Leading People

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Leading People by Mind Map: Leading People

1. Class 1: Evidence Based Management

1.1. Lecture

1.1.1. Evidence based people management Psychology, sociology, economics, political science, anthropology, communication Manage yourself, manage your team, manage your organization Connection between being, thinking and doing

1.2. Readings

1.2.1. Why every company needs evidence-based management (Pfeffer, Sutton) Bad decisions are made Mergers <> Success Decisions are often based on hope, fear, trend, etc., NOT FACTS Halt current methods of making decisions Hard: to trust research, to absorb everything, to identify strong research Half truths Better way to decide Correct mindset: Go beyond conventional wisdom, gather facts Focus on copying how they think, not what they do Don't do what has worked in the past Don't follow deep yet unexamined ideologies Structured people still make unstructured decisions Experiment and control What assumptions does the idea have? Which assumptions seen reasonable or questionable? Could this idea still succeed if assumptions were wrong? How can data be gathered fast, cheap and easy? What ideas could address the same problem and be more consistent with believes? e.g. rewarded teacher models don't work

1.2.2. NPR Podcast: From Harvard Economist to Caesar's CEO Experiment based, special offers for people who would not go otherwise Rewards: low cost to casino, high value to customers Avoid high winners and high loosers, win early on Customer data through loyalty cards Help 2% addict gamblers

2. Class 2: Motivating Performance

2.1. Lecture

2.1.1. What affects motivation Output (pay, promotions, security, etc.) / Input (time, reliability, sharing, etc.), relative to others Aim for overpayment (higher output): motivated people With equity, people work to standards (ok) Income doesn't make people happier Extrinsic factors = job dissatisfaction, intrinsic factors = job satisfaction

2.1.2. How to correctly motivate "Pay people enough to stop people worrying about money" Aim for autonomy, mastery, challenge, making a contribution Best practices Use intrinsic and extrinsic rewards, not just money Make it frequent Clarify and reinforce connection and desired effort Be consistent

2.2. Readings

2.2.1. Employee Recognition at Intuit (Stanford GSB) Started basic, had lots of opportunities Cash: forgotten 2001: simple system, quickly adopted, uneven Evolved to formal program Gift certificates High use Surveys, feedback, prompt, simple, global Third party: globoforce BUT Solutions

2.2.2. On the folly of rewarding A, while hoping for B. (Kerr, S) Frequent mistakes Societal Organizations Business Causes Fixated on "objective" criteria Overemphasis on highly visible behaviors Hypocrisy Emphasis on morality or equity, not efficiency Solutions Select individuals aligned to management Train employees, although not great Alter reward system: positively reinforce desired behaviors

2.2.3. Six dangerous myths about pay (Pfeffer, J) 6 Myths Labor rate = labor costs Lower labor rates = lower labor costs Labor costs are a big part of total costs Labor costs are a competitive advantage Motivation = compensation People work for money Merit pay systems They take time and make people unhappy If you came for money, you would leave for money. You want employees that like work, culture and people

3. Class 3: Performance Appraisal

3.1. Lecture

3.1.1. Purpose of performance appraisals Evaluation Coaching Rewards / Pay

3.1.2. Problems General problems Communication problems Reporting and evaluation problems Perceptual problems / expectations Impediments Recipient problems (self illusions) Sender problems (illusion of transparency, sugarcoating) Overestimation of contributions Evaluation problems Leniency error: honesty is hard Halo error: correlation between dimensions high Forcing information: Appraisal constructed after evaluation is made Input bias: Focusing solely on effort Recency error: Recent actions have more influence Similarity error: Like me = good Evaluation bias Self-fulfilling expectations

3.1.3. Solutions Self evaluations Forced distributions, although not perfect Bell curve, strict hierarchy, quartiles People don't want it, forced turnover bad, perceptual biases, lawsuits Praise vs. Criticism Start with praise Be specific in criticisms Make it a sandwich: good, bad, bood Ask to identify their own challenges Frame correctly Non judgemental language Teachable moment Timely: soon, personal

3.1.4. Best practices Ask questions to get their perspective Provide positive feedback first, negative second End with actions and be concrete

