HRM & OB 1

Overconfidence: Too sure of your judgment
Anchoring: Stuck on initial information
Confirmation bias: Only looking for supporting info
Availability bias: Relying on recent/available info
Escalation of commitment: Continuing with a failing plan
Randomness error: Seeing patterns where none exist
Risk aversion: Choosing safe options
Hindsight bias: Thinking you “knew it all along”

Source: OB Reader p. 126–130; Slides

Individual factors:

• Personality (e.g., risk-taking, openness)
• Experience
• Cognitive ability
• Gender and cultural background

Organizational conditions:

• Time pressure
• Reward systems
• Policies and rules
• Leadership and culture

These shape how decisions are made and which options are considered.

Source: OB Reader p. 130–133; Slides p. 15–16

Personality is typically measured in two main ways:

• Self-report questionnaires: Individuals assess their own behaviors and traits.
• Observer ratings: Colleagues, supervisors, or peers evaluate a person’s personality.

Best results come from combining both methods for higher accuracy.

MBTI classifies personality into 16 types based on four dichotomies:

• Extraversion (E) ↔ Introversion (I)
• Sensing (S) ↔ Intuition (N)
• Thinking (T) ↔ Feeling (F)
• Judging (J) ↔ Perceiving (P)

Advantages:

• Popular for team-building and self-reflection
• Easy to understand
• Encourages awareness of different working styles

Disadvantages:

• Lacks scientific reliability and validity
• Not predictive of job performance
• Forces binary choices, missing nuance

MBTI should not be used for hiring or performance assessment.

The Big Five (OCEAN) and their relevance for leadership:

• Openness – Encourages innovation, adaptability to change
• Conscientiousness – Leads with discipline, responsibility, reliability
• Extraversion – Strong in communication, inspiration, networking
• Agreeableness – Builds trust, resolves conflicts, promotes collaboration
• Emotional Stability (low neuroticism) – Handles stress, remains calm under pressure

Successful leaders typically score high in conscientiousness, extraversion, and emotional stability.

Openness: Creativity, learning agility, innovation
Conscientiousness: High job performance, goal orientation
Extraversion: Leadership, sales success, assertiveness
Agreeableness: Teamwork, service orientation, conflict resolution
Emotional Stability: Stress tolerance, resilience

Conscientiousness is the strongest predictor of job performance across roles.

Through two key theories:

Situation Strength Theory

• Strong situations (with clear rules, structure) suppress personality expression
• Weak situations (ambiguous, unstructured) amplify personality traits

Trait Activation Theory

• Specific situations trigger certain traits.

E.g., a sales role activates extraversion, a data analyst role may activate conscientiousness.

Personality has more influence in unstructured or ambiguous work environments.

Hofstede’s 6 Dimensions:

1. Power Distance
2. Individualism vs. Collectivism
3. Masculinity vs. Femininity
4. Uncertainty Avoidance
5. Long-Term Orientation
6. Indulgence vs. Restraint

GLOBE adds 3 more dimensions:

• Performance Orientation – Focus on achievement and excellence
• Humane Orientation – Emphasis on fairness and kindness
• Assertiveness – Degree of confrontation in relationships

Both models help managers understand cross-cultural differences, but GLOBE is more leadership-oriented and detailed.

• Intensity: How much effort is put forth
• Direction: Where the effort is focused (goal relevance)
• Persistence: How long the effort is maintained

These elements define how strong, purposeful, and sustained a person’s motivation is toward achieving work-related goals.

• Maslow’s Hierarchy of Needs

→ Suggests people are motivated by progressing needs: physiological, safety, social, esteem, self-actualization

→ Use today: helps understand employee needs and design benefits packages or recognition systems

• McGregor’s Theory X and Theory Y

→ Theory X assumes employees dislike work and need control; Theory Y sees work as natural and people as self-motivated

→ Use today: influences management style (e.g., micromanaging vs. empowering)

• Herzberg’s Two-Factor Theory

→ Hygiene factors (pay, policies) prevent dissatisfaction; motivators (growth, recognition) drive satisfaction

→ Use today: supports job design and workplace motivation strategies

While less scientifically supported today, these theories still offer helpful frameworks for managing people.

