MGMT Test 3 Study Guide

Mission Statement

A short statement that signifies an organization's purpose and reason for being. Unlike the vision statement, a company also has a mission statement , which is the purpose of the company. Microsoft's mission statement, like most others, is short and to the point: "We work to help people and businesses throughout the world realize their full potential."

Exit interviews

Formal conversations with employees that are leaving an organization. Exit interviews are one way of trying to diagnose what type of turnover is occurring. The purpose of these conversations is to determine why they are leaving and what we can do in the future to improve the conditions and environment for our other employees.

Unstructured interviews

Conversational style of interviewing in which the questions and process are fluid. Unstructured interviews are essentially conversations between the hiring manager and the candidate. There is no list of questions or systematic scoring system involved. Unstructured interviews are considered highly suspect because of their risk for bias and are often attacked in legal proceeding for just that reason.

Voluntary turnover

Employees who leave an organization for their own reasons. Voluntary turnover refers to employees that leave the organization for their own reasons. What we need to do is figure out whether the reason they left was avoidable or not.

ii. Realized

the firm's goal

Strategic Vision

​Dan Schendel and Charles Hofer published a model of strategic management in 1979 that is still used today. In essence, the model outlines the strategy formulation component, implementation of the strategy and the evaluation component. The first step in the strategic management process is determining your strategic vision: A statement of the organization's long term goals and ultimate image. A vision is an inspiring statement with a long-term approach in mind. Some refer to this as a "bird's eye view" and a statement that is powerful and compelling. What is "The Happiest Place on Earth"? Most Americans can quickly connect this phrase to Disney.

Value Chain

Michael Porter created a tool to analyze a firm's value creating activity. His value chain analysis provides a quick way to identify value in organizations including your competitors. Value is created from both primary and support activities.

Sustainable Competitive Advantage

Those advantages that allow for an organization to stay ahead of competitors over the long term. In order to create long-term sustainable advantage, the firm is seeking unique, valuable, rare and difficult-to-copy resources.

i. Intended Strategy

developed by the firm

Quid pro quo

Quid pro quo literally means "this for that." In regards to harassment, it is the granting of a job benefit based on acceptance of a sexual demand. Quid pro quo is the type of discrimination that is dramatized in many movies and shows

Involuntary turnover

Employees who are forced to leave an organization. Involuntary turnover refers to employees that are fired or laid-off. This may be for violations of company policy or poor performance in the case of firing, or due to down turns in business or the economy in the case of layoffs (also called downsizing).

vii. Escalation of Commitment Bias

Escalation of Commitment Bias occurs when people become too attached to the decisions themselves. Even in the face of overwhelming evidence, they fail to admit they are wrong and continue to "double-down" on a failing course of action. When the Denver International Airport decided to construct an automated baggage handling system, it sounded like a great idea. They were wrong. At multiple times, despite mounting evidence, they poured more money and time into a failing process. By the end of construction, the project was $2 billion over budget and 16 months behind schedule.

Tangible and Intangible

Tangible: Any resources that have a physical existence. Tangible resources include things that are easy to see, touch and experience—cash, equipment, patents, reward systems, etc. Remember, if one company has excellent and valuable tangible resources, competitors will try to copy and imitate them. Intangible: Any resources that do not have a physical existence. Intangible resources are not as readily apparent and may be embedded in the firm. These might include human resources (experience, trust, expertise) or reputation, brand awareness or culture. Of course, intangible resources are much harder to imitate, especially in the short-term. Because of that, they tend to be more valuable than tangible resources.

Cost-Leadership Strategy

The Cost-Leadership Strategy is pursued by firms that are pursuing efficiency and cost minimization. It is important to remember that firms are not trying to develop cost leadership in a way that detracts from profitability. Would you buy a low-cost automobile that was so cheap it doesn't work properly? Firms pursuing this strategy are trying to find cost advantages relative to their rivals. Quite often, it takes a large investment to create the efficiencies necessary to pursue this strategy. Companies pursuing this strategy might include Wal-Mart or Kia Motors.

2. Unrelated (conglomerate)

A business expands into activities that have no clear connection to its current offerings. Unrelated diversification is when a firm enters a business that has no clear connection in core competence. In many cases, conglomerates seek a portfolio approach to identify failing businesses and turn them around for profit. One might be surprised to know that Lowe's Corporation is a multi-billion dollar company invested in oil, tobacco and hotels. They have no distinct core competence in any one of those areas; however, they feel they have an expertise in business restructuring.

3. Geographic

A business expands its activities into different regions. Many companies will have different operations set up in separate regions of the country, or potentially globally. The purpose for doing this is to reduce exposure to risk associated with events that occur in a region. For example, the tsunami that rocked Japan in 2011 caused shutdowns and several issues at a number of Toyota manufacturing plants, severely disrupting their supply chain. However, they have since adjusted some of their methods to allow for plants in several other regions to be able to take up slack if another event like this were to occur. Aside from just reducing risk, this strategy can also be utilized to take advantage of less stringent regulations or potential financial gains in different regions.

1. Related (concentric)

A business expands its activities into product lines that are similar to its current offerings. In related diversification, a company is building on their existing core competence. Teva Pharmaceuticals is a prominent producer of generic pharmaceuticals; acquiring Allergan's generic line of business is clearly related to what they do. Related diversification can lead to significant market power and long-term cost reductions due to scale.

Business-Level Strategy

A firm must stay focused on its customers in order to create and sustain competitive advantage. If they focus too much on price, they may experience a drop in quality. If they focus too much on growth, they may experience a drop in customer service. Michael Porter developed a tool to explore "business-level" strategy that examines a firms potential generic strategies. A generic strategy focuses on the breadth of your target market (industry-wide vs. 'niche') and how competitive advantage was derived (low cost or high value).

Strategy

A method or plan designed to achieve a goal or objective. Regardless of your perspective on strategic management, it is important to understand what strategy is and how and why it differs with every organization. Henry Mintzberg, a scholar from McGill University, distinguished between intended strategy (developed by the firm), realized strategy (the firm's goal) and emergent strategies (strategies developed due to changing external and internal circumstances).

iii. Organizational Capability

An organization's ability to utilize their available resources. On top of tangible and intangible resources, firms also possess organizational capabilities. These are the capabilities of deploying the assets. Firms might have strong brand awareness, but knowing how to use it is a marketing capability. Other capabilities might include manufacturing ability or being able to generate innovation. Again, these are even more difficult to copy or imitate so they are also the most valuable.

BCG Matrix

Because firms often compete in numerous areas, firms needed a tool to determine the competitive position of the businesses they own. The term 'portfolio management' is used to evaluate the long-term strategy and priorities of the firm. The most commonly used tool is the Portfolio Matrix developed by The Boston Consulting Group. The BCG Matrix plots all of the business units of a company on a 2x2 grid based on industry growth rate (how fast the market is growing) and relative market share (how much of the industry they own). For example, the toothpaste industry is very stable and not growing. Crest and Colgate have about 60% of the toothpaste market share. Pepsodent, on the other hand, was introduced in 1915 and is considered a "value" brand. They currently own only 1% of the toothpaste market.

i. Diversification

Businesses are often focused on growth and that means they will be interested in diversification. Diversification is the process of expanding their core operation and entering into new businesses. In the following short video, Allergan's President and CEO explains selling a part of his company to Teva Pharmaceuticals. In short, Allergan is exiting the 'generic pharmaceutical' business for $40 Billion. Allergan explains that the sale of this portion of their business is so they can focus on other parts of their existing business.