3.2. Readings

3.2.1. Performance appraisal exercise Different perspectives Not cooperative

3.2.2. Conducting a performance appraisal interview (Beer, M) Goals Placement Promotions Fire Pay Evaluation goals Give feedback Develop data for pay Discharge and retention decisions Coaching and Development Goals Coach subordinates for better performance Develop commitment Motivate Strengthen supervisor-subordinate relations Diagnose problems Both are in contraposition: eval and development Self-image Rewards Therefore, people are ambivalent Problems People are ambivalent They avoid the process They don't fully engage: superficial, not specific, sandwich, not analyzed Feedback and defensiveness: self image Avoidance and defensiveness combined: worst combination Solutions: Appraisal System Uncouple evaluation and development Choose appropriate performance date: specific goals and tailored data, use 360° eval Upward appraisal Eliminate performance appraisal system, work by exceptions Solutions: Appraisal Interview Tel and sell method Tell and listen interview Problem solving interview Mixed model interview: begin open ended (problem solving), end tell and sell or tell and listen Best practices: schedule, agree on content and process, good location and space, review objectives when opening, exchange feedback, develop plan for improvement, close discussion with future

3.2.3. Self-Fulfilling Stereotypes (Snyder, M) When people expect someone to behave in a way, they alter their behavior and make the other party act as expected Examples Physical attractiveness Sex differences Aggraviating factors Selective memory: reinforces stereotype Stigmatized groups subscribe to same stereotypes

4. Class 4: Decision Making

4.1. Lecture

4.1.1. Rational tools MAUT: Multi attribute utility theory Decision trees Rational approach requires subjective inputs People are boundedly rational GIGO (Great input, great output)

4.1.2. Biases and Solutions Confirmation bias Sampling on dependent variable Overconfidence Availability People using recent or easy date Anchoring and ease of recall Representativeness Insensitivity to base rates Conjunction fallacy Solution: Think about cause and effect, collect good data and avoid causal relationships

4.2. Readings

4.2.1. Decision Making Exercise Survey, "unexpected" results

4.2.2. The hidden traps in decision making (Hammond) Anchoring trap View from different perspectives Think about problem before consulting others Be open minded Avoid anchoring advisors, share little info Status quo trap Status quo is comfortable Remind yourself of objectives Never consider it the only alternative Ask if status quo would be preferred if it weren't the status quo Avoid exaggerating effort to change Force to choose: inaction is a choosing Sunk-cost trap Justifies past choices Seek views of uninvolved Examine why admitting mistakes distresses you Be on the lookout for influence of sunk cost biases Avoid failure fearing culture Confirming evidence trap Tendency to decide what we want before we figure it out Examine all evidence with same rigor Consider position with open mind Be honest about motives Don't ask leading question that invite confirming evidence Framing trap Frames as gains vs looses, frame with different reference points Don't accept initial frame Pose problems in neutral, redundant way Think about the framing problem Examine the framing you are given Estimating and forecasting traps Overconfidence Recallability trap Start considering extremes State your estimates honestly Examine assumptions

5. Class 5: Team Decision Making

5.1. Lecture

5.1.1. Teams Social facilitation Increases performance Fear what others think Speed, accountability, consistent values, efficient use of time, less conflict

5.1.2. Individuals Productivity, diversity of knowledge, high quality decisions, increase acceptance, pooling of resources

5.1.3. Problems and solutions Groupthink Not being critical Symptoms Fixes Escalation of commitment Tendency to maintain commitment to losing curses of action, even in face of negative news Causes Fixes

5.2. Readings

5.2.1. Carter Racing exercise

5.2.2. Selection bias and the perils of benchmarking (Denrell, J) Same behavior, different outcomes Problem Persistence & Persuation: success or failure We only evaluate successful companies VCs look at entire spectrum Management practice: also biased Solution Analyze all data: successes and failures Benchmark unsuccessful firms also

5.2.3. Why teams don't work (Hackman, J.R.) Implications of teams Coordination Motivation Competition Solutions Designate deviant (devil's advocate) Avoid double digits: keep small Keep the team together Be ruthless about membership Set compelling direction Embrace own style Focus coaching on group processes Protect deviant

6. Class 6: Negotiation / Conflict Resolution

6.1. Lecture

6.1.1. Essentials BATNA: Best Alternative to a Negotiated Agreement RP: Reservation point ZOPA: Zone of Possible Agreement

