Category Archives: Decision Making
Handle with Care: Ensuring That Downsizing Decisions are Made for the Right Reasons (IO Psychology)
Among the many personnel-related processes that organizations engage in, downsizing is undoubtedly one of the most dreaded by everyone involved. The employees themselves who lose their jobs often face financial hardships, while the employees who remain employed by the organization may face an increased workload and pressure from management during the transition. Although it is clear that downsizing is an important process that can have major impacts on many people, research in I-O psychology has generally neglected to study the way in which downsizing decisions are actually made (i.e. how it is determined which employees will stay and which will be let go). However, a new study by Dale Dwyer and Morgan Arbelo has begun to shed some light on this area.
Using a mixed sample of both MBA students and human resource professionals, the authors instructed participants to read 25 hypothetical employee profiles, and then asked each participant to choose the 5 employees that they would select to lay off. Participants were also asked why they would choose to lay off the employees they selected. The authors were interested in the criteria that participants would use to make their downsizing decisions; would they choose employees based on objective, job-relevant criteria, such as performance ratings and absenteeism records, or would they base their choices on personal characteristics, such as the gender or race of the employee?
In general, the authors found that demographic characteristics were quite influential in making downsizing decisions. Specifically, older and minority employees were more likely to be laid off than younger or non-minority employees; in addition, participant demographic characteristics (e.g. age, sex, and race of the research participant) had an influence on downsizing decisions. Unfortunately, downsizing decisions did not appear to be impacted by performance ratings at all; lower-performing employees were no more likely to be laid off than high-performing employees.
In all, the findings of this study suggest that there may be substantial opportunities for I-O practitioners to influence the way in which downsizing decisions are made. Specifically, practitioners might emphasize that individuals in organizations who are making downsizing decisions should focus on job-relevant criteria, to avoid both poor downsizing decisions and possible legal challenges.
Why directors choose to quit (Human Resource Management)
Do you think it would be helpful to know if one of your directors serving on a board was about to leave? If so, pay attention. According to a recent study, prestige, the ability to have influence over others, and identification with the director role decrease the chance of a director leaving a large firm, while the extent of the time commitment increases the chances of a director leaving. Since an ounce of prevention is worth a pound of cure, it may be prudent to keep an eye on these variables in order to anticipate and execute succession planning of board members.
Email Etiquette: The Unwritten Rules We Follow
Topic: Culture, Decision Making
Publication: Administrative Science Quarterly (SEP 2012)
Article: Appeasing Equals: Lateral Deference in Organizational Communication
Authors: Alison R. Fragale, John J. Sumanth, Larissa Z. Tiedens, and Gregory B. Northcraft
Reviewed By: Susan Rosengarten
Lets face it. We’re all addicted to checking our email. How many of us can go more than a day or two without succumbing to the suspicion that we’ve received some highly critical, time-sensitive message in our inbox that requires our immediate attention? Writing emails has become so routine for many of us that sometimes it seems like our fingers automatically start typing before our brain gets a chance to catch up and tell us what to write.
A recent study by Fragale et al. (2012) found that our thought processes in composing and responding to emails are a bit more complicated than meets the eye. One might think it intuitive that employees would use deferential language in their correspondence to those above them in their companies’ organizational hierarchies. We want to appease our superiors and show them that we recognize our place below them within our companies’ social structure. Surprisingly enough though, the authors found that deferential email language is most often used in communication “among equals,” or between peers of equal or similar rank within their organization. They also found that patterns of deferential language were moderated by individuals’ concern for their status positions.
Rank indicators like job titles and physical workspaces serve to clarify organizational roles and elucidate the power relationship between superiors and their subordinates. Deferential communication becomes especially important among peers of the same rank, who are most likely to see each other as a threat to their advancement within the organization and are more sensitive to perceived cues of status competition. Bet you never thought the cognitive processes involved in “shooting” someone an email could be quite so complex, huh?
human resource management, organizational industrial psychology, organizational management
Using data to make smart decisions: 1 + 1 = It’s Not That Simple
Topic: Business Strategy, Decision Making, Evidence Based Management, Statistics
Publication: Harvard Business Review (APR 2012)
Article: Good Data Won’t Guarantee Good Decisions
Authors: S. Shah, A. Horne, and J. Capellá
Reviewed By: Megan Leasher
When we were in grade school, we learned that 1 + 1 = 2. We quickly realized and celebrated the immediate success in figuring out what came after the equal sign. This celebration built faith; blind faith that we should always believe in the result of an analysis.