BCG Matrix four categories

Cash Cows - A good example might be Crest toothpaste. They have a very high market share within a slow-growth market. The general market strategy for a cash cow is to avoid large investments and reap stable financial profits. Dogs - Dogs have both a low market share and low growth rate. Drawing from above, Pepsodent is a good example here. Typically, dogs must either try to increase their market share (and move toward a cash cow position) or divest. Stars - These units are the opposite of dogs. They have both high market share and high market growth. While the growth of the smartphone market has cooled in recent years, Apple possibly still holds a star position. These are the ideal products for companies—well-established and profitable. Question Marks - The unknown of the group. These products have a low market share, but the potential for high growth. Often, these are products that could eventually grow into stars, but without proper investment, could also become dogs.

i. Human Relations

Empathy— Empathy is the ability to care about other people in meaningful ways. The ability to understand why people don't want your product, service, or process is counterintuitive to many people. Courage—Courage is the ability to confront agony, intimidation, pain, danger, or uncertainty without ceasing from your original goal. Courage is evident in the development of many entrepreneurial projects and in bringing innovations to market. Listening—Listening without hearing happens many times in business. Many entrepreneurs are "tone deaf"—that is, they do not listen to customers, critics, the market (through pricing, competition, etc.), or themselves and their team. Listening is the act that entrepreneurs have to be the best at in order to determine what human beings want, particularly when the cost of bringing goods, services, and processes to market seems inexpensive. Decision-Making—Entrepreneurs make decisions. They also are very adept at understanding the difference between making a decision (a temporary act with long-term consequences) and having choices (a permanent state of affairs in the entrepreneurial journey). Entrepreneurs will always be surrounded by various choices, but the ability to make decisions is not something that can be taught. Instead, decision-making is an act that entrepreneurs get better and better at the more that they fail at. Success comes after many failed decisions. Decision-making takes listening, empathy and courage to make a decision in the face of the unknown of whether the decision is going to be successful or not.

Organizational Behavior

How people engage in groups and the culture they develop either accidentally, or on purpose, is another skill entrepreneurs need to possess. Understanding organizational behavior includes having emotional intelligence, empathy, and strong listening skills. In addition, the skill of knowing when to collaborate and when to be independent is also important. Finally, understanding other people's motivations, negotiation, mediation, and conflict management are also key skill sets. Organizational behavior circles around all of these areas and many times entrepreneurial projects fail because founders, V.C.'s and others fail to understand the importance of these skills.

iii. Business

Management Organizational Behavior Sales Marketing Strategy

Management

Many entrepreneurs don't consider management, and the clear majority (the statistic is around 90%) of all entrepreneurial ventures fail within the first year. The lack of consideration around hiring, firing and developing the skills for managing employees is common. Hiring a team involves the entrepreneur having a strategic combination of financial understanding (how many employees can we afford to do the work?) and the ability to understand and empathize with human beings (what kind of culture do we want in our organization?). When entrepreneurs hire, particularly in high tech, software companies, cultural considerations become key, including acknowledging what type of culture an entrepreneur seeks to build in a long-term way. When early Zappos investor (and later CEO) Tony Hsieh invested in the company in 1999, he began to think intimately about making sure that the employees he hired were committed to customer service, including the happiness of both customers and other employees. This thinking about hiring transformed his company from one based in a hierarchy to one based on a holocracy. Seeking alignment in hiring involves thinking quite deeply about who is hired and even how employees are hired. Firing people is at the other end of building entrepreneurial projects. From the early 1970s until the early 2010s there was a tendency by investors to fire and replace the founder of a company with a more seasoned CEO with experience, who would help shepherd the company through moving from a private company to a publicly traded company on the stock market. The change in thinking really began when Facebook founder and CEO Mark Zuckerberg continued to head the company in spite of his inexperience. At the top, there may be little churn in modern entrepreneurial ventures, but at the middle of these companies and at the bottom, many start-up companies experience a high rate of turnover, particularly as companies transition from being private to being public. Workload responsibilities increase as well as public scrutiny. Finally, many employees may stay from the point of their hire and then, after the company becomes publicly traded, may sell their company stock shares and leave the company voluntarily.

Marketing

Marketing in developing an entrepreneurial product, service, or process is an area that entrepreneurs have tended to focus on quite a bit. Marketing from the days of the Medieval Period until the 21st Century has been focused on the art of persuasion. Persuasion is defined by the researcher Robert Cialdini in the book Influence: The Psychology of Persuasion as "the process aimed at changing a person's (or a group's) attitude or behavior toward some event, idea, object, or other person(s), by using written or spoken words to convey information, feelings, or reasoning, or a combination thereof." 27 Understanding the psychology of how and why a person feels the way that they do about buying pottery, woolen coats, horses, computers, or digital goods hasn't changed over time, because human psychology hasn't shifted much around the need for an emotional connection to a product, service, or process before deciding to make a purchase. Digital tools such as websites, social media platforms, and other Internet-based applications can allow the leverage of creative means such as design, in order to create a deeper emotional response to a product, service, or process. Advertising, as a subset of marketing, is about the act of either pushing a product, service, or process to a customer, or pulling them toward a product, service, or process, in order to get them to buy it at a precise moment in time.

iii. Porter's Five-Forces Analysis

Michael Porter, a professor at Harvard University, developed the Five-Forces Model to analyze the attractiveness (potential profitability) of a particular industry. It is important for students to understand that Porter's model analyzes the entire industry, not a particular company in an industry. It is quite possible for a company to be profitable in an unattractive market; likewise, it is possible for a company to fail in a very attractive market. competitive rivalry threat of substitutes bargaining power of buyers threat of new entrants bargaining power of suppliers

i. SWOT

One of the most basic techniques for analyzing a firm and its environment is a SWOT analysis. SWOT consists of internal factors of the organization (Strengths and Weaknesses) and external conditions (Opportunities and Threats).

ii. General Environment

Political/Legal- major changes in the law ex: Americans with Disabilities Act & Affordable Care Act, taxes, minimum wage Economic- recession/boom Sociocultural- hot topics Demographic- changes w/in organization's area Technological- anything that can change how you do business or produce product & Global forces- globalization/interdependence, trade, culture, transportation, technology no control over; decisions influenced by these groups some of the changes are interconnected

Sales

Sales and the revenues generated through a sales cycle, support the development of any entrepreneurial venture. Customer acquisition through understanding the development of a sales funnel is critically important for the success of any entrepreneurial venture. As potential customers become prospects and then buyers, the cycle of opening and closing sales requires an appreciation of several aspects of traditional sales, as well as the growing field of inbound sales. Inbound sales rely heavily on acquiring sales leads via websites, social media platform interactions, email lists, and other methods involving non-traditional means. Customer loss occurs when a potential customer leaves the sales cycle and moves on to another product, service, or process. Many entrepreneurs have traditionally established proprietary processes to determine why a customer would leave the sales cycle before making a purchase and this process has become more efficacious with digital tools. Entrepreneurs and entrepreneurial thinking drive the sales cycle in determining how, when, and where a potential customer can be touched.

