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All main topics / BWL / Personalwirtschaft

Management II (111 Cards)

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What are the two main purposes of organizational structure?
• to break down the overall organizational task into subtasks

• to coordinate these tasks to accomplish the overall objectives of the organization
Explain the expectancy theory.


-> Expectancy: A person‘s perception about the extent to which his or her effort will result in a certain level of performance


-> Instrumentality: A person‘s perception about the extent to which performance at a certain level will result in the attainment of outcomes

-> Valence: How desirable each of the outcomes available from a job or organization is to a person
According to the Expectancy Theory: When are employees highly motivated?
Expectancy is high: People perceive that if they try hard, they can             
                                  perform at a high level.

Instrumentality is high: People perceive that high performance leads           
                                       to the receipt of certain outcomes.

Valence is high: People desire the outcomes that result from high             

• Motivation will be high when workers believe:
- High levels of effort will lead to high performance.
- High performance will lead to the attainment of desired outcomes.
Give additional information on the Expectancy Theory.
• Other determinants of job performance: motivation is only one of several important determinants
- Skills and abilities - determine person/job fit
- Role perceptions - what employees believe their jobs duties to be
- Opportunities - chance to perform the job
• Managerial Applications of Expectancy Theory
- Clarify people’s expectancies that effort leads to performance
o train, make desired performance attainable, and help employee to attain level of performance
- Administer rewards with a positive valence
o Cafeteria-style benefit plan - incentive system in which worker can select the fringe benefits s/he wants from a menu of available alternatives
- Clearly link valued rewards and performance
o enhance beliefs about instrumentality by specifying what behavior leads to what rewards
What are need theories?
• Need
- A requirement for survival and well-being.
• Need Theories
- Theories of motivation that focus on what needs people are trying to
satisfy at work and what outcomes will satisfy those needs.
- Basic premise is that people are motivated to obtain outcomes at work to satisfy their needs.
o Managers must determine what needs a worker wants satisfied and
ensure that a person receives the outcomes when performing well.
Explain Maslows Hierarchy of Needs.
• The lowest level of unsatisfied needs motivates behavior
• Once this level is satisfied, the person tries to satisfy the needs on the next level

5. Self-actualisation needs
4. Esteem needs
3. Belongingness Needs
2. Safety Needs
1. Physiological Needs
Explain Alderfelders ERG Theory.
   Needs                          Description                              Example

3. Growth                    Self-development,              continually improve
                                      creative work                           skills

2. Relatedness        Interpersonal Relations,         Good relations,
                                           Feelings                       accurate feedback

1. Existence              Food, water, clothing            adequate pay for
                                         and shelter                          necessities

After lower level needs satisfied, person seeks higher needs. When
unable to satisfy higher needs, lower needs motivation is raised.

In contrast to Maslow, a person can be motivated by needs at more than one level at the same time.
Describe Herzberg’s Motivation-Hygiene Theory.
• Focuses on outcomes (motivator needs) that lead to higher motivation and job satisfaction, and those outcomes (hygiene needs) that can prevent dissatisfaction.

- Motivator needs relate to the nature of the work itself - autonomy,
responsibility, interesting work.

- Hygiene needs are related to the physical and psychological context of the work - comfortable work environment, pay, job security.
o Unsatisfied hygiene needs create dissatisfaction; satisfaction of
hygiene needs does not lead to motivation or job satisfaction.

- Insights:
o Focus attention on the difference between intrinsic (motivator) and
extrinsic (hygiene) needs.
o Managers should create jobs, which activate motivator not only
hygiene needs.
Describe McClelland’s Needs for Achievement, Affiliation and Power.
• Need for Achievement
- A strong need to perform challenging tasks well and meet personal
standards for excellence
• Need for Affiliation
- A concern for good interpersonal relations, being liked and getting along
• Need for Power
- A desire to control or influence others
• Which jobs require high need for power, for affiliation, or for
Describe the concept of Motivating by being Fair.
• Organizational Justice - people’s perception of fairness in organizations, consisting of perceptions regarding how decisions are made concerning organizational decisions and the distribution of outcomes

split up into:

• Procedural justice - focus is on the process used to resource allocation decisions / organizational decision making processes

