and rituals that often place women in a one-down position: Getting credit. Men are more likely to blow their horn about something they have done. Confidence and boasting. Men tend to be more boastful about themselves and their capabilities and minimize their doubts so they are perceived as more confident. Asking questions. Men are less likely than women to ask questions in situations that can put woman in a one-down position and reflect negatively on them. Apologies. Women and men differ in their use of apologies. Men avoid ritual apologies because it is a sign of weakness that can place them in a one-down position. For women, it is a way of expressing concern. Feedback. Women buffer criticism by beginning with praise as a way to save face for the person receiving the criticism and avoid putting them in a one-down position. Men are more blunt and straightforward. These differences can lead to misunderstandings. Compliments. Women are more likely to provide compliments than men. Men are more likely to provide a critique. Ritual opposition. Men often use ritual opposition or fighting as a form of communication and the exchange of ideas. Women see this as a personal attack and something to be avoided. Managing up and down. Men spend much more time communicating with their superiors and talking about their achievements. Women tend to downplay their superiority leading others to believe that they are not capable of projecting their authority. Indirectness. Women in positions of authority tend to be indirect when giving orders. Such indirectness can lead to misunderstandings and be perceived as a lack of appropriate demeanour and confidence. The differences in communication styles between men and women almost always reflect negatively on women and place them in a one-down position. Problems and misunderstandings arise when those communicating do not understand the rituals and styles of each other. Therefore, it is important to recognize that people have different linguistic styles and adopt a flexible style so you can adjust your style when necessary. Being able to use different communication styles allows people to adjust their style to any given situation. Cross-Cultural Communication Communication across cultures poses many challenges and tends to magnify the difficulties encountered even within a single culture. Many failures between members of different cultures stem from problems in cross-cultural communication. There are a number of important dimensions of cross-cultural communication. Language Differences Language differences pose the most obvious barrier to cross-cultural communication. Communication is generally better between individuals or groups that share similar cultural values. This is all the more so when they share a common language. However, speaking the same language is no guarantee of perfect communication. Non-verbal Communication Across Cultures While there are some similarities across cultures in non-verbal communication, there are also many differences. Here are some examples: • Facial expressions. People in different nations generally are good at decoding basic, simple emotions in facial expressions. • Gestures. Gestures do not translate well across cultures. This is because they involve symbolism that is not shared. • Gaze. There are considerable cross-cultural differences in the extent to which it is considered suitable to look others directly in the eye. • Touch. In some cultures, people stand close to one another when meeting and touch each other as an adjunct to conversation. In other cultures, people prefer to “keep their distance.” Etiquette and Politeness Across Cultures Cultures differ considerably in how etiquette and politeness are expressed. This often involves saying things that one does not literally mean. The problem is that the exact form that this takes varies across cultures and careful decoding is necessary to avoid confusion and embarrassment. Literal decoding will almost always lead to trouble. Learning these differences is important for managers who seek to deal with their counterparts in other nations. For example, in social situations, the Japanese are particularly interested in maintaining feelings of interdependence and harmony. To do this, they use a large number of set phrases or “lubricant expressions” to express sympathy and understanding, soften rejection, say no indirectly, or facilitate apology. Social Conventions Across Cultures There are cross-cultural differences in social conventions and these can lead to communication problems. For example, the directness of business dealings, greetings and how people say hello, the “proper” degree of loudness of speech, punctuality, the pace of life, and the practice of nepotism differ across cultures. All of these should be taken into account when dealing with people of other cultures. Cultural Context Cultural context is the cultural information that surrounds a communication episode. Cultures differ in the importance to which context influences the meaning to be put on communications. Some cultures, including many East Asian, Latin American, African and Arab cultures are high-context cultures meaning that the message in the communication is strongly influenced by the context in which the message is sent. In high-context cultures, literal interpretations are often incorrect. This is in contrast to low-context cultures like North America, Australia, Northern Europe (except France), and Scandinavia, where more meaning resides in the message than the context in which the communication occurs. These differences have implications for organizational communication, especially when we consider what might occur during cross-cultural business negotiations. For example: ● People from high-context cultures want to know about you and the company that you represent in great detail. ● Getting to the point quickly is not a style of communication that people in high-context cultures favour. ● When communicating with people from a high-context culture, give careful consideration to the age and rank of the communicator. Age and seniority tend to be valued in high-context cultures, and the status of the communicator is an important contextual factor that gives credibility to a message. ● Because they tend to devalue cultural context, people from low-context cultures tend to favour very detailed business contracts. For them, the meaning is in the message itself. Computer-Mediated Communication Does communicating electronically differ from face-to-face communication? A good way to begin thinking about this issue is to consider information richness, the potential information-carrying capacity of a communication medium. For example, a face-to-face transmission of information is very high in richness because the sender is personally present, audio and visual channels are used, body language and verbal language are occurring, and feedback to the sender is immediate and ongoing. Communicating via numeric computer output lacks richness because it is impersonal and uses only numeric language. Feedback on such communication might also be very slow. Two important dimensions of information richness are the degree to which information is synchronous between senders and receivers, and the extent to which both parties can receive non-verbal and paraverbal cues. Highly synchronous communication, such as face-to-face speech, is two-way, in real time. On the low side of synchronization, memos, letters, and even e-mails are essentially a series of one-way messages, although e-mail has the clear potential for speedy response. Face-to-face interaction and video-conferencing are high in non-verbal (e.g., body language) and paraverbal (e.g., tone of voice) cues, while these are essentially absent in the text-based media. In general, highly synchronous media that is high in non-verbal and paraverbal cues exemplify the most information richness. E-mail, chat systems, teleconferencing, and video-conferencing are commonly classified as computer-mediated communication in that they rely on computer technology to facilitate information exchange. All of these media permit discussion and decision making without employees having to be in the same location, potentially saving time, money, and travel hassles. Most research has focused on “chat” type group decision support systems that rely on text-based computer conferencing to generate ideas and make decisions. Such systems have been shown to enhance the sheer number of ideas regarding some problem generated under “brainstorming” conditions. By almost any criterion other than generating ideas, computer-mediated groups perform more poorly than face-to-face groups. Computer-mediated decision groups generally take more time, make less effective decisions, and have less satisfied members than face-to face groups. However, recent research suggests that time is an issue, and that computer-mediated groups gradually develop increased trust and cooperation over repeated meeting sessions. A good rule to follow is that less routine communication requires richer communication media. Memos, reports, e-mails, and web portals are fine for recurrent non-controversial, impersonal communication in which information is merely being disseminated. Important decisions, intended changes, controversial messages, and emotional issues generally call for richer media such as face-to-face or video. Personal Approaches to Improving Communication People are learning that developing their communication skills is just as important as developing other skills that will give them an edge in the job market. There are a number of personal approaches for improving your ability to communicate better with others. Basic Principles of Effective Communication Several basic principles of effective face-to-face communication apply to upward, downward, horizontal, and outside communication. They generally apply to cross-cultural encounters as well. Take the Time. Good communication takes time. Developing an awareness of context factors and selecting the appropriate medium to ensure good communication takes time. Not taking adequate time often leads to the selection of the wrong communication medium. Be Accepting of