Effectiveness and Efficiency (Drucker)

Strategy requires a tradeoff between effectiveness and efficiency . Effectiveness is measured by whether or not your goal was accomplished. Efficiency, on the other hand, deals with how well you utilized your resources to try to accomplish that same goal. Just because you have one, it doesn't mean that you also have the other. For example, two students may want to get a good grade on an exam. Student A, being effective, reads the entire chapter, does all of the homework, creates flashcards, has friends quiz him, then repeats the process five times, not leaving any time for other classes or life. It gets the job done, but probably not in the best way possible—effective. Student B, being efficient, skims the chapter for bold-faced type and rushes through the homework, all the night before the exam. He didn't get the grade he wanted, but he didn't waste much time (resource) doing so. He was efficient, but not effective. To be successful, you need to find the middle ground between the two.

Differentiation Strategy

The Differentiation Strategy is designed to pursue unique services or products that others can't offer. This could include prestige, quality, unique features or high service. One might be able to identify this strategy when one is willing to pay more to get the same product. Also, just as low-cost leaders cannot ignore items like quality, differentiators cannot completely ignore cost. The goal is to produce identifiable value and many times that means a higher price. Companies pursuing this strategy might include Burton (snowboards) or BMW.

Strategy

The ability to intuitively understand the long-term impacts of decisions and to not be fearful of their impact and the ability to mitigate the impact of short-term strategic decisions is an entrepreneurial business skill. Goal setting, focus, planning, and implementation (or execution) have been explored academically in many other areas. However, for the practicing entrepreneur, strategic thinking and responding is a day-by-day, moment-by-moment, management skill set that is invaluable for success. Many entrepreneurs fail in their business projects when they cannot explain their strategy to others (i.e. employees and investors) or when they have no strategy and are merely reacting to the market on a day-by-day basis.

Competitive Advantage

The favorable position an organization seeks in order to attain leverage over its competitors. Competitive advantage is the combination of a firm's resources (physical and human) and capabilities (what the firm does well).

Strategic Management

The field of strategic management is relatively new and there is no precise definition of the term. Some theorists view strategic management as an evolving process of analysis, decision-making and action that leads to long-term competitive advantage. This definition moves away from the traditional idea of long-range planning. One might think of long-range planning in static terms—defining the mission, the vision and objectives of the firm. These concepts are more fixed and structured into the concept of the company. Strategic management, on the other hand, is more dynamic—organizations are always adapting to the external environment in an effort to create value for all of the stakeholders involved.

Primary activities

The major activities done by an organization to provide competitive advantage in its industry. Primary activities include acquiring the inputs (inbound logistics) to transforming the inputs (operations) to distributing the finished product to marketing and selling the product. After sales service is the final step of primary activities. In sum, the primary activities include the entire process of creating, selling and servicing the product. 1. inbound logistics 2. operations 3. outbound logistics 4. sales & marketing 5. service

Resource-Based View of the Firm Definition

The resource-based view (RBV) of the firm suggests that competitive advantage comes from a mix of strategic resources and dynamic capabilities. Together, resources and capabilities combine to give a firm advantages over their competitors. Resources are all assets, processes, information and knowledge that combine to create value. For example, you might purchase a specific car because it's high quality or because it has specific features you want. The value that is provided by the company comes from resources and capabilities within the firm. The term "resources" are meant to include both tangible and intangible resources.

Focus Strategy

The third generic strategy is referred to as a Focus Strategy. Unlike the first two strategies above, a focus strategy has a narrow competitive scope or niche market. Porter split the focused strategy into low-cost focus and focused differentiation. Some examples might include Rolls Royce as a focused differentiator—this company targets a narrow market based on income. They are mindful of delivering enhanced value to their customer base and are obviously not focused on low cost advantages! A good example of low-cost focus, perhaps, is Toyota Prius. Toyota does a very good job maintaining lean manufacturing and using scale advantages to lower cost. The Prius, perhaps, targets consumers who are mostly focused on "environmentalism" or those interested in lowering their carbon footprint.

ii. Financial

There are two financial skills that every entrepreneur must possess: the ability to determine how to raise money (e.g., through a loan, through giving away equity in the business in exchange for capital to a wealthy investor, or through bootstrapping—that is, self-funding and customer funding) and when to spend money. Both of these are discretely different skills.

Support activities

Those activities intended to aid the primary functions. A student might imagine these activities to be necessary indirect costs of product development. Employees are tasked with procurement (finding cheaper or better inputs), technology development (research and development), human resource management (hiring skilled employees), and general administration. Taken together, the primary and support activities should be combined in a way to provide customer value and firm profit. -procurement -product and tech development -human resource management -finance infrastructure

Intrapreneurship

We have talked quite a bit in this chapter about entrepreneurs, but when the principles of entrepreneurship—innovation, risk-taking, scaling, acquiring resources, etc.—are applied inside an already-established organization, then we define the individuals who engage in these acts as intrapreneurs ​Intrapreneurship is the act of behaving like an entrepreneur while working within a large organization. Intrapreneurship is known as the practice of a corporate management style that integrates risk-taking and innovation approaches, as well as the reward and motivational techniques, that are more traditionally thought of as being the province of entrepreneurship Intrapreneurship is a case of management inside of major organizations attempting to harness the innovative power of entrepreneurship. Unfortunately, many managers may struggle with internalizing and capitalizing on the long-term value of entrepreneurial thinking and approaches in a standardized, scaled, and revenue generating system. These are the systems that are internal to major organizations, corporations, and businesses. Thus, they may fail to contribute resources to support intrapreneurial efforts such as employees, time, energy, or other material resources to intrapreneurial efforts. Many such efforts have failed recently, even in innovative and progressive organizations, such as Target in Canada.

Business-Level Strategy

i. Cost-Leadership ii. Differentiation iii. Focus

Resource-Based View of the Firm

i. Definition ii. Tangible and Intangible iii. Organizational Capability

Corporate-Level Strategy

i. Diversification 1. Related (concentric) 2. Unrelated (conglomerate) 3. Geographic

Entrepreneurial Skillsets

i. Human Relations ii. Financial iii. Business

Mintzberg

i. Intended Strategy ii. Realized iii. Emergent Strategy

Analyzing the Environment

i. SWOT 1. Internal (SW) 2. External (OT) ii. General Environment 1. Demographic 2. Legal 3. Technology 4. International 5. Economic 6. Socio-Cultural iii. Porter's Five-Forces Analysis

iii. Emergent Strategy

strategies developed due to changing external and internal circumstances

ii. Rational

The Rational Decision-Maker does a thorough search for information and then rationally evaluates all of the alternatives.

Discrimination

?

iii. Side-Hustle

"Side hustling" (or a "side hustle") is a modern term associated with entrepreneurship that unites the ideas of freelancing with the freedom inherent in consulting, but also the ability to act in an entrepreneurial fashion without having to quit a full-time job. The side hustle allows a person to be successful slowly (so speed is not a factor) while also mitigating the inherent risk of failure in entrepreneurship (so scaling is not a factor). As the power of the Internet to connect people, products, and ideas, has expanded over the last 25 years, "side hustling" (or working on the side) has become a way for people to leverage their hobbies and interests to make money in niche markets that could not be reached formally before the advent of the Internet. Various Internet companies have made this leverage possible, including Amazon, Ebay, PayPal, Uber, Lyft, Apple, Google, Facebook, Dropbox, and many, many more.

