Organizational Theory & Behavior Study Guide
Index
Pgs 2-34 - Reframing Organizations
Pgs 34-39 – Judgment and Managerial Decision Making
Pgs 39-40 – Attribution Theory
Pgs 40-42 - Promise and Peril of Pay-For-Performance
Pgs 43- 45 – Learning to Fail Intelligently
Pg 45 – Actionable Feedback
Reframing Organizations – Bolman & Deal
Chapter 1- Introduction
Virtues & Drawbacks of Organizations:
 Prevalence of large, complex organizations is historically recent
 Much of society’s important work is done in or by organizations, but…
 They often produce poor service, defective or dangerous products and…
 Too often they exploit people and communities, and damage the environment
Signs of Cluelessness:
 Management errors produces 100s of bankruptcies of public companies every
year
 Most mergers fail, but companies keep on merging
 One study estimates 50 to 75% of American managers are incompetent
 Most change initiatives produce little change; some makes things worse
Strategies to Improve Organizations:
 Better management
 Consultants
 Government policy and regulation
What is a Frame?
 Mental map to read and negotiate a “territory”
 The better the map, the easier it is to know where you are and get around (a
map of New York won’t help in San Francisco)
 Frame as window: enables you to see some things, but not others
 Frame as tool: effectiveness depends on choosing the right tool and knowing
how to use it
Structural Frame:
 Roots: sociology, management science
 Key concepts: goals, roles (division of labor), formal relationships
 Central focus: alignment of structure with goals and environment
 Metaphor for organization : Factory or machine
 Central Concepts: Rules, roles, goals, policies, technology,
environment
 Image of Leadership: Social architecture
 Basic Leadership Challenge: Align structure to task technology,
environment
Human Resource Frame:
 Roots: personality and social psychology
 Key concepts: needs (motives), capacities (skills), feelings
 Central focus: fit between individual and organization
 Metaphor for organization: Family
 Central concepts: needs, skills, relationships
Political Frame:
 Roots: political science
 Key concepts: interests, conflict, power, scarce resources
 Central focus: getting and using power, managing conflict to get things done
 Metaphor for organization: Jungle
 Central Concepts: Power, conflict, competition, organizational politics
 Image of Leadership: Advocacy
 Basic Leadership Challenge: Develop agenda and power base
Symbolic Frame:
 Roots: social and cultural anthropology
 Key concepts: culture, myth, ritual, story,
 Central focus: building culture, staging organizational drama
 Metaphor for organization: Carnival, temple, theater
 Central Concepts: Culture, meaning, ritual, ceremony, stories, heroes
 Image of Leadership: Inspiration
 Basic Leadership Challenge: Create faith, beauty, meaning
Expanding Managerial Thinking
Traditional management thinking Artistic thinking
See only one or two frames
Holistic, multi-frame perspective
Try to solve all problems with
logic, structure
Rich palette of options
Seek certainty, control, avoid
ambiguity, paradox
Develop creativity, playfulness
One right answer, one best way
Principled flexibility
Conclusions from Chapter 1:
 Narrow thinking leads to clueless managers
 Multiple frames improve understanding, promote versatility
 Multiple frames enabling reframing: viewing the same thing from multiple
perspectives
Chapter 2 - Simple Ideas, Complex Organizations (refer to Learning to Fail Intelligently
article)
Properties of Organizations:
 Organizations are complex
 Organizations are surprising
 Organizations are deceptive
 Organizations are ambiguous
Sources of Ambiguity:
 Not sure what the problem is
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Not sure what’s going on
Not sure (or can’t agree) on what we want
Don’t have the resources we need
Not sure who’s supposed to do what
Not sure how to get what we want
Not sure how to know if we succeed or fail
Organizational Learning
Peter Senge-We learn best from experience, but often don’t know consequences of our
actions. Systems Maps
Barry Oshry-Asymmetric relationships (top-middle-bottom-customer)—“Dance of blind
reflex”
Short-term
Strategy
Short-term
gains
Long-term
costs
Delay
Argyris and Schon:
-actions to promote learning actually inhibit it
-defenses: avoid sensitive issues, tiptoe around taboos
Coping with Ambiguity and Complexity:
-what you see what you expect—and what you want
-conserve or change?
 Advantages of relying on existing frames and routines
 Protect investment in learning them
 They make it easier to understand what’s happening and what to do about
it
 …but we may misread the situation, take the wrong action, and fail to
learn from our errors
 Change requires time and energy for learning new approaches but is necessary to
developing new skills and capacities
Common fallacies in Organizational Diagnosis
 Blame people
 Bad attitudes, abrasive personalities, neurotic tendencies, stupidity or
incompetence
 Blame the bureaucracy
 Organization stifled by rules and red tape
 Thirst for power
 Organizations are jungles filled with predators and prey
Conclusion
 Complexity, surprise, deception and ambiguity make organizations hard to
understand and manage
 Narrow frames become rigid fallacies, blocking learning and effectiveness
 Better ideas and multiple perspectives enhance flexibility and effectiveness
Chapter 3 – Getting Organized
Structural Assumptions
 Achieve established goals and objectives
 Increase efficiency and performance via specialization and division of labor
 Appropriate forms of coordination and control
 Organizations work best when rationality prevails
 Structure must align with circumstances
 Problems arise from structural deficiencies
Origins of the Structural Perspective
 Frederick Taylor – Scientific Management
 Efficiency, time and motion studies, etc.
 Max Weber – Bureaucracy
 Fixed division of labor
 Hierarchy of offices
 Performance rules
 Separate personal and official property and rights
 Personnel selected for technical qualifications
 Employment as primary occupation
Structural Forms and Functions
 Blueprint for expectations and exchanges among internal and external players
 Design options are almost infinite
 Design needs to fit circumstances
Basic Structural Tensions
 Differentiation: dividing work, division of labor
 Integration: coordinating efforts of different roles and units
 Criteria for differentiation: function, time, product, customer, place, process
 Sub-optimization: units focus on local concerns, lose sight of big picture
Vertical Coordination
 Authority (the boss makes the decision)
 Rules and policies
 Planning and control systems
 Performance control (focus on results) vs. action planning (focus on
process
Lateral Coordination
 Meetings
 Task Forces
 Coordinating Roles
 Matrix Structures
 Networks
 Strengths and Weaknesses of Lateral Strategies
McDonald’s and Harvard: A Structural Odd Couple
 McDonald’s: clearer goals, more centralized, tighter performance controls
 Harvard: diffuse goals, highly decentralized, high autonomy for professors
 Why have two successful organizations developed such different structures?
Structural Imperatives
 Size and Age
 Core Process
 Environment
 Strategy and Goals
 Information Technology
 People: Nature of Workforce
 The case of Citibank
Conclusion
 Structural frame – examine social context of work
 Differentiation and integration
 Structure depends on situation
 Simpler more stable  simpler, more hierarchical and centralized
structure
 Changing, turbulent environments  more complex, flexible
structure
Chapter 4 – Organizing Groups and Teams
Tasks and Linkages in Small Groups
 Structural Options
 Situational Variables Influencing Structure
 What are we trying to accomplish?
 What needs to be done?
 Who should do what?
 How should we make decisions?
 Who is in charge?
 How do we coordinate efforts?
 What do individuals care about most?
 What are special skill and talents?
 What is the relationship?
 How will we determine success?
 Basic Structural Configurations (Shown in the following figures)
 One Boss
 Dual Authority
 Simple Hierarchy
 Circle
 All Channel
Figure 5-1: One Boss
Figure 5- 2: Dual Authority
Figure 5-3: Simple Hierarchy
Figure 5-4: Circle
Figure 5-5 All-Channel
Teamwork and Interdependence
 Baseball
 Football
 Basketball
Determinants of Successful Teamwork
 Determining an appropriate structural design
 Nature and degree of task interaction
 Geographic distribution of members
 Where is autonomy needed, given the team’s goals and objectives?
 Should structure be conglomerate, mechanistic, or organic?
