Cognitive Biases

Cognitive biases are present in our daily lives. Last Thursday my boyfriend came to Shippensburg to visit me. We decided that we would go out to eat with two other couples. When we were deciding where we wanted to go, he said that he didn't want to go to a hibachi restaurant because we ate there last time. We then considered italian and seafood restaurants, but we would have to travel further and possibly make reservations. We considered going to Italian Village becuase its BYOB and located between Shippensburg and Chambersburg. We decided against this because we dind't know how well they could handle a group of 6. Eventually, we decided that the Shippensburg hibachi restaurant would be best afterall. When I texted our friends to tell them the place and time, I suffered from primacy effect remembering that we weren't doing hibachi because we did that last time, and I told them 6:30 at Italian Village. When I read the sent text to my boyfriend he caught the mistake and I quickly had to call everyone and correct my mistake. My memory was clouded by the information presented earlier (that we weren't going for hibachi because we did that last time).

On our way to the hibachi restaurant, a car from the other lane swirved and almost hit our car. My boyfriend said, "Of course, it's a woman driver." This incident confirmed his bias thinking that women are bad drivers. To him, this is an emotionally charged issue because he has been in numerous car accidents with women where they are at fault, and this incident confirmed his prior beliefs.

As we got out of the car and walked toward the door of the restaurant I said, "Last time we were here, I saw a lot of people that I know from work. I bet I'll see people from work again." When I said this, I suffered from the availability heuristic, presumed assumptions. I have overestimated the probability that these two events will co-occur again.

Politics and Decision Making

I think that Romney and Santorum thought that in order to win the Republican vote, they needed to have beliefs that are exactly the opposite of the Democratic party. Since Obama made a clear stance on higher education, these Republican candidates were so used to taking a stance in the opposite direction, and in turn, the decision was made using system one thinking. 

However, I don’t think that this was a rational decision because they didn’t seem to consider the possible options and consequences of each option. These candidates failed to realize that federal aid to education is supported by both political parties. In order to win the Republican vote, both candidates should have determined their options (for a stance on higher education) and possible outcomes for each (levels of voter support). Then they should assign values and probabilities to each outcome, calculate the expected value of each option and then determine which option to choose based on the highest expected value. I think that if they would have went through a rational decision making process, they would have determined that taking a different stance on higher education would have been the better decision.

Afghan War (redone)

As far as casualties, the expected value of the USA leaving Afghanistan is higher than the expected value of the USA staying in Afghanistan. Therefore, according to my analysis and perceived values and probabilities, it would be more beneficial for the USA to leave Afghanistan.

Afghan War

As far as economic costs, the expected value of the USA leaving Afghanistan is higher than the expected value of the USA staying in Afghanistan. Therefore, according to my analysis and perceived values and probabilities, it would be more beneficial for the USA to leave Afghanistan.

What Career Should I Choose?

I decided to use the decision tree to help me decide which career to choose. I competed the decision tree based on salary because salary is a monetary value. Also, relatively accurate salary figures are easily researched.

Based on the expected value, the Commercial Real Estate Appraiser career would be the best choice.
Source: www.salary.com

Incentives and Motivation

In five to ten years I see myself as a loan officer working for a bank or a private company. At this future point I hope to be living comfortably and I suspect that economic incentives will no longer be as motivating as they currently are to me as a college student.

I want to work for an organization that views their employees as a source of a competitive advantage. That way, the employees would be valued, trusted and empowered. This type of organization would naturally incentivize its employees by giving them autonomy. I think autonomy is an important motivator because I like to make my own decisions based on my judgment of what is best. I don’t want to have to break out the big book of rules every time a problem arises.

I think another incentive that would motivate me is the gratification I would feel after I know that I helped someone go through the process of buying their first home, for example. Also, the pride of mastery would be motivating. I want to be the helpful person that makes the loan process easy for any customer to understand. This would make me feel respected and prideful.

Looking at Maslow’s theory of needs, I think once the safety needs are met, economic incentives no longer motivate effectively. Other incentives need to be introduced to motivate employees. Some examples include: autonomy, mastery, and emotional commitment to work.