the Other Person. Try to be accepting of the other person as an individual who has the right to have feelings and perceptions that may differ from your own. Empathy will go much farther than arrogance. Don’t Confuse the Person with the Problem. Focus on behaviours rather than attributing motives to the person. Focus on what the person did not who the person is. Try to be descriptive instead of evaluative. Say What You Feel. Be sure that your words, thoughts, feelings, and actions exhibit congruence. Congruence is the condition in which a person’s words, thoughts, feelings, and actions all contain the same message. Congruence can be thought of as honesty or authenticity. Listen Actively. Effective communication requires good listening and good communicators employ active listening to get the most out of an interaction. Active listening is a technique for improving the accuracy of information reception by paying close attention to the sender. It includes: • Watch your body language • Paraphrase what the speaker means • Show empathy • Ask questions • Wait out pauses Give Timely and Specific Feedback. When providing feedback to others about their behaviour, do it soon and be explicit. Speed maximizes the reinforcement potential of the message, and explicitness maximizes its usefulness to the recipient. When in Rome... In addition to the basic principles above, several others are particularly useful in a cross-cultural communication situation. Assume Differences Until You Know Otherwise. Projection and a foreign speaker’s good command of English can tempt us to assume that culture is not an issue leading us to ignore differences. Assume that differences exist until proven wrong. Recognize Differences within Cultures. Avoid culture based stereotypes and be alert for occupational and social class differences that can be more difficult to decipher in other countries. Watch Your Language (and Theirs). Speak clearly, slowly, and simply. Avoid cliches, jargon, and slang. Don’t assume that those who can speak your language well are smarter, more skilled or more honest than those who cannot. Organizational Approaches to Improving Communication There are a number of organizational techniques that can improve communication. Provision of Explanations Organizations sometimes have to enact controversial policies that have the potential to spark much employee resistance (e.g., restructuring, layoffs). However, many organizations simply announce such policies with little or no explanation. Two factors are critical to the perceived fairness of controversial policies: the adequacy of the explanation and the style with which it is delivered. Adequate explanations should be specific and detailed, highlighting the reasons for the policy, how the decision was made, and the benefits that will accrue from it. The delivery of the message should be truthful, sincere, respectful, and sensitive. When appropriate, the communicator should express sincere remorse for having to implement the policy and acknowledge any suffering that the policy might cause. A rich communication medium, such as a personal appearance by the CEO or other high organizational representative, is also called for. 360-Degree Feedback 360-degree feedback is a type of performance appraisal that uses the input of supervisors, employees, peers, and clients or customers of the appraised individual. Because the 360 feedback approach focuses on behavioural competency rather than bottom-line performance, it is used mainly for employee development rather than salary determination. Research shows that 360-degree feedback leads to performance improvements. Employee Surveys and Survey Feedback Surveys of the attitudes and opinions of current employees can provide a useful means of upward communication. An employee survey is an anonymous questionnaire that enables employees to state their candid opinions and attitudes about an organization and its practices. Thus, they can reliably tap employee concerns and also provide information that is useful for practical purposes. They are most useful when they are conducted periodically. When survey results are fed back to employees, along with management responses and any plans for changes, downward communication is enhanced. Suggestion Systems and Query Systems Suggestion systems are programs designed to enhance upward communication by soliciting ideas for improved work operations from employees. Much better systems reward employees for suggestions actually adopted and provide feedback on how management evaluated each suggestion. Related to suggestion systems are query systems that provide a formal means of answering questions employees may have about the organization. These systems foster two-way communication and are most effective when questions and answers are widely disseminated. Telephone Hotlines, Intranets, and Webcasts Telephone hotlines use a news format to present company information that is especially valuable during times of crisis. They may also serve as query systems in which employees can call in for answers to their questions. Corporate intranet portals represent an important information source on various topics of interest to employees and can also allow employees to communicate information to the organization, such as changes of address or in benefits enrolment. Corporate webcasting constitutes a rich communication medium that allows for the broadcasting of both audio and video that can reach employees located anywhere in the world. Multipoint webcasting allows for a number of presenters who can be located in multiple cities. Such communication mediums are especially good for general information sessions, training, and new product introduction. The synchronous, interactive nature of webcasts supports audience engagement either through written questions, audio questions, or, where possible, video interaction. In order to reduce costs and enhance communication, some organizations use podcasts. The benefit of podcasts is that there is no need for camera equipment. A simple recording of the audio presentation will suffice. Although podcasts lack the richness of video, they still capture the emotion of the speaker and, when used live, allow for audio question-and- answer periods. Management Training Supervisors can be trained to become more effective communicators by isolating specific communication skills and giving them the opportunity to practice these skills. Effective training programs often present videotaped models correctly handling a typical communication problem. Managers then role-play the problem and are reinforced by the trainers when they exhibit effective skills. A manager who can communicate effectively downward can expect increased upward communication in return. CHAPTER 11 DECISION MAKING CHAPTER LEARNING OBJECTIVES After reading Chapter 11, students should be able to: LO11.1 Define decision making and differentiate well-structured and ill-structured problems. LO11.2 Compare and contrast perfectly rational decision making with decision making under bounded rationality. LO11.3 Discuss the impact of framing and cognitive biases on the decision process. LO11.4 Explain the process of escalation of commitment to an apparently failing course of action. LO11.5 Consider how emotions and mood affect decision making. LO11.6 Summarize the pros and cons of using groups to make decisions, with attention to the groupthink phenomenon and risk assessment. LO11.7 Discuss techniques for improving organizational decision making. CHAPTER OUTLINE AND TEACHING NOTES What Is Decision Making? Decision making is the process of developing a commitment to some course of action. It involves making a choice among several action alternatives requiring a commitment of resources. Decision making is also a process of problem solving. A problem exists when a gap is perceived between some existing state and some desired state. Well-Structured Problems For a well-structured problem, the existing state is clear, the desired state is clear, and how to get from one state to the other is fairly obvious. Such problems are simple, and their solutions arouse little controversy. They are repetitive and familiar. Because decision making takes time and is prone to error, organizations (and individuals) attempt to program the decision making for well-structured problems. A program is a standardized way of solving a problem. Ill-Structured Problems Ill-structured problems are those for which the existing and desired states are unclear and the method of getting to the desired state is unknown. They are unusual, complex problems that involve a high degree of uncertainty. As a result, they frequently arouse controversy and conflict among those who are interested in the decision. They cannot be solved with programmed decisions. Decision makers resort to non-programmed decision making to solve ill-structured problems. They are likely to gather more information and be more self-consciously analytical in their approach. Ill-structured problems can entail high risk and stimulate political considerations. As shown in Exhibt 11.1, a rational decision maker would you use a decision making model once a problem is identified. When a rational decision maker identifies a problem, he or she is likely to search for information to clarify the problem and suggest alternatives; evaluate the alternatives and choose the best for implementation. The implemented solution is then monitored over time to ensure its immediate and continued effectiveness. If difficulties occur at any point in the process, repetition or recycling may be affected. The Compleat Decision Maker — A Rational Decision-Making Model Perfect versus Bounded Rationality The prototype for perfect rationality is Economic Person. This means that he or she is completely informed, perfectly logical, and oriented toward economic gain. Economic Person can gather information without cost and is completely informed; is perfectly logical; and economic gain is the only criterion for decision making. In reality, managers tend to exhibit bounded rationality rather than perfect rationality. That is, while they try to act rationally, they are limited in their capacity to acquire