 Task of management:
 fill out line-up card
 prepare game plan
 Influence flow
Team Structure and Top Performance
 Six distinguishing characteristics of high-performing teams
 Shape purpose in light of demand or opportunity
 Specific, measurable goals
 Manageable size
 Right mix of expertise
 Common commitment
 Collectively accountable
Saturn: The Story Behind the Story
 Quality, Consumer Satisfaction, Customer Loyalty
 Employees granted authority
 Assembly done by teams – Wisdom of Teams
 Group Accountability
Conclusion
 Every group evolves a structure, but not always one that fits task and
circumstances
 Hierarchy, top-down tend to work for simple, stable tasks
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When task or environment is more complex, structure needs to adapt
Sports images provide a metaphor for structural options
Vary the structure in response to change
Few groups flawless members; the right structure can make optimal use of
available resources
Chapter 6 - People and Organizations
Human Resource Assumptions
 Organizations exist to serve human needs
 People and organizations need each other
 When the fit between individual and system is poor, one or both suffer
 A good fit benefits both
Human Needs
 The concept of “need” is controversial
 Economists: people’s willingness to trade dissimilar items disproves
usefulness of concept
 Psychologists: need, or motive is a useful way to talk enduring preferences
for some experiences compared to others
 Needs are a product of both nature and nurture
 Genes determine initial trajectory
 Experience and learning profoundly influence preferences
Maslow’s Need Hierarchy
 Needs arrayed in a hierarchy
 Lower needs are “pre-potent”
 Higher needs become more important after lower are satisfied
 Maslow’s hierarchy:
 Self-actualization
 Esteem
 Belongingness, love
 Safety
 Physiological
McGregor’s Theory X and Theory Y
 Theory X
 Workers are passive and lazy
 Prefer to be led
 Resist change
 Theory Y
 Management’s basis task is to ensure that workers meet their important
needs while they work
 Either theory can be self-fulfilling prophesy
Argyis: Personality and Organization
 Traditional management principles produce conflict between people and
organizations
 Task specialization produces narrow, boring jobs that require few skills
 Directive leadership makes workers dependent and treats them like
children
 Workers adapt to frustration:
 Withdraw – absenteeism or quitting
 Become passive, apathetic
 Resist top-down control through deception, featherbedding, or
sabotage
 Climb the hierarchy
 Form groups (such as labor unions)
 Train children to believe work is unrewarding
Human Capacity and the Changing Employment Contract
 Handy – Shamrock form
 Core group of managers
 Basic workforce – part-time or on shifts to increase organization’s
flexibility
 Contractual fringe – temps, independent contractors
 Lean and mean (win through low costs): downsize, outsource, hire temps and
contractors
 Invest in people (win with talent): build competent, well-trained work force
 Shift from production economy to information economy produces skill gap
Conclusion
 Organizations need people and people need organizations, but the trick is to
align their needs
 Dilemma: lean and mean vs. invest in people
Chapter 7 – Improving Human Resource Management
Build and Implement a Human Resource Philosophy
 Develop a public statement of the organization’s human resource philosophy
 Build systems and practices to implement philosophy
Hire the Right People
 Know what you want and be selective
 Hire people who bring the right skills and attitudes
 Hire those who fit the mold
Keep Employees
 Reward well and protect jobs
 Promote from within
 Powerful performance incentive
 Increases trust and loyalty
 Capitalizes on knowledge and skills
 Reduces errors
 Increases the likelihood to think longer-term
 Share the Wealth: give workers a stake in organization’s success
Invest in Employees
 Invest in learning
 Create opportunities for development
Empower Employees
 Provide Information and Support
 Make performance data available and teach workers how to use them
 Encourage workers to think like owners
 Everyone gets a piece of the action
 Foster Autonomy and Participation
 Redesign Work
 Build Self-Managing Teams
 Promote Egalitarianism
Promote Diversity
 Develop explicit, consistent diversity philosophy, strategy
 Hold managers accountable
Putting it all Together: TQM and NUMMI
 Total Quality Management
 High quality is cheaper than low quality
 People want to do good work
 Quality problems are cross-functional
 Top management is ultimately responsible for quality
 New United Motors Manufacturing, Inc.
Getting There: Training and Organization Development
 Barriers to better human resource management
 Management reluctance
 Disrupts established patterns, relationships
 Lack of communication and interpersonal skills
 Training and OD to build capacity
 Group interventions: T-groups, large-group interventions (e.g., “Workout’
at GE)
 Survey feedback
Conclusions
 High-involvement management strategies
 Strengthen employee-organization bond
 Pay well, share the benefits
 Job security
 Promote from within
 Training and development
 Empower and improve quality-of-work-life
 Participation, democracy, egalitarianism
 Job enrichment, teaming
 Promote diversity
Chapter 8 – Interpersonal and Group Dynamics
Interpersonal Dynamics
 Managers spend much of their time in relationships
 Three recurrent questions regularly haunt managers:
 What is really happening in this relationship?
 Why do other people behave as they do?
 What can I do about it?
 Argyris and Schön’s theories for action
 Espoused theory: how individuals describe, explain, or predict their own
behavior
 Theory-in-use: the program that governs an individual’s actions
 Argyris and Schön’s theories for action
 Model I Theory in use
 Model I Assumptions
 Problem is caused by others
 Unilateral diagnosis
 Get person to change
 Model II Assumptions
 Emphasize common goals
 Communicate openly
 Combine advocacy with inquiry
 The Perils of Self-Protection
Core values
Action strategies
(governing variables)
Define and achieve
Design and
your own goals
manage
unilaterally
Maximize winning,
Own and control
minimize losing
what’s relevant to
you
Avoid negative feelings Protect yourself
Be rational
Unilaterally
protect others
Consequences for
relationships
You’re seen as
defensive,
inconsistent, selfish
You generate
defensiveness
Consequences for
learning
Self-sealing
You reinforce
mistrust,
conformity,
avoiding risk
Key issues become
un-discussable
Private testing of
assumptions
Single-loop learning
Unconscious collusion
to avoid learning
Model I Assumptions
 Problems are caused by the other person
 Since they caused the problem, get them to change
 If they refuse or defend, that proves they caused the problem
 If they resist, intensify the pressure, protect them (to avoid discomfort), or
reject them
 If you don’t succeed, it’s their fault; you’re not responsible
Model II Assumptions
 Focus on common goals, mutual influence
 Communicate openly, test beliefs publicly
 Combine advocacy with inquiry
Inquiry
HIGH
Advocacy
LOW
Assertive
Integrative
Passive
Accommodating
Emotional Intelligence
 Emotional Intelligence: awareness of self and others, able to deal with emotions
and relationships (Salovey and Mayer)
 A Management Best-seller: Daniel Goleman’s Emotional Intelligence
 EI more important than IQ to managerial success
 Individuals with low EI and high IQ are dangerous in the workplace
Management Styles
 Lewin, Lippitt and White: autocratic, democratic and laissez-faire leadership
 Fleishman and Harris: initiating structure vs. consideration of others
 Myers-Briggs Inventory
 Introversion vs. extraversion
 Sensing vs. intuition
 Thinking vs. feeling
 Judging vs. perceiving
 Big 5 Model”
 Extraversion (enjoying other people and seeking them out)
 Agreeableness (getting along with others)
 Conscientiousness (orderly, planful, hard-working)
 Neuroticism (difficulty controlling negative feelings)
 Openness to experience (preference for novelty and creativity)
Groups and Teams in Organizations
 Informal Roles
 Informal role: an unwritten, often unspoken expectation about how a
particular individual will behave in the group
 Individuals prefer different roles: some prefer to be active and in
control, others prefer to stay in the background
 Individuals who can’t find a comfortable role may withdraw or
become troublemakers
 Individuals may compete over the same role (for example, two people
who both want to run things), hindering group effectiveness
 Informal Group Norms
 Informal norm: unwritten rule about what individuals have to do to
be members in good standing
 Norms need to align with both the task and the preferences of group
members
 Norms often develop unconsciously; groups often do better to discuss
explicitly how they want to operate
 Interpersonal Conflict in Groups
 Develop skills
 Agree on basics
 Search for interests in common
 Experiment
 Doubt your infallibility
 Treat conflict as a group responsibility
 Leadership and Decision-Making in Groups
 How will we steer the group
 Leadership is essential, but may be shared and fluid
 Leaders who over-control or understructure produce frustration,
ineffectiveness
Summary
 Employees bring social and personal needs to the workplace
 Individuals’ social skills or competencies are a critical element
 Though often frustrating, groups can be both satisfying and efficient
Chapter 9 – Power, Conflict, and Coalitions
Assumptions of the Political Frame
 Organizations are coalitions
 Enduring differences among coalition members
 Allocation of scarce resources
 Conflict is central process and power most important resource
 Goals and decisions arise from bargaining, negotiation and jockeying for
position
Organizations as Coalitions
 Coalitions rather than pyramids
 Organizational goals are multiple and sometimes conflicting because they
reflect bargaining involving multiple players with divergent interests
Power and Decision-Making
 Gamson: Authorities and partisans
 Authorities make binding decisions
 Partisans are subject to authorities’ decisions; they will support or
question authority depending on decisions affect their interests
Sources of Power
 Position power
 Information and expertise
 Control and rewards
 Coercive power
 Alliances and networks
 Framing: control of meaning and symbols
 Personal power
Distribution of Power: Over-bounded and Under-bounded Systems
 Over-bounded: strong, top-down control, conflict is tightly-regulated (e.g.,
Iraq under Saddam Hussein)
 Under-bounded: weak authority, chaotic decision-making, open conflict and
power struggles (Iraq after collapse of old regime)
Conflict in Organizations
 Conflict is natural and inevitable: organizations can have too much or too
little
 Political frame focuses on strategy and tactics for dealing with conflict
 Forms of organizational conflict
 Hierarchical conflict
 Horizontal
 Cultural
Moral Mazes: The Politics of Getting Ahead
 Getting ahead is a political process involving conflict for scarce resources
 Assessment of individual performance often depends on subjective
judgments
 Does advancement depend on doing good work or doing what is
politically correct?