Equal Employment Opportunity Commission

-enforce laws that prohibit discrimination The final category of laws that are important for HRM professionals are those that cover Equal Employment Opportunity (EEO) in the workplace. These laws primarily address discrimination in the workplace based on several demographic categories. Workplace discrimination happens when employment decisions (hiring, promotion, performance appraisal, etc.) are made based upon factors that are not relevant to the job. Essentially, all EEO legislation states that employment decisions must be made based on job-related criteria.

Privacy Act

-governs personal info about individuals

Fair Labor Standards Act

-minimum wage & 40 hr work week & hourly/salaried workers

Social Security Act

-old-age benefits The Social Security Act (SSA) was the first of the major laws pertaining to compensation passed by the U.S. government. The SSA established the first U.S. retirement fund and, nearly 80 years later, maintained its importance and has been the subject of several recent political debates.

Civil Rights Act Title VII

-prohibits discrimination "undue hardship"

Age Discrimination in Employment Act

-prohibits discrimination of 40 yrs & older

Turnover ratio

?

Analysis and Design

A cornerstone of HRM is the process of understanding each of the jobs within the organization and ensuring that each job contributes to the overall mission, strategy, and goals of the organization. To do this, we conduct something called a job analysis. We may find that certain jobs are not contributing to the organization as they should, in which case we may need to change the TDRs for that job. This change is referred to as job design. To help you distinguish between these terms you can think about it this way—job analysis helps us understand the job as it exists, while job design allows us to change the job as needed.

Decision

A determination arrived at after consideration.

Problem

A gap between an existing state and a desired state.

Group Decision-Making

A recent survey of organizations showed that the majority of large companies (>5,000 employees) use some form of team structure within their organization. When this is the case, decisions may not be the responsibility of one individual, but of a group or team. Group Decision-Making takes place when there is a question to solve, a set of possible options, and a set of individuals who present their opinions and preferences over the set of options.

Job Description

A summary of the tasks, duties, and responsibilities that are associated with a particular job. A job description is a summary of the tasks, duties, and responsibilities that are associated with a particular job. As a college student, your job description may include studying, attending classes, and rolling your eyes when a professor makes a bad joke.

Adverse impact

Adverse impact is the other type of discrimination. This occurs when an employer uses some criteria for making employment decisions that while not overtly discriminatory, still has a discriminatory impact. For example, if I was the proprietor of a restaurant and required all of my kitchen staff to be over six feet in height, I would disproportionately hire men over women. This would be classified as adverse impact in this case, since height has nothing to do with someone's performance when it comes to preparing food.

Sexual Harassment

Along with workplace discrimination and affirmative action, EEO laws also cover sexual harassment under Title VII of the Civil Rights Act. There are two types of sexual harassment that violate the law—quid pro quo and hostile work environment.

Job Specification

An outline of minimum qualifications that a potential employee must possess to be successful at that job in terms of the knowledge, skills, abilities, and other characteristics. A job specification outlines the minimum qualifications that a potential employee must possess to be successful at that job in terms of the knowledge, skills, abilities, and other characteristics. So, again, as a student, the specification might include graduation of high school, a minimum GPA requirement, and the ability to find free t-shirts.

ii. Anchoring Bias

Anchoring Bias is our tendency to be overly influenced by numbers, and a failure to adjust our perspective once we have information. In the 1990s, when I began to drive, gasoline cost around $1.00 per gallon. As prices rose near the turn of the century toward $3.00 per gallon, I was shocked and dismayed. We should try to understand where our anchors are set, and try to avoid an irrational connection to outdated or inaccurate information.

Separation

Another aspect that goes hand-in-hand with performance management is turnover. Employees typically don't stay with a single organization for their entire career. In fact, according to a Bureau of Labor Statistics study, the average American worker has had nearly 12 jobs by the time they are 48 years old! People leave their jobs, and for several reasons. However, organizations that can manage turnover rate and understand why employees are leaving, will have a big advantage. Turnover can be either voluntary or involuntary.

Contingent assessment methods

At this point, we are ready to make our offer of employment. We refer to the individual as a new hire, but there is still one final set of assessments. These assessments are called contingent, because employment is contingent upon the successful completion of these last steps. Some companies may require drug testing. Others may run a final background check just to make sure you are who you say you are and haven't done anything bad enough to warrant you un-hirable. This is also the point at which many organizations will contact the references that you provide.

iv. Availability Bias

Availability Bias is a tendency to rely on easily remembered information and a failure to seek out multiple perspectives. Research has also shown that information that is more recent is given more importance than older information. People that are afraid to fly, might avoid air travel because plane crashes are easy events to remember. Even explaining to them that there is a 1 in 4,068,434 chance that they will be in a plane crash might not change their decision.

Avoidable voluntary turnover

Avoidable voluntary turnover Avoidable voluntary turnover, however, represents those employees that leave the organization for better opportunities, better pay, better management, or for any other cause over which we have direct control. When we experience high avoidable voluntary turnover, we need to understand that this is a symptom of something wrong within our organization.

Affirmative Action

Because of this history of workplace discrimination, companies that have contracts with the government are required to engage in affirmative action. Affirmative action is an effort to achieve an equitable environment for all employees. Affirmative action programs are not quotas! Quota systems are illegal except in the case of egregious action on the part of specific employers. Instead, affirmative action programs attempt to provide a level playing field on which decisions are made only considering job-related criteria.

Business Analytics

Business analytics is the exploration of organizational data that usually focuses on statistical or mathematical evaluation. In today's business environment, business analytics is used financial analysis, health care, retail sales, and almost any industry you can imagine. Bloomberg Businessweek reported that 97% of companies with revenues of over $100 million use some form of business analytics. The digitization of business data and the use of the internet have drastically increased the amount of data available to organizations. The next step is to utilize this data to make important decisions. While larger organizations may have the resources to tackle Big Data, even smaller companies can utilize analytical techniques to improve their decision making process. We can think of business analytics as possibly being the purest form of rational decision making because it depends solely on data. However, that means that the decisions and predictions provided by business analytics are only going to be as good as the data provided. The acronym GIGO stands for garbage in, garbage out. The implication is that if we are using incomplete, out-of-date, or faulty data, then we are going to make bad decisions. For this reason, while business analytics will continue to grow in popularity and importance, there will need to be a human judgement factor incorporated to ensure we are not feeding the process "garbage." This is an important consideration, particularly when organizations use decision support systems.