• Goal Theory (linked to SMART goals):

→ Motivation is enhanced when goals are Specific, Measurable, Attractive, Reachable, and Time-related

→ Clear, challenging goals improve performance

• Self-Efficacy Theory (Bandura):

→ Belief in one’s ability to succeed drives motivation

→ Built through mastery, modeling, encouragement, and managing arousal (stress, energy)

• Reinforcement Theory (Skinner):

→ Behavior is shaped by its consequences

→ Positive reinforcement (rewards) and negative reinforcement (removal of discomfort) strengthen behaviors

→ Punishment and extinction reduce undesired behaviors

Both deal with fairness at work:

• Equity Theory (Adams):

→ People compare their input/output ratio to others

→ Perceived imbalance leads to reduced motivation or turnover

• Organizational Justice expands fairness into:
  • Distributive justice: fairness of outcomes
  • Procedural justice: fairness of decision-making processes
  • Interactional justice: fairness in interpersonal treatment

Fairness is central to both, and perceptions of injustice can directly reduce motivation.

Expectancy Theory (Vroom) assumes motivation depends on:

1. Expectancy – Belief that effort → performance
2. Instrumentality – Belief that performance → reward
3. Valence – Value of the reward to the individual

Motivation = E × I × V

If any of these components is zero, motivation breaks down.

Self-Determination Theory (SDT) assumes that motivation flourishes when three needs are met:

• Autonomy – feeling in control
• Competence – feeling capable
• Relatedness – feeling connected to others

Application to rewards:

• Intrinsic rewards (meaningful work, development opportunities) should reinforce autonomy and competence.
• Extrinsic rewards (pay, bonuses) should be used carefully to avoid undermining intrinsic motivation.
• Design jobs and environments that allow choice, feedback, and positive social interaction.

Similarities:

• All aim to explain what drives effort
• Emphasize feedback, fairness, clarity, and growth

Differences:

• Some focus on internal beliefs (e.g., SDT, self-efficacy)
• Others focus on behavior and environment (e.g., reinforcement, equity)

The Job Characteristics Model (JCM), developed by Hackman and Oldham, identifies five core job dimensions that influence motivation, satisfaction, and performance:

1. Skill variety – use of different skills and talents
2. Task identity – completing a whole, identifiable piece of work
3. Task significance – impact on others inside or outside the organization
4. Autonomy – freedom in scheduling and task execution
5. Feedback – direct and clear information about performance

These dimensions lead to three critical psychological states:

• Experienced meaningfulness
• Experienced responsibility
• Knowledge of results

The Motivational Potential Score (MPS) quantifies a job’s motivational capacity:

MPS = (Skill variety + Task identity + Task significance) ÷ 3 × Autonomy × Feedback

A higher MPS means the job has greater motivational potential, which can result in better work outcomes like engagement, job satisfaction, and performance.

Work activities can be transformed through job redesign, aiming to improve the motivational potential of jobs:

• Job rotation: Moving employees between different tasks to reduce monotony and increase skill variety.
• Job enlargement: Expanding the number of tasks to increase variety and reduce boredom.
• Job enrichment: Increasing the depth of a job by giving more autonomy, responsibility, and feedback.

These strategies aim to strengthen the core dimensions from the JCM, thus improving the intrinsic motivation and job satisfaction of employees.

Variable pay is compensation that depends on individual, team, or organizational performance. It is not fixed and varies based on predefined performance metrics.

Types of variable pay:

• Bonuses – one-time financial rewards for reaching targets
• Profit sharing – distributing company profits among employees
• Commissions – payment based on sales or performance
• Gainsharing – sharing cost savings or productivity gains with employees
• Stock options – employees buy company shares at a discount

Advantages:

• Encourages higher performance and results focus
• Aligns employee interests with company goals
• Can reduce fixed salary costs for employers

Disadvantages:

• May create internal competition or reduce collaboration
• Uncertainty can reduce motivation in poor performance periods
• May not appeal to risk-averse employees

Intrinsic rewards are the psychological benefits of doing meaningful, engaging, and enjoyable work. They are not material or financial.