• Equity theory - focus is on the perceived fairness of the outcomes
themselves / distribution of outcomes
Expain the Equity Theory.
- People strive to maintain a ratio of their own outcomes (rewards) to their own inputs (contributions) equal to the outcome/input ratio of others with whom they compare themselves
- Outcomes
o the rewards, such as salary and recognition, that employees receive from their jobs
- Inputs
o people’s contributions to their jobs, such as their experience, qualifications, or amount of time worked
• Overpayment inequity
o the condition, resulting in feelings of guilt, in which the ratio of one’s outcomes to one’s inputs is more than the corresponding ratio of comparison person
o individual may raise her inputs or lower his outcomes
• Underpayment inequity
o the condition, resulting in feelings of anger, in which the ratio of one’s outcomes to one’s inputs is less than the corresponding ratio of comparison person
o individual may lower her inputs or raise his outcomes
• Perceptual resolution of inequity
o change how you think about the situation
What is meant by procedural justice?
Making Decisions Fairly
• Structural side of procedural justice
- determining how decisions need to be made for them to be considered fair
- give people a say in how decisions are made - voice
- provide an opportunity for errors to be corrected - appeal process
- apply rules and policies consistently
- make decisions in an unbiased manner
• Social side of procedural justice - quality of interpersonal treatment
received at the hands of decision maker
• Interactional justice - perceived fairness of the interpersonal treatment used to determine organizational outcomes
• Informational justification - thoroughness of the information received about a decision
• Social sensitivity - amount of dignity and respect
demonstrated when presenting an undesirable outcome
What are the implications of procedural justice?
• Avoid underpayment
- employees may attempt to “even the score”
o Two-tier wage structures
o payment systems in which newer employees are paid less than
employees hired at earlier times who do the same work
• Avoid overpayment
- managers should strive to treat all employees equitably
- be open and honest about outcomes and inputs
• Give people a voice in decisions that affect them
- give people a say in matters that pertain to their jobs
• Present information about outcomes in a thorough, socially sensitive
- take sting out of undesirable outcomes
Describe the correlation of pay and motivation.
• Pay as a Motivator
- Expectancy: Instrumentality, the association between performance and outcomes, must be high for motivation to be high.
- Need Theory: pay is used to satisfy many needs.
- Equity Theory: pay is given in relation to inputs.
• Merit Pay Plan
- A compensation plan that bases pay on individual, group and/or
organization performance.
- Individual plan: when individual performance (sales) can accurately
- Group plan: when group that works closely together is measured and rewarded as a group.
- Organization plan: when group or individual outcomes not easily
Distinguish between a higher salary and a bonus.
• Motivational Value of a Bonus Is Higher When:
- Salary levels are unrelated to current performance.
- Changes in other compensation items (cost of living, seniority) are not having a large effect in increasing compensation.
- Salaries rarely change and performance does.
• Benefits of Using Bonuses
- Do not become permanent part of compensation
- Are more directly tied to current performance
- Provide more flexibility in distributing rewards
• Employee Share Option
- A financial instrument that entitles the bearer to buy shares of an
organization’s stock at a certain price during a certain period of time or under certain conditions.
o To attract high-level managers
o To motivate employee performance through ownership in the firm
What are the requirements of pay for performance?
- PfP has to be based on quantifiable criteria
- employees with an instrumental work orientation concentrate on
performance criteria that are linked with pay
• Example: pay for sales
o Short-term maximization
o Neglect of customer satisfaction
o Neglect of customer information, deadlines, repairs etc.
o Reduced cooperation among salespeople
o Company performance will suffer in the long run
• These dilemmas increase with complexity of tasks
• Bonuses and stock options are usually not options of individual PfP
How are pay for performance and motivation correlated?
• Elements which should be included in PfP schemes: innovation,
independent actions, contributions to team performance etc.
• Results of empirical analyses:
- Overall no correlation between PfP and company performance
- Reverse causality possible: company performance results in incentives
- PfP increases motivation only for simple, well measurable tasks
- Badly designed PfP systems can have negative effects:
o With “multiple tasks” concentration on tasks that lead to monetary
o Short-term orientation
o Imbalance of exploration and exploitation
What is meant by Crowding out Intrinsic Motivation?
• Monetary incentives only motivating when interpretable as supportive
• However: Intrinsic motivation gets crowded out if relationship between the company and its employees is reduced to PfP
• Motivation through PfP is overcompensated through loss of intrinsic
motivation, especially with complex tasks
• Effects dependent on characteristics of the individual:
- Extrinsically motivated persons
o Income maximizers
o Status oriented persons  important: comparison with others
- Intrinsically motivated persons
o Loyals  own goals in congruence with company goals
o Formalists  important: procedural justice
o Self-controlled persons  pursuit of own ideas
Describe the correlation of Individuals, PfP and Motivation.
• PfP motivates certain individuals:
- Motivating for income maximizers if relationship between performance and pay is seen as acceptable
- Motivation for status oriented people if pay effects their status positively
• PfP demotivates other personality types
- Loyals are getting demotivated – pay is interpreted as signal that
performance is not seen as sufficient, reduction of self-esteem
- Formalists perceive PfP as inappropriate outer control
- Self-controlled people see their own interpretation of their tasks
•  PfP only potentially motivates two types but only under certain
conditions: income maximizers if they accept the function between pay and performance and status oriented ones if income makes a difference for their status
What has to be assumed in pfp-systems?
• People have enough information to work effectively and all other
organizational systems are not the main roadblocks to performance
• Performance is under the control of the people who get the incentives
• Financial incentives turn attention to the organizational values and its priorities
• PfP attracts the right people and repels the wrong ones
• Theses: Many organizations implement PfP because it is a management fashion
What are the Hazards of PfP?
- Incentives signal what is important, but the signal may be too blunt
- Incentives do motivate behavior, but sometimes it‘s the wrong behavior.
Conditions under which the right behavior is motivated:
- Task is easy to learn, little interdependence with others
- Task is easy to monitor for quality
- Employee’s goals are clear and one-dimensional
- Incentive systems do affect who joins the organization, but the results
can backfire
- The use of variable pay increases dispersion, which can damage
A 2004 survey 0f 350 companies showed that 83 percent of
organizations believe their pay-for-performance programs are only
somewhat successful or not successful at accomplishing their goals
What are Myths of Executive Compensation?
- Total shareholder return and earnings per share are good measures to use in executive pay-for-performance plans
- All equity compensation (including plain stock options and time-vested restricted stock) creates alignment with longer-term interests ofshareholders
- Executive compensation surveys and benchmarking reports accurately reflect the market for executive talent and can be used at face value
- Money is the key driver of senior executive and executive officers, and they will leave if boards renegotiate pay and pay-for-performance
- CEO pay is driven by competition
- Compensation committees are independent
What are the Three key questions to ask concerning PFP?
- What are we paying for?
- How can we link pay with longer-term performance and value creation?
- How much to pay? (Performance driven, internally equitable, market
Explain the importance of communication.
• Communication
- The sharing of information between two or more individuals or groups to reach a common understanding.