Source:

http://www.EnvisionSoftware.com/articles/Maslows_Needs_Hierarchy.html#Physiological_Needs

The Organizational Kid

Golden Nugget: Motivation

I think that the Princeton University students live this lifestyle because they have successful, wealthy parents. They understand what it takes to get to that level of success and they see it as attainable. As Brooks says, “Opportunity lures them.” Also, these students are very goal oriented. They see the light at the end of the tunnel. They are willing to give up a few hours of sleep each night, participate in a limited amount of dating, and schedule appointments to chat with their friends if it means accomplishing their goals.

Living the nonstop lifestyles that they do comes as second nature. Their parents have probably set high standards and expectations for them from a young age. After all, these students were apart of what Brooks describes as the big back pack era in elementary school. He suggests that the big backpack era was a response to A Nation at Risk where Secretary of Education, Terrel Bell criticizes American schools’ loose curriculum lack of homework, and easy examinations. Brooks says, “Nowhere did I find anybody who seriously considered living any other way.”  This demonstrates that these students see college as the first step to their career success and this is why they live these lifestyles. College is about self-improvement, resume-building and enrichment and these students take that to the extreme.

In the end, their efforts pay off. “Investment banks flood the campus looking for hires. Princeton also offers a multitude of post-graduation service jobs in places like China and Africa” (Brooks). The strategy of these students is to work hard, behave pleasantly, explore their interests, volunteer their time, obey the codes of political correctness and ascend the social hierarchy (Brooks).

Source:

Brooks, David. "The Organization Kid." The Atlantic Monthly (2001): 40-54. Print.

The Fall of the House of Grasso

From reading the article, “The Fall of the House of Grasso,” Dick Grasso seems to attain his power from four sources. These include referent, expert, legitimate and coercive.

Grasso attained referent power by developing interpersonal relationships with others and influencing through charisma. By gaining this referent power, he was able to influence by personal appeal, ingratiation, and coalition. He was quoted saying, “You need to move to an area where the people around you are the people you do business with. That way, even in your downtime, you’re in your uptime.” This shows how important it was for Grasso to build a network of relationships and his image. “Gradually he came to know everyone and everything about the institution, cultivating hundreds of personal relationships that would later prove invaluable.”

Grasso’s expert power was attained by developing skills and knowledge that others valued. He became the “unquestioned master of the trading floor” even before he became CEO. A brokerage executive who served on the board’s search committee said Grasso was viewed as “the inside guy in the skunkworks who always made things work.” These statements illustrate Grasso great knowledge for everything involved in the New York Stock Exchange.

Legitimate power was the toughest for Grasso to develop. He was passed over for promotions on several occasions. In response, Grasso raised his profile. He testified in Washington, gave speeches and became more active in charities. When he eventually earned his promotion to CEO, “he made every decision, large and small. He was the unquestioned boss.”

Coerciveness was the biggest source of power for Grasso that stood out to me from this article. He had the ability to threat and punish. Sarah Telsik, executive director of the Council of Institutional Investors, criticized the NYSE’s role in recommending fees for a proxy solicitation firm. That year she got no bonus. Her board advised her that she should be nicer to the NYSE. Telsik later found out that Grasso tried to get her fired. She says, “You cross Dick Grasso, you better have a working spouse.” Subordinates who failed to meet his exacting standards received brutal tongue lashings. These examples show that Grasso had such great connections and influence in the business world that he could bring you close to unemployment if you challenged him. Many insiders reported that they feared him because he was good at destroying people.

Overall, Dick Grasso was a very influential person during his time at the NYSE. He drew power from four major sources: referent, expert, legitimate, and coercive. Toward the end of his career it seems as though he used his coercive power more than anything.