Incentives

Compensation above and beyond just the base pay and may include bonuses, stock grants or options, profit-sharing, or other programs. In some jobs, competition for talented employees is so fierce that organizations are forced to offer incentives. Incentives are compensation above and beyond just the base pay and may include bonuses, stock grants or options, profit-sharing, or other programs. These incentives are typically done as a percentage of base pay. It is important to understand this for salary negotiation purposes. A lot of companies may offer a lower base pay, but have many incentive programs to bring total compensation up.

ii. Consultants

Consultants (or the act of consulting) are people (or teams of people) who advise, strategize, and sometimes execute on projects for an organization, team, or institution. Consultants rarely produce a physical product. Instead, they tend to provide expert advice about a process, product, or service about which they have domain knowledge or may be subject matter experts (SME's). Many "white collar" fields can increasingly be designated as fields where consulting can (and often does) happen, including engineering, medicine, and the law. Consultants sometimes scale the act of providing advice and strategies into businesses (i.e., PWC, Bain Consulting, Deloitte, etc.) but usually, those organizations act as temporary employment agencies, and the price markup is high in order to compensate entry-level consultants with little subject matter knowledge. Interestingly enough, sometimes established entrepreneurs will hire consultants (private and those operating in companies at scale) and pay them in equity in lieu of cash, in order to defer hiring full-time resources until those entrepreneurs can self-fund their growth.

Decision Support Systems

Decision Support Systems (DSS) are computer-based applications that allow businesses to gather data and analyze that information for operational and planning purposes. The Carnegie Institute and the Massachusetts Institute of Technology pioneered these advanced systems in the 1950s and 1960s, but they really took off with the advent of query systems and rules-based software. DSS are direct applications of business analytics and the Big Data concepts previously discussed. These systems put important data right at the fingertips of decision makers.

External recruiting

External recruiting is the process of finding and attracting potential employees from outside the organization. The advantages and disadvantages are essentially the reverse of the internal method. It is more expensive and time-consuming, but offers the opportunity to bring in new talent, ideas, and perspectives. The most cost-effective and most successful is generally through employee referral.This means that the organization uses existing employees to find new employees through those individuals' social networks. Other companies might attend career fairs at colleges or universities. Most organizations will use their websites or an online presence to "spread the word." Some companies might even advertise on radio or television.

Benefits

Finally, under federal law, all employers are required to offer some benefits to their employees. These required benefits include Social Security and Federal Insurance Contributions (FICA) among others. Most organizations realize that they must also include other benefits to be competitive in the labor market. These optional benefits include things such as: health insurance, vision and dental insurance, paid time off, retirement savings accounts, and educational reimbursement. The Bureau of Labor Statistics recently reported that benefits comprise approximately 30% of an employee's total compensation package from their employer.

Problems vs. Symptoms

First, we need to identify the problem. Unfortunately, we often mistake symptoms for problems. Is my company's turnover the problem, or is the problem that I do not pay my employees enough, so they inevitably quit for better opportunities? Turnover may be a symptom of a much larger problem within my organization.

iii. Framing Bias

Framing Bias is undue influence based on the way that a situation or information is presented. Given the polarized nature of political discourse in the United States, many people with disagree with policies solely because they are presented by the opposite party. If President Trump proposes tariffs on foreign goods, some Democrats may disagree with that position solely because it came from a Republican president, even though their party has historically supported protectionist policies (ones that protect workers and/or unions). Individuals may discount information because they do not like the source.

i. Freelancers

Freelancers (or freelancing) are people who create work and get paid for it by independently contracting with a larger organization, team, or institution. The freelancer provides value by having expertise in a domain area, having a point-of-view about a topical area, and by having the skillset to leverage that point of view for the success of their clients. Freelancing and freelancers are increasingly associated with the developing the "gig" economy in post-modern economies, and the IRS estimate that by 2040, 40% of all reported income will be from individuals engaged in freelance activities. This includes everything from Uber and Lyft drivers to babysitters and writers. Another important differentiation between freelancing and entrepreneurship is that freelancers rarely hire other people, scale businesses, create products, or do any of the other activities we often associate with entrepreneurs.

Group Decision-Making Advantages and Disadvantages

Group-based decision making has both advantages and disadvantages. + -greater pool of knowledge -greater level group understanding -greater level of commitment to decision - -potential domination group -potential group polarization -more time consuming and costly -satisficing to avoid conflict and time commitment -groupthink may occur

vi. Sunk-cost Bias

Have you ever had a friend in a bad relationship that they would not terminate because they had spent X number of years with that individual? Sunk-Cost Bias occurs when individuals cannot walk away from an investment they have already made. That investment could be in time or money. Some individuals might take this to an extreme called the escalation of commitment bias.

2. Bounded Rationality

Herbert Simon attacked rational decision making by proposing that managers could not actually be rational. He proposed that instead, managers operate under bounded rationality. Bounded rationality is the view that there are too many constraints to rationality. The single largest of these constraints is our own limited cognitive capacity. Business decisions are made under conditions of uncertainty and risk. They need to be made under time constraints, involve economic outcomes, and can be incredibly complex. Because of this, managers will have a tendency to fall back on what they know. Instead of pursuing perfect information, and developing a complete list of potential alternatives, they instead depend on their values, skills, and routine. This may lead them to, as Simon noted, satisfice their decision.

Hostile work environment

Hostile work environment occurs when office behavior creates an environment that is difficult or uncomfortable to work in. Hostile work environment is the far more common type of harassment.

Substantive assessment methods

If an applicant is deemed to meet the minimum qualifications, then they become a candidate for the job. This begins our substantive assessment methods in the selection process. Candidates are subjected to a number of selection methods in an attempt to rank order or distinguish them from all of the other candidates. These methods could include personality assessments, cognitive ability testing, job knowledge tests, physical ability tests, or samples of previous work. The substantive stage is also when most organizations will conduct the most in-depth interviews.

Ethical Decision-Making

If decision-making is choosing among alternatives, then ethical decision-making is choosing among alternatives while remaining consistent to the moral principles that guide our behavior. four stages: First, decision makers must be aware that there is an ethical issue. Then that individual must make an ethical judgement. They must apply those moral principles directly to the issue that they are addressing. That judgement must then lead to an intention to act in an ethical fashion. Just because you realize that an ethical dilemma exists does not mean that you will necessarily act in an ethical fashion. The final stage of the process is to then engage in the ethical behavior (decision) that you have identified. While many scholars agree on this basic approach to ethical decision making, subsequent research has found that social, cultural, economic, organizational practices, job characteristics, and internal differences are all important considerations in ethical decision-making. Scott Reynolds goes further and suggests that there is a neurocognitive basis for ethical decision-making. Dr. Reynolds suggests that for events that do not have an obvious ethical implication, we engage different parts of our brains that are reserved for more complex problem solving and analysis to reach an ethical judgement.

Decision-Making Styles

In this chapter, we have primarily focused on the issues of problem solving and decision making from a process orientation. In other words, we are addressing the steps that individuals or organizations might undertake when making a decision or addressing a critical problem. However, there is significant research that indicates that decision-making is influenced by individual level differences. Decision-making style was defined by Michael Driver as a "habitual pattern individuals use in decision-making." This decision making style can be influenced by the way that we collect information, or by the way that we interpret that information.

Internal recruiting

Internal recruiting means using existing employees to fill vacancies within the organization. There are a number of benefits to internal recruiting which include: knowledge of the employee's current performance, enhanced loyalty from the opportunity to advance from within, lower cost, less time consuming, and consistency in the workplace. However, there are also a number of drawbacks. These might include: creating another opening by moving people around, limiting your pool of options, and not gaining a unique perspective someone from outside the organization could offer.

iii. Non-Rational Models

Nonrational models of decision-making are potential explanations for how managers actually make decisions in the workplace. These differ from the rational and evidence-based approaches, which propose how managers should be making decisions.