• Importance of Good Communication
- Increased efficiency in new technologies and skills
- Improved quality of products and services
- Increased responsiveness to customers
- More innovation through communication
Describe the Communication Process.
                                             Transmission Phase

Message     >      Encoding    >   Medium    >    Decoding by Receiver

Sender                           N   o   i   s   e                            Receiver

Decoding by    <   Medium    <    Encoding       <        Message
(now receiver)

                                              Feedback Phase

• Messages are transmitted over a medium to a receiver.
- Medium: the pathway over which the message is transmitted (e.g.
telephone, written note, email).
- Receiver: the person getting the message.
o The receiver decodes (interprets) the message, allowing the receiver to understand the message.
o This is a critical point: failure to properly decode the message can lead to a misunderstanding.
- Feedback by receiver informs the sender that the message is understood or that it must be resent.
Point out the difference between Verbal & Nonverbal Communication.
• Verbal
- written communication
- spoken messages

• Nonverbal
- facial expressions
- body language
- styles of dress
What is the Role of Perception in Communication?
• Perception – process through which people select, organize and
interpret sensory input to give meaning and order to the world
around them

• Biases – systematic tendencies to use information about others in ways that can result in inaccurate perceptions

• Stereotypes – often inaccurate beliefs about the characteristics of
particular groups of people
- Can interfere with the encoding and decoding of messages
What makes Effective Communication?
• Managers and their subordinates can become effective communicators
- Selecting an appropriate medium for each message—there is no one “best” medium.
- Considering information richness
o A medium with high richness can carry much more information to aid understanding.

Dangers of ineffective communication?
What is meant by information richness?
• The amount of information that a communication medium can carry
• The extent to which the medium enables the sender and receiver to
reach a common understanding

1. Face-to-face communication (highest information richness)
2. Spoken communication electronically transmitted
3. Personally addressed written communication
4. Impersonal written communication (low information richness)
Distinguish between different communication media.
• Face-to-Face
- Has highest information richness.
- Can take advantage of verbal and nonverbal signals.
- Provides for instant feedback.
o Management by wandering around takes advantage of this with
informal talks to workers.
o Video conferences provide much of this richness and reduce travel costs and meeting times.

• Spoken Communication Electronically Transmitted
- Has the second highest information richness.
o Telephone conversations are information rich with tone of voice,
sender’s emphasis and quick feedback, but provide no visual
nonverbal cues.

• Personally Addressed Written Communication
- Has a lower richness than the verbal forms of communication, but still is directed at a given person.
o Personal addressing helps ensure receiver actually reads the
message—personal letters and e-mail are common forms.
o Does not provide instant feedback to the sender although sender may get feedback later.
o Excellent media for complex messages requesting follow-up actions by receiver.

• Impersonal Written Communication
- Has the lowest information richness.
o Good for messages to many receivers where little or no feedback is expected
o Examples:
newsletters reports rules and regulations
What is meant by Communication Networks?
• The pathways along which information flows in groups and teams and throughout the organization.
- Choice of communication network depends on:
o The nature of the group’s tasks
o The extent to which group members need to communicate with each other to achieve group goals.

- Chain Network
- Circle Network
- Wheel Network
- All-chanel Network
What is meant by Organization Communication Networks?
• Organization Chart
- Summarizes the formal reporting channels in an organization.
o Communication in an organization flows through formal and informal
o Vertical communications flow up and down the corporate hierarchy.
o Horizontal communications flow between employees of the same
o Informal communications can span levels and departments—the
grapevine is an informal network carrying unofficial information
throughout the firm.
Describe different Technological Advances in Communication?
• Internet
- Global system of computer networks that is easy to join and is used by employees to communicate inside and outside their companies
• World Wide Web (WWW)
- “Business district” with multimedia capabilities
• Intranets
- A company-wide system of computer networks for information sharing by employees inside the firm.
• Groupware
- Computer software that enables members of groups and teams to share information with each other and improve communication.
o Best used to support team-oriented working environments.
What are Barriers to Effective Communication?
• Messages that are unclear, incomplete, difficult to understand

• Messages sent over an inappropriate medium

• Messages with no provision for feedback

• Messages that are received but ignored

• Messages that are misunderstood

• Messages delivered through automated systems that lack the human element
Name important Communication Skills for Managers as Senders.
• Send clear and complete messages.
• Encode messages in symbols the receiver understands.
• Select a medium appropriate for the message and, importantly, one
that is monitored by the receiver.
• Avoid filtering (holding back information) and distortion as the
message passes through other workers.
• Ensure a feedback mechanism is included in the message.
- Provide accurate information to avoid rumors.
Name important Communication Skills For Managers as Receivers?
• Pay attention to what is sent as a message.
• Be a good listener: don’t interrupt.
• Ask questions to clarify your understanding.
• Be empathetic: try to understand what the sender feels.
• Understand linguistic styles: different people speak differently. (cultural differences, gender differences)
• Speed, tone, pausing all impact communication.
- This is particularly true across cultures and managers should expect and plan for this.
What communication means can be used for the initiation of organizational change?
Visions -> Campaigns -> Training, Workshops, Newsletter, Competitions, Logos/ Stickers
Explain how Deficient Communication Leads to Drastic Effects on the Organization.
Insufficient experiencing of Leadership in Corporate Change
• The top level does neither symbolize nor coordinate the change process Insufficient insight of top management
-> … leads to distrust
• The necessity of the change is questioned