and process information. Also, time constraints and political considerations act as bounds to rationality. Bounded rationality can be illustrated by framing and cognitive biases as well as the impact of emotions and mood on decisions. Framing refers to the aspects of the presentation of information about a problem that are assumed by decision makers. Cognitive biases are tendencies to acquire and process information in an error- prone manner. They constitute assumptions and shortcuts that can improve decision-making efficiency but frequently lead to serious errors in judgment. Problem Identification and Framing Although a perfectly rational decision maker is completely informed, the following difficulties may develop in problem identification for a manager exhibiting bounded rationality: • Perceptual defence. This can keep a decision maker from perceiving problems as the perceptual system defends the perceiver against unpleasant perceptions. • Problem defined in terms of functional specialty. A problem may be defined in terms of one’s functional specialty. • Problem defined in terms of solution. This involves jumping to conclusions and short-circuiting the rational decision-making process. • Problem diagnosed in terms of symptoms. A problem may be diagnosed in terms of symptoms, ignoring the underlying cause of the problem. When problems are identified they are framed in some way and different decision frames might lead to very different decisions. Rational decision makers should try to be very self-conscious about how they have framed problems, they should try out alternative frames, and they should avoid overarching, universal frames. Information Search Information clarifies the nature or extent of a problem and suggests alternative solutions. The perfectly rational Economic Person has free and instantaneous access to all information needed to clarify the problem and develop alternative solutions. In bounded rationality, the information search may be slow and costly. Too Little Information. Sometimes, decision makers do not acquire enough information to make a good decision. Several cognitive biases contribute to this. Managers often rely on their own flawed memory. Unfortunately, our memory is more selective then representative—we remember vivid, recent events and rely on familiar information. Overconfidence in decision making is also a problem and it is reinforced by confirmation bias - the tendency to seek out information that conforms to one’s own definition of or solution to a problem. These biases lead people to shirk the acquisition of additional information. Too Much Information. Managers may also obtain too much information which can also damage decisions. Information overload is the reception of more information than is necessary to make effective decisions. Information overload can lead to errors, omissions, delays, and cutting corners. Even though this usually results in lower quality decisions, decision makers tend to be more confident with more information and think that more is better. People also tend to have a cognitive bias to value advice for which they have paid over free advice of equal quality. Alternative Development, Evaluation, and Choice A decision maker lists alternative solutions to a problem, examines the solutions, and chooses the best one. This is easy for the perfectly rational decision maker since he or she conceives of all alternatives, knows the ultimate value of each, and knows the probability that each will work. A rational decision maker exhibits maximization — the choice of the decision alternative with the greatest expected value. However, the decision maker working under bounded rationality may not know all alternative solutions, may be ignorant of the ultimate values and probabilities of success of those solutions that he knows. Cognitive biases also come into play. People are weak intuitive statisticians and frequently violate statistical principals. They have trouble incorporating known existing data about the likelihood of events (base rates) into their decisions. They also have trouble with sample size (large samples warrant more confidence), probability estimates of multiple event scenarios (overestimate the odds of complex chains occurring), and are poor at revising estimates of probabilities and values as they acquire additional information. An example of this last problem is the anchoring effect, which refers to the inadequate adjustment of subsequent estimates from an initial estimate that serves as an anchor. It is possible to reduce some of these basic cognitive biases by making people more accountable for their decisions. However, this accountability must be in place before a decision is reached. The perfectly rational decision maker evaluates alternative solutions against a single criterion- economic gain. A decision maker working under bounded rationality has to factor in other criteria such as political acceptability of the solution to other organizational members which increases the complexity of the decision-making process. As a result, the decision maker working under bounded rationality frequently “satisfices” rather than maximizes. Satisficing involves establishing an adequate level of acceptability for a solution and then screening solutions until one that exceeds this level is found. When this occurs, evaluation of alternatives ceases and the solution is chosen for implementation. Risky Business Choosing between decision alternatives involves an element of risk. The role of risk in decision making also demonstrates the power of framing. Research by Kahneman and Tversky shows that when people view a problem as a choice between losses, they tend to make risky decisions, rolling the dice in the face of a sure loss. When people frame the alternatives as a choice between gains they tend to make conservative decisions, protecting the sure win. Learning history can modify these general preferences for or against risk. Solution Implementation The perfectly rational decision maker factors any possible implementation problems into his or her choice of solutions. However, solution implementation for a bounded decision maker is more difficult since he or she is usually dependent on others to implement the decision and it is difficult to anticipate their ability or motivation to do so. A good example of this is when products such as cars are designed, engineered, and produced in a lengthy series of stages. Solution Evaluation Solution evaluation is the last step in the decision making process. The perfectly rational decision maker evaluates the effectiveness of a decision with calm, objective detachment. However, a bounded decision maker might encounter problems. Justification. People tend to be overconfident about the adequacy of their decisions. To avoid dissonance because of a faulty decision, individuals may avoid testing the adequacy of the decision. If circumstances force them to recognize an error, they may try to justify the faulty decision. The justification of faulty decisions is best seen in the irrational treatment of sunk costs. Sunk costs are permanent losses of resources incurred as a result of a decision. Even though the resources have been lost, people try to justify a past bad decision by escalating the decision (throw good resources after bad), attempting to prove that they were right all along and to recoup the sunk costs. This process is known as escalation of commitment. Escalation of commitment is the tendency to invest additional resources in an apparently failing course of action. The escalation involves devoting more and more resources to actions implied by the decision. In addition to dissonance reduction, it is motivated by a desire not to appear wasteful, a desire to appear consistent, or an attempt to avoid the sure loss represented by sunk costs. Escalation of commitment sometimes happens even when the current decision maker is not responsible for previous sunk costs. In addition to situational causes, personality, moods, and emotions can affect escalation. People high on neuroticism and negative affectivity are less likely to escalate. Escalation can occur in both competitive and non-competitive situations. Attempts to prevent the escalation of commitment might include the following: • Encourage continuous experimentation with reframing the problem. Reframe the problem from one of spending to one of saving. • Set specific goals that must be met before additional resources are invested. • Place more emphasis on evaluating managers on how decisions are made and less on decision outcomes. • Separate initial and subsequent decision making. Using groups does not reduce the tendency toward escalation. Groups are more prone than individuals to escalate commitment. Hindsight. The careful evaluation of decisions is also inhibited by faulty hindsight. Hindsight is the tendency to review the decision-making process to find what was done right or wrong. It often reflects a cognitive bias. Individuals engaging in hindsight may exhibit the knew-it-all-along effect. This is a tendency to assume, after the fact that we knew all along what the outcome of a decision would be. Another form of faulty hindsight is taking personal responsibility for successful decision outcomes while denying responsibility for unsuccessful outcomes. How Emotion and Mood Affect Decision Making Contrary to the rational model of decision making, there is ample evidence that emotions also play a role in decision making. In fact, strong emotions frequently figure in the decision-making process that corrects ethical errors (Chapter 12), and so-called whistleblowers often report that they were motivated by emotion to protest decision errors. Strong (positive) emotion has also been implicated in creative decision making and the proper use of intuition to solve problems. Such intuition (Chapter 1) can lead to the successful short-circuiting of the steps in the rational model when speed is of the essence. There are also many cases in which strong emotions are a hindrance such as when people experiencing strong emotions are often self-focused and distracted from the actual demands of the problem at hand. A common theme over