 Organizations can’t eliminate politics, but they can influence the kind of
politics they have
Conclusion
 The political frame sees a very different world from the traditional view of
organizations
 Traditional: organizations are hierarchies, run by legitimate
authorities who set goals and manage performance
 Political view: organizations are coalitions whose goals are
determined by bargaining among multiple contenders
 Politics can be nasty and brutish, but constructive politics is possible and
necessary for organizations to be effective
Chapter 10- The Manager as a Politician
Skills of the Manager as a Politician
 Agenda Setting (knowing what you want and how you’ll try to get it)
 Vision or objective
 Strategy for achieving the vision
 Mapping the Political Terrain
 Determine the channels of informal communication
 Identify the major players
 Analyze possibilities for internal and external mobilization
 Anticipate the strategies that others are likely to employ
Drawing the Political Map
 Frame the central issue – the key choice that people disagree about
 Identity the key players (those who are most likely to influence the outcome)
 Where does each player fall in terms of the key issue?
 How much power is each player likely to exert
 Example: Belgian bureaucracy
 Key issue: are automated records a good thing?
Figure 10-1:
The Political Map as Seen by the “Techies” – Strong
Support and Weak Opposition for Change
High
TopManagement
Techies
Power
Middle
Managers
Front-line
Officials
Low
Pro-Change
Opposed to Change
Interests
Figure 10-2:
The Real Political Map: a Battle Ground With
Strong Players on Both Sides
High
Top Management
Techies
Middle
Middle
Managers
Managers
Power
Front-line
Officials
Low
Pro-Change
Opposed to Change
Interests
Skills of the Manager as a Politician
 Networking and Building Coalitions
 Identify relevant relationships
 Assess who might resist
 Develop relationships with potential opponents
 Persuade first, use more forceful methods only if necessary
 Bargaining and Negotiation
 Value Creating: look for joint gain, win-win solutions
 Value Claiming: try to maximize your own gains
Value Creating: Getting to Yes (Fisher & Ury)
 Separate people from problem: “ deal with people as human beings, and the
problem on its merits”
 Focus on interests, not positions
 Invent options for mutual gain
 Insist on objective criteria: standards of fairness for a good decision
Value Claiming: The Strategy of Conflict (Schelling)
 Bargaining is a mixed-motive game (incentives to complete and collaborate)]
 Process of interdependent decisions
 Controlling other’s uncertainty gives power
 Emphasize threats, not sanctions
 Threats are only effective if credible
 Calculate the optimal level of threat: too much or too little can undermine your
position
Morality and Politics
 Ethical criteria in bargaining and organizational politics
 Mutuality – are all parties operating under the same understanding
of the rules?
 Generality – does a specific action follow a principle of moral
conduct applicable to all comparable situations?
 Openness – are we willing to make our decisions public?
 Caring – does this action show care for the legitimate interests of
others?
Conclusion
 Politics can be sordid and destructive, but can also be the vehicle for
achieving noble purposes
 Managers need to develop the skills of constructive politicians:
 Fashion an agenda
 Map political terrain
 Networking and building coalitions
 Negotiating
Chapter 11 – Organizations as Political Arenas and Political Agents
Organizations as Arenas
 Arenas shape:
 Rules of the game
 Players
 Stakes
 Bottom-up Political Action
 Labor unions and civil rights movements
 Political Barriers to Control from the Top
 U.S. Department of Education scenario: initiatives often lost to political
opposition despite new resources and top-down support
Organizations as Political Agents
 Organizations exist in ecosystems
 Organizations depend on environment for resources support
 Organizations needs the skills of a politician: develop agenda, map
environment, manage relationships with allies and competitors, negotiate
 Ecosystem
 “Organizational field” in which competitors and allies co-evolve
Pfeffer and Salancik: The Eternal Control of Organizations
 Organizations are controlled more than they control their external environment
 Organizations are “other-directed”
 Struggle for autonomy and discretion in the face of constraint and external
control
 Confront conflicting demands from multiple constituents
 Organizations’ understanding of environment is often distorted, imperfect
 Dilemma: alliances essential to gain influence, but reduce autonomy by increasing
dependency and obligations
Ecosystems
 Business Ecosystems
 Apple  IBM  “Wintel”
 General Motors and General Electric
 Public Policy Ecosystems
 Federal Aviation Administration
 Schools
 Business-government ecosystems
 Pharmaceutical companies, physicians and government
 Fedex lobbying clout
 Society as Ecosystem
 Business, public and government
 What is and should be the power relationship between organizations and
society?
 Are organizations “instruments of market tyranny” or largely
shaped by larger social and economic forces?
 Jihad vs. McWorld
Conclusion
 Organizations are both arenas for internal politics and political agents with
their own agendas, resources, and strategies
 Arenas house contests, shape ongoing interplay of interests and agendas
 Agents exist, compete and co-evolve in larger ecosystems (“organizational
fields”)
Chapter 12 – Organizational Culture and Symbols
Core Assumptions of Symbolic Frame
 Most important – not what happens, but what it means
 Activity and meaning are loosely coupled
 People create symbols to resolve confusion, find direction, anchor hope and
belief
 Events and processes more important for what is expressed than what is
produced
 Culture provides basic organizational glue
Organizations as Culture
 Organizations have cultures or are cultures?
 Definitions of culture:
 Schein: “pattern of shared basic assumptions that a groups has
learned as it solved its problems…and that has worked well enough to
be considered valid and taught to new members”
 “How we do things around here
 Culture is both product and process
 Embodies accumulated wisdom
 Must be continually renewed and recreated as newcomers learn old
ways and eventually become teachers
 Manager who understand culture better equipped to understand and
influence organizations
Organizational Symbols
 Symbols reveal and communicate culture
 McDonald’s golden arches and legend of Ray Kroc
 Harvard’s myth, mystique and rituals
 Volvo France and Continental Airlines
 Myths: deeply-rooted narratives that explain, express and build cohesion
 Often rooted in origin legends (“how it all began”)
 Values: what an organization stands for and cares about
 Vision: image of future rooted in core ideology
 Heroes and Heroines
 Icons and living logos who embody and model core values
 Stories and Fairy Tales
 Good stories convey information, morals, values and myths vividly,
memorably, convincingly
 Ritual





 Repetitive, routinized activities that give structure and meaning to
daily life
 Men’s hut and initiation rituals
Ceremony
 Grand, infrequent symbolic occasions
Metaphor, humor, play
 “As if” role of symbols: indirect approach to issues that are too hard
to approach head-on
Metaphor: image to compress ambiguity and complexity into
understandable, persuasive message
Humor: way to illuminate and break frames
Play: permits relaxing rules to explore alternatives, encourages
experimentation and flexibility
Geert Hofstede, Culture’s Consequences in Work-Related Values
 Culture: “collective programming of the mind that distinguishes one human group
from another”
 Dimensions of national culture:
 Power distance: how much inequality between bosses and subordinates?