Influence: The Power of Reciprocation and Liking

The power of reciprocation is very strong in human society. It has to do with person one doing something for person two. Person two feels ‘indebted’ to person one. Therefore, anytime person one asks person two to do something for them, person two feels obligated (regardless of the size of the request). This concept of reciprocation is common in all human society. It is something that is taught in early childhood and has social consequences if not abided by. For example, an Olive Garden server asked if I wanted to try a free sample of wine. Free wine? Of course I would like a sample. After checking my ID, he pours me about one fourth of a glass. A couple minutes later he comes back and asks if I like it. I said yes. Then he asked if I would like a glass with dinner. I responded no (it was kind of awkward). After placing our orders, my boyfriend promptly lectured me that I shouldn’t have taken the free wine if I didn’t want to pay for a glass. I ended up feeling guilty,  I had gone against the reciprocation rule.

During breaks from school I work at a small health club in York. I work the front desk. Basically I answer the phone and give tours. Each time I give a tour, I ask the person or group what they are looking for in a gym. When they respond, I imply that I like the same things and explain and show how our health club can meet their needs (indicating that I know from personal experience). I try to build a liking based on similarity so that at the end of the tour, they are more willing to sign a one year contract and I can make my commission. Unfortunately this does not always work for me. I attribute that partially to the high membership prices, partially to the sluggish economy, and partially to the fact that I’m not a pushy salesperson.

It makes sense that we let people that we like influence us. Also, a “free” gift triggers a "click, whirr" response. It is in human nature to practice the reciprocation rule. We are consciously and subconsciously influenced everyday by people using these tactics.

Women in Leadership

It is evident that women are not equally represented in the upper leadership ranks of the corporate, political, and non-profit worlds. Sheryl Sandberg, COO of Facebook, suggests that this is due to three reasons, which I agree with.

First of all, women don’t ‘sit at the table’. This infers that women underestimate their abilities compared to men. Secondly, women need to ‘make their partner a real partner’. This means that all of the household responsibilities should not fall on the woman of the house. These responsibilities need to be equated so that women have the chance to work outside of the home and be successful in it. Lastly, women shouldn’t ‘make decisions too far in advance’. Too many times, women plan out their lives and worry about how children will fit into them. Women feel the need to make room and decide too far in advance what this decision will be. Sandberg suggests that women should ‘keep their foot on the gas pedal until the decision needs to be made’.

Sandberg put the responsibility on the women. I think that this is reasonable.  In this modern society, women in the workforce are accepted. There is no reason that a woman shouldn’t be able to attain upper leadership positions. Although it is evident that there is inequality in upper leadership, I don’t think that there is an injustice because these opportunities are available to everyone. It depends on each person’s priorities as to whether they will take advantage of these opportunities. I think that the inequality of men to women in upper leadership positions is due to women’s priorities. A lot of women fear that if they have a child and a full time job, the child will be raised by someone else and the mother will miss important years of their child’s life that they won’t ever get to experience again.

I think that the best solution to this problem is finding a work environment that allows flex time. I think this is most important for a working mother so that she can be involved in her child’s life helping at school functions and being present at sporting events. On-site child care would definitely be an advantage as well. This would make the mother feel like she is still a large part of her child’s life because she can check on them any time.

I can relate to one cause of the lack of women in upper leadership positions. Specifically, I make decisions too far in advance. Lately, I’ve been contemplating getting my MBA a couple years after graduation. However, the more I think about it, the more I’m not sure that the benefits will outweigh the costs. Basically, I’m unsure that I will get full use of the MBA because I fully intend on having a family and I think that I would want to be in a less demanding position or exit the workforce while I raise children.

All in all, I think that women have the abilities and opportunities to attain upper leadership status. I think it all comes down to each individual’s priorities.

Leadership v. Management

While leading and managing are both essential to organizations, they are vastly different. As we learned in class and from the article, “What Leaders Really Do”, leaders cope with change. They set a direction, align people and motivate them. On the other hand, managers cope with complexity. They plan and budget, organize and staff, and control and problem solve.  I have experienced and observed this in two different situations in my life. 