But in business, it’s not quite so simple. We should not automatically rejoice in what we see after an equal sign, because we need to judge what went into the numbers in the first place. This concept is the focus of a study conducted by the Corporate Executive Board, which classified 5,000 employees at 22 global companies into one of three categories: Those who always trust analysis over judgment, those who always rely on their gut, and those who balance analysis and judgment together. The Board advocates the latter “balanced” group, as their research found that this group demonstrated higher productivity, effectiveness, market-share growth, and engagement than those in the other two groups. However, the Board also found that only 38% of employees and 50% of senior executives fell into this “balanced” group. Taken together, their findings advocate cultivating both analysis and judgment in decision-making at all levels of organizations.
The authors present several ideas as to how organizations can begin to make a shift toward a culture of applying appropriate insight and judgment to their data analysis. First and foremost, they argue that data must be made accessible and presented in usable formats that enable analysis. A dual-focus must be placed on the both the data and the judgment; increase data literacy and statistical expertise while simultaneously training employees how to correctly use the data, encouraging both dialogue and dissent throughout the interpretation.
But this is easier said than done. You have to know what to trust and distrust in data. You have to learn if and how metrics support the strategy and growth of an organization. You have to learn what types of caveats and error can be found within the data. You have to learn how the data was collected, what might be wrong with the collection process, and what important information might have been ignored. You have to know how to interpret and proceed when you find that multiple metrics of performance are giving you competing answers; not all data play nice with each other. You have to know what data is worth analyzing and what data should be abandoned altogether. Sometimes running away screaming is the appropriate response.
Analysis isn’t just about writing a formula and clicking “run” or “execute” to crunch the numbers. After all, data without method is just numbers in columns and rows. It’s about a series of critical, incremental, and ethical judgment calls before and after each iteration within an analysis. Some of the judgment calls come from understanding the content and context of the data, some come from a grounding in organizational and industry knowledge, and some come from an understanding of the past, present, and future strategy of the organization. And yes, some judgment calls come from pure statistical knowledge. The true expertise comes from a constant interplay and interdependence of all of these factors.
Regardless of the challenges presented, the authors are clear that decisions should never be made by data or one’s gut alone; analysis is critical, but so is applying corresponding judgment.
human resource management, organizational industrial psychology, organizational management
My Ideas are an Extension of Me: Why Individuals Embrace or Resist Feedback (IO Psychology)
Topic: Decision Making, Change Management
Publication: Organizational Behavior and Human Decision Processes (MAY 2012)
Article: Blind in one eye: How psychological ownership of ideas affects the types of suggestions people adopt
Authors: M. Baer, G. Brown
Reviewed by: Kecia Bingham
Remember that time your polite suggestion to your loving partner on how he/she could pare down their “funny story” was met with an exaggerated eye roll? Or perhaps there was a time you suggested to your partner that he/she add a certain ingredient to their signature recipe and to your surprise they did. This study sought to understand why people at times seem open to feedback, while at other times seem to resist it. The authors proposed that psychological ownership (feeling a material or non-material object, such as an idea, is yours and is part of your extended self) and the nature of the change attempt determines how people respond to suggestions for change.
While most research focuses on the benefits of psychological ownership and encourages it, results across two studies in this article indicate that ownership can have both positive and negative implications for change. Specifically, participants who felt strong ownership of their ideas were more likely to adopt additive change (suggestions that built upon his/her idea) and less likely to adopt subtractive change (suggestions that eliminate aspects of his/her idea) compared to those who felt limited ownership of their ideas. The authors reasoned that additive change builds upon our ideas so people with strong psychological ownership were willing to adopt such changes for personal growth. In contrast, individuals with limited ownership tend to be less invested in their ideas and would not view additive change as a way of enhancing themselves. As expected, since subtractive change takes away from what individuals have attached themselves to, people with strong ownership in these situations experienced a greater sense of personal loss compared to participants with limited ownership. Results also indicated that personal loss was positively related to negative affect (e.g., being upset or frustrated), such that when feelings of personal loss were high, negative affect was also high. This finding is compelling since participants with high negative affect were less likely to adopt others’ suggestions for change. In sum, when people with psychological ownership of their ideas were presented with feedback that diminished their ideas, they were more likely to experience a sense of personal loss which then elicited elevated levels of negative emotions and reduced their adoption of subtractive changes. However, the reverse was true when participants with strong ownership were presented with feedback that enhanced their ideas.