 Uncertainty avoidance: comfort with ambiguity
 Individualism: how much value on the individual vs. group?
 Masculinity-femininity: how much pressure on males for career-success
and workplace dominance?
Conclusion
 In contrast to traditional views emphasizing rationality and objectivity, the
symbolic frame highlights the tribal aspect of contemporary organizations.
 Culture as basic organizational glue, the “way we do things around here”
 Symbols embody and express organizational values, ideology
Chapter 13 – Organization as Theater
Organizational Theater
 Theater plays to both internal and external audiences
 A convincing dramaturgical performance reassures external constituents,
builds confidence, keeps critics at bay
Institutional Theory
 “Institutionalized organizations” focus more on appearance than
performance
 When goals are ambiguous and performance hard to measure (as in
universities and many government agencies), organizations maintain
stakeholder support by staging the right play, conforming to
audience expectations of how the organization should operate
DiMaggio and Powell, “The Iron Cage Revisited…”
 “Isomorphism” – process of becoming similar to other organizations in the same
“organizational field”
 Coercive isomorphism – organizations become alike because law, regulation or
stakeholders pressure them to do so
 Mimetic isomorphism – organizations become more alike by copying one another
 Normative isomorphism – organizations employing the same professionals
become similar because the professionals have similar values and ideas
Organizational Structure as Theater
 Structure as Stage design: an arrangements of lights, props and costumes
 Makes drama vivid and credible
 Reflects and expresses current values and myths
 Public schools reassure stakeholders if…
 The building and grounds look like a school
 Teachers are certified
 Curriculum mirrors society’s expectations
 Colleges judged by:
 Age, endowment, beauty of campus
 Faculty student ratio
 Faculty with degrees from elite institutions
Organizational Process as Theater
 Activities (meetings, planning, performance appraisal, etc.) often fail to
produce intended outcomes, yet persist because they help sustain
organizational drama
 Scripts and stage markings: cue actors what to do and how to behave
 Opportunities for self-expression and forums for airing grievances
 Reassure audiences that organization is well-managed and important
problems are being addressed
 Meetings as “Garbage cans”
 Attract an unpredictable mix of problems looking for solutions,
solutions looking for problems, and participants seeking opportunities
for self-expression
 Planning
 Plans are symbols
 Plans become games
 Plans become excuses for interaction
 Plans become advertisements
 Evaluations
 Often fail in intended goals of improving performance and identifying
strengths and weaknesses
 Ceremony signals the organization is well-managed and cares about
performance improvement
 Collective Bargaining
 Public face: intense, dramatic contest
 Private face: back-stage negotiation, collusion
 Power
 Exists in eye of beholder – you are powerful if others think you are
 May be attributed based on outcomes
Conclusion
 Organizations judged by appearance
 The right drama:
 Provides a ceremonial stage
 Reassures stakeholders
 Maintains confidence and faith
 Drama serves powerful symbolic functions
 Engages actors in their performances
 Builds excitement, hope, sense of momentum
Chapter 14 – Organizational Culture in Action
The Eagle Group’s Sources of Success
 Why do some groups produce extraordinary results while others produce little or
nothing?
 Play, spirit and culture are at the core of peak performance
Success Principles
 How someone becomes a group member is important
 Diversity provides a team’s competitive advantage
 Examples, not command, holds a team together
 A specialized language fosters cohesion and commitment
 Stories carry history and values and reinforce group identity
 Humor and play reduce tension and encourage creativity
 Ritual and ceremony lift spirits and reinforce values
 Informal cultural players make contributions disproportionate to their formal roles
 Soul is the secret of success
Conclusion
 Symbolic perspectives questions traditional views on team building
 Right structure and people are important, but not sufficient
 The essence of high performance is spirit
 Team building at its heart is a spiritual undertaking
Chapter 15 – Integrating frames for Effective Practice
Life as Managers Know It
 Myth:
 Managers are rational, spent time planning, deciding and controlling
 Organized, in control, unruffled
 Reality:
 Management life is hectic, frantic, constantly shifting
 Too busy to read or even think
 Rely on intuition and hunches for many of the most important
decisions
 Hassled priests, modern muddlers, wheeler-dealers
Across the Frames: Organizations as Multiple Realities
 Four Interpretations of Organizational Processes
 Doctor Fights to Quit Maine Island
Organizations as Multiple Realities
Process
Structural
Human Resource Political
Strategic
planning
Decisionmaking
Reorganizing
Evaluating
Approaching
conflict
Create strategic Meeting to
Arena to air
direction
promote
conflict
participation
Rational
Open process to Chance to gain
process to get build commitment or use power
right answer
Improve
Balance needs and Reallocate
structure/
tasks
power, form
environment fit
new coalitions
Allocate
Help people grow Chance to
rewards, control and develop
exercise power
performance
Authorities
Individuals
resolve conflict confront conflict
Keep
organization
headed in right
direction
Communication Transmit facts,
information
Goal setting
Meetings
Motivation
Keep people
involved and
informed
Exchange
information,
needs, feelings
Formal
Informal
occasions to
occasions to
make decisions involve, share
feelings
Economic
Growth, selfincentives
actualization
Matching Frames to Situations
 Choosing a Frame
 Commitment and motivation
 Technical quality
 Ambiguity and uncertainty
 Conflict and scarce resources
 Working from bottom up
Bargaining,
forcing,
manipulating
Let people
make their
interests
known
Influence or
manipulate
others
Competitive
occasions to
score points
Symbolic
Ritual to reassure
audiences
Ritual to build
values, bonding
Image of
accountability,
responsiveness
Occasion to play
roles in
organizational
drama
Develop shared
values, meaning
Develop symbols,
shared values
Tell stories
Sacred occasions
to celebrate,
transform culture
Coercion,
Symbols,
manipulation, celebrations
seduction
Choosing a Frame
Question
Are individual commitment and
motivation essential?
Is technical quality of decision
important?
Is there high level of ambiguity,
uncertainty?
Are conflict and scarce resource a
significant factor?
Are you working from the bottom
up?
If yes:
Human resource,
symbolic
Structural
If no:
Structural, political
Human resource,
political, symbolic
Political, symbolic Structural, human
resource
Political, symbolic Structural, human
resource
Political, symbolic Structural, human
resource
Effective Managers and Organizations
 Characteristics of Excellent/Visionary Companies
 Embrace paradox
 Clear core identity
 Effective Senior Managers
 Highly complex jobs requiring diverse skills
 Political dimension is critical
 Effective middle managers
 Structural and human resource skills help performance, but political
skills help you get ahead
Effective Organizations
Frame
Peters & Waterman
Structural
Collins & Porras
Autonomy,
Clock building, not
entrepreneurship, bias for time telling; try a lot,
action; simple form, lean keep what works
staff
Collins
Human Resource Close to customer;
productivity through
people
Home-grown
management
Confront brutal facts;
best in world;
economic engine;
technology
accelerators;
“flywheel”, not doom
loop
“Level 5 leadership”;
first who, then what
Political
********
*******
*******
Symbolic
Hands on, value-driven, BHAGs; cult-like
Never lose faith;
loose-tight; stick to the cultures; good enough deeply passionate;
knitting
never is; preserve the culture of discipline
core, stimulate
progress; more than
profits
Challenges in Managers’ Jobs
Frame
Kotter (1982)
Lynn (1987)
Luthans, Yodgetts, &
Rosenkrantz (1988)
Structural
Keep on top of large, Attain intellectual grasp Communication
complex set of
of policy issues
(paperwork, etc.);
activities; set goals
traditional management
and policies under
(planning, goal-setting,
conditions of
controlling)
uncertainty
Human resource Motivate, coordinate Use personality to best Human resource
and control large,
advantage
management
diverse group of
(motivating, managing
subordinates
conflict, staffing, etc.)
Political
Allocate scarce
Exploit opportunities to Networking (politics,
resources; get
achieve strategic gains interacting with
support from bosses
outsiders)
and other
constituents
Symbolic
Develop credible
strategic premises;
identify and focus on
activities that give
meaning to
employees
Manager’s Frame Preferences
 Research shows ability to use multiple frames is consistently associated with
effectiveness.