Insufficient insight of top management
• Top managers are not aware of their role in the change process and do not prepare
-> … takes impetus and power off the change
• Speechlessness toward employees disempowers potential drivers

Missing: „sense of urgency“
• There is no consciousness for the emergency of the change
-> … prevents the building up of change motivation
• The crucial motif for change is missing

Unclear overall picture
• Because of a multitude of individual projects the overall vision gets out of sight
-> … deprives the change of its dynamics
• Information remains without any effect because it is not possible to integrate it into an overall picture

A deficient and incomplete process planning
• Moves in the change process are communicated ad hoc
-> … rattles employees and slows down the change process
• The Process is perceived as
What are the rules for effective communivation?
1. Top management leads by example: Agenda, Big Picture, Walk the talk!

2. Involve middle management as communicators!

3. Clear language – avoid jargon!

4. Content before form! Instruction, understanding/acceptance, mobilization

5. Enable participation through „storytelling“
Stories emotionalize, enable identification, induce new scripts

6. Orchestrate – harmonize instruments: HRM (Workshops, Trainings, seminars), internal communication (media, intranet, publications, events)

7. Secure sustainability: measure, companywide organization of
knowledge exchange, provide feedback!
Why is a vision essential in a change process?
• The purpose of a vision in a change process
 Clarifying the general direction for change
 Motivating people to take steps in the right direction, even if they are initially painful
 Helping to coordinate actions of different people

• The relationship among vision, strategies, plans and budgets
Leadership creates vision (a sensible and appealing picture of the future) and strategy
-> Management plans the budget
What are the functions of visions?
• Orientation
• Coordination
• Motivation
• Sensemaking
• Image
• Legitimation
• Facade
What can you say about The Nature of an Effective Vision?
A vision can be a mundane and simple, because it is only one element in a large system that includes strategies, plans and budgets

• Characteristics of an effective vision
 Imaginable: Conveys a picture of what the future will look like
 Desirable: Appeals to the long-term interest of stakeholders
 Feasible: Comprises realistic, attainable goals
 Focused: Is clear enough to provide guidance in decision making
 Flexible: Is general enough to allow individual initiative and alternative responses
 Communicable: Is easy to communicate; can be explained within five minutes
Distinguish between effective and ineffective visions.
• Effective visions
 Ambitious enough to force people out of routines (e.g. becoming best)
 Aim in a general way at providing better products at lower costs
 Take advantage of fundamental trends
 Have a certain moral power

• Ineffective visions
 Financial Goals
 Vague listing of positive values
 Unreadable and too detailed
How should a change vision be communicated?
• Key elements in the effective communication of a vision
- Simple language without all jargon and technobabble
- Using metaphors, analogies and examples
- Spreading the vision through multiple forums
- Leadership by example: head executives must be role models for the new vision
- Explanation of seeming inconsistencies
- Two-way communication is more powerful than one-way communication
What is the Nature of Motivation?
• Motivation

- The psychological forces acting on an individual that determine:

   o Direction - possible behaviors the individual could engage in
   o Effort - how hard the individual will work
   o Persistence - whether the individual will keep trying or give up
- Explains why people behave the way they do in organizations

• Key Points

- Motivation and job performance are not synonymous
   o motivation is one of several determinants of performance
- Motivation is multifaceted
   o several motives may be operative at the same time
- People are motivated by more than just money
   o goals, other than financial goals, are operative at work

• Intrinsically Motivated Behavior

- Behavior that is performed for its own sake.
   o The source of the motivation that comes from actually engaging 
       in the behavior.
   o The sense of accomplishment and achievement derived from    
       doingthe work itself

• Extrinsically Motivated Behavior
- Behavior that is performed to acquire material or social rewards or to avoid punishment.
   o The source of the motivation is the consequences of the   
       behavior and not the behavior itself.
What is the Motivation Equation?
Managers should assure that people are motivated to contribute inputs, which lead to a high performance of the organization and that this results in outcomes, which people desire.

Time, Effort, Education, Experience, Skills, Knowledge, Work, Behaviors
Contributes to organizational efficiency, organizational effectiveness and the attainment of organizational goals
Pay, Job security, Benefits, Vacation time, Job satisfaction, Autonomy, Responsibility, A feeling of, accomplishment, The pleasure of doing, interesting work
Does Social loafing depend on culture?
 Individualistic Cultures:
National groups whose members place a high value on individual accomplishments and personal success

 Collectivistic Cultures: National groups whose members place a high value on shared responsibility and the collective good of all

In individualistic cultures like the US people performed better alone than in groups. Social loafing occurs.

