Module 1: Making Difficult Decisions - Learning Objectives Study Guide

Question 1

What is an asshole?

Answer 1

Someone who disrespects & demeans other people, and either denies it or just doesn’t care.

Question 2

How is asshole behaviour shown?

Answer 2

Asshole behaviour is shown passive-aggressively, or active-aggressively.

Question 3

Who do assholes usually target?

Answer 3

Assholes typically target people within the same level of hierarchy as them, or someone below them

Question 4

What are the impacts of asshole behaviour on colleagues and firms, and why? (6)

Answer 4

• Environment of fear, which leads to decreased communication
• Decreased productivity, as others become demotivated
• Worse performance and decision-making, especially on cognitive tasks: Makes you dumber, by undermining your ability to think clearly and creatively
• Contagious disease: More negative attitudes towards others
• Rise of unethical behaviour, and attempts at retaliation against supervisors
• Smaller likelihood of helping others

Question 5

How can you deal with an asshole?

Answer 5

• Assume you don’t know (Give the other person the benefit of the doubt): by assuming good intentions, trying to learn, and being curious
• Don’t fight back in the moment (Don’t put them on the defensive): Separate intentions and impact
• Help them find a less demeaning way to accomplish their goals: Use humour, rather than calling them out on bad behaviour.

Question 6

How can you avoid hiring assholes?

Answer 6

When speaking to references, ask the right questions and spot nuances in their answers.

Get them to be more honest, by forcing them to choose between two negative qualities.

Question 7

Fill in the blanks: Replacing a toxic worker with a ________ one can be twice as profitable as upgrading an _________ worker to a ____________.

Answer 7

Replacing a toxic worker with an average one can be twice as profitable as upgrading an average worker to a star.

Question 8

How can you lock out and stop assholes within your workplace?

Answer 8

• Give employees a voice, allow them to provide feedback
• Give subordinates power, by letting them choose who they want to work with
• Don’t solely incentivize individual achievement
• Ask: “Who is a superstar here?” Is it the jerks, the takers?

Question 9

Is it possible to have an asshole-free workplace?

Answer 9

NO! There will always be temporary jerk behaviour. It is impossible that no one will never be upset.

Question 10

Why should leaders care about striving for a no-asshole culture?

Answer 10

• To attract, motivate and retain talented people

- It is the right thing to do!

Question 11

How can leaders proactively prevent asshole culture?

Answer 11

• Screen assholes out of the hiring process
• Don’t reward people who get individual results at the expense of others, and create a toxic culture
• When someone is demeaning, try to find a respectful way to let them know the impact they have made.
• If you can’t remove/reform an asshole, minimize interaction

Question 12

What is the lens of realistic optimism?

Answer 12

• Standing outside the experience, without reacting to it
• Facts, vs the mental stories you are making up about the facts
• Exploring alternative perspectives that would serve you better

Ask yourself:

• What are the FACTS in this situation?
• What’s the story I’m telling myself about those facts?

Question 13

What is the reverse lens?

Answer 13

• Widening your perspective, by viewing the situation from the other party’s eyes
• Using empathy, by appreciating others’ perspective

Ask yourself:
-What is this person feeling, and in what ways does that make sense?

Question 14

What is the long lens?

Answer 14

-Looking beyond the present to imagine a better future

Ask yourself:
-Regardless of how I feel about what’s happening right now, how can I grow and learn from this experience?

Question 15

What are heuristics?

Answer 15

Heuristics: The unconscious routines we use to cope with the complexity inherent in most decisions.

Question 16

Decision-making biases: What is the anchoring trap?

Answer 16

Initial impressions/estimates/data ANCHOR subsequent thoughts and judgments. When considering a decision, the mind gives disproportionate weight to the first information it receives.

Question 17

How can we avoid the anchoring trap?

Answer 17

• View the problem from different perspectives, widening your frame of reference: Seek information and opinions from various people
• Think about the problem on your own, before consulting others (avoid being anchored by their ideas): Have your own position before the negotiation begins

Question 18

Decision-making biases: What is the status-quo trap?

Answer 18

Decision-makers display a strong bias toward alternatives that perpetuate the status-quo, as it is a safer course that puts the individual at less psychological risk.

Question 19

How can we avoid the status-quo trap?

Answer 19

• Remind yourself of your objectives, and how they will be served by the status-quo choice in the future
• Identify other options, weighing the benefits and consequences
• Ask yourself: Would I choose this option, if it weren’t the status-quo?
• Don’t default to the status-quo option, just because you have a hard time choosing

Question 20

Decision-making biases: What is the sunk-cost trap?