6.1.2. Key strategies First offer when you can correctly guess their reservation price Tell BATNA when it's better than they think it is Never tell reservation price

6.1.3. Integrative negotiation Make the pie as big as possible Best practices Build trust and share information Ask questions about interests, not positions Make package offers Search for post-settlement settlements

6.2. Readings

6.2.1. Negotiation exercise

6.2.2. Chapter 9: Negotiation (Bazerman, Moore) Objective: improve total outcomes Decision analytics approach Describes other party Prescribes your actions BATNA Interests: Evident <> Underlying Share info for a given position Create value, claim value Overlap: positive bargaining zone No overlap: negative bargaining zone Creating value Trade issues -> Increase total value Create value through bets Build trust and share information Ask questions Strategically disclose information Negotiate multiple issues simultaneously

7. Class 8: Power and Influence

7.1. Takeaways

7.1.1. Be careful of authority, blind obedience can lead to unforseen results (no robots)

7.1.2. Ensure everyone can express opinion, don't assume silence is agreement

7.2. Lecture

7.2.1. Case: Milgram experiment Compliance more likely due to Expert in room Shifting blame Blaming others Participant got paid "Lab" setting

7.2.2. Obedience Efficient, needs to keep morals or won opinion Depends on time: discussion (less obedience) vs. execution (more obedience) Pro: efficient, necessary for certain situations Con: can lead to less creativity or one-sided results How to reduce it? Instill sense of responsibility in individual employees Cultivate culture of questioning authority Ensure channel for reporting unethical behavior

7.2.3. Persuasion Strategies (1) Liking People like people who like them: similarity and flattery increases liking => Uncover real similarities and offer genuine praise (2) Reciprocity People feel obligated to return favors: offer sth. up front, instill sense of trust => Do favors, offer to help, and give gifts to co-workers & bosses (3) Social Proof People follow the lead of similar others: we look at what our peers do to find out what is appropriate => Use evidence from peers whenever available (4) Consistency People try to do what they say they will: make subordinates write down tasks, public declaration even stronger motivator, has to be voluntary, people want to be seen as consistent => Make commitments active, public and voluntary (5) Authority People defer to experts: life is complicated and we use short-cut of asking experts => Expose your expertise, don't assume it's self-evident (e.g. manager gives you recommendation) (6) Scarcity People want more of what is difficult to get: scarcity makes sth valuable, more demanded and seems more important => Highlight unique benefit and exclusive information

7.3. Readings

7.3.1. Obedience to authority (Milgram, S.) Milram Experiment: tested how far the participant will comply with the experimenter's instruction before refusing to carry out the actions (giving electric shocks) required of him. (Results) ・Many people obey the experimenter by sense of obligation (Takeaways) ・They didn't feel sence of responsibility because they're only an intermediate link in a chain of evil action ・The setting of experiment (Yale University, professor, etc...) gave an authority ・Systematic devaluation of the victim (psychological justification for brutal treatment) ・The closeness of the victim affected the results

7.3.2. Harnessing the Science of Persuassion (Cialdini, R.) ・"Born persuaders" are often unable to account for their remarkable skill. How can executives cquire them? Here are principles (1) Liling: If you want to influence people, win friends by finding the similarity and praising. (2) Reciprocity: Give what you want to receive (3) Social proof: People tends to follow peers, friends more. (4) Consistency: Promises spoken out loud or written down is more likely to be achieved. (5) Authority: Executives should establish their expertise before try to influcence others. (6) Scarcity: Highlight unique benefit and exclusive information to the specific key players.