 Effectiveness as manager – structural frame is key
 Effectiveness as leader – political and symbolic frames are central
Conclusion
 Managers’ daily reality is messier, less rational, more conflict-filled than is
often realized
 Choice of frame depends on circumstances
 Managers need multiple frames to survive
Chapter 16 - Reframing in Action – Opportunities and Perils
Cindy Marshall
 New manager with big challenge
 High risk dilemma: looking weak vs. acting impetuously
 Each frame suggests distinct possibilities
 Reframing as tool for generating options
 Scenarios: story-lines for generating options for action
 Each frame can be effective or not, depending on skill and insight of
individual
Structural Scenario
 Clarify goals
 Attend to relationships between structure and environment
 Design and implement structure to fit circumstances
 Focus on task, facts, logic, not personality or emotion
Human Resource Scenario
 People are at the heart of organization
 Respond to their needs and goals, and they’ll be committed and loyal in
return
 Align needs of individuals and organization, serving best interests of both
 Support and empower people
 Show concern, listen to their aspirations
 Communicate warmth and concern
 Empower through participation and openness
 Give people resources and autonomy they need to do their jobs
Political Scenario
 Recognize political reality, deal with conflict
 Scarce resources produce conflict over who gets what
 Know the players (individuals and interest groups) and what they want
 Build ties to key players and group leaders
 Build a power base and use power carefully
 Overplaying your hand makes you weaker
 Create arenas for negotiation and compromise
 Look for and emphasize common interests to unify your group
 Rally troops against outside enemies
Symbolic Scenario
 Most important part of leader’s job is inspiration
 Give people something to believe in
 People get excited about a special place with unique identity where their
work is important
 Be passionate about making organization the best of its kind, communicate your
passion
 Use dramatic, visible symbols to involve people, communicate the mission
 Be visible, energetic
 Create slogans, hold rallies and celebrations, give awards, manage by
walking around
 Study and use organizational culture
 Use heroes, stories, traditions as a base for build cohesive, meaningful
culture
 Articulate a persuasive, exciting vision
The Power and Risks of Reframing
 Frames can be used as scenarios or scripts to generate options and guide
action
 By choosing a new script, we can act in new ways and create new
possibilities
 Choose the role and drama that works for you
 Each frame has distinctive advantages and risks
Frame Risks
Frame
Risks
Ignore non-rational elements: irrational neglect of human, political
Structural
and cultural elements
Over-rely on authority and under-rely on alternative sources of power
Human Resource Blinded by romantic view of human nature
Too optimistic about trust and win-win in high-conflict/high-scarcity
situations
Political
Symbolic
Becomes cynical, self-fulfilling prophesy that intensifies conflict,
misses opportunities for rationality and collaboration
You may be seen as amoral, scheming, selfish
Concepts are elusive
Effectiveness heavily dependent on user’s art and skill
Symbols may be employed as fluff, camouflage, manipulation
Awkward use of symbols may produce embarrassment, ridicule
Reframing for Newcomers and Outsiders
 Use of only one or two frames often leads to entrapment: inability to generate
effective options in tough situations
 Risk is even higher for newcomers and outsiders (including members
of groups that have historically been excluded)
 Newcomers and outsiders are less likely to get a second chance or the
benefit of the doubt when they make mistakes
Conclusion
 Mangers can use the frames as scenarios, or scripts, to generate alternative
approaches to challenging circumstances.
 Reframing is a complex skill that takes time and persistence to develop
Chapter 17 – Reframing Leadership
Coping with leadership crisis: Queen Elizabeth II & Rudy Giuliani
 Queen Elizabeth
 In the face of Princess Diana’s death, the Queen stayed on vacation and issued
short, tight-lipped statement
 She almost disappeared when constituents most wanted her to be present
and reassuring
 Rudy Giuliani
 Went immediately to 9-11 scene and plunged in, at personal risk
 Took charge of disaster efforts
 Was continually visible: appeared on television, gave tours, etc.
The Idea of Leadership
 Leadership often viewed as panacea: fix for whatever is wrong in
organization or society
 Leadership not the same thing as power
 Leaders expected to persuade, inspire, not coerce or manipulate
 Leadership is distinct from authority
 Authority produces obedience because legitimated to make certain
decisions
 Leadership vs. management
 Leaders think long-term, look outside as well as in, influence beyond
their formal jurisdiction, have political skills, emphasize vision and
renewal,
The Context of Leadership
 Leaders make things happen, but things also make leaders happen
 What leaders can do always influenced by the stage on which they
play their role
 Leadership is a relationship, a subtle process of mutual influence
 Leaders are non independent actors: they both shape and are shaped
by circumstances and their constituents
 Leadership is distinct from position – you can lead from anywhere
What Do We Know About Good Leadership?
 One Best Way
 Good leaders have certain characteristics in common
 Contingency Theories
 Good leadership depends on the situation
One Best Way: Qualities of Highly Effective Leaders
 Vision and focus
 Image of future
 Standards for performance
 Clear direction
 Passion
 Deep personal, emotional commitment to the work and the people
who do it
 Ability to inspire trust and build relationships
 Honesty is the trait followers say they admire most in a leader
Blake & Mouton: The Managerial Grid
Contingency Theories
 Leadership varies by situation, but there is no consensus on the nature of the
key situational variables and how they influence leadership
 Hersey/Blanchard “Situational Leadership” model is popular, but research
support is weak
Hersey & Blanchard: Situational Leadership
Gender and Leadership
 Do Men and Women Lead Differently?
 Karren Brady, Carly Fiorina, and Margaret Thatcher
 Do women have a “female advantage”?
 Research has found few consistent leadership differences
between men and women
 Why the Glass Ceiling?
 Stereotypes linking leadership to maleness
 Women walk tightrope of conflicting expectations
 Discrimination
 Women pay a higher price
 Women may put higher premium on balancing work and
family
 Women still do majority of housework and child-rearing in
dual-career families
 Fast-track women less likely to marry, more likely to
divorce than similar men
Structural Leadership
Effective
Analyst, architect
Leader
Leadership process Analysis, design
Ineffective
Petty tyrant
Management by detail and fiat
Effective structural leaders…
 Do their homework
 Rethink relationship of strategy, structure, environment
 Focus on implementation
 Experiment, evaluate, adapt
Human Resource Leadership
Effective
Catalyst, servant
Leader
Leadership process Support, empowerment
Ineffective
Weakling, pushover
Abdication, indulgence
Effective human resource leaders…
 Believe in people and communicate that belief
 Are visible and accessible
 Empower others
Political Leadership
Leader
Leadership process
Effective
Advocate, negotiator
Advocacy, coalition-building
Ineffective
Con artist, thug
Manipulation, fraud
Effective political leaders …
 Are clear about what they want and what they can get
 Assess distribution of power and interests
 Build linkages to key stakeholders
 Persuade first, negotiate second, and coerce only if necessary
Symbolic Leadership
Effective
Ineffective
Leader
Prophet, poet
Fanatic, fool
Leadership process Inspiration, framing experience Mirage, smoke and mirrors
Effective symbolic leaders…
 Lead by example
 Use symbols to capture attention
 Frame experience
 Communicate a vision
 Tell stories
 Study and use history
Conclusion
 Leadership is widely accepted as a cure for all organizational ills, but it is
also widely misunderstood.