Answer 20

A decision-making bias that gives individual a tendency to make choices that justify past, non-valid choices (sunk costs/decisions). Arises due to unwillingness to admit to a mistake.

Question 21

How can we avoid the sunk-cost trap?

Answer 21

• Seek out and listen carefully to the perspectives of people who were uninvolved with the earlier decisions.
• Examine WHY admitting to an earlier mistake distresses you.
• Look out for the influence of sunk-cost biases in your subordinates’ decisions and recommendations.
• Avoid cultivating a failure-fearing culture: Focus on quality decision-making, not outcomes generated.

Question 22

Decision-making biases: What is the confirming-evidence trap?

Answer 22

Leads us to seek information that supports our existing perspective, and avoid information that contradicts it.

Question 23

How can we avoid the confirming-evidence trap?

Answer 23

• Check if you are examining all evidence with equal rigour.
• Get someone you respect to play the devil’s advocate (building counterarguments).
• Be honest with yourself about your motives.
• Don’t ask leading questions that invite confirming evidence.

Question 24

Decision-making biases: What is the framing trap?

Answer 24

The way in which a problem is presented affects the choices we make (gains vs losses, different reference points).

Question 25

How can we avoid the framing trap?

Answer 25

-Try to reframe the problem in various ways, and look out for frame-caused distortions.

Question 26

Decision-making biases: What is the overconfidence trap, and how can we avoid it?

Answer 26

Tendency to be overconfident about our accuracy.

Avoid by considering the extremes.

Question 27

Decision-making biases: What is the prudence trap, and how can we avoid it?

Answer 27

Tendency to adjust our estimates and forecasts, to be overcautious.
Avoid by being honest about your statements.

Question 28

Decision-making biases: What is the recallability trap, and how can we avoid it?

Answer 28

Influence from past, dramatic events that have made a strong impression on your memory.
Avoid by examining all your assumptions, and using concrete evidence.

Question 29

What is the best protection against psychological traps?

Answer 29

Awareness!

Question 30

What are the pros of using algorithms in decision-making?

Answer 30

• Can reveal patterns that are otherwise hard to see: Broadens your search criteria
• Fairly easy to use
• Can improve efficiency
• Can reduce biases
• Provides consistency

Question 31

What is “algorithm aversion”?

Answer 31

People prefer to rely on intuitive human forecasts than people analytics.

Question 32

How should algorithms (people analytics) be applied?

Answer 32

They should be a complement to, and not a substitute for, human judgment

Question 33

What are the cons of using algorithms in decision-making?

Answer 33

• Need to understand the basis (criteria) and the methodology on which the algorithm makes recommendations
• The algorithm can’t know exactly what the objective behind the decision-making is

Question 34

What are the pros of using your instinct (trusting your gut) in decision-making?

Answer 34

-Sometimes, there is no time to perform a thorough analysis of options/alternatives

Question 35

What is cross-indexing?

Answer 35

Cross-indexing: The ability to see similar patterns in disparate fields, elevating intuitive skillls

Question 36

What does good, intuitive decision-making require? (2)

Answer 36

• Balanced emotions and feelings

- Self-checking mechanism: Self-awareness, with an ability to recognize your own emotions, moods and objectives

Question 37

What are the cons of using your instinct (trusting your gut) in decision-making?

Answer 37

• Overfitting the data: Tendency to try to find, see and draw on rules and patterns, even when they are not there –> This narrows our thinking!
• Revisionism: Tendency to remember when we didn’t trust our gut, and should have.
• Self-fulfilling prophecy: Tendency to make extra efforts to ensure that our decision appears to be the good one.
• Overconfidence
• Bounded rationality: Limitations on an individual’s ability to interpret, process and act upon information.
  (ie. Satisficing: ‘Good-enough’ solution)

Question 38

When should you use rational decision-making (reason and analysis)?

Answer 38

Complex situations, with an abundance of options, data, challenges

Question 39

When should you use intuitive decision-making?

Answer 39

Simple situations, in which the decision is fast-tracked, and there needs to be little attention to the fine distinctions/details.

High uncertainty, low clarity, limited time, no precedent, few facts, several reasonable alternatives.

Question 40

What are decision-support tools?

Answer 40

Decision-support tools harness the human intuition’s power, while remedying its most pernicious flaws.

Question 41

When is agent-based modelling most useful?

Answer 41

Decisions with complex systems of interrelated and unpredictable elements (takes a scenario-based approach).

Question 42

What makes business ethics so challenging?