Motivational benefits:

• Promote sustainable motivation driven by personal fulfillment
• Enhance engagement and creativity
• Support self-determination, which meets needs for autonomy, competence, and relatedness
• Are less prone to adaptation, meaning their effect lasts longer than extrinsic rewards like bonuses

Intrinsic motivation is especially important in knowledge work, creative industries, and roles requiring high autonomy.

The goal of personnel selection is to identify and hire the most suitable candidate for a given position, ensuring they possess the right skills, personality, and cultural fit. This process aims to enhance job performance, reduce turnover, and contribute to organizational success.

Preliminary screening helps to quickly filter out candidates who do not meet the basic requirements of the job. It is a time-saving step that ensures the remaining applicants are worth further evaluation through tests or interviews.

Commonly used tests include:

• Cognitive ability tests (e.g., reasoning, problem-solving)
• Personality tests (e.g., Big Five, MBTI)
• Skills/knowledge tests (e.g., Excel proficiency)
• Integrity tests
• Work sample tests
• Situational judgment tests
• Assessment centers (for leadership roles)

• Validity: Measures how well a test predicts or reflects job performance (does it measure what it should?).
• Reliability: Measures how consistently a test yields the same results under similar conditions (is it stable and dependable?).

A good test must be both valid and reliable.

• Unstructured interviews: Conversational, flexible, but risk inconsistency.
• Structured interviews: Standardized questions, rated using scoring guides – higher reliability and fairness.
• Behavioral interviews: Use past experiences (e.g., STAR method).
• Situational interviews: Hypothetical scenarios to assess decision-making.

• Halo effect: One positive trait influences the whole impression
• Horns effect: One negative trait overly influences the judgment
• Similarity bias: Favoring those who resemble the interviewer
• Stereotyping: Making assumptions based on group traits
• Contrast effect: Comparing one candidate unfairly to others
• Leniency/severity bias: Being too generous or harsh

By using key selection metrics:

• Time-to-hire
• Cost-per-hire
• New hire retention rate
• Job performance ratings
• Turnover within first year
• Predictive validity of selection methods

These help assess the effectiveness and fairness of the selection process.

• Leadership is about setting direction, inspiring people, and driving change.
• Management focuses on planning, organizing, and controlling processes to maintain stability.

Leaders influence people; managers manage work.

• Trait Theories: Focus on who leaders are (e.g. Big Five traits like extraversion, conscientiousness).
• Behavioral Theories: Focus on what leaders do (e.g. people-oriented vs. task-oriented behaviors).
• Validity: Traits help predict who becomes a leader, but behavior predicts effectiveness better. Both are valuable but limited if used alone.

• They assume one best style fits all, ignoring situational context.
• They can’t explain why a style works in one situation but fails in another.
• Focus too much on leaders’ actions, not on follower readiness or environment.

• Situational Leadership (Hersey & Blanchard): Leaders adapt style based on followers’ readiness (ability + willingness).
  • Styles: Directing, Coaching, Supporting, Delegating.
     
• Path-Goal Theory (House): Leaders adjust style (directive, supportive, participative, achievement-oriented) to help followers reach goals. Based on Expectancy Theory.

• Example: If a team lacks skills → use directive style (Path-Goal) or coaching (Situational Leadership).
• A skilled but demotivated team? → supportive style or delegating.
• Behavioral styles help identify leader’s natural tendencies; situational theories help adapt to team needs.

• Use the Full Range Leadership Model:
  • Laissez-faire → Passive, ineffective
  • Transactional → Clarifies expectations, rewards/punishes
  • Transformational → Inspires, motivates, develops followers
• In a case, evaluate which behaviors are shown and suggest ways to move towards transformational leadership.

• Charismatic: Based on personal charm, vision, emotional appeal.
• Transformational: Broader – includes charisma, but also intellectual stimulation, inspirational motivation, individualized consideration.
• Both inspire followers, but transformational leaders also develop and empower them.

• Authentic leaders are self-aware, transparent, ethical, and consistent with values.
• Ethics & trust: Build psychological safety, long-term influence, and organizational commitment.

People follow leaders they trust and believe in.