In collectivistic cultures likeChina or Israel people performed better as member of groups than they did alone.
Give suggestions to enhance group performance.
• Increase the task and activity-based attractiveness of the group
• Develop a clear purpose, clarify work assignments
• Share leadership functions
• Identify the norms and expectations of the wider social system
• Enable common achievements and mutual social support; reduce
• Foster civilized disagreement with consensus orientation
• Allow for style diversity
• Facilitate the development of trust
Define the terms group and team.
• Group

- Two or more people who interact with each other to accomplish certain goals or meet certain needs.

• Team

- A group whose members work intensely with each other to achieve a specific, common goal or objective. All teams are groups but not all groups are teams.

o Teams often are difficult to form.
o It takes time for members to learn how to work together.
How can group dynamics be described?
Group Dynamics focus on the nature of groups – the variables governing their formation and development, their structure, and their interrelationships with individuals, other groups, and the organizations within which they exist.

Three points of interest: Roles, Norms, Cohesiveness
Which determinats and types of group roles do you know?
• Role: The typical behaviors that characterize a person in a social

• Role Incumbent: A person holding a particular role

• Role Expectations: The behaviors expected of someone in a
particular role

• Role Differentiation: The tendency for various specialized roles to
emerge as groups develop

• Common Roles :
- Task-Oriented Role: The activities of an individual in a group who,
more than anyone else, helps the group reach its goal
- Socioemotional Role: The activities of an individual in a group who is supportive and nurturant of other group members, and who helps them feel good
- Self-Oriented Role: The activities of an individual in a group who
focuses on his or her own good, often at the expense of others
Specify the three types of organizational control.
Input Stage: Feedforward control (Anticipate problems before they

Conversion Stage: Concurrent control (Manage problems as they

Output Stage: Feedback control (Manage problems after they have
What said Belbin in 1996 about roles in groups?
an ideal work group produces followings roles:

Resource Investigator
Team Worker
Define Group Norms.
• Norms = generally agreed upon informal rules that guide group members’ behavior

- Shared expectations of all members how group members should think and behave in certain situations

- Rule for the joint communication and cooperation on which group
members agree on

- Shared standards which set the behavior, motivations and interactions of group members

• Prescriptive norms dictate the behaviors that should be performed

• Proscriptive norms dictate specific behaviors that should be avoided
Describe four ways by which norms develop.
1) Precedents set over time:
Seating location of each group member around a table

2) Carryovers from other situations:
Professionel standards of conduct

3) Explicit statements from others:
Working a certain way because you are told "that's how we do it around here"

4) Critical events in group history:
After the organization suffers a loss due to a one's person divulging company secrets, a norm develops to maintain secrecy  
What do you know about the Milgram experiment?
It measures the willingness of study participants to obey an authority figure who instructed them to perform acts that conflicted with their personal conscience.

"[People] have learned that when experts tell them something is all right, it probably is, even if it does not seem so. (In fact, it is worth noting that in this case the experimenter was indeed correct: it was all right to continue giving the 'shocks' — even though most of the subjects did not suspect the reason.)"[14]

The first is the theory of conformism, based on Solomon Asch's work, describing the fundamental relationship between the group of reference and the individual person. A subject who has neither ability nor expertise to make decisions, especially in a crisis, will leave decision making to the group and its hierarchy. The group is the person's behavioral model.

The second is the agentic state theory, wherein, per Milgram, the essence of obedience consists in the fact that a person comes to view himself as the instrument for carrying out another person's wishes, and he therefore no longer sees himself as responsible for his actions. Once this critical shift of viewpoint has occurred in the person, all of the essential features of obedience follow.[13]
Describe Tuckman’s Five-Stage Theory of Group Development.
1) Forming: Definition of goal and tasks; allocation of resources (Task orientation / Test of behavioral patterns)

2) Storming: Redefinition of tasks and goals; Negotiating about approaches; Development of internal group structure; Conflicts may arise (Emotional reaction to tasks and demands / Internal group conflicts)

3) Norming: Collecting and interpreting Information; developing group cohesion (Open exchange of Relevant information)

4) Performing: The group makes decisions and further specifies its structure (Emergence of alternatives / Refinement of role structure)

5) Adjourning (Trennung): The group disintegrates
Define Group cohesiveness.
• The degree to which members are attracted to their group

• Determinants of cohesiveness:
- Group size
- History of success
- Homogeneity of the group (similar education, attitudes)
- Social contacts within the group
- Inner-group competition
- Competition with other groups
- Agreement on the groups goals
What are the effects of group cohesion?
• Enforcement of the effectiveness of group norms

• Strengthening of the individual security perception
- Orientation and sense-making
- Reduction of fear and stress
- Protective function of the group

• Less fluctuation

• Increasing conformity

• Predictability of behavior of group members
What is the downside of group cohesion?
Groupthink and Peer Pressure

• Symptoms:
- Invulnerability
- Inherent morality
- Rationalization
- Stereotyped views of opposition
- Self-censorship
- Peer pressure
- Mindguards

Suggest guidelines for avoiding group think.
• Admit shortcomings; promote open inquiry
Search for flaws and limitations of decisions; avoid reaching premature agreements

• Use subgroups
If subgroups disagree, a discussion of their differences is likely to raise important issues

• Hold second-chance meetings
Before implementing a decision, a review meetings can seek doubts and propose new ideas

 Techniques: Stepladder technique
- Devil‘s advocate technique
- Delphi technique
- Nominal group technique
Describe the stepladder technique.
• A technique for improving the quality of group decisions that minimizes the tendency for group members to be unwilling
to present their ideas by adding new members to a group one at a time and requiring each to present his or her ideas
independently to a group that already has discussed the problem at hand