Answer 42

• There are multiple, feasible, good alternatives

- What’s good for the company and its shareholders may not be good for employees, the environment, the future

Question 43

Ethical theories: What is deontology? What are its pros/cons?

Answer 43

Normative ethical theory that the morality of an action should be based on whether that action itself is right or wrong under a series of rules, rather than based on the consequences of the action.

Pros: It is simple to apply, and fits well with our natural intuition.
Cons: It doesn’t weigh costs and benefits, meaning it potentially disregards the consequences of our actions. It doesn’t account for the context, which can produce results that many find unacceptable.

Question 44

Ethical theories: What is utilitarianism? What are its limitations?

Answer 44

Consequentialist ethical theory using outcomes to determine right from wrong. States that the most ethical choice is the one that will produce the greatest good for the greatest number, accounting for costs and benefits.

Limitations: Doesn’t take in account personal values, and that we can’t predict the future.

Question 45

Ethical theories: What is virtue ethics? How can we acquire virtue?

Answer 45

Virtue ethics is a broad term for theories that emphasize the role of character and virtue in moral philosophy rather than either doing one’s duty or acting in order to bring about good consequences. A virtue ethicist is likely to give you this kind of moral advice: “Act as a virtuous person would act in your situation.”

Unlike deontological and consequentialist theories, theories of virtue ethics do not aim primarily to identify universal principles that can be applied in any moral situation.

Virtue can be acquired through practice.

Question 46

What is distributive justice?

Answer 46

Distributive justice is a concept that addresses the ownership of goods in a society. It assumes that there is a large amount of fairness in the distribution of goods. Equal work should provide individuals with an equal outcome in terms of goods acquired or the ability to acquire goods. Distributive justice is absent when equal work does not produce equal outcomes or when an individual or a group acquires a disproportionate amount of goods.

Question 47

What is procedural justice?

Answer 47

CONSISTENCE IN DECISION-MAKING PROCESS: Procedural justice concerns the fairness and the transparency of the processes by which decisions are made. Hearing all parties before a decision is made is one step which would be considered appropriate to be taken in order that a process may then be characterized as procedurally fair. Some theories of procedural justice hold that fair procedure leads to equitable outcomes.

Question 48

What makes for a successful integrative negotiation?

Answer 48

STRATEGY 1: EXPLORE INTERESTS AND ADD ISSUES (EXPANDING THE PIE)

• Beginning with a positive overture (showing a willingness to give something up at the beginning)
• Focusing on your issues, your position, your BATNA (Best Alternative To a Negotiated Agreement) and your interests.
• Considering the other side’s issues, position, BATNA and interests.
• Paying little attention to initial offers, as they are often meaningless.
• Addressing problems, not personalities
• Showing empathy, by asking questions and revealing own interests
• Bridging gaps in underlying value differences, by identifying overarching values that could motivate collaborative work –> value-creating opportunities
• Emphasizing win-win situations (options for mutual gains)

STRATEGY: PLAY THE GAME OF ‘WHAT-IF’
-Test a variety of packages simultaneously, each creating a little more value.

STRATEGY: BRING NEW PARTIES TO THE NEGOTIATION TABLE

• If there is little trust between the negotiators, consider recruiting an intermediary that is trusted by both parties
• Creating an open and trusting climate.

Question 49

What is a benefit of integrative negotiation?

Answer 49

Helps build long-term relationships

Question 50

What do the best integrative solutions focus on?

Answer 50

The best integrative solutions focus on the interests (“why”), not the positions (“what”).

Question 51

What is distributive negotiation?

Answer 51

• Win/Lose, Zero-Sum negotiations, in which there is a FIXED amount of value (slicing up the pie).
• Typically, the only issue at stake is price.

Question 52

How can you prepare for a distributive negotiation, and be successful in a distributive negotiation?
(Example: Negotiating Salary)

Answer 52

1. Work on improving your BATNA
   - Research the various alternatives available, and pursue several negotiations simultaneously
2. Prior to the negotiation, determine your reservation point (the ‘turning’ figure between acceptance/rejection)
3. Assess the other party’s reservation point and BATNA, to give you a sense of how high/low you can go
4. Determine the ZOPA (Zone of Potential Agreement): Range of all possible deals that both parties would accept
5. Make an aggressive first offer, a statement anchoring the discussion in your favour

Question 53

What are critical factors for effective salary negotiation?

Answer 53

• Adapting your negotiation strategy, between assertiveness and cooperativeness.
• Considering the context (education level, experience)
• Gathering info, so that you know what value you can bring, and believe that your demand is defensible
• Examining your weaknesses and vulnerabilities, planning ahead to compensate for them