 Leadership is relational and contextual, distinct from power and
position
 Each of the frames highlights significant possibilities for leadership
 Managers need to combine multiple frames into a comprehensive approach
to leadership
Chapter 18 - Reframing Change: Training, Realigning, Negotiating, Grieving, and
Moving on
A Common Change Scenario: Thomas Lo at DDB Bank
 Profitable bank faced changing environment
 Thomas Lo recruited to improve service and innovate
 Lo introduced many changes, but six months later nothing was different
 Lo encountered lip service, passive resistance, but no overt conflict
 Familiar story: hopeful beginning, muddle middle, disappointing ending
 Change strategies that rely on only one or two frames usually fail
Reframing Change
Frame
Barriers to Change
Human resource Anxiety, uncertainty
People feel incompetent, needy
Structural
Political
Symbolic
Essential Strategies
Train to build new skills
Participation & involvement;
Psychological support
Loss of clarity and stability;
Communicating, realigning,
confusion, chaos
and renegotiating formal
patterns and policies
Disempowerment
Create arenas for negotiating
Conflict between winners & losers issues, forming new coalitions
Loss of meaning and purpose;
clinging to the past
Transition rituals
Mourn past , celebrate future
Change and Training
 Change initiatives often fail because employees lack knowledge and skills
 People resist what they don’t understand, don’t know how to do, or
don’t believe in
 Training, participation and support can increase understanding of
why change is needed, as well as skills and confidence needed to
implement
Change and Realignment
 Structural change undermines existing patterns, creating ambiguity,
confusion and resistance
 People don’t know how to get things done or who’s supposed to do
what
 Change efforts need to anticipate structural issues, realign roles and
relationships
Change and Conflict
 Change creates winners and losers
 Winners support the change and fight for its implementation
 Losers resist, try to block change effort (and often succeed)
 Conflicts often are buried, where they smolder and become more
unmanageable
 Successful change requires framing issues, building coalitions, and creating
arenas where conflict can be surfaced and agreements negotiated
Change and Loss
 Loss of a cherished symbol produces loss – akin to losing a job or a loved one
 Change produces conflicting impulses: replay the past vs. plunge into the
future
 Cultures create transition rituals to ease loss
 Ritual and ceremony are essential to successful change: celebrate or
mourn the past and envision the future
Kotter: Stages of Effective Change
 Create sense of urgency
 Pull together guiding team with need skills, credibility and connections
 Create uplifting vision and strategy
 Communicate vision and strategy through words, deeds, symbols
 Remove obstacles, empower people to move
 Create visible progress: early wins
 Persist when things get tough
 Nurture and shape new culture to support new ways
Reframing Kotter’s Change Model
Kotter stage
Structural
Human
resource
Political
Symbolic
Involve, solicit
input
Sense of
urgency
Build guiding
team
Coordination
strategy
Team building
Uplifting vision,
strategy
Communicate
through words,
deeds, symbols
Implementation
plan
Build structures to Meetings to
support change
communicate,
process
get feedback
Remove
obstacles,
empower
Early wins
Change old
structures
Keep going
when going gets
tough
New culture to
support new
ways
Keep people on
plan
Training,
support,
resources
Plan for short-term
victories
Align structure to
new culture
Network with
key players
Build power
base
Stack team
with key
players
Map political
terrain
Create
arenas
Build
alliances
Stack team
with key
players
Do what it
takes to get
wins
Tell
compelling
story
Put CEO on
team
Create vision
rooted in past
Kickoff
ceremonies
Visible
leadership
Public
hangings
Celebrate
early progress
Revival
meetings
Create “culture” Stack team
team
with key
Broad
players
involvement in
creating new
culture
Mourn past
Celebrate
heroes
Share stories
Team Zebra: The Rest of the Story
 Top-down, Bottom-up Structural Design
 Learning and Training
 Areas for Venting Conflict
 Occasions for Letting Go and Celebrating
 Core values
 Encouraging rituals
 Anchoring vision
 Inventing ceremonies to keep spirit high
Conclusion
 Major organizational change inevitably generates four categories of issues
 Affects individuals’ ability to feel effective
 They need training, participation, support
 Change disrupts existing patterns
 Structure needs to be realigned
 Change creates conflict
 Need arenas to negotiate conflict, reach agreements
 Change creates loss of meaning for recipients
 Need transition rituals to mourn past and celebrate future
Chapter 19 – Reframing Ethics and Spirit
Soul and Spirit in Organizations
 Organizational soul: bedrock sense of identity, clarity about core ideology and
values
 Core ideology emphasizing “more than profits” key to highly successful
firms (Collins and Porras, 1994)
 Enron
 Rapid shift from pipelines to deal-making produced enormous growth -for a while
 In the process, Enron lost a sense of core identity and values (“lots of
smart people, but no wise people”)
 Merck
 Core purpose: not profit but “preserve and improve human life”
 Developed and gave away river blindness drug
Conclusion
 Organizational ethics ultimately need to be rooted in soul
 Modern organizations suffer a crisis of meaning and moral authority
 Leaders need to hold and model values like excellence, caring, justice, faith
Conclusion:
Reframing, like management and leadership, is much more art than science.
Judgment in Managerial Decision Making--Bazerman
The book’s main objective: To improve the reader’s judgment by attempting to unfreeze
the reader’s present decision-making processes by demonstrating how your judgment
systematically deviates from rationality. It also gives tools that allow you to change your
decision-making processes and the methods that will allow the reader to refreeze thinking
to ensure that it will last.
Chapter 2 – Specific biases that affect the judgment of virtually all managers. They are
caused by three heuristics.
 Bias 1—Ease of Recall (based on vividness and recency)
o An availability bias
 Bias 2—Retrievability (based on memory structures)
o An availability bias
o Organizational mode affects information search behavior
 Bias 3—Presumed Associations
o An availability bias
o Frequently occurs when assessing the likelihood of two events occurring
together
The availability heuristic helps us often make accurate, efficient judgments in estimating
the likelihood of events. Misusing it can lead to the three previously mentioned errors in
managerial judgment
 Bias 4—Insensitivity to Base Rates
o This bias often occurs when individuals cognitively ask the wrong
question
o Representativeness heuristic
 Bias 5—Insensitivity to Sample Size
o Sample size is seldom part of our intuition
o Representativeness heuristic
 Bias 6—Misconceptions of Chance
o Gambler’s fallacy—the expectation that probabilities will even out
o The “hot hand” in sports
o We expect a sequence of random events to “appear” random
o Representativeness heuristic
 Bias 7—Regression to the Mean
o Many effects regress to the mean—counterintuitive in many cases
o Representativeness heuristic
 Bias 8—The Conjunction Fallacy
o Simple statistics demonstrate that a conjunction cannot be more probable
than any one of its descriptors
o Can be triggered by a greater availability of the conjunction than its
descriptors.
o This biasing effect tends to be greater in groups than individuals
o Representativeness heuristic
These five biases are examples of the representativeness heuristic—the likelihood of a
specific occurrence is related to the likelihood of a group of occurrences which that
specific occurrence represents. It tends to be overused in decision-making.



Bias 9—Insufficient Anchor Adjustment
o Individuals make estimates for values based upon an initial value (derived
from past events, random assignment, or whatever information is
available) and typically make insufficient adjustments from that anchor
when establishing a final value.
o Anchoring and adjustment heuristic
Bias 10—Conjunctive and Disjunctive Events Bias
o Individuals exhibit a bias toward overestimating the probability of
conjunctive events and underestimating the probably of disjunctive events.
o Anchoring and adjustment heuristic
Bias 11—Overconfidence
o Individuals tend to be overconfident of the infallibility of their judgments
when answering moderately to extremely difficult questions.
o Anchoring and adjustment heuristic
Other biases:
 Bias 12—The Confirmation Trap
o Individuals tend to seek confirmatory information for what they think is
true and fail to search for disconfirmatory evidence
 Bias 13—Hindsight and the Curse of Knowledge
o After finding out whether or not an event occurred, individuals tend to
overestimate the degree to which they would have predicted the correct
outcome. Furthermore, individuals fail to ignore information they possess
that others do not when predicting others’ behavior.
Chapter 3 – Examining the psychological factors that explain how managers deviate
from “rationality” in responding to uncertainty.
 Decision makers are grasping for certainty in a certain world
 People tend to cope with uncertainty by ignoring it
 The need to do way with uncertainty leads people to take too much credit for
successes and too much blame for failures
 Managers can make better decisions by accepting that uncertainty exists and by
learning to think systematically in risky environments—risk is not bad; it is
simple unpredictable.