the years has been how excessive emotional conflict between business partners or family business members provokes questionable business decisions. There is plenty of evidence that mood affects what and how people think when making decisions and that it has greatest impact on uncertain, ambiguous decisions of the type that are especially crucial for organizations. Research on mood and decision making has found that: • People in a positive mood tend to remember positive information. Those in a negative mood remember negative information. • People in a positive mood tend to evaluate objects, people, and events more positively. Those in a negative mood provide more negative evaluations. • People in a good mood tend to overestimate the likelihood that good events will occur and underestimate the occurrence of bad events. People in a bad mood do the opposite. • People in a good mood adopt simplified, short-cut decision-making strategies, more likely violating the rational model. People in a negative mood are prone to approach decisions in a more deliberate, systematic, detailed way. • Positive mood promotes more creative, intuitive decision making. The impact of mood on decision making is not necessarily dysfunctional. If the excesses of optimism can be controlled, those in a good mood can make creative decisions. If the excesses of pessimism can be controlled, those in a negative mood can actually process information more carefully and effectively. A good example of how mood and emotion can lead to faulty decision making can be seen in the “dot.com meltdown” that began in the 1990s. Rational Decision Making—A Summary The rational decision-making model provides a good guide for how many decisions should be made but offers only a partially accurate view of how they are made. For complex, unfamiliar decisions the rational model provides a pretty good picture of how people actually make decisions. However, there is plenty of case evidence that in organizations the rational decision-making process is often short-circuited in part because of the biases discussed above. This might explain why about half of the decisions made in organizations have been found to be failures. Group Decision Making Many organizational decisions are made by groups rather than individuals, especially when problems are ill structured. There are both advantages and problems of group decision making. Why Use Groups? Groups may be used to make organizational decisions for three reasons. Decision Quality. Groups should make higher quality decisions than individuals because groups are more vigilant, can generate more ideas, and can evaluate ideas better than individuals. These characteristics suggest that groups should make higher-quality decisions than individuals. Decision Acceptance and Commitment. Often, a decision made by a group is more likely to be accepted because people wish to be involved in decisions that affect them, they will better understand a decision in which they participated, and will be more committed to a decision in which they invested personal time and energy. The acceptability of group decisions is especially useful in decision implementation, since committed individuals should be willing to follow through with implementation. Diffusion of Responsibility. This refers to the ability of group members to share the burden of the negative consequences of a poor decision. Each member of a group shares part of the burden of the negative consequences of a poor decision, and no one person will be singled out for punishment. Do Groups Actually Make Higher-Quality Decisions Than Individuals? Research has shown that groups usually produce more and better solutions to problems than individuals working alone. Certain conditions should enable groups to perform better than individuals. • Group members differ in relevant skills and abilities, as long as they don’t differ so much that conflict occurs. • Some division of labour can occur. • Memory for facts is an important issue. • Individual judgments can be combined by weighting them to reflect member expertise. Disadvantages of Group Decision Making Group decision making has four potential disadvantages. Time. Groups seldom work quickly or efficiently, compared to individuals due to process losses. This problem increases with size. When the speed of arriving at a solution to a problem is a prime factor, organizations should avoid using groups. Conflict. Participants in group decisions often have their own personal axes to grind or their own resources to protect and as a result, decision quality may take a back seat to political wrangling and infighting. In general, groups will make better decisions when their members feel psychologically safe. Domination. The advantages of group decision making will seldom be realized if meetings are dominated by a single individual or a small coalition. If the dominant person is particularly misinformed, the group decision is very likely to be ineffective. Groupthink. Groupthink happens when group pressures lead to reduced mental efficiency, poor testing of reality, and lax moral judgment. Psychologist Irving Janis, who developed the groupthink concept, felt that high group cohesiveness was at its root. It now appears that other factors are more important such as strong identification with the group, concern for approval from the group, and the isolation of the group from other sources of information. The promotion of a particular decision by the group leader appears to be the strongest cause. Groupthink symptoms include: • Illusion of invulnerability. Members are overconfident and willing to assume great risks. They ignore obvious danger signals. • Rationalization. Problems and counterarguments that members cannot ignore are “rationalized away.” • Illusion of morality. The decisions the group adopts are not only perceived as sensible, they are also perceived as morally correct. • Stereotypes of outsiders. The group constructs unfavourable stereotypes of those outside the group who are the targets of their decisions. • Pressure for conformity. Members pressure each other to fall in line and conform with the group’s views. • Self-censorship. Members convince themselves to avoid voicing opinions contrary to the group. • Illusion of unanimity. Members perceive that unanimous support exists for their chosen course of action. • Mindguards. Some group members may adopt the role of “protecting” the group from information that goes against its decisions. Victims of groupthink are operating in an atmosphere of unreality that should lead to low-quality decisions. To prevent groupthink, leaders must be careful to avoid exerting undue pressure for a particular decision outcome and concentrate on good decision processes. They should establish norms that encourage and even reward responsible dissent, and outside experts should be brought in from time to time to challenge the group’s views. How Do Groups Handle Risk? Problems that are suitable for group decision making involve some degree of risk and uncertainty. This raises the question of whether groups make more or less risky decisions than those of individuals. A key factor is the initial positions of the group members before they discuss a particular problem. When group members are initially more willing to take risks, they experience a risky shift after discussion. A risky shift is the tendency for groups to make riskier decisions than the average risk initially advocated by their individual members. When group members are somewhat conservative before interaction, they tend to exhibit a conservative shift when they discuss the problem. A conservative shift is the tendency for groups to make less risky decisions than the average risk initially advocated by their individual members. Risky and conservative shifts occur in a wide variety of real settings, including investment and purchasing decisions. A key factor appears to be the initial positions of the group members before they discuss the problem. Group discussion seems to polarize or exaggerate the initial position of the group. Two main factors explain risky and conservative shifts when groups make decisions: • Group discussion generates ideas and arguments that individual members have not considered before. This information naturally favours the members’ initial tendency toward risk or toward conservatism. • Group members try to present themselves as basically similar to other members but “even better.” They try to one-up others in discussion by adopting a slightly more extreme version of the group’s initial stance. Groups that communicate via computer are inclined to polarize even more than face-to-face groups. Improving Decision Making in Organizations Decision making is improved if decision makers are encouraged to approximate more closely the rational model. There are five techniques often used to encourage this goal. Training Discussion Leaders Discussion leaders should provide some guidance without acting autocratically. The actions of the leader can “make or break” the decision. Leadership skills can be learned through role-playing training which has been shown to increase the quality and acceptance of group decisions. Stimulating and Managing Controversy As long as it does not become full-blown conflict, controversy provokes new ideas and improves decisions. In groups, controversy can be stimulated by having members with diverse ideas and backgrounds, forming subgroups to “tear the problem apart,” and establishing norms of open sharing of information. A devil’s advocate may be appointed to identify and challenge the weaknesses of a proposed plan or strategy. The controversy promoted by the devil’s advocate improves decision quality. To be effective, the advocate must present his or her views in an objective, unemotional manner. Traditional and Electronic Brainstorming Brainstorming attempts to increase the number of creative solution alternatives to problems by focusing on idea generation rather than evaluation. Group members voice any ideas they have in a freewheeling, non-critical environment. However, research on brainstorming has concluded that individuals working alone tend to generate more ideas than