Chapter 13

Business

Industrial/Organizational Psychology

• The study of human behavior in the workplace.

• Hawthorne plant studies found that simply observing workers increased their productivity.– “Hawthorne effect”

Personnel Selection

Typical Job Interviews

• Do interviews promote sound hiring?• Research suggests interviewing has mixed

effects.– Live interviews may actually diminish the

tendency to make simple stereotyped judgments.– But one source of bias may be physical

attractiveness.

• Sometimes lack predictive validity– “faking”

The Bias For Beauty in Hiring

Job Interviews: A Self-Fulfilling Prophecy

“Scientific” Alternatives to Traditional Interviews

• Polygraph or lie-detector test as a screening device

• Standardized tests measuring:– Intellectual and cognitive abilities– Job specific knowledge and skills– “Street smarts” or common sense

• Integrity tests– Overt and covert types– Can they be faked?

Can Integrity Tests Be Faked?

Structured Interviews

• Structured Interview: Each applicant is asked a standard set of questions and evaluated on the same criteria.

• Assessment Center: Structured setting in which job applicants are exhaustively tested and judged by multiple evaluators.

Personnel Selectionas a Two-Way Street

• Concrete, job-specific tests and interview situations seen as most fair.

• Dislike for more general standardized tests of intelligence, personality, and honesty.

• Preference for in-person interviews.

Affirmative Action

• The policy whereby preferences in recruiting, hiring, admissions, and promotion are given to women and underrepresented minority groups.

• The debate:– Preferential treatment is necessary to overcome

past inequities– Policy results in unfair reverse discrimination

American Attitudes Toward Affirmative Action

Affirmative Action: Effects on Individuals, Groups, and Organizations

Why Can Preferential Selection Policies Have Negative Effects?

• People perceive a procedure as unjust to the extent that it excludes those who are qualified simply because of their nonmembership in a group.

• Recipients become less able to attribute success on the job to their own abilities and efforts.

• Seen as a form of assistance.

Varying Effects of Affirmative Action on Women

Managing Affirmative Action

Culture and Organizational Diversity

• Affect of diversity on motivation, morale, and performance in the workplace?

• What is the net impact of diversity on a group’s performance?

Performance Appraisals

Performance Appraisals

• The process of evaluating an employee’s work within the organization.

• Objective, quantifiable measures are often not available for assessing a worker’s performance.– So, performance appraisals are usually based on

subjective measures.

Supervisor Ratings

• How accurate and fair are supervisors’ ratings of subordinates’ performances?

• Appraisal-related problems:– Halo effect– Contrast effect– Restriction of range problem

Self-Evaluations

• Workers are sometimes asked to evaluate their supervisors (“upward feedback”).

• Self-evaluations are subject to many biases because people like to present themselves favorably to others.

• Self-evaluations put both subordinates and female employees at a disadvantage.

New and Improved Methods of Appraisal

• Make evaluations right after performance.• Teach evaluators some of the skills necessary

for making accurate appraisals.• Use multiple evaluators and collect and

combine assessments

Due Process Considerations

• Principle #1: There should be adequate notice of expected performance standards.

• Principle #2: Employees should receive a fair hearing.

• Principle #3: Appraisals should be based on evidence of job performance.

• People judge organizational justice on multiple criteria

Leadership

The Classic Trait Approach

• What traits characterize “natural-born” leaders?

• Some traits have been found to be characteristic of people who become leaders.

• More situationally-oriented theories posit that the emergence of a given leader depends on time, place, and circumstances.

Quotable Conceptions of Leadership

Fiedler’s ContingencyModel of Leadership

• Leaders are either primarily task oriented or relations oriented.

• Task oriented leaders are most effective in clear-cut situations that are either low or high in control.

• Relations oriented leaders perform better in situations that afford a moderate degree of control.

NormativeModel of Leadership

• Leadership effectiveness is determined by the amount of feedback and participation leaders invite from workers.

• Effective long-term leadership depends on having the right amount of worker participation.– The “right amount” depends on situational

factors.

Transactional Leadership

• Compliance and support from followers is gained primarily through goal setting and the use of rewards.

• Depends on the leader’s willingness and ability to reward subordinates who perform as expected.– As well as the willingness and ability to correct

those who do not

Transformational Leadership

• Motivates followers to transcend personal needs in the interest of a common cause.– Particularly in times of growth, change, and crisis

• Articulates a clear vision of the future and then mobilizes others to join in that vision.

Characteristics of Transformational Leaders

Leadership among Women and Minorities

• Women and minorities are extremely underrepresented in top leadership positions.

• Are there gender differences with respect to leadership?– Only difference seems to be that men are more

controlling and women more democratic in their approaches.

Motivation at Work

Economic Reward Models

• Vroom’s Expectancy Theory: Workers become motivated and exert effort when they believe that:– Their effort will result in an improved performance– Their performance will be recognized and rewarded– The money and symbolic rewards that are offered

are valuable and desirable

• Goal setting is particularly important for motivation

Goal Setting and Performance Cycle

Bonuses, Bribes,and Intrinsic Motivation

• How a reward is interpreted determines its effect on motivation.– Controlling rewards such as bribes can lower

intrinsic motivation.– Informational rewards such as bonuses can have a

positive effect on intrinsic motivation.

The Effect of Payment on Intrinsic Motivation

Equity Considerations

• According to equity theory, people want rewards to be equitable.

• Being overpaid or underpaid should cause distress.

• To relieve the distress from inequity, a person can:– Restore actual equity – Convince oneself that equity already exists

Equity in the Workplace

Losing Sleep Over Underpayment and Organizational Injustice

Equity Considerations (cont.)

• Satisfaction may depend not only on equity outcomes but also on the perceived fairness of how the outcomes were determined.

• Equity in the workplace may be more important for men than for women.

• Gender gap is narrowing but is not completely closed

The Progress Principle

• Through a meta-analysis of 92 studies that reported correlations between pay and various aspects of job satisfaction, it was found that although the correlation is greater than zero, people's level of satisfaction at work was only weakly correlated with how much they were paid.

Economic Decision Making

The Symbolic Power of Money

• “Money changes people at a core, basic level,” that “having money makes people feel less connected and more independent, whereas having little money makes you feel more interdependent with others.”

Links Between Money and Social Rejection

Social Influences in the Stock Market

• The stock market is influenced by social psychological factors as much as by rational economic factors.– Social comparison and conformity revisited.

Social Influences in the Stock Market (cont’d)

• Misperceptions of random events, misattributions, and even unpublished rumors can influence decisions of investors.

• Endowment effect: Tendency to inflate the value of objects, goods, or services already owned

Commitment, Entrapment, and Escalation

• People can become entrapped by own initial commitments.

• Explanations for the escalation effect– Loss aversion– Feelings of personal responsibility

Sunk Cost Principle

• People often violate the sunk cost principle of economics.– The principle that only future costs and benefits,

not past commitments, should be considered in making a decision.

• Economic decisions are biased by past investments of time, money, and effort.