 Two key concepts of a normative theory of preferences under risky conditions:
o Probability – the likelihood that any particular outcome will occur
 Probability can be very complex, both mathematically and
psychologically
o Expected value – the weighting of all potential outcomes associated with
an alternative by their probabilities and summing them
 People do not always follow the expected-value rule
 Risk considerations
 Risk neutral—certainty equivalent for an uncertain event that
is equal to the expected value of the uncertain payoff is risk
neutral (same as using expected-value rule)
 Risk adverse—certainty equivalent for an uncertain event
that is less than the expected value of that uncertain payoff
 Risk seeking—certainty equivalent for an uncertain event
that is more than the expected value of that uncertain
payoff
 Utility = degree of pleasure or net benefit
 Expected-utility theory—individuals identify outcomes in terms of
their overall wealth and the additional wealth they would gain from
each alternative outcome
 Framing Information key concepts:
o Individuals treat risks concerning perceived gains differently from risks
concerning perceived losses

Prospect theory
 People evaluate rewards and losses relative to a neutral
reference point
 People think about potential outcomes as gains or losses
relative to this fixed, neutral reference point
 People form their choices based on the resulting change in
asset position as assessed by an S-shaped value function.
 The way the problem is “framed,” or presented, can
dramatically change the perceived neutral point of the
question
 Our response to loss is more extreme than our response to
gain.
 We tend to overweight the probability of low-probability
events and underweight the probability of moderate and
high-probability events
 Framing of Risky Decisions
o We would be wise to follow the expected value rule when making
decisions
o Deviations from this rule in the real world should probably be reserved for
critically important decisions, after careful consideration of the problem
from multiple frames
 Anchors matter therefore:
 Identify your reference point when making a risky decision
 Ask if other reference points exist
 If yes—think about the decision from multiple frames and
examine any contradictions that emerge
 Pseudo-certainty
o People value the creation of certainty over the equally valued shift in the
level of uncertainty
o Certainty effect—a reduction of the probability of an outcome has more
importance when the outcome was initially certain than when it was
merely probable.
 Other key terms:
o Acquisition utility—the value you place on a commodity
o Transactional utility—the quality of the deal that you receive, evaluated in
reference to “what the item should cost.”
o Endowment effect—the value a person places on a commodity is related
to its intrinsic worth and the value placed on his or her attachment to the
item. In other words—we tend to over value what we own
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Chapter 4 – Overview of motivated biases
 Two selves: Want vs. Should
o Want self—more transient, visceral, adaptive to natural environment,
more based on emotional criteria—tends to dominate when only one
option is assessed at a time
o Should self—more long term focused, more conservative and risk
adverse—tends to dominate when multiple options are considered.
o If there is conflict between the two, it may be an indication that you need
to think more carefully about the information provided by each of the two
selves. Ignoring the want self may lead to rebellion and sabotage. It is
important to come to a negotiated agreement through favoring the should
approach but getting input or voice to the want self.(decision-theoretic
approach)
o Positive illusions—we tend to view ourselves, world, and future more
positively than what it is in reality or objectively likely. Four most
important positive illusions:
 Unrealistically positive views of the self—individuals tend to
perceive themselves as being better than others on a variety of
desirable attributes
 Unrealistic optimism—a judgmental bias that leads people to
believe that their futures will be better and brighter than those of
other people.
 The illusion of control—people believe that they can control
uncontrollable events.
 Self-serving attributions—people interpret the causes of events in a
biased manner. Success is perceived as the result of internal
reasons. Failure is attributed to external reasons
 The same positive illusions also occur at the group and society
level
o Positive illusions may be adaptive and helpful in some instances; they tend
to have a negative impact on learning and the quality of decision making,
personnel decisions, and responses to organizational crises. They can also
contribute to conflict and discontent.
o Egocentrism—perceptions and expectations tend to be biased in a selfserving manner
o We are highly motivated to avoid regret in decision making
Chapter 5 – The research evidence and psychological explanations for why managers
may make subsequent non-optimal decisions in order to justify their previous
commitment to a particular course of action. (Escalation)
 Why does escalation occur?
o Perceptual biases
o Judgmental biases
o Impression management
o Competitive irrationality
 Implication: Managers should take an experimental approach to management.
Make and implement a decision but be open to dropping your commitment and
shift to a different course of action if the first plan doesn’t work out.
Chapter 6 – The concept of fairness and our inconsistencies in our assessments of
fairness.
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Judgments of fairness are made throughout organizational life. Fairness and
comparison help us make interpret our world.
Judgments of fairness are based on more than objective reality.
*Feel free to refer to Chapter 10 for a summary on how to improve decision-making.
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Fiske: Attribution theory - Biases, errors, and criticisms:
Fundamental Attributional Error—attributes another person’s behavior to his or
her own dispositional qualities, rather than to situational factors.
o Qualifications of FAE:
 Our methods for detecting the actual causes of behavior are quite
poor.
 Subjects in experiments may have been answering a different
question than the researcher believed was being asked.
 People over-attribute another’s behavior to situational factors—
thus underestimating dispositional factors.
The Actor-Observer Effect—to see your own behavior as quite variable, but
others’ behavior as quite cross-situationally stable.
o Qualifications of AOE:
 The AOE is weakened when positive or negative, as opposed to
neutral, outcomes are involved.
 There are circumstances when the actor might make more
dispositional attributions for his or her own behavior than an
observer would.
 The category “situational attributions” is ambiguous, and people
may use it when they are not sure what caused behavior.
 The AOE can be reversed with empathy set behaviors (pretending
to observe one’s self from the perspective of another person.
 Active observers are usually more likely to attribute an actor’s
behavior dispositionally than passive observers if the behavior is
not neutral or if they empathize with the actor
Underutilization of Consensus Information—failing to sufficiently assess the
accuracy of our causal perceptions by comparing them with those of others.
o Qualifications of UUCI:
 Consensus had the weakest effect on attributions
 Whereas consensus information may change one’s perceptions of
how common an experience is, it does not change the experience
itself.
 Consensus information may not seem as trustworthy as other kinds
of experience.
 Consensus information is often overruled by what might be termed
self-based consensus.
 When a person has strong prior beliefs about what is normative, he
or she is likely to ignore discrepant opinions offered by others.
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Self-Based (False) Consensus Effect—to see one’s own behavior as typical, to
assume that under the same conditions, others would have reacted the same way
as oneself.
o Explanations:
 We seek out people similar to us
 We must resolve ambiguous details in our minds
 We have a need to see our own beliefs and behaviors as good,
appropriate, and typical while attributing them to others
defensively to preserve our self-esteem.
Defensive Attributions—Observers attribute more responsibility for an accident
that produces severe, rather than mild consequences.
o Explanations:
 If you find yourself in similar circumstances as the perpetrator, you
may deny similarity to the perpetrator. If personal similarity is
high, you will probably attribute the accident to chance or bad luck
to minimize implications for similar future outcomes befalling you.
Self-Serving Attributional Biases—take credit for successes and deny
responsibility for failure.
o Key points:
 There is far more evidence that people take credit for success than
they deny responsibility for failure.
 Sometimes the opposite is true
 It seems that cognitive and motivational factors contribute to selfserving biases.
 Self-serving biases may extend beyond explanations for one’s own
behavior to include the people and institutions with which one is
allied.
Self-Centered Bias—taking more than one’s share of responsibility for a jointly
produced outcome.
o Key points:
 There are cognitive and motivational explanations for this bias
 Not all apply in all instances
 One tends to be able to notice and recall instances of one’s own
contributions more easily than those of another person.
What do attributional biases say about the social perceiver?
o The social perceiver adopts the self as a central point of reference—things
are generally seen in ways that are advantageous to the ego.
o Biases produce an underlying conservatism: a willingness to form stable
attributions, especially about others and an unwillingness to amend or
change one’s beliefs, whether about others or the self, in the face of
discrepant evidence.
Promise and Peril in Pay for Performance—Beer & Cannon
Focus of the article is on the experience of managers in one company in implementing
pay for performance and how they made sense of and made decisions about their pay-forperformance initiatives. The article deals with how an organization’s particular culture
might affect its management’s ability to effectively implement a particular pay-forperformance system. The example used in the article was Hewlett Packard.
 Key points:
o Pay for performance seemed to motivate behavior desired by management
as initial.
o Managers tend to be unrealistically optimistic about what can be
accomplished by a management intervention.
o Design and maintenance of effective pay-for-performance programs is
complicated—especially in a rapidly changing business environment.
o There were significant barriers to linking pay to performance.
o Ineffective design or maintenance can cause significant problems such as
bitter feelings and damage to important relationships.
o Implementation costs and risks of pay-for-performance systems appear to
be higher in high-commitment cultures where trust and employee
commitment is perceived by managers to be crucial to long-term success.