those in groups. Some reasons include inhibition, domination of the group by an ineffective member, or the sheer physical limitations of people trying to talk simultaneously. However, brainstorming can provide advantages that extend beyond the mere number of ideas generated that can have creative and business advantages. Brainstorming shapes the organizational culture, helps retain good talent, and contributes to client confidence. An alternative to traditional brainstorming is electronic brainstorming. Electronic brainstorming uses computer mediated technology to improve traditional brainstorming practices. As noted, the face-to-face interaction actually reduces individual brainstorming performance. Research has shown that once over the size of two members, electronic brainstorming groups perform better than face-to-face groups in both the quantity and quality of ideas. Also, as electronic groups get larger, they tend to produce more ideas, but the ideas-per-person measure remains stable. In contrast, as face-to-face groups get bigger, fewer and fewer ideas per person are generated (remember social loafing from Chapter 7). Nominal Group Technique The Nominal Group Technique is a structured group decision-making technique in which ideas are generated without group interaction and then systematically evaluated by the group. Thus, it separates the generation of ideas from their evaluation. Its chief disadvantages are the time and resources required to assemble the group for face-to-face interaction. The Delphi Technique The Delphi technique is a method of pooling a large number of expert judgments by using a series of increasingly refined questionnaires. Participants do not engage in face-to-face interaction and do not make a final decision. The heart of Delphi is a series of questionnaires sent to respondents. Disadvantages include the long time required for the questionnaire phases and the demands made on writing skills and continuing interest of the respondents. Delphi is an efficient method of pooling a large number of expert judgments while avoiding the problems of conformity and domination that can occur in interacting groups. CLASSROOM DEMONSTRATION AND MINI-LECTURE: THE DOLLAR AUCTION AND ESCALATION OF COMMITMENT Semester dragging? Student interest flagging? This exercise is guaranteed to get their attention and provide a good introduction to a mini-lecture on the process of escalation of commitment to a failing course of action. The demonstration is called the dollar auction. It is described in Max Bazerman’s excellent book Judgment in Managerial Decision Making. Max credits the economist and game theorist M. Shubik with the basic idea (The dollar auction game: A paradox in non-cooperative behavior and escalation. Journal of Conflict Resolution, Volume 15, 1971, 109-111). Here’s how to do the auction. Hold up a dollar and announce that you are going to auction it off to the highest bidder. Then give these instructions to the class: • You can participate or watch. • Only bidders can talk (no extraneous conversation). Bidding will be in 5¢ or 10¢ increments. • There is only one deviation from a conventional auction. Both the winner and the second highest bidder must pay the amount that each has bid. If you win at 30¢ and beat out a bid of 25¢, I get that 25¢ and I owe you 70¢. • Will someone give me 10¢ for this dollar? Experience shows that someone will pay a lot more than 10¢. Generally, the bidding begins fast and furious and then comes down to two people who slug it out to the end. It is not unusual for the winner to pay more than a dollar for the dollar. Remember that the runner-up must pay too! If your conscience bothers you, give the money back, give it to charity, or buy the class a treat. The dollar auction is great for demonstrating irrationality, a common theme in the chapter, right in class. The moment a second bid is received for the dollar, somebody is going to lose something here. Seasoned executives and students with extensive coursework in finance, accounting, and economics fall prey to the auction as frequently as inexperienced students. In debriefing, ask the winner what was going through his or her mind during the auction. Do the same for the loser, early dropouts, and non-participants. Call the class’s attention to the fact that this is an escalation of commitment situation, although unlike some of the bad investments discussed in the book this is competitive escalation. A real life example is a corporate takeover battle in which both sides spend millions on lawyers and investment bankers regardless of who “wins.” Also, a gasoline price war illustrates competitive escalation. Review the possible reasons for escalation of commitment in such situations, tying them back to the students’ comments: • Competition and the desire to win (an extra-economic criterion). • To justify the earlier decision to bid, thereby reducing dissonance. • Inability to ignore sunk costs. • Desire to appear consistent to others. • Desire not to appear wasteful. • The framing of the problem as a sure loss (as when your competition has upped the bid and you are now the second highest bidder). People are risk seeking when problems are framed this way. • How can escalation situations be avoided? This, of course, depends on just which of the above factors is operating in a given situation. Here are some possible strategies: • Try to reframe the problem. For example, in the dollar auction, think of the savings of dropping out rather than the sure loss incurred. • Set advance limits on the amount to be invested. • Bring in experts or consultants who do not have a personal stake in the past stream of decisions. These people can serve as devil’s advocates. • Try not to stifle controversy about the failing stream of decisions. Dissenters might show the value of stopping escalation. CLASSROOM DEMONSTRATION: INDIVIDUAL VERSUS GROUP DECISION MAKING If you would like to show your students how group decisions are often higher in quality than individual decisions, try the following exercise: Spring a “pop quiz” on your class concerning the material in Chapter 11 or another chapter that they’ve read recently. Use about 10 of the multiple choice questions from the Test Bank. First, have the students complete the quiz individually. Then have them break into groups of 4 or 5 students each, discuss the questions, and come to a group consensus about the answer to each question. Provide the groups with the correct answers to the questions so that the group can mark its “consensus exam” and each individual can mark his or her individual pre-discussion exam responses. Have each group calculate the average of the individual responses. On the board, make a chart that shows for each group the group score, the average of the groups’ individual scores, and the range of individual scores (high score and low score) in the group. On a task of this nature, we would generally expect the group score to be higher than the average of the individual scores. Memory of facts and concepts is critical for a good score, and groups should have more “memory capacity” than individuals. If the group score is lower than the average of the individual scores it may indicate that the interaction was dominated by one of the poorer individual scorers. Research in this general domain often shows that the group performs better than its average member but not as well as its best member. However, in a research study that did this specific task using organizational behaviour questions, intact learning groups, and marks as rewards, Larry K. Michaelsen, Warren E. Watson, and Robert Black found that groups outperformed their best member 97 percent of the time! (A realistic test of individual versus group consensus decision making. Journal of Applied Psychology, Volume 74, 1989, 834-839.) Other issues that might be considered during debriefing include: • How structured was this problem? • Did your group attack the problem “rationally” and systematically? • How did your group manage controversy? • Could groupthink occur in this task? • What are some similar tasks that one might encounter in an actual organization? Variations on the above exercise: The quiz in question could be an actual scheduled quiz, and you could count either the individual mark or the group mark as part of the students’ grades. In the former case, have the students turn in one copy of their responses before they meet in groups (keeping another copy). In the latter case, obtain a copy of the group results before giving the correct answers. Also, if you are concerned that students will be embarrassed about revealing their individual scores to their groups, take a small pad of paper into class and have the students report their scores to the group on anonymous “ballots.” This will allow the group to calculate its average score and determine the range of scores. CHAPTER 12 POWER, POLITICS, AND ETHICS CHAPTER LEARNING OBJECTIVES After reading Chapter 12, students should be able to: LO12.1 Define power and review the bases of individual power. LO12.2 Explain how people obtain power in organizations. LO12.3 Discuss the concept of empowerment. LO12.4 Review various influence tactics. LO12.5 Provide a profile of power seekers. LO12.6 Explain strategic contingencies and discuss how subunits obtain power. LO12.7 Define organizational politics and discuss its various forms. LO12.8 Define ethics and review the ethical dilemmas that managers and employees face. LO12.9 Define sexual harassment and discuss what organizations can do to prevent it and how they should respond to allegations. CHAPTER OUTLINE AND TEACHING NOTES What Is Power? Power is the capacity to influence others who are in a state of dependence. It is the capacity to influence the behaviour of others as it is not always perceived or exercised. This does not necessarily imply that a poor relationship exists between the power holder and the target, as most friendships involve reciprocal influence processes. Power can flow in any direction in an organization, although members at higher levels typically have more power than those at low levels. Power is a broad concept that applies to individuals as well