This past summer I worked as a part time floating bank teller at a local bank in York. The term ‘floating’ means that I would travel to all branches in York, depending on which branches were short staffed. My supervisor at the bank displayed more of a manager role. Banks have many policies and practices that need to be followed which are set by the law and by corporate guidelines. Managers are expected to enforce these policies. For example, anything that is done in a bank vault is supposed to be ‘dual controlled’. This means that we were allowed access to the vault if we had at least one other employee with us.  At one particular branch, the vault was opened with two different combinations and the key box opened with two different keys. So, before I worked an opening shift at that branch, the manager needed to make sure that I had access to a five digit combination and one key to open the key box. This shows that the manager had to deal with complexities and conform to policies. This manager was also very safe when making decisions. One time an account holder wanted to deposit a check that her dog had literally chewed up and spit out. The check was severely crinkled, but all necessary numbers were visible. To be on the safe side, the manager refused to accept the check even though it technically could have been processed. When it came to following policies, she 'would rather be safe than sorry’.

My boyfriend, Nate, is an entrepreneur and started Xtreme Archery in York. His business consists of archery retail, service, and an indoor 3D target range.  Being an entrepreneur, he has a different way of looking at things and treating his employees. I have observed him take on more of a leadership role in his business. His direction for the business is simple; he wants to be the ‘go-to’ archery shop in York and surrounding areas. His strategy is to treat his customers to quality customer service and hope that they tell their friends, family and co-workers about their great experience. He is very imaginative in that hosting a sportsman’s yard sale in the parking lot, where people can buy and sell their used sporting equipment, is his way to increase community awareness. He made a goal to motivate his employees. If they collectively sold a certain number of new bows by the end of the year, they would all get to go to the highly anticipated Archery Trade Association (ATA) trade show in Columbus, Ohio this past January, all expenses paid. Needless to say, the motivational technique worked.

Looking at this experience and observation, I realize that part of the difference in leadership and management depends on the type of organization. Clearly Nate has more room to be a leader because he is his own boss. On the other hand, the bank manager has many policies and regulations to comply with and less freedom to make decisions.

Does Personality Matter in Leadership?

I think that a leader’s personality plays a large role in the success of their leadership. However, I don’t think that there are specific personality traits that can be analyzed and are guaranteed to result in effective leadership. I think that the success of the leader greatly depends on the environment or situation, the culture of the company and the personalities of the employees. There are important characteristics that are imperative in all situations. These include being conscientious, having an internal locus of control and being able to get along with different types of personalities.

It is essential that leaders are conscientious. This means that they are reliable, well-organized, and self-disciplined. This allows employees to trust and feel comfortable with their leader. Also, the employees will have a better understanding of what is expected of them and when tasks need to be accomplished. A self-disciplined leader is able to motivate employees and set a good example.

I think another important characteristic of successful leadership is having an internal locus of control. This means that the leader thinks that their success is due to their efforts, not luck.  On the other hand, if there is a problem in the organization, the leader needs to take responsibility and realize that the problem is not due to bad luck. An internal locus of control ensures that leaders take responsibility for their actions, policies and practices.

It is also essential that leaders are able to get along with different personalities. Each employee comes with different life experiences, opinions and ways of doing things. It is important that the leader creates a relationship with each employee. This will lead to a higher level of employee satisfaction and, in turn, productivity.

As far as personality tests, I believe that you can learn a lot about yourself and others from analyzing the results. However, I don’t think that specific results lead to effective leaders. For example, my results of the big five personality test were low in openness to experience, high in conscientiousness, low in extraversion, middle in agreeableness and low in neuroticism. At first glance, you would assume that scoring low in openness to experience and low in extraversion are bad traits for a leader. However, the results don’t mean that I’m not open to new experiences, they mean that I prefer familiar experiences and that I am down to earth. Also being more introverted doesn’t mean that I am socially awkward or don’t like being around people. This means that sometimes I just prefer to do things on my own.

All in all, I think that personality plays a large role in the effectiveness of a leader. However, there are very few personality traits that an effective leader must have because each leader is in a different situation or environment working for companies with different cultures and with employees that have different personalities.