8. Class 9: Diversity

8.1. Takeaways

8.1.1. Discrimination is not only open, traditional prejudice

8.1.2. Reducing prejudice requires vigilance

8.1.3. Organizational: hiring policies, managers discouraging biases, identity self-help groups

8.1.4. Individual: Awareness of implicit attitudes, Seeking experiences that contradict prejudice

8.2. Lecture

8.2.1. Types of prejudice traditional prejudice "a hostile attitude toward a person who belongs to a group" adopted conciously varies from person to person expressed overtly Social norm to punish the traditional prejudice is developed Implicit prejudice Negative, non-conscious association towards a group Relatively ubiquitous (everyone has it) Leads to automatic behavior (how nice you are, help etc.) measured by Implicit Association Task (IAT)

8.2.2. IAT Measure how quickly one can categorize words and people Shows subconscious prejudice, and people normally have difficulity to accept result

8.2.3. Found in reality Disparate Impact Adverse effect: when a process has the intention of being neutral, but still results in discriminating between men/women or black/white Stereotype threat The anxiety to show one's own abilities which may confirm a negative stereotype of society Person themselve reacts to stereotype that he thinks will be used on him e.g. Asians on math tests (Try not to show the ability)

8.2.4. Solutions Reduce implicit bias conscious / deliberate thought debiasing agents (Like B. Obama! Good examples) What can organization do? Put people in charge that are visibly part of intended bias change (e.g. women as senior leaders or allocate quota for specific group) Education collect data to disconfirm stereotype

8.3. Readings

8.3.1. Chapter 3, The Warren Harding Error: Why we fall for Tall, Dark and Handsome Men (Gladwell, M) ・Warren Harding won the presidency in 1920 only because he was “a great looking President” but he was not a good president at all. - the dark side of rapid discrimination ・IAT (Implicit Association Test) : we make connections much more quickly between pairs of ideas that are already related in our minds than we do between pairs of ideas that are unfamiliar to us. IAT measures the immediate, automatic associations that tumble out before we’ve even had time to think. & we may not even be aware of them. What should we do about Warren Harding errors? :We can change our first impressions by changing the experiences that comprise those impressions. Changing life so that you are exposed to minorities on a regular basis and become comfortable with them and familiar with the best of their culture.

8.3.2. Thin ice: "Stereotype threat" (Steele, C.M.) ・Stereotype threat: the threat of being viewed through the lens of a negative stereotype : example [Math ability test] Perfomance White>Black [No judging test] Performance White = Black ・In addition to stereotype threat, there is also a negative effect of "self-fullfilling prophecy", which is internalized negative stereotypes. ・ Research shows that it is possible to create a space in which negative stereotypes are not felt to apply => School or office should try to weaken a group's sense of being threatened by negative stereotype

8.3.3. NPR podcast: How to fight racial bias when it's silent and subtle

9. Class 10: Human Resource Decisions

9.1. Takeaways

9.1.1. Understand skills that define success at job

9.1.2. Be careful of overweighing past results

9.2. Lecture

9.2.1. Affects hiring Past history Past history can be indicator of future performance, but can also be misleading FAE Bias: easier to link performance to ability than situational influences "Fit" Often attractive, tall, extroverted and those matching stereotype Often indistinguishable from bias, prejudice or whim Imitating behavior of interviewer increases performance People believe in importance of "fit" and that the are good judge of character Recruiting practices Interviewers are often untrained Preferred traits (height, attractive, sociable) don't necessarily lead to good job performance Interviewer has perceptual biases (similar-to-me, first-impression, self-fulfilling prophecy, halo) Be aware of illegal questions (race, religion, sexual orientation..)

9.2.2. Solutions Work-relevant questions Same interviewer asks each candidate same questions Same interviewer for all candidates Systematic rating & system for combining all interviewers' ratings Use quantitative tools But people hate this!

9.3. Readings

9.3.1. New Recruits Case (SG Cowen) Hiring Process (1)On campus recruiting (by juniors, alums) -pros: establish presence in schools, juniors can evaluate technical skills, know the school's program (alum), candidates can feel closer -cons: can these young people assess FIT?, subjective? (2) Super Saturday (by managers): go to HQ, all day interviews, dinner with CEO, the decision is done by the end of the day -pros: seniors might be better at assessing FIT (?) -cons: subjective, really using the evaluation sheet? (people don't like systematic evaluation), sparkle?, do they really understand the recruiting policy?, the criteria are somewhat vague

9.3.2. NPR Podcast: How Yahoo's Marissa Mayer is hiring a Dream Team in Silicon Valley

9.3.3. NPR Podcast: Employers Forced to Judge Job Candidates' Career Trajectory

9.3.4. Stubborn reliance on intuition and subjectivity in employee selection (Highhouse, S.) Researches showed that selection decision aids (rational tools for hiring, such as paper-and-pencil tests, structured interviews, mechanical combination of predictors) often outperform unstructured interviews. However, the managers don’t believe it. These are two beliefs that inhibit adoption of selection decision aids. (1)Inherent resistance to analytical approaches because they fail to view selection as probabilistic and subject to error. (2)The prediction of human behavior is improved through experience. → results in an over-reliance on intuition and reluctance to undermine one’s own credibility by using a selection decision aid.