Step 1: Two Individual decisions of two independent persons

Step 2: Tentative Group Decision made by Person A and B
              + individual Decision of Person C

Step 3: Tentative Group Decision made by Person A, B and C
              + individual decision of person C

Step 4: Final Group decision made by Person A, B, C and D
Describe the Delphi technique.
• A systematic way of collecting and organizing the opinions of several experts into a single decision

The Delphi method is a systematic, interactive forecasting method which relies on a panel of experts. The experts answer questionnaires in two or more rounds. After each round, a facilitator provides an anonymous summary of the experts’ forecasts from the previous round as well as the reasons they provided for their judgments. Thus, experts are encouraged to revise their earlier answers in light of the replies of other members of their panel. It is believed that during this process the range of the answers will decrease and the group will converge towards the "correct" answer. Finally, the process is stopped after a pre-defined stop criterion (e.g. number of rounds, achievement of consensus, stability of results) and the mean or median scores of the final rounds determine the results.[1]

Describe the Nominal Group Technique.
• A technique for improving group decisions in which small groups of individuals systematically present and discuss their ideas before privately voting on their preferred solution. The most preferred solution is accepted as the group’s decision.

1. A small group gathers around a table and receives instructions; Problem is identified.

2. Participants privately write down ideas about the solution.

3. Each participants ideas are presented, one at a time, and are written on a chart until all ideas are expressed.

4. Each idea is discussed, clarified, and evaluated by group members

5. Praticipants privately rank the ideas in order of their preference.

6. The highest-ranking idea is taken as the groups decision.
How are Groupthink, Cohesion and Performance correlated?
• Group pressure may have positive or negative consequences for
- Performance pressure
- Performance restraints

 The level of group pressure is positively related to narrowing performance rather than to a level of performance.

Put differently: The correlation between cohesion and performance is positive if the group standards are high and negative if the group standards are low.

• Success and performance may also be a reason for, rather than a
consequence of, group cohesion  inverse causality

• Cohesive groups are more productive if the cohesion rests on task and activity-based attractiveness
What is meant by Organization-Wide Goal Setting?
Corporate-level managers set goals for individual divisions that will
allow the organization to achieve corporate goals

Divisional managers set goals for each function that will allow the
division to achieve its goals

Functional managers set goals for each individual worker
that will allow the function to achieve its goals
In which Situations is group performance higher than individual performance?
• Superior group performance is based on two variables:
a) Actual task
b) Coordination of the group process

• Actual task:
Group performance is superior to individual performance if the task is:
- Complex (comprises many, interdependent aspects)
- Difficult to be structured
- Multi-level (no solution in one step)

• Coordination of the group process:
- Individual and separate work as the first step
- Exchange and recombination as the second step
o Intervening variables: groupthink; distribution of communication; establishment of sub groups; competition between group members
- Acceptance of interim solutions by group members
How is Individual Performance influenced in Groups?
• Two basic mechanisms

• Social facilitation
- Working in the presence of others: Depending on how well someone knows the task, presence of others can improve or reduce performance
- Performance monitoring

• Social loafing: Free riding when working with others

Individual performance in groups depends on the task type and the perceived relation of the individual to the group.

Learning Task: Negative Correlation with relation to group
Performance Task: Positive Correlation with relation to group
What is social loafing?
- The human tendency to put forth less effort in a group than individually.
o Results in possibly lower group performance and failure to attain
group goals

- Reducing social loafing:
o Make individual efforts identifiable and accountable.
o Emphasize the valuable contributions of individual members.
o Keep group size at an appropriate level.
Describe the steps of a control process.
Step 1:
Establish the standards of performance, goals, or targets
against which performance is to be evaluated

Step 2:
Measure actual performance

Step 3:
Compare actual performance against chosen
standards of performance

Step 4:
Evaluate the result and initiate corrective action if
the standards not being achieved
What is Organizational Control?

Managers monitor and regulate how efficiently and effectively an organization and its members are performing the activities necessary to achieve organizational goals.

- Keeping an organization on track, anticipating events, changing the
organization to respond to opportunities and threats
Which questions concerning organisational control should be asked?
Managers must monitor and evaluate:

- Is the firm efficiently converting inputs into outputs?
o Are units of inputs and outputs measured accurately?
- Is product quality improving?
o Is the firm’s quality competitive with other firms?
- Are employees responsive to customers?
o Are customers satisfied with the services offered?
- Are our managers innovative in outlook?
o Does the control system encourage risk-taking?
What are operating budgets?
(Output Control)

Blueprints state how managers intend to allocate and use the resources they control to attain organizational goals effectively and efficiently.