Differences in Leadership: Buffett v. Obama

Leadership is a process in which a person influences and motivates others to achieve a set goal in a cohesive and orderly way. I have learned from my Strategic Management class that there are a few characteristics of good strategic leaders that lead to high performance in an organization.  These include:

      
1. Vision, Eloquence, and Consistency

This implies that it is important to have a sense of direction, be able to properly express the sense of direction and be consistent in reinforcing the sense of direction
2. Articulation of the Business Model

This means that the individual must be able to understand and explain how the organization will attain the vision.
3. Commitment

This means that the leader is dedicated and passionate. One way to show commitment would be leading by example.
4. Being Well-Informed

Becoming well-informed is best achieved through a network in formal and informal sources.
5. Willingness to Delegate and Empower

This is imperative so that one person doesn’t become overloaded with responsibilities.
6. Astute Use of Power

The leader attempts to build consensus for their ideas rather than force ideas through.
7. Emotional Intelligence

This is a term created by Daniel Goldman that suggests a good balance of self-awareness, self-regulation, motivation, empathy and social skills allows a leader to move people in a desired direction.

I think that each of these characteristics is important for a leader to posses. I have decided that the best way to highlight the differences between Warren Buffett’s and Barack Obama’s leadership style and “brand” is to comment on each leader (based on the assigned readings) following the leadership characteristics listed above.
1. Vision, Eloquence, and Consistency

*Buffett: Buffett seems to have a blurry vision. If his vision is to keep the financial results high and increasing, then he shouldn’t be so pessimistic. However, he is consistent with his message that the stock market is a gamble and there is a possibility that the positive results of his company may not be repeated. Buffett is good at communicating.

*Obama: Obama has a strong vision, he is good at communicating it and it remains consistent.

2. Articulation of the Business Model

*Buffett: Buffett’s business strategy is well-known. He is known for keeping “his head while others are losing theirs...” He buys out companies at an advantageous price when the stock market is turbulent.

*Obama: Obama may have a very strong vision, however, it is blurry how he plans to accomplish these goals.

3. Commitment

*Buffett: Buffett’s commitment is apparent because he leads by example. He is pessimistic about the stock market, he is frugal and a penny-pincher. He believes that these are the ways to be a smart and successful investor.

*Obama: Obama’s commitment is evident through his speeches. He is able to inspire people by demonstrating that he cares about the people. His emotion toward the topics at hand are evident in his speeches.

4. Being Well-Informed 

* I think the success of both leaders have demonstrated that they are well-informed.

5. Willingness to Delegate and Empower

*Buffett: Buffett made a comment saying “(Berkshire) didn’t miss me while I was gone.” I think that this implies that Buffet has done a very good job of delegating power and empowering his employees

*Obama: Obama did a great job of delegating when he hired Chris Hughes to do the social networking for the campaign.

6. Astute Use of Power

*Buffett: Based on his financial success, Buffett is able to use his power to form a consensus when it comes to making decisions.

*Obama: I think that Obama uses the power of being the first African-American man to climb the political latter so high in his favor. This helps him to inspire and motivate people.

7. Emotional Intelligence

* Buffett: I think that Buffett has a moderate level of emotional intelligence. I think that his self-awareness is very good, he is able to keep calm and collected in the face of calamity. Also, he thinks before acting. He has good social and communication skills. However, he is not a good motivator due to his pessimism. This is unfortunate because I believe that motivation is very important in a leader.

*Obama: Obama has very high emotional intelligence. This is apparent because he easily gains trust and confidence from the people, his motivation is infectious, and he is able to move people in the direction of his vision.

Overall I think that image is very important to a leader and it needs to be strategically aligned with their goals. For example, if Obama had a laid back, lack of motivation,  penny-pinching persona (like that of Buffett) it is likely that he wouldn’t have attained presidency because his image would go against his beliefs. There are many different leadership styles that have proven to be successful. The key to leadership success is that the image they portray is aligned with their goals.

Sources (other than those provided):

http://www.nwlink.com/~donclark/leader/leadcon.html

Hill, C.L. & Jones, G.R. (2012). Strategic Management, An Integrated Approach.

            Mason : South-Western, Cengage Learning.