as to groups. The Bases of Individual Power Power can be found in the position that you occupy in the organization or the resources that you are able to command. Legitimate power is dependent on one’s position or job. The other bases (reward, coercion, referent, and expert power) involve the control of important resources. Legitimate Power Legitimate power derives from a person’s position or job in the organization. It constitutes the organization’s judgment about who is formally permitted to influence whom and it is often called authority. When legitimate power works, it often does so because people have been socialized to accept its influence. Reward Power Reward power exists when a power holder can exert influence by providing positive outcomes and preventing negative outcomes. It corresponds to the concept of positive reinforcement. Reward power is often used to back up legitimate power, although any organizational member can attempt to influence others with rewards such as praise, compliments, and flattery. Coercive Power Coercive power is available when a power holder can exert influence by the use of punishment and threat. Like reward power, it is often used as a support for legitimate power. However, when mangers use coercive power, it is generally ineffective and can provoke considerable employee resistance. Referent Power Referent power exists when a power holder is well liked by others. It stems from identification with a power holder, rather than mere compliance to achieve rewards or avoid punishment. Also, referent power is available to everyone, since anyone in the organization may be well liked, irrespective of his or her other bases of power. Expert Power A person has expert power when he or she has special information or expertise that is valued by an organization. Expert power corresponds to the difficulty of replacement. The more crucial and unusual this expertise, the greater is the expert power available. Of all the bases of power, expertise is most consistently associated with employee effectiveness. Employees perceive women managers as more likely than male managers to be high in expert power. Coercion is likely to produce resistance and lack of cooperation. Legitimate power and reward power are likely to produce compliance with the boss’s wishes. Referent and expert power are most likely to generate true commitment and enthusiasm for the manager’s agenda. How Do People Obtain Power? People obtain power by doing the right things and cultivating the right people. Doing the Right Things Rosabeth Moss Kanter suggests that certain types of activities are “righter” and than others for obtaining power. Activities lead to power when they are extraordinary, highly visible, and relevant to the solution of organizational problems. Extraordinary Activities. Excellent performance in unusual or non-routine activities may be needed to attain power. Examples include occupying new positions, managing substantial changes, and taking great risks. Visible Activities. Those with an interest in power are especially good at identifying visible activities and publicizing them. If no one knows about one’s extraordinary activities they will not generate power. Relevant Activities. Work that is not seen as relevant to the solution of important organizational problems will not generate power. Activities must be relevant to the needs of the organization for power to accrue. Therefore, extraordinary and visible activities must be relevant to the solution of important organizational problems. Cultivating the Right People Developing informal relationships with the right people can prove a useful means of acquiring power. The right people can include outsiders, subordinates, peers, and superiors. Outsiders. Establishing good relationships with key people outside one’s organization can lead to increased power within the organization. Sometimes this power is merely a reflection of the status of the outsider. Other times organizational members may acquire more tangible sources of power such as critical information from outsiders that they can use to their advantage. Subordinates. Influence can be accrued by being closely identified with certain up-and-coming subordinates. As well, cultivating subordinate interests can provide power when a manager can demonstrate that he or she is backed by a cohesive team. Peers. Cultivating good relationships with peers is mainly a means of ensuring that nothing gets in the way of one’s future acquisition of power. As one moves up the ranks, favours can be asked of former associates. Superiors. Liaisons with key superiors probably represent the best way of obtaining power through cultivating others. Such superiors are often mentors or sponsors. Mentors can provide special information and useful introductions to other important people. Empowerment – Putting Power Where It Is Needed Empowerment involves giving people the authority, opportunity, and motivation to take initiative and solve organizational problems. People who are empowered have a strong sense of self-efficacy, the feeling that they are capable of doing their jobs well and “making things happen.” Empowering lower-level employees can be critical in service organizations, where providing customers with a good initial encounter or correcting any problems that develop can be essential for repeat business. Make sure that students appreciate the proper situations where empowering workers is appropriate. The description of Canada’s Delta Hotels (page 425) is a good example of how an organization uses empowerment to ensure excellent service and customer satisfaction. Empowerment can foster job satisfaction, organizational commitment, organizational citizenship behaviours, and high performance. Used properly, empowerment puts power where it is needed to make the organization effective which depends on organizational strategy and customer expectations. People are empowered, and should exhibit effective performance, when they have sufficient power to carry out their jobs. Excessive power can lead to abuse and ineffective performance. Influence Tactics – Putting Power to Work Influence tactics convert power into actual influence over others. They are specific behaviours that people use to affect others and manager others’ impressions of themselves. These tactics range from the overt to the covert and include: • Assertiveness—ordering, nagging, setting deadlines, and verbal confrontation. • Ingratiation—using flattery and acting friendly, polite, or humble. • Rationality—using logic, reason, planning, and compromise. • Exchange—doing favours or offering to trade favours. • Upward appeal—making formal or informal appeals to organizational superiors for intervention. • Coalition formation—seeking united support from other organizational members. Which tactics are used may be influenced by the power bases of the individual exercising power and who you are trying to influence. People report trying to use rationality very frequently. Subordinates are more likely to be the recipients of assertiveness than peers or superiors. Rationality is most likely to be directed toward superiors. Exchange, ingratiation, and upward appeal are favoured tactics for influencing both peers and subordinates. Men using rationality as an influence tactic receive better performance evaluations, earned more money, and experienced less work stress. A particularly ineffective influence style is a “shotgun” style that is high on all tactics with particular emphasis on assertiveness and exchange. Women who used ingratiation as an influence tactic received the highest performance evaluations from male managers. Who Wants Power? Although power has certain evil connotations, it can be used in a responsible and controlled manner. Need for power is the need to have strong influence over others. It is a reliable personality characteristic – some people have more n Pow than others and just as many women have high n Pow as men. When n Pow is responsible and controlled, the negative properties associated with it are not observed. David McClelland has studied the need for power and argues that the most effective managers: • have a high need for power; • use their power to achieve organizational goals; • adopt a participative or “coaching” leadership style; • are relatively unconcerned with how much others like them. Such managers are called institutional managers, because they use their power for the good of the institution rather than for self-aggrandizement. McClelland’s research reveals that institutional managers are more effective than personal power managers who use their power for personal gain, and affiliative managers, who are more concerned with being liked than with exercising power. Institutional managers are superior in giving subordinates a sense of responsibility, clarifying organizational priorities, and instilling team spirit. Thus, the need for power can be a useful asset, as long as it is not a neurotic expression of perceived weakness. Controlling Strategic Contingencies — How Subunits Obtain Power The term subunit applies to organizational departments. Subunit power is the degree of power held by various organizational subunits, such as departments. Organizational subunits acquire power by controlling strategic contingencies. Strategic contingencies are critical factors affecting organizational effectiveness that are controlled by a key subunit. In other words, the work performed by other subunits is contingent on the activities and performance of a key subunit. Again, we see the critical role of dependence in power relationships. Several conditions influence the ability to control strategic contingencies. Scarcity Differences in subunit power are likely to be magnified when resources become scarce. Subunits tend to acquire power when they are able to secure scarce resources that are important to the organization as a whole. Uncertainty Organizations do not like uncertainty so those subunits most capable of coping with uncertainty tend to acquire power. This is because these subunits are able to protect others from serious problems. Also, uncertainty promotes confusion which permits changes in power priorities