- Each division is evaluated on its own budgets for cost, revenue or
- Managers are evaluated by how well they meet goals for controlling costs, generating revenues or maximizing profits while staying within their budgets.
What are the tasks for Change Management for SOP’s?
(Behaviour Control)

- Establish responsibilities for rules
- Formulate goals for rules (intention)
- Use simple language
- Use graphical representation whenever possible
- Institutionalize regular evaluation
- Minimize number of SOP
Define Organizational Culture.
The set of internalized values, norms, standards of behaviour and common expectations that control the ways in which individuals and groups in an organization interact with each other and work to achieve organizational goals.
Describe a Concept of Organizational Culture.
1. Symbol systems, manifestations
  language, rituals clothes, personal conduct, leadership, symbols
(Visible, in need of interpretation)

2. Norms and standards
    Maxims, codes of behaviour, prohibitions.
(Partly visible, Partly unconscious)

3. Basic Assumptions about the environment:
    Truth, Human nature
(invisible, Mostly unconscious)
Give some facts about Organizational Culture.
- Adaptive Culture
Strong and cohesive culture that controls employee attitudes and behaviours

- Inert Culture
Culture that leads to values and norms that fail to motivate or inspire employees

- Points to Remember About Organizational Culture
Organizations contain several cultures
Organizational cultures may change over time
No one culture is better than another
It is not the task of the company culture to align all
subcultures, rather to provide a common reference point
What are Negative Effects of Strong Cultures?
• Thinking in stereotypes
• Conformity pressures
• Suppression of creative problem solutions
• Fixation on success patterns of the past
• Neglect of negative feedback

urther problems:
- “Management through ideology”
- Danger of misuse and indoctrination
- Concealment of reality (e.g. Direct Selling Companies)
- Problem with cultures that are incompativble with the organization’s structure
What are Positive Effects of Strong Cultures?
• Provides clear orientation for actions through reduction of complexity
• Efficient communication network
• Fast information processing and decision-making
• Fast implementation of plans and projects
• High motivation and loyalty
• Less need for control
Under which conditions is a strong organizational culture advantageous?
o High task uncertainty (ambiguity), complexity, and interdependence of transactions.
o Cooperation among several organizational members is important
Define Organizational Learning?
Process through which managers try to increase organizational members’ abilities to understand and appropriately respond to changing conditions

- Impetus for change
- Can help members make decisions about changes
How does organizational change happen?
Comes about when those who are affected evaluate it positively

Amount of dissatisfaction with current conditions
+Availability of a desirable alternative
+Existence of a plan for achieving a desirable alternative

= Benefit of making change

- Cost of making change

either change is made or not
Describe possible directions of change.
• Top-down change
- Top managers identify what needs to be changed and move quickly to implement changes throughout the organization

• Bottom Up Change
- Managers at all levels work together to develop a detailed plan for change
What are rules for an effective chnage?
1. Top management leads by example: Agenda, Big Picture, Walk the talk!

2. Involve middle management as communicators!

3. Clear language – avoid jargon!

4. Content before form! Instruction, understanding/acceptance, mobilization

5. Enable participation through „storytelling“

6. Orchestrate – harmonize instruments: HRM (Workshops, Trainings, seminars), internal communication (media, intranet, publications, events)

7. Secure sustainability: measure, companywide organization of knowledge exchange, provide feedback!
What is direct supervision?
(Behaviour Control)

Managers who directly manage can teach, reward, lead by example and take corrective action as needed.

• Easy to design
• Clear responsibilities
• Flexible

• Can be very expensive since only a few workers can be personally managed by one manager
• Overload of chain of command
• Supervisor needs high leadership qualifications
• Arbitrariness
• Close supervision demotivates workers who desire less scrutiny and more autonomy, causing them to avoid responsibility.
What is meant by Management by objectives?
(Behaviour control)

A goal-setting process in which managers and subordinates negotiate specific goals and objectives for the subordinate to achieve and then periodically evaluate their attainment of those goals.
- Specific goals are set at each level of the firm.
- Goal setting is participatory with manager and worker
- Periodic reviews of subordinates’ progress toward goals are held (pay raises and promotions are tied to goal attainment).
- Teams are also measured in this way with goals and performance
measured for the team.
What is meant by Bureaucratic Control?
(Behaviour Control)

Control through a system of rules and standard operating procedures (SOPs) that shapes the behaviour of divisions, functions and individuals.

- Rules and SOPs tell the worker what to do (standardized actions)
so outcomes are predictable.
- Rules contain the results of learning through experience

- There is still a need for output control to correct mistakes.
- Rules easier to make than discard, leading to bureaucratic “red tape” and
slowing organizational reaction times to problems.
- Firms become too standardized and lose flexibility to learn, to create new ideas and solve to new problems.
What are appropriate Techniques for Designing Jobs that Motivate?
• Combine tasks
• instead of having several workers perform separate parts of a whole job, have
each person perform the entire job
• Open feedback channels
• Establish client relationships
• person performing a job comes into contact with the recipient of that service
• Load jobs vertically
• give people greater responsibility for the job
What is typical of Grouping Jobs into Functions?
Functional Structure:

- An organizational structure composed of all the departments that an organization requires to produce its goods or services.

- Advantages
o Encourages learning from others doing similar jobs.
o Easy for managers to monitor and evaluate workers.

- Disadvantages
o Difficult for departments to communicate with others.
o Preoccupation with own department and losing sight of organizational goals.
Describe four Divisional Structures!
• Divisional Structure
- An organizational structure composed of separate business units within which are the functions that work together to produce a specific product for a specific customer

• (Global) Product Structure
- Customers are served by self-contained divisions that handle a specific type of product or service.

• Market Structure
- Each kind of customer is served by a self-contained division
- Global market (customer) structure
o Customers in different regions buy similar products so firms can locate manufacturing facilities and product distribution networks where they decide is best.