An alternative conclusion is that monetary incentives in a fast-changing
environment may undermine the capacity of a firm to build trust and
commitment unless the process of introduction incorporates an honest
discussion of mutual expectations.
 Baron’s commentary key points:
o Pay for performance itself is not dangerous per se, but rather systems that
excessively emphasize financial rewards for performance.
o Instead of pay for performance, we need to think more broadly about
rewards for performance.
o PFP plans can attain superior results when their framing, communication,
and implementation don’t batter employees over the head with financial
attributions for their behavior.
 Dailey’s commentary key points:
o It is wrong to connect Carly Fiorina (HP CEO) with the outcomes of these
experiments.
o Fundamental principles of good change management seem to be missing
in all of these experiments.
o Change is complex
o The risk/return issues of various organizational change initiatives would
be a very productive topic for the authors to focus more attention on.
o PFP requires pay systems and mangers to encourage certain selected
behaviors and reward differentially the resulting outcomes.
o HP has a long reputation for “start-stop” practices on many things.
o Words are important.
 Gerhart’s commentary key points:
o More established companies may have a harder time implementing PFP
than those that implemented it from the beginning.
o Does not believe that any evidence from employment settings that PFP
necessarily harms intrinsic motivation or creativity. The design of the
program may impact its effect on teamwork.
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o It is important to recognize that PFP can have beneficial effects via
attraction-selection-attrition.
o More weight is given to the competence of “local management.”
Heneman’s commentary key points:
o Why the plan failed Lack of knowledge and skill regarding PFP plans among site
managers. They were unable to anticipate problems
 Attempts to facilitate implementation with the use of other
mechanisms that typically accompany the PFP plans, particularly
formal communication and training programs, were missing.
 HR department or function was missing.
Kochan’s commentary key points:
o There is no PFP plan that management is likely to dream up and
implement unilaterally that will work.
o There is no substitute for employee voice.
o The challenge lies in making implicit negotiations explicit and real
Ledford’s commentary key points:
o Why HP abandoned the new pay programs:
 Definition of PFP
 Success criteria
 Company-specific issues
Locke’s commentary key points:
o Why four of the five HP plans were not well-designed:
 The use of team-based pay when the proper bonus unit perhaps
should have been larger
 Combining performance bonuses with skill-based pay
 Changing the standards
 Non-control over performance
 The use of competition to determine bonuses
 Lack of sufficient employee knowledge
 Bonuses too small
o Incentive plans need to be designed very carefully
o Is not convinced that incentive plans may be unsuitable within a highcommitment culture
o Disagrees with the notion that organizational change programs fail
because they are pushed from the top. Rather, they fail because the
programs are not pushed hard enough.
Beer and Cannon’s response to commentaries:
o Disagree with the implication that if managers had just been a bit smarter
and more experienced in designing and implementing PFP, these programs
could have been avoided.
o A legitimate goal of PFP might simply be fair pay
Failing to Learn and Learning to Fail Intelligently—Cannon & Edmondson
Three core aims:
1. To provide insights about what makes organizational learning from failure
difficult, paying particular attention to what we see as a lack of understanding of
the essential processes involved in learning from failure in a complex
organizational system such as a corporation, hospital, university, or government
agency.
2. To develop a model of three key processes through which organizations can learn
how to learn from failure. Learning from organizational failure is feasible—it
involves skillful management of the interrelated processes of identifying failure,
analyzing failure, and deliberate experimentation.
3. To argue that most managers underestimate the power of both technical and social
barriers to organizational learning from failure, leading to overly simplistic
criticism of organizations and managers for not exploiting learning opportunities.
Organizational failure = deviation from expected and desired results which include both
avoidable errors and the unavoidable negative outcomes of experiments and risk taking.
It also includes large and small failures
Key points:
 Most organizations do not learn from failure due to their lack of attention to
small, everyday organizational failures. Identifying small failures (early warning
signs) and addressing them when they occur may be the key to avoiding
catastrophic failure in the future.
 Learning from failure is a hallmark of innovative companies but most
organizations do a poor job of putting it into practice.
 Barriers of organizational learning:
o Barriers embedded in technical systems—lack of scientific know-how to
be able to draw inferences systematically, the presence of complex
systems or technologies, task design flaws or errors, etc.
o Barriers embedded in social systems—strong psychological reactions to
failure, self-esteem and ego protection attempts, positive illusions,
attributions, organizational cultures, social factors. These can also
discourage reporting failure as well.
 Learning from failure is just as much a process as an outcome. The three
processes are:
o Identifying failure
o Analyzing failure
o Deliberate experimentation
 Proactive effort to surface available data on failures for use in ways that promote
learning is required by managers.
 Formal processes or forums for discussing, analyzing, and applying the lessons of
failure elsewhere in the organization are needed to ensure that effective analysis
and learning from failure occurs.
 Skills for managing a group process of analyzing a failure with a spirit of inquiry
and sufficient understanding of the scientific method is an essential input to
learning from failure as an organization.
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When analyzing failure we are more prone to attribute too much blame to other
people and forces beyond their control. This reduces the ability to learn from the
experience
The value of learning from analyzing and discussing simple mistakes is often
overlooked.
Recommendations on technical barriers:
o Build information systems to capture and organize data, enabling detection
of anomalies, and ensure availability of systems analysis expertise.
o Structure After-Action-Reviews or other formal sessions that follow
specific guidelines for effective analysis of failures, and ensure availability
of data analysis expertise.
o Identify key individuals for training in experimental design; use as internal
consultants to advise pilot projects and other line (operational)
experiments.
Recommendations on social barriers:
o Reinforce psychological safety through organizational policies such as
blameless reporting systems, through training first line mangers in
coaching skills, and by publicizing failures as a means for learning.
o Ensure availability of experts in group dialogue and collaborative learning,
and invest in development of competencies of other employees in these
skills.
o Pick key areas of operations in which to conduct an experiment, and
publicize results, positive and negative, widely within the company. Set
target failure rate for experiments in service of innovation and make sure
reward systems do not contradict this goal.
Reframing Failure to a learning-oriented frame:
o Reframe expectations about failure as a natural byproduct of a healthy
process of experimentation and learning
o Reframe beliefs about effective performance involving avoiding failures to
involving learning from intelligent failure and communicating the lessons
broadly in the organization.
o Reframe self-protective psychological and interpersonal response to
failure to curiosity, humor, and a belief that being the first to capture
learning creates personal and organizational advantage.
o Reframe leadership from day to day management operation to recognizing
the need for spare organizational capacity to learn, grow, and adapt for the
future.
o Reframe managerial focus of controlling costs to promoting investment in
future success.
Five Characteristics of Intelligent Failures:
1. They result from thoughtfully planned actions.
2. They have uncertain outcomes.
3. They are modest in scale.
4. They are executed and responded to with alacrity.
5. They take place in domains that are familiar enough to permit effective learning.
Reframing failure to be associated with risk and improvement is a critical first step on the
learning journey.
Actionable Feedback - Unlocking the Power of Learning
Key Ideas:
 Actionable feedback is feedback that produces learning and tangible, appropriate
results, such as increasing effectiveness and improving performance on the job.
 Candid, insightful feedback is essential to development and learning (at times, it
can have a negative impact on performance)
 Cognitive and emotional dynamics can make it difficult to give and receive
feedback—therefore hindering learning and development.
 Attributional biases can affect either party and lead them to form conflicting
views. Self-serving biases and actor-observer biases are particularly relevant here
in explaining why conflicting views emerge. Delivery of negative feedback can be
seen as a personal attack and threaten one’s ego. Feeling this way can hinder
learning.
 Flawed feedback:
o Attacks the person rather than the person’s behavior
o Vague or abstract assertions
o Without illustrations
o Ill-defined range of application
o Unclear impact and implications for action
 Cognitive and emotional dynamics impacting feedback givers:
o Inference-making limitations
o Attributional biases
o Overconfidence
o Third-party perspective differences
o Strong emotions can impact ratings and feedback formulation and delivery
 Taking a third-party perspective and understanding the ladder of inference can be
extremely helpful in improving feedback. Engaging in self-questioning and 360degree feedback is also helpful
o The ladder of inference steps:
 Select data
 Paraphrase the data
 Name what’s happening
 Explain/evaluate what’s happening
 Decide what to do