as the organizational environment changes. Those functions that can provide the organization with greater control over what it finds problematic and can create more certainty will acquire more power. Centrality Subunits whose activities are more central to the mission or work flow of the organization acquire more power than those whose activities are more peripheral. These activities may affect the work of most other subunits, or the subunit may have an especially crucial impact on the quantity or quality of the organization’s key product or service. A subunit’s activities are more central when their impact is more immediate. Substitutability A subunit will have little power if others inside or outside of the organization can perform its activities. A subunit is more likely to acquire power if its activities cannot be performed by others inside or outside of the organization. Labour market conditions, the degree of technical training of the subunit’s employees, and the opportunity to contract work out affect substitutability. If work can be contracted out, the power of the subunit that usually performs these activities is reduced. Organizational Politics — Using and Abusing Power Not all uses of power constitute politics as described below. The Basics of Organizational Politics Organizational politics is the pursuit of self-interest in an organization, whether or not this self-interest corresponds to organizational goals. Political activity is self-conscious and intentional, may involve individuals or subunits, and it can have beneficial outcomes for the organization even though these outcomes are achieved by questionable tactics. Organizational politics can be illustrated using the means/ends matrix (see Exhibit 12.4 in text). It is the association between influence means and influence ends that determines whether activities are political and whether these activities benefit the organization. • I. Sanctioned means/sanctioned ends. Power is used routinely to pursue agreed upon goals. Accepted means of influence are employed to achieve accepted outcomes. • II. Sanctioned means/not-sanctioned ends. Acceptable means of influence are abused to pursue goals that are not approved by the organization. • III. Not-sanctioned means/sanctioned ends. Ends that are useful for the organization are pursued through questionable means. • IV. Not-sanctioned means/not-sanctioned ends. This is the most flagrant abuse of power. Disapproved tactics are used to pursue disapproved outcomes. Research on organizational politics has found that political activities occur under particular conditions or in particular locations in organizations as follows: • Most political maneuvering occurs at middle and upper management levels. • Subunits with clear goals and routine tasks might provoke less political activity than those with vague goals and complex tasks. • Some issues are more likely than others to stimulate political activity such as budget allocation, reorganization, and personnel changes. • In general, scarce resources, uncertainty, and important issues tend to provoke political behaviour. Highly political climates result in lowered job satisfaction, commitment, and organizational citizenship, and increased stress and turnover intentions. When it comes to performance, evidence indicates that politics take a toll on older workers but not younger workers, perhaps due to stress factors. The Facets of Political Skill Gerald Ferris and colleagues define political skill as “the ability to understand others at work and to use that knowledge to influence others to act in ways that enhance one’s personal or organizational objectives.” This definition includes two aspects—comprehending others and translating this comprehension into influence. Research by Ferris and colleagues indicates that there are four facets to political skill: • Social astuteness. Good politicians are careful observers who are tuned in to others’ needs and motives. They can “read” people and thus possess emotional intelligence. • Interpersonal influence. The politically skilled have a convincing and persuasive interpersonal style but employ it flexibly to meet the needs of the situation. They put others at ease. • Apparent sincerity. Influence attempts will be seen as manipulative unless they are accompanied by sincerity. A good politician comes across as genuine and exhibits high integrity. • Networking ability. Networking involves establishing good relations with key organizational members or outsiders to accomplish one’s goals. Networks provide a channel for favours to be asked for and given. An effective network enhances one’s organizational reputation, thus aiding influence attempts. Political skill, as measured by these four facets, is positively related to rated job performance. Also, more skilled politicians are less inclined to feel stressed in response to role conflict, evidently due to better coping. Networking is a critical aspect of power acquisition and political success and involves developing informal social contacts to enlist the cooperation of others when their support is necessary. Monica Forret and Thomas Dougherty determined that there are several aspects to networking: • Maintaining contacts—giving out business cards; sending gifts and thank you notes. • Socializing—playing golf; participating in company sports leagues; having drinks after work. • Engaging in professional activities—giving a workshop; accepting a speaking engagement; teaching; publishing; appearing in the media. • Participating in community activities—being active in civic groups, clubs, and church events. • Increasing internal visibility—accepting high-profile work projects; sitting on important committees and task forces. Those high in self-esteem and extraversion are more likely to engage in networking behaviours. Engaging in professional activities and increasing internal visibility are most associated with career success but only for men despite the fact that men and women engaged in networking equally, except for socializing, where men had the edge. Being central in a large network provides power because you have access to considerable resources, such as knowledge. This is especially true if the network is diverse and consists of those who themselves hold power. Machiavellianism—The Harder Side of Politics Machiavellianism is a set of cynical beliefs about human nature, morality, and the permissibility of using various tactics to achieve one’s ends. It is a stable personality trait. High Machs are convincing liars and are skillful manipulators who assume that others are gullible. They act in an exceedingly practical manner, assuming that the ends justify the means. High Machs are likely to be enthusiastic organizational politicians. High Machs are cool and calculating rather than emotional and are able to insulate themselves from the negative social consequences of their tactics. They are able to identify situations in which their favoured tactics will work. The ideal situation for a high Mach has the following characteristics: • The high Mach can deal with those to be influenced face-to-face. • The interaction occurs under fairly emotional circumstances. • The situation is fairly unstructured, with few guidelines for appropriate forms of interaction. In combination, these characteristics reveal a situation in which the high Mach can use his or her tactics because emotion distracts others. High Machs are especially skilled at getting their way when power vacuums or novel situations confront a group, department, or organization. Although they sometimes get their own way, high Machs are unlikely to be high performers and are inclined toward counterproductive behavours such as sabotage and theft. Defensiveness—Reactive Politics Defensiveness is a form of political behaviour that is reactive and seeks to protect self-interest. The goal is to reduce threats to one’s own power by avoiding actions that do not suit one’s own political agenda or avoiding blame for events that might threaten one’s political capital. Astute organizational politicians are aware that sometimes the best action to take is no action at all. Such avoiding actions include: • Stalling. Moving slowly when someone asks for your cooperation is the most obvious way of avoiding taking action without actually saying no. • Overconforming. Sticking to the strict letter of your job description or to organizational regulations is a common way to avoid action. • Buck passing. Having someone else take action is an effective way to avoid doing it yourself. Another set of defensive behaviours is avoiding blame for consequences. These behaviours include: • Buffing. Buffing is the tactic of carefully documenting information showing that an appropriate course of action was followed. • Scapegoating. . Blaming others when things go wrong is classic political behaviour. Although these tactics are quite mundane, viewing them in context illustrates the sometimes subtle way that individuals pursue self-interest in organizations. Ethics in Organizations Ethics can be defined as systematic thinking about the moral consequences of decisions. These moral consequences pertain to the outcomes or potential harm of a decision for any stakeholders. Stakeholders are people inside or outside of an organization who have the potential to be affected by organizational decisions. Research shows that managers overwhelmingly agree that unethical practices occur in business. Many report pressure to compromise their own ethical standards when making decisions, but most feel that they have higher ethical standards than others. Top managers tend to see their organizations as being more ethical than do those lower in the hierarchy. Research also shows that among business students, undergraduates have been found to be more ethical than MBA students. Women have been found to be marginally more ethical than men and older people are marginally more ethical than the young. The Nature of Ethical Dilemmas The results of a Conference Board study of corporate codes of business ethics indicate the extent to which various issues are covered for the firms' own employees, its suppliers, and its joint venture