10. Class 11: Social Networks

10.1. Takeaways

10.1.1. Networks are dynamic, non-linear, invisible, but manageable and appropriate in diff. situations

10.1.2. Social capital provides opportunity to apply human & financial capital

10.2. Lecture

10.2.1. Capitals of Prosperity Social capital becomes as important as financial capital (cash) and Human capital (skill, ideas, talent) Social capital is your network of trusted contacts (in several social worlds) Allows you to transcend your individual limitations referrals: to diverse forms of human capital Access: to private info Timing: of info before becomes public

10.2.2. Types of Social Network Closure Network All members linked to each other Few gaps in team, high closure in network Most people in group center know each other PRO => Trustful / Easy to give referral / High accountability / Max cooperation & control / More equal distribution of info / Max loyalty & cohesion / Increase reciprocity CON => Information in group is rarely novel & often redundant / No big picture view / Groupthink Brokerage Network Position between several individuals or groups Gaps between groups, members often don't know each other Groups otherwise unable to communicate with each other PRO => Opportunity to combine or exploit info in new ways / Access to diverse opportunities / High autonomy & flexibility / Can adopt to org or market changes CON => Others may not see you as loyal to any group / Difficult to develop expertise in any one area / Decreases motives to cooperate in case of uncertain payoffs / Can create unequal dist. of rewards

10.2.3. How to build/maintain network Favor exchange: Giving and asking favors (unprompted & personal) Shared activity: Joining different organizations outside normal circles (Professional / Social / Hobby) Share network: Ask invitees to bring someone new / make it habit to know contacts of contacts

10.3. Readings

10.3.1. Hale and Dore Case Selling legal service Relationship matters a lot/ Trust is important / Expertise makes a swithing cost for customers high / referrals are important What's important in this business? ・Utilize incentive for biz dev ・Formalize network by using a technology such as sales force ・ Manage crossfunctionally (integrate know-how of different divisions)

11. Class 12: Founding Teams

11.1. Takeaways

11.1.1. Who you choose affects decisions

11.1.2. 3Rs

11.2. Lecture

11.2.1. Key elements of teams Roles Commitment Idea People Past experiences Relationships Teams of friends and family What to do Rewards Splitting equity What to do

11.3. Readings

11.3.1. Smartix: Swinging for the Fences Case Issue faced in the case - How to divide the equity once business is established - How to build a good team Shoud we have a co-founder? (pros) Share risk / Not lonely / Share responsibility (cons) No 100% control / No 100% equity / Confidentiality risk How should we divide equity? In the case, the division was based on the past / future contribution, commitment, and opportunity cost. Outcome They did not go with MSG, Six Flags instead During pitches to VCs the stock market crashed Closed Smartix Biggest mistake: Not attracting David Keebler

12. Class 13: Managing Innovation

12.1. Takeaways

12.1.1. One view of innovation is about having lots and lots of ideas and options

12.1.2. Bureaucracy, though natural, is the hobgoblin of innovation

12.1.3. Org structure, Culture and HR policies can increase chances a firm will be radically innovative

12.2. Lecture

12.2.1. 3M Case - Innovation is about trying lots of things and failing often - Diff between "Innovation company (Explore)" and "Incremental improvement company"(Exploit). - Company should balance it in terms of HR, Culture and structure - Innovation is not knowing the future, but have enough ideas to be able to respond to it well - Organization needs to constantly generate ideas

12.2.2. Problem of company size As age and size grow, a company tends to be bureaucratic - Employees develop expertise in existing systems/technology (very good at 1 product) - Changes threaten entrenched structure -> often disruptive & threatens old expertise Options how to stay "small": Slip company / Invest in other companies / Physical distance between research and "old" business