Objective appraisal

Objective appraisals, also called results-based appraisals, are based on some kind of objective or numeric outcome. How many units were produced? How many cars sold last month? What percentage of customers were contacted within two hours? Each of these has a specific value that can be assessed and compared to established goals. The benefit of these types of appraisals is that they are legally defensible and they measure some tangible output. The problem is that in today's economy, many jobs do not have a single tangible output on which we can base a performance appraisal.

Discretionary assessment methods

Once all of the appropriate substantive assessments have been conducted, this should allow us to develop a list of the job finalists. These finalists move on to the discretionary assessments in our selection process. If there is a single finalist, then hire the person, pass Go, and collect $200. However, if you have multiple finalists that you feel are equally qualified for the job, you need a method to further distinguish among these individuals. At this point, some organizations that have an active interest in promoting diversity in workplace may use demographic characteristics to promote underrepresented groups. Other organizations may use evaluations based on the finalists fit with the organization as a whole, not just with the job. They might determine which finalist best matches the culture of the organization.

Selection

Once we have developed a pool of interested individuals through our recruiting efforts, we need to figure out which of them would be the best employee. We will examine the selection process by dividing it into four assessment methods: initial, substantive, discretionary, and contingent. During this process we refer to individuals under consideration as applicants, candidates, finalists, and new hires depending on how far they make it during the process.

Performance Management

Once we have hired, trained, and paid our employees, we need to ensure that they are in fact doing their jobs well! Performance management is how organizations make sure employees are doing what is needed and working toward organizational goals. Performance management is often based on performance appraisals constructed by managers or supervisors. These can be either objective or subjective and utilize a number of criteria.

ii. Evidence-Based

Proposed by Jeffrey Pfeffer and Robert Sutton, the evidence-based approach acknowledges that decision makers are not rational and are acting in the absence of perfect information. This model insists that managers should always be seeking out new knowledge and updating their assumptions about the way the world works. recommendations: First, managers should demand evidence. The second insight is that we need to examine logic. The next suggestion is to treat the organization as an unfinished prototype. Finally, managers should embrace the attitude of wisdom.

iii. Intuitive

The Intuitive Decision-Maker is reliant upon hunches and feelings. While the rational decision-maker is more methodical, the intuitive decision-maker goes with what "feels right."

Training and Development

Regardless of how qualified or experienced a new employee might be, they will still require some degree of training. Training is an organization's efforts to give employees the knowledge or skills to better do their current job. We differentiate this from development, which is meant to improve an employee's knowledge and skills for jobs they might hold in the future. In other words, we train you for now, and develop you for later.

3. Satisficing

Satisficing is a tendency to consider our alternatives until we find one that meets some minimum criteria. If Jon and Mary are still looking for a car, then they should continue the search until they find the perfect option. Unfortunately, many of us instead settle for the first reasonable alternative—which is why Jon and Mary bought a used Kia they found on Craigslist rather than waiting for the best possible vehicle they could afford.

Predictive Modeling

Some organizations use a form of business analytics called predictive modeling. Predictive modeling is a procedure that allows companies to use existing data to predict future outcomes or behavior. Ex: Netflix uses predictive modeling in two important ways. First, they use data about viewing habits to predict what other shows their customers may enjoy, and second, they use data from all of their viewers to predict how well their new shows and movies will perform.

Group Decision-Making Techniques

The Nominal method The Delphi Technique

The Nominal method

The Nominal method requires a group to listen to the statement of a problem or decision and then generate ideas for themselves independently and silently. Once everyone has constructed their own potential solutions, each member of the group quickly presents their ideas and those potential solutions are recorded. When all potential solutions have been presented, the group discusses the options, then rank orders the solutions based on the decision criteria. Using this process, the decision is reached by group consensus.

v. Avoidant

The Avoidant Decision-Maker does everything in their power to avoid decision-making altogether.

The Delphi Technique

The Delphi Technique starts with the same statement of the problem or decision to be addressed and the independent generation of possible alternatives by all group members. Unlike the Nominal method however, each person does not present their ideas. Instead, they submit their alternatives by email or on paper, which are then summarized and distributed back to members of the group. Each person then attempts to improve and comment on all of the alternatives that have been generated. This could involve several rounds of submission and improvement. The goal is for everyone to have the opportunity to contribute anonymously without the fear that his or her comments will be ignored or ridiculed as might be the case in a group environment.

iv. Dependent

The Dependent Decision-Maker searches for advice and direction from other individuals rather than acting independently.

Industrial Revolution (18th Century - Late 20th Century) Executing Scalable Ideas and Gaining a Monopoly

The Industrial Revolution, which began in Britain in the 17th century, entailed the mass production and scaling of products, services, and processes, based in the principles of production control (monopoly) and supply chain development (stability). The entrepreneurs of the 17th century who succeeded and created a world of products, services, and processes that served the needs of a growing base of wealthy consumers also lifted whole economies into a new stratum of social, economic and even cultural, development. One example of such an individual is Josiah Wedgewood. Wedgewood, a potter and entrepreneur, applied the principles of the growing field of modern science in the 18th century to his development of better glazes and finishes for his home-grown pottery. The principles of scale were exemplified in Wedgewood's approach to selling pottery. He also pioneered the idea that his pottery was the best pottery on the market by providing consumers at the higher end of the market with specialty pottery, thus creating a monopoly in the market and squeezing out his competitors—who all tried to copy his designs, approach, marketing, and processes. Wedgewood's model of entrepreneurship: having an original idea for a product, service, or process, pursuing funding from other non-interested parties, building factories, buildings, or even infrastructure to execute on developing a product, service, or process. The Wedgewood model of growth, scalability, and monopolistic control of an idea, service, or process was followed by future entrepreneurs. This led to the development of the Founders' Myth—the idea that an entrepreneur develops a "world-changing" idea through grit, resilience, risk-taking, and without the help of other parties. This myth would fuel the development of products, services, and processes, and would ultimately be reinforced through the development of the digital era in the middle of the 20th century all the way through today. However, with the development of computers, the Internet, and global trade policies, in the 20th century, the Wedgewood model would get a steroid-like injection and would push entrepreneurs to focus less and less on delivering products, services, and processes to a growing consumer class, and instead shift to delivering ideas, experiences, and relationships globally.

Entrepreneurship

The ability to scale an idea into a revenue generating business over time The most modern (i.e., 21st century) definition of entrepreneurship views the act of creating an innovative business, based on innovative business models, as one that causes disruption in established markets of goods, services, products, and processes.