• (Global) Geographic Structure
- Each region, country or area with customers with differing needs is served by a local self-contained division producing products that best meet those needs.
- Different divisions serve each world region when managers find different problems or demands across the globe.
- Generally, occurs when managers are pursuing a multi-domestic strategy
What is meant by Market (Customer) Structure?
• Basic principle: to group tasks which belong together into one department.
• But which tasks belong together?
• The sales department of a company that sells soups, honey and snacks to wholesalers, large customers and retailers
Describe the Matrix Design Structure!
- An organizational structure that simultaneously groups people and
resources by function and product.
- Results in a complex network of superior-subordinate reporting
- What are the potential advantages and drawbacks of the matrix structure?
Describe the Product Team Design Structure!
- The members are permanently assigned to the team and empowered to bring a product to market.
- Avoids problems of two-way communication and the conflicting demands of functional and product team bosses.
- Cross-functional team is composed of a group of managers from different departments working together to perform organizational tasks.
What are Hybrid Structures?
- The structure of a large organization that has many divisions and
simultaneously uses many different organizational structures

o Managers can select the best structure for a particular division – one division may use a functional structure, another division may have a geographic structure.
o The ability to break a large organization into smaller units makes it easier to manage.
How is Authority determined!
Coordinating Functions: Allocating Authority

• Authority
- The power to hold people accountable for their actions and to make decisions concerning the use of organizational resources.

• Hierarchy of Authority
- An organization’s chain of command, specifying the relative authority of each manager.
o Span of Control: refers to the number of workers a manager manages.
Specify the difference between tall and flat hierarchies!
• Tall structures have many levels of authority and narrow spans of
- As hierarchy levels increase, communication gets difficult creating delays in the time being taken to implement decisions.
- Communications can also become garbled as it is repeated through the firm.
• Flat structures have fewer levels and wide spans of control.
- Structure results in quick communications but can lead to overworked managers.
• What can be done to flatten organizational structures?
• Should jobs for individuals be highly specialized or less specialized?
• What can be done to widen spans of control?
Describe organizational structure!
- The organizational structure, control systems, culture, and human
resource management systems that together determine how efficiently and effectively organizational resources are used.
What is meant by organizing?
- The process by which managers establish working relationships among employees to achieve goals
What is organizational design?
- The process by which managers make specific choices that result in a particular kind of organizational structure.
Describe the Contigency Theory!
Different organizational conditions require different structures:

Basic elements:

• Factors affecting the organizational structure
• Description and measurement of dimensions of the organizational structure
• Effects of different situation-structure-constellations on organizational members’ behavior
Which factors determine the design of organizational structure?
- Organizational Environment
- Technology
- Strategy
- Human Resources

- Tension of Specialisation (Differentiation) vs. Coordination (Integration)
Describe four Coordination Mechanism!

• Advantages:
- Easy to establish
- Flexible with regard to tasks
• Disadvantages:
- Cost intensive
- Leads to many levels
- Increases rigidity


• Always present
• Can be supported through establishment of teams (committees, groups, etc.)
• Advantages: increase in flexibility and creativity, self-commitment
• Possible disadvantages: groups are often time-consuming
• Remedy: rules, training

Programs (Standard Operating Procedures)

• Often listed in handbooks, intranet
• More or less detailed and more or less flexible
• Functions: relieve of hierarchy, reduction of information, uncertainty absorption, independence from persons, reduction of qualification
• Possible disadvantages: increase of inertia
• Remedy: permanent change service

Compare Centralized and Decentralized Authority!
- Decentralization puts more authority at lower levels and leads to flatter organizations.
o Works best in dynamic, highly competitive environment
o Stable environment favors centralization of authority
Name three different Forms of Integrating Mechanisms!
Liaison Rules
Task Force
Cross Functional Team
Integrating Role
Explain Strategic Alliances!
• Strategic Alliance
- An agreement in which managers pool or share firm’s resources and know-how with a foreign company and the two firms share in the rewards and risks of starting a new venture.
• Network Structure:
- A series of strategic alliances that an organization creates with suppliers, manufacturers and distributors to produce and market a product.
• What are the potential advantages and disadvantages of B2B networks?
Name advantages & disadvantages of division of work!
Positive effects:

• Short introduction period
• Simple tasks  low work qualification
• Greater expertise and economies of scale through frequent repetition
• Low operational demands

Negative effects:

• Monotonous work leads to high turnover and absenteeism
• Motivation- and recruiting problems
• Need for higher levels of integration to bring the specialized parts back together
• Downgrading of jobs/alienation from work
• Narrow interests
What is job design?
- The process by which managers decide how to divide tasks into specific jobs.
- The appropriate division of labor results in an effective and efficient workforce
What is job simplification?
- The process of reducing the tasks each worker performs.
What is job enlargement?
- Increasing the number of tasks for a given job to reduce boredom.
What is job enrichment?
- Increasing the degree of responsibility a worker has over a job can lead to increased worker involvement.
Describe the Job Characteristics Model!
Job characteristics    Psychological states    Outcomes

Skill variety                 Experienced
Task identity               meaningfulness
Task significance       of work

Autonomy                    Experienced                  High motivation
                                     responsibility for            High performance
                                     work outcomes              High satisfaction

Feedback                    Knowledge of
                                      results of work
Flashcard set info:
Author: Egregius
Main topic: BWL
Topic: Personalwirtschaft
School / Univ.: Universität Mannheim
Published: 11.03.2010
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