12.2.3. Encourage Exploration Organization - Flat Org Structure (Vertical and horizontal interaction, decentral control, agile) - Divisions open & close (Interaction, Cross-breeding of ideas) - Independent teams (few & quick decisions lead to easy experimentation, less deciders) Culture - Failure is accepted (Reward trying, punish inactivity) - Disobedience is tolerated (need confident employees, keep balance though) - Disagreement is encouraged (culture of discussion, multiple inputs, devil's advocate) HR - Select employees with diversified ideas (hire people with ideas, creativity and new backgrounds) - Give people time to persue their interests - Shield creative teams from customers (no admin or operational tasks)

12.3. Readings

12.3.1. Microsoft's Creative Destruction (Brass, D.) ・Microsoft has never developed a true system for innovation. Why? ・Internal uncontrolled and destructive competition -ClearType: denied by the head of Office and CP for pocket devices -tablet PC: refused to modify Office applications to work with the tablet, by VP of Office ・historic preference to develop (highly profitable) software without undertaking (highly risky) hardware ・Timing has also been poor.

12.3.2. How Google Decides to Pull the Plug (Goel, V.) ・Interests are necessary for new products ・Key tests for continued incubation ・Tries products internally before releasing them ・Listening to users. (official blog) ・Willing to take risks ・Google purposefully puts out imperfect and unfinished products (in-class discussion) But are they enough? - Only focusing on big projects? - Became too big? - different department people less likely to work together?

12.3.3. Profile of an Innovating Company: 3M Case Organization design - Specialized in product (42 divisions and 80 labs) - Each division has its own sales force and budget Culture - Torelate risk / Care about the new-in-market products - No hierarchy / exchange ideas HR Policy - 15% freetime for innovation / 25% new-product revenue rule - Dual ladder rule (You can both persue engineer or management) Recent year change - Corporate planning function / Short term growth plan/More descipline => These may contradict with innovative org. design

13. Class 14: Leadership

13.1. Takeaways

13.1.1. Leadership requires different styles in different situations

13.1.2. A good leader needs to get comfortable with these styles and recognize when to use them

13.2. Lecture

13.2.1. Leadership Styles 1. Directing High direction, low support (Military; easy & repetitive tasks) 'Primary objective: securing immediate compliance - Efficient & quick: provides clear directives without soliciting others' input or listening to their reactions - Maintains tight control through frequent visits, reports and close monitoring - Relies on negative corrective feedback (make clear what is wrong & needs correcting) - Clearly indicates negative consequences of non-compliance 2. Coaching High direction, high support (New recruits, direct reports that one wants to develop) Primary objective: long-term professional development - Develops and articulates clear vision and direction - Helps others identify strengths and weaknesses - Helps others establish long-range development goals in light of their strengths and weaknesses - Gives feedback on performance and development - May trade off immediate performance for long-term development, sees mistakes as learning opportunities 3. Supporting Low direction, high support (R&D supported by budget etc. but otherwise left alone) Primary objective: building commitment and consensus - Gives others full participation in setting direction of work team and establishing plans to achieve it - Emphasizes importance of consensus in group-decision making processes - Listens carefully to team members for their ideas - Ensures organizational roadblocks are removed 4. Delegating Low direction, low support (Senior partners, Executives, Startups sometimes) Primary objective: juggle multiple demands and high complexity - Allow managers to have freedom to do what they think best - Leads by example, or "modeling", anticipating that others understand rationale for what is being modeled - Delegates demanding tasks to outstanding performers who need little instructions - Requires high managerial ability of subordinates

13.2.2. Key points - Actively note different styles in others (learn from others, emulalte them, understand when, how, and with whom to use each style) - Practice new behaviors in low-risk situations - Ask people you trust for feedback on how you are doing and how you can improve (awareness) - Remember that there is no best way to lead

13.3. Readings

13.3.1. Leslie Brinkman Versutia Capital Case Problems: - gap between her hope and the organization - industry norm? (because it's hedge fund?) - growth in size (she can't handle all of her responsibilities) - relative to gender norms? -Is she aware of the problems? - What gets you promoted isn't management. -lack of processes Solutions - try to make less stressful, focus on coaching & supervision - delegate, change organization less flat - return some money, focuse only on good ideas - step back and reflect on cultures, values - identify what's the long-term goal - get a coach?