Human Resource Management (HRM) Basic Definition

The activities that center on the attraction, development, and retention of high quality employees. Organizations are comprised of physical, financial, and human resources. The activities that center on the attraction, development, and retention of high quality employees is referred to as human resource management (HRM).

iii. Competitive Advantage

The advantages that 20th-century firms and businesses used to have (size, scale, market dominance, limited competition, etc.) are no longer applicable. Monopolies in a knowledge economy might be a competitive advantage, as the Facebook investor, PayPal co-founder, and venture capitalist Peter Thiel argues in his book Zero to One: Notes on Startups, or How to Build the Future. But the fact is that many businesses in many sectors of the economy are seeing monopolies based on competitive advantages that they believed were proprietary, disappear due to the advent of the Internet, but also globalism, free trade, and an ever-expanding knowledge-based economy. Managers need to leverage entrepreneurial thinking to navigate market sectors where competitive advantages that used to be dominant, may be on the wane.

ii. Speed of Change

The competitive cycles in free market economies have tightened considerably, as have the cycles between technological innovations. The theory of riding a Blue Ocean strategy of creating demand in a market niche to market dominance (popularized through the 2004 Harvard Business Review article Blue Ocean Strategy 10 written by W.Chan Kim and Renee Mauborgne) no longer applies in businesses where competitors come into markets via indirect methods. This indirect methodology causes businesses to have speed-to-market and causes market competitors to scramble to pivot at the last minute. There are multiple examples of this in all industries, from Amazon going into the health insurance industry to Netflix being offered through Comcast cable service, or the local heavy manufacturing company developing a VR application to train workers on how to use a forklift and then selling that application to its competitors. Managers have a responsibility to adapt, manage, and compete through change cycles that are unpredictable (due to technology changes and an increase in competition). Applying entrepreneurial thinking to your management style may reduce the anxiety that comes from addressing these changes.

Social Capital

The connections between individuals and entities that can be economically valuable. This connection between the individuals and how they fit within their organizations is known as social capital. It isn't enough simply to hire talented people. We need to make sure our policies, strategies, and relationships fit these people in a way they are able to get the most out of their potential.

Human Capital

The economic value of what our employees can produce or the services that they provide. Organizations that have good HRM policies and practices increase the production of their employees, as well as the value of their organization's services. This is known as human capital. In order to achieve and sustain competitive advantage, companies need to maximize this human capital by utilizing their resources in the best way possible.

i. Innovation

The fact of the matter is, Google (founded in 1997) and other Internet-based companies have pushed the envelope of what technology can do for organizations in the development of products, processes, and services for consumers. In a modern industrialized economy, a little entrepreneurship could provide massive scale value (e.g., profits, consumer value), with a high level of proprietary control of knowledge, information, process, and procedures. Innovation does not always come about from leveraging technological advances alone. Many times, innovation in a market sector comes from a new business perspective being applied to an old market problem. In a post-modern knowledge-based economy, the Internet and companies based on it have provided the impetus for challenging network effects and the ability for the average individual to leverage the technology available for smaller (but not insignificant) profits.

Base pay

The wage or salary that an employee receives for completing the tasks, duties, and responsibilities associated with the job. Base pay is the starting point for compensation. It is basically the salary that an employee receives for doing their job. Base pay will fluctuate with factors such as rarity of the skills involved, availability of other workers, and the amount of danger or risk associated with the job.

iv. Black Swans

The idea of black swans—incidents that have a major impact, are explained in hindsight, and are outliers and thus impossible to accurately predict—was popularized by investment banker and author Nicholas Nassim Taleb. The impact of black swan events can be seen everywhere in post-modern market economies, from the slow-motion collapse of modern B2C book retailing due to the presence of Amazon, all the way to the changes in how passengers fly on planes due to September 11th. The problem for managers compounds because many organizations are primed to be reactive in their posture toward the impact of black swans. However, entrepreneurs by their nature and entrepreneurial thinking by its nature are inherently proactive toward the presence of black swans, thus making entrepreneurs ideal for managers to consider as hires in their organizations. One way to combat the overwhelming impact of black swans is for managers to prioritize execution on non-obvious solutions to problems, which is a skill at the core of entrepreneurship itself. The other skill for managers to develop is thinking in light of a portfolio of potential strategic actions. All entrepreneurs must solve problems, and usually, they do so by taking ideas from market sectors, and businesses unrelated to their own, and then applying those ideas in a portfolio approach to potential black swan events.

4. Incremental

The incremental model of decision-making proposes another possible explanation. Using the Incremental Model managers make decisions to solve short-term or pieces of the problem rather than addressing the larger problems or underlying causes.

Initial selection methods

The initial selection methods are when we determine whether or not each of our applicants meets the basic minimum requirements for the job. Applicants submit resumes or complete applications that highlight their education, experience, and other pertinent information. Companies are trending toward putting more focus on applications rather than resumes. The reason for this is that recent research has found that approximately 75% of people exaggerate their education and experience, while around 50% will outright lie on their resumes. Most applications include a signature requirement and disclaimer that states you may be terminated if it is discovered you lied or dissembled on the application. This same guarantee does not exist on the resume.

5. Intuitive

The intuition model provides yet another alternative explanation for how we make decisions. Intuitive decision-making is reaching a judgement through a rapid non-conscious process of holistic association. Some might refer to this approach as "going with your gut." That generalization, however, relegates this theory to being completely based on emotion and ignoring logic or reason. More recent research into the role of intuition in decision-making indicates that intuition can be informed by our expertise and experience. In other words, there is a reason that a choice or alternative "feels" right. While we classify intuitive decision making as a nonrational, because decisions at the highest levels of organizations are unique, complex, and devoid of precedent, intuition can be very important.

Decision-Making

The process of choosing from available alternatives to maximize outcomes.

Problem Solving

The process of developing alternatives to address specific issues.

Recruiting

The process of finding and attracting new employees. If your organization has determined that it has a labor shortage and needs to bring in new talent, then the first step is recruiting. Recruiting can be done internally or externally and using a variety of methods and sources.

Forecasting

The process of predicting both our labor demand and labor supply for the different jobs in an organization. The goal of this forecast is to determine whether we expect a labor surplus or labor shortage, and allow us to develop a strategy to deal with these possibilities. What everyone needs to understand is that it is very rare that we have the perfect number of employees to meet our strategies. The knee-jerk reaction to shortages or surpluses is to simply hire or fire employees as needed, but these reactions can be damaging to an organization's reputation and bottom-line.

Compensation

The total amount of the monetary and non-monetary pay provided to an employee by an employer in return for work performed. Once an employee has been hired, they probably want to be compensated for their labor. We can think about compensation as everything the organization provides for an employee doing their job. We can break down these rewards into three separate categories: base pay, incentives, and benefits.

Disparate Treatment

There are two types of workplace discrimination we need to be concerned with. The first type is called disparate treatment, which is intentional discrimination based on an individual's belonging to a protected category such as race, gender, or disability. While we often think of discrimination in the worst of ways, disparate treatment is something that can even come from some of the best intentions.

Value Proposition

This disruption can come through leveraging technology, leveraging a product innovation (e.g., through patents and trademarks), or leveraging a new perspective on an old process (e.g., Google's use of keyword search terms to create an auction for publishers, marketers, and others) in order to generate value to both an end user and other individuals in the supply chain.

Subjective appraisal

This lack of a tangible output, may encourage an organization to utilize a subjective appraisal. Subjective appraisals, rather than being based on a specific measure, are instead rooted in the perception of the manager or supervisor doing the appraisal. Behavioral appraisals are a form of subjective appraisals that evaluate specific behaviors in the workplace such as "arrives on time," "greets customers with a smile," or "contributes to employee meetings." While there is still room for subjectivity in the evaluation of these behaviors, methods such as behaviorally anchored rating scales (BARS) can remove some bias and create more objective standards for appraisal.