Results imply that individuals with strong psychological ownership may selectively adopt feedback so that they are blind to suggestions that diminish parts of their idea, while being receptive to feedback that builds upon their idea regardless of the quality and usefulness of the feedback. To encourage collaboration and innovation the authors suggest organizations encourage collective vs. individual ownership of ideas and train employees on how to use techniques that foster a culture of openness and agreement (e.g., agree, accept, and add).
human resource management, organizational industrial psychology, organizational management
Big Decision? Take some time to think about it (IO Psychology)
Topic: Decision Making, Ethics
Publication: Academy of Management Journal (FEB 2012)
Article: Contemplation and conversation: Subtle influences on moral decision making
Authors: Gunia, B. C., Wang, L., Huang, L., Wang, J., & Murninghan, J. K.
Reviewed By: Katie Bachman
In the workplace, important decisions can hinge on the ethical strength of your decision makers. It may be more profitable to make an unethical or self-interested choice, but long term consequences can be dire (I’m lookin’ at you, Wall Street). When it comes to choosing between right and wrong, it is sad to think how easily employees can be swayed. Good news! It works the other way too! You can encourage your employees to make more ethical decisions with just a couple of simple actions. How? Oh, let me tell you!
In an experiment measuring how often individuals would be tell the truth about money (a jackpot to be split between the two of them), participants were more likely to tell the truth about the amount of money to be split if they had some extra time to think about it (contemplation) or if they talked to someone who suggested they make the moral choice (conversation). Take note—they could be swayed to lie if they were encouraged to do so as well, but the relationship was stronger for the positive. Now, isn’t that nice?
So, in this experiment, the choices were pretty clear–tell the truth or tell a lie. If only everything were that easy! For us folks living in the real world, lines tend to be fuzzier, but the bottom line still holds. When faced with a decision, time to think and talking to someone on the high road can help us make more ethically sound decisions.
human resource management, organizational industrial psychology, organizational management
Teams Behaving Badly: A Combination of the People and the Environment
Topic: Ethics, Teams, Decision Making
Publication: Journal of Applied Psychology (MAR 2011)
Article: Thick as Thieves: The Effects of Ethical Orientation and Psychological
Safety on Unethical Team Behavior
Authors: M.J. Pearsall & A.P. Ellis
Reviewed By: Ben Sher
Individuals faced with ethical dilemmas are always free to choose between their perceptions of right and wrong. But some situations are more complicated than that. What happens when an entire team must collectively decide what to do? What factors might sway the group decision in favor of acting unethically? According to research by Pearsall and Ellis (2011), certain types of groups are more prone to ethical violations than others.
The authors first distinguish between two common attitudes people may have:
utilitarianism and formalism. Utilitarianism is when a person tends to make decisions by only focusing on possible outcomes and striving to maximize benefits. Formalism is when a person makes decisions while trying to stay within the guidelines of specific rules and regulations.
After conducting an experiment in which work groups were presented with an
opportunity to cheat on a self-scored evaluation, the authors found that groups whose members had a high level of utilitarianism were more likely to cheat than groups whose members do not espouse a high level of utilitarianism. Groups whose members espoused formalism cheated less than groups whose members did not espouse formalism, although this effect was not as strong as predicted.
Even among groups whose members had a high level of utilitarianism, some groups were more likely than others to act on it. The determining factor was psychological safety, which is the extent to which group members believe that they will not be punished for making suggestions that seem out of the box or risky. On teams that have a high level of psychological safety, unethical people feel free to suggest solutions that may compromise ethics, without fear that the group will chastise or look down upon them. On these teams, utilitarianism is more likely to lead to actual ethics violations.