partners. Contractual and legally mandated issues find the most consensus (e.g., bribery, conflict of interest, proprietary information). The important but more subjective matters at the bottom of the list in Exhibit 12.6 (page 438 of the text) are less likely to be addressed. Ethical issues are often occupationally specific. However, common themes that run through ethical issues faced by managers include: • Honest communication. Evaluate subordinates candidly; advertise and label honestly; do not slant proposals to senior management. • Fair treatment. Pay equitably; respect the sealed bid process; do not give preference to suppliers with political connections; do not use lower-level people as scapegoats. • Special consideration. The “fair treatment” standard can be modified for special cases, such as helping out a long-time employee, giving preference to hiring the disabled, or giving business to a loyal but troubled supplier. • Fair competition. Avoid bribes and kickbacks to obtain business; do not fix prices with competitors. • Responsibility to organization. Act for the good of the organization as a whole, not for self-interest; avoid waste and inefficiency. • Corporate social responsibility. Do not pollute; think about the community impact of plant closures; show concern for employee health and safety. • Respect for law. Legally avoid taxes, do not evade them; do not bribe government inspectors; follow the letter and spirit of labour laws. Causes of Unethical Behaviour Knowing the causes of unethical behavour can aid in its prevention. The causes of unethical behaviour include the potential for gain, role conflict, strong organizational identification, too much or too little competition, personality, and an organizational culture that rewards or condones questionable ethics. Gain. Temptation plays an important role in unethical activity. The anticipation of healthy reinforcement for following an unethical course of action, especially if no punishment is expected, should promote unethical decisions. A good example is compensation systems designed around very high bonuses. Role Conflict. Many ethical dilemmas that occur in organizations are actually forms of role conflict that get resolved in an unethical way. A common form of role conflict that provokes unethical behaviour occurs when our “bureaucratic” role as an organizational employee is at odds with our role as the member of a profession. Reward systems often heighten the conflict when there is a conflict of interest between self and client. Strong Organizational Identification. Employees who identify very strongly with their organization might engage in unethical activities to “help” the organization. Strong identifiers are most likely to do this when they expect their “loyalty” will be reciprocated with favours. Competition. Stiff competition for scarce resources and the absence of competition can stimulate unethical behaviour. There is also the temptation to make unethical decisions in situations where no competition exists. Personality. The cynical and those with external locus of control are less tuned to ethical matters. People with a high need for power may be prone to make unethical decisions, using their power to further self-interest rather then for the good of the organization. People with strong economic values are also more likely to behave unethically. Research shows that less disengagement and more attentiveness with regard to moral issues is associated with more ethical behaviour. Organizational and Industry Culture. Aspects of an organization’s culture (and its subcultures) can influence ethics. The ethical values of a given organization are often shaped by how the behaviour of highly visible role models is rewarded. If the models are rewarded for unethical behaviour, rather than punished, the development of an unethical culture is likely. It is the combination of factors that lead to an unethical corporate culture. Codes of ethics that are specific, tied to the actual business being done, correspond to the reward system, and are rigorously enforced should bolster an ethical culture. Whistle-blowing Whistle-blowing occurs when a current or former organizational member discloses illegitimate practices to some person or organization that might be able to take action to correct these practices. The whistle might be blown either inside or outside of the offending organization, depending on the circumstances. Most organizations seem to rely on vague open door policies rather than having specific channels and procedures for whistle-blowers to follow (see Exhibit 12.6 on page 438 of the text). People with power rarely blow the whistle. Sexual Harassment – When Power and Ethics Collide Sexual harassment is near the top of the list of ethical concerns. Sexual harassment is a form of unethical behaviour that stems, in part, from the abuse of power and the perpetuation of a gender power imbalance in the workplace. Managers who use their position, reward, and coercive power to request sexual favours or demonstrate verbal or physical conduct of a sexual nature as a condition of employment or as a basis for employment decisions toward those in less powerful positions are abusing their power and acting in an unethical manner. While the most severe forms of sexual harassment are committed by supervisors, the most frequent perpetrators are actually co-workers. Whether the harasser is a supervisor or a co-worker, he/she is likely to be more powerful than the person being harassed, and the most vulnerable victims are those who cannot lose their jobs. Sexual harassment is also prevalent in hostile work environments that perpetuate the societal power imbalance between men and women. Incidents of harassment and organizational inaction to complaints of harassment are more likely in male-dominated industries and organizations. Clients and customers can also engage in harassment. Research has found that minority women are more likely to be harassed and harassment is more likely to be experienced by women who exhibit traditionally masculine personality traits such as independence, assertiveness, and dominance. Thus, the motive is punishment for gender role “deviance” rather than sexual desire. Many organizations are slow to react to complaints of sexual harassment. This phenomenon has been labelled the “deaf ear syndrome” which refers to the “the inaction or complacency of organizations in the face of charges of sexual harassment.” The three main reasons that organizations don’t respond are inadequate organizational policies and procedures for managing harassment complaints; defensive managerial reactions; and organizational features that contribute to inertial tendencies. Organizations can effectively deal with allegations of sexual harassment and increase their responsiveness by taking a number of important measures: • Examine the characteristics of deaf ear organizations. • Foster management support and education. • Stay vigilant. • Take immediate action. • Create a state-of-the art policy. • Establish clear reporting procedures. In general, organizations that are responsive to complaints of sexual harassment have top management support and commitment, comprehensive education and training programs, continuously monitor the work environment, respond to complaints in a thorough and timely manner, and have clear policies and reporting procedures. Employing Ethical Guidelines Some simple guidelines should help in the ethical screening of decisions. The point is to think seriously about the moral implications of your decisions before you make them. • Identify the stakeholders that will be affected by the decision. • Identify the costs and benefits of various alternatives to these stakeholders. • Consider the relevant moral expectations that surround a particular decision. • Be familiar with the common ethical dilemmas in your specific role or profession. • Discuss ethical matters with decision stakeholders and others. • Convert your ethical judgments into appropriate action. These guidelines should enable one to recognize ethical issues, make ethical judgments, and then convert these judgments into behaviour. Training and education in ethics have become popular in North American organizations and can have a positive impact on ethical attitudes. A TEACHING TIP As an innovative group assignment or class activity for Chapter 12, you might consider having students write a short dramatic play illustrating some aspects of power, politics, or ethics in organizations. The subject matter of Chapter 12 is especially conducive to a playwriting assignment, although it might work well with other chapters that deal with groups and organizational processes. In most cases, the plays will be fictional. However, a particular student might have experienced a real incident that can be dramatized. Alternatively, some students might wish to develop a play based on a real event that they have read about. To add real spice to your class, have the students act out the plays wearing clothing appropriate to the roles they have devised. Have the class analyze the concepts illustrated after each play is completed. Then have the playwrights give a three-minute lecture describing the points they were trying to make. This assignment works best when the plays are written by groups of about five students. They should be encouraged to limit the characters in the play to three persons. The “hams” in the group can also be the actors. The plays should be kept short (about five minutes) and be preceded by a prologue to be read to the class that describes the organizational setting, the jobs of the characters, and so on. The students may wish to use cue cards, but they should be encouraged to rehearse before the “big performance.” Be sure to insist that the plays illustrate several concepts from the chapter. This will guarantee that an interesting and amusing assignment is also highly instructive. Perhaps you might give a prize (the OBEE AWARD?) for the best performance! Instructor Manual for Organizational Behaviour: Understanding and Managing Life at Work Gary Johns, Alan M. Saks 9780133347500, 9780133951622
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