Computer and Digital Age (Mid-20th Century - Current Age) Economies of Scale Fragmented by Globalism

Throughout the 20th Century, entrepreneurs continued to expand their businesses and projects using principles of scale, monopolistic trade, and pricing practices, and through having access to capital. As global markets exploded, initially after the First World War and in earnest after the Second World War, many entrepreneurs began to push toward new innovations in the field of communications, transportation, and entertainment and the use of those innovations to catapult growth. The combat communications innovations that the British, Japanese, Germans, and Russians developed in the mid-20th century included radar, sonar, solid fuel rockets, and eventually the silicon chip. The exploitation of all of these wartime innovations would set the stage for the development of personal computing technology, telecommunications, and the Internet. Integral also to the growth of innovation during this time was the impact of Andy Grove's work at Intel and Gordon Moore's work at Fairchild Semiconductor in the mid-1960s and the development of Moore's Law. Moore's law states that the number of transistors in a dense integrated circuit (i.e., a computer chip) doubles about every two years.27 Innovators and entrepreneurs began also to flock en mass to geographic areas such as Northern California (soon to become known as Silicon Valley) to make their entrepreneurial fortunes come to life. Two of these innovators, Steve Jobs (the co-founder of Apple Computers) and Bill Gates (the founder of Microsoft) would serve as examples of how innovation, driven by geography, an understanding of Moore's Law, and other factors, would compete to foster a culture of growth and success that would fuel other innovations, such as the Internet in the 21st century. The development of both Apple and Windows OS could not have occurred with globalism and free trade. The establishing of secured trading and communication routes during the Cold War (1945-1989) by both the Soviet Union and the United States led to the development of an economic system that would ensure new markets, and new consumers, for innovative products, services, and processes.

Unavoidable voluntary turnover

Unavoidable voluntary turnover is when an employee leaves, but not due to the organization. If an employee has a sick family member and has to move to a certain city to be closer to better hospitals and treatment, there is very little that can be done to hold on to that employee. We wish them well and begin looking for a replacement.

i. Classical/Rational

Underlying the classical model are some important assumptions: (1) that the decision maker is rational and logical (2) that the decision maker has access to complete and accurate information (3) that the decision maker will do what is in the best interest of organization limitations: The problem with this approach is that while Jon and Mary can probably find perfect information on these automobiles, perfect information is not available for many decision makers. This is a major limitation to the classical model. Other limitations include the possibility that the decision maker is not rational or logical and that decision makers may not have the best interest of the organization at heart. The individuals making decisions may have different goals from the organization. They may also forgo a rational or logical decision for one that feels correct.

i. Emotion

We should recognize the role of emotion in our decisions. Emotion is the intuitive state we experience in reaction to our circumstances or personal interactions. This entire section is dedicated to discussing the ways that we use limited rationality when making decisions. Some scientists would go further by suggesting that decision making is almost purely emotional. Antoine Bechara found that patients with damage to the ventromedial section of the prefrontal cortex, the part of the brain associated with emotion, had significant problems making decisions. The parts of their brains that allowed for logical thought remained undamaged, so based rational models of decision-making, there should not have been any problems. From this and similar findings, we can actually think about decisions being projections of our emotions into the future. Jon and Mary, based on rational information, should purchase a Honda Civic. When they think about driving a Civic, though, they just do not feel like it would make them happy. That new Lexus, however, gets them very excited.

Evaluation

We will conclude this chapter by thinking about the final step in the problem solving process. Once a decision has been reached and implemented, we must assess the success or failure of that decision. At the core of this final stage is the evaluation of whether or not you solved the problem that you identified in step one of the process. This may not be a yes/no question. Yes, they solved the problem, but what is their level of satisfaction with the decision and did it satisfy all of the criteria that were important? evaluation process: First, we have to collect data. Once the decision has been implemented, we need track effectiveness by measuring the outcome that we intended to impact. Without data we really can't determine whether or not we addressed the issue. Second, understand that we will inevitably receive complaints—complaints from customers, employees, managers, shareholders, or other stakeholders. Our solutions will rarely make everyone happy. We need to determine whether these complaints are based on a resistance to change, or if they represent a mistake that should be addressed. Feedback can be an important source of data. Finally, remember that this is an iterative process. That means that the decision, implementation, and evaluation do not represent the end of the process, but just one-time through the process. We should always seek the next issue or improvement to ensure that we are doing business in the best way possible.​

1. Prospect Theory

When we make decisions are we really trying to maximize the outcome, or are we trying to minimize the loss? Prospect Theory looks at this question and proposes that as individuals, we fear losses more than we value gains. People typically prefer certainty. Decision-makers also tend to evaluate potential outcomes based on relative position rather than long-term outcome.

v. Confirmation Bias

When we only seek out information that aligns with our current perspective, we are succumbing to the Confirmation Bias. As in the previous example, there is a miniscule probability of being in an airplane crash and various reports state that between 66 and 97% of those in crashes survive, but those that do not want to fly will only pay attention to the information that confirms their preexisting position.

HRM Functions

analysis & design planning selection recruiting compensation performance management training & development employee relations

Decision-Making Models

i. Classical/Rational ii. Evidence-Based iii. Non-Rational Models 1. Prospect Theory 2. Bounded Rationality 3. Satisficing 4. Incremental 5. Intuitive

Decision-Making Styles

i. Definition ii. Rational iii. Intuitive iv. Dependent v. Avoidant

Legal Aspects of HRM

i. EEOC ii. Affirmative Action iii. SSA iv. FLSA v. Title VII, CRA (1964) vi. ADEA vii. Privacy Act

Barriers to Rational Decision-Making

i. Emotion ii. Anchoring Bias iii. Framing Bias iv. Availability Bias v. Confirmation Bias vi. Sunk-cost Bias vii. Escalation of Commitment Bias

Alternative Work Arrangements

i. Freelancers ii. Consultants iii. Side-Hustle

Historical Perspectives on Entrepreneurship

i. Industrial Revolution ii. Digital Age

Importance of Entrepreneurship to Society and the Economy

i. Innovation ii. Speed of Change iii. Competitive Advantage iv. Black Swans

Generating Alternatives

​"Don't look for perfect." - The point is that if we only offer up what we consider the perfect solution, we might miss several very good alternatives. "Nothing is stupid." - Everyone should feel comfortable offering their suggestions. Good decision-making is about selecting the best alternative, not limiting the number of possible solutions. Brainstorming and stream of consciousness approaches address a need to let the ideas fly. Try to develop multiple alternatives quickly that can later be reassessed and discarded accordingly. "Be sure that you are informed." - In other words, ensure that you are examining relevant information and reviewing what others have done in similar positions. We do not always have to recreate the wheel. If an existing solution exists and fits your problem, consider it as a reasonable alternative. "Change scenery." - Often a change of context or environment can increase our creativity and broaden our perspective. "Rephrase the question." - Instead of just addressing a question such as how to increase revenue from existing products. Think about the issue from a different angle. "Ask for help." - Be sure that you are soliciting feedback from those with expertise or experience.

Structured interview

​Interviews typically take one of two forms. The superior approach would be to conduct a structured interview. Structured interviews use a predetermined list of questions that are asked of each candidate and will often be evaluated using a standardized scoring system. This means that every candidate is asked the same questions, and the quality of their responses can be easily compared. Structured interviews are also typically comprised of behavioral and situational questions.