So if utilitarian-minded people and psychological safety lead to unethical behavior, does that mean they are bad? Not necessarily. In fact, utilitarian people are known for their innovation and can be quite valuable on teams. Likewise, psychological safety is something that organizations strive to increase in order to foster idea-generation and creativity. So what can organizations do to curb ethics violations? One solution is for managers to practice ethical leadership. The authors explain that this might influence followers to uphold ethics standards, even when utilitarian-minded people exist in a psychologically safe environment. And while it may be impractical to completely avoid situations that encourage ethics violations, identifying when they are most likely to occur is the first step in reducing their frequency.
human resource management,organizational industrial psychology, organizational management
Organizational Culture: Attracting Job Applicants by Advertising the “Softer Side”
Topic: Culture, Recruiting, Gender
Publication: Journal of Business and Psychology (WINTER 2010)
Article: The impact of organizational culture on attraction and recruitment of job applicants
Authors: D. Catanzaro, H. Moore, T.R. Marshall
Reviewed By: Rebecca Eckart
As top talent becomes sparse but human capital continues to be a chief competitive advantage, the ability to recruit highly skilled applicants is paramount. Additionally, modern organizations have the added hurdle of attracting job applicants that also fit well with the values of the organization. Organizational culture is typically described as the collective set of values and norms shared by members of an organization. Recently, researchers have started to categorize organizational cultures as either being “supportive” or “competitive” in nature. Supportive cultures value collaboration, equality, supportiveness, and work-life balance, whereas organizations with a competitive culture typically value individualism, ambition, rewards, and a focus on one’s career.
In a recent study, Catanzaro, Moore, and Marshall (2010) examined how beliefs about the organization’s culture impacts male and female applicants’ job pursuit, organizational preference, and organizational choice. They found that both men and women would rather pursue a job with a supportive organization, even if that meant accepting less compensation. However, when presented with a job in a competitive organizational culture, men are more likely than women to pursue the job.
Minority Opinions: A Vital Role in Team Success
Topic: Teams, Decision Making
Publication: Journal of Applied Psychology (SEP 2010)
Article: A Multilevel Model of Minority Opinion Expression and Team Decision-Making Effectiveness
Authors: G. Park, R.P. DeShon
Reviewed By: Ben Sher
Pop quiz, hot shot. There’s a meeting in a conference room. Your team seems to reach quick consensus, but with a flash of independent thought, you see through the group’s flawed logic and are baffled by their oversights. You must now decide if you should rock the boat and voice your minority opinion. What do you do?
According to recent research by Park and DeShon (2010), the decision should be clear: Minority opinions are vital to team success, and they must be expressed. Similar to Janis (1982) who explained how groupthink can lead to catastrophe, these authors present a roadmap to team success that centers around minority opinion holders’ confidence to speak up and influence the group.
The authors propose a model which they support through a study that included 180 participants who worked in teams on a task that mimicked airport security luggage inspection. Team dynamics and decision-making processes were observed and recorded, and participants provided several self-reports of their attitudes. The authors found that their model accurately portrays how minority opinions can contribute to team success.
Here’s how it works. First, teams need to be “learning goal oriented”. This means team members believe that lots of communication, exploring alternatives, and sometimes making mistakes, will ultimately lead to greater clarity and better decisions. This open atmosphere makes minority opinion holders more confident and more likely to speak up.
A Fresh Look at Strategy
Topic: Decision Making, Judgement
Publication: Harvard Business Review (MAR 2010)
Article: Finding your strategy in the new landscape
Authors: P. Ghemawat
Reviewed By: Liz Brashier
In light of the continuing recession – an aftermath of the still recent 2008 crash – it seems appropriate to discuss corporate strategy. Companies have a lot to prepare for, rather than look forward to, in the coming decade. Some will react to weak growth and rising capital by retreating to the home market, using the word “global” to reference “economic slowdown” rather than true globalization. This reaction, however, could be a poor decision for firms that are based outside of the developed world. With low per capita incomes in developing countries, there is room for significant growth. Regardless of company location, it is imperative for managers to reevaluate strategy if they are to pursue a global strategy.
The first element of the global strategy described in Pankaj Ghemawat’s article is competition. While views on global strategies have centered around an idea of integrating markets, a shift to managing differences and adapting to local conditions is key. Resource allocation processes must change; companies cannot afford to invest in long-term payoffs on investments, and need to be more selective in making investments.
The second element is markets and products. A shift in customer targeting would allow companies to reach a broader market, and move to an economy that was previously unreached (i.e., moving a company that typically markets to the suburbs into urban areas could prove successful in expanding customer base).
