Theories Of The Term Structure Of Interest Rates Finance Essay

Theories Of The Term Structure Of Interest Rates Finance Essay This coursework explains what information does term structure of interest rate gives to finance executives while analyzing project. Term Structure of interest rate is important in formulating investment decisions. Term structure of interest rate compares the market yield (Saunders Cornett, 2003, p. 190). The shape of the yield curve reflects the markets future expectation of the interest rate. Thus, the term structure is important for a finance executive, because they believe that interest rate across time tells about the markets expectation of future events (John Cox et al, 1985). Also, the behaviour of term structure impacts monetary policy (Marvin, 1998), economic activity (Dotsey, 1998) and inflation. By having understanding the term structure will help them to extricate information and predict how variables such as interest rates, maturity will affect the yield curve. Thus, helps them to take investment decision in order to generate future capital gain and cash flow. This coursework will first discuss about interest rate, yield in context of term structure of interest rate. Next section critically assesses the four different theories of term structure and what information do these theories have. In conclusion, importance of interest rate to finance executive is portrayed and validity of which theory holds good in todays market is discussed. Interest rates, Yield curves and Term Structure of Interest rates The main component of term structure is prices, Interest rates and time (term). Interest rates are important to understand because all the financial instruments are sensitive to interest rates. Financial executive invest in the projects depending on alternative options and cost of capital which depends on interest rates. One of the major concerns in making investment decision is uncertainty about the future capital/ rewards from the investment. Finance executives have to take decision in the unstable economic environment where the information comes gradually, so knowing term structure interest rate helps them to decide whether to invest and when to invest (Dias Shacklenton, 2005). Interest rate change with time due to risk, inflation, and also depends on variables such as tax, term of maturity. Term Structure of interest rate i.e. Yield curve is analysis tool of different interest rates of bonds or securities with different term of maturity (Marvin, 1998). Why to understand yield curves? The yield to maturity is quantified as the rate of return that mathematically equates the fixed payment stream to the bonds current market price. The yield to maturity cannot be easily calculated, so it must be analysed through trial and error method. Yield to maturity is same as internal rate of return (McInish, 2000). Finance executives are concerned with the internal rate of return the project will generate. Term structure is relation between different yields. This section first explains about yields and their importance and then assesses theories of term structure of interest rates. There are three yield curves: upward sloping, downward sloping and flat. If the yield curve is upward sloping it means that long term rates are above short term rates. As depicted in the figure, it has positive slope means that finance executive expects the economy to grow in future (Mishkin, 1990). As economy will grow it will lead to increase in inflation rates. With the rise in the inflation rate, central bank with tighten the monetary policy to control the inflation rate (Marvin, 1998). This generates the risk for uncertainty in inflation rate and to future value of cash flows. If the yield curve is downward sloping it means that long term rates are below short term rates (Mishkin, 2006).It means that finance executive expects interest rates and economy to fall. Tight monetary policy could lead long term rates to be lower than short term rates. If the yield curve is flat means that long term rates are equal to short term rates. Term structure of interest rate is defined as relation between interest rate and yield curve for default free securities having different maturity (John Cox et al, 1985). Term structure of interest rate is the correlation between different yields of financial instruments with same risk, tax but different maturity (Saunders Cornett, 2003). The term-structure model mainly analyses the expectations channels and the interest rate. While taking decision, the IRR (Internal rate of return) of the projects needs comparison with the opportunity cost of capital. But often the long run and short run interest rate/opportunity costs differs. And both cash flow and cost of capital include the inflation. Below theories of term structure of interest rates helps finance executives to understand expected inflation and interest rates. Theories of term structure of interest rates There are four theories namely expectation theory, market segment theory, liquidity preference theory and preferred habitat theory that explains the shape of yield curve (Saunders Cornett, 2003, p. 190). Expectation Theory John Hickss (1939) expectation theory suggests that expectation, of the investors in the market, about the future interest rate determine the term structure of interest rates and these expectations could affect the economic growth (Russell, 1992). This theory assumes that bonds with different maturities are perfect substitutes. Buyers will not prefer bond for which expected return is less than the expected return of another bond. Inflation and interest rate risk are not considered in this theory (Mishkin, 2006). According to this theory, expected return of the long term rates are average of short term rates. It means there is no uncertainty in expected rate of return over the holding period as return is same for all the securities over the holding period (Mishkin, 2006). Expectation theory proves that two facts, first, Interest rate for different maturities move together over the time and second Yields on short-term bond more volatile than yields on long-term bonds (Mishkin, 2006). Yield curve is based on market expectation. If the finance executives expect that the short term rates will be 10% in next 3 years, then interest rate on 3-year bond will also be 10%. For finance executive opportunity will be less because the yield curve will be flat as current long term rate is equal to current short term rate. This imply that movement of short term rates and long term rates can be predicted and if the yield curve is sloping upward then future interest rate will increase and if curve is sloping downwards then future interest rate will decrease (Russell, 1992). If the short term rates are high, yield curve will be downward sloping. Yield curve will be expected to be upward sloping if short term rates are low  [1]  . Hence this theory doesnt prove why the yield curve is usually upward sloping (Mishkin, 2006). As per this theory, finance executives are assumed to be investing in efficient market and with less transaction cost. Thus, Yield curve is determined by the short term interest rates and by uncertainty in the accuracy of their expectation. Liquid preference theory As the expectancy theory doesnt completely explain the term structure i.e. current rates are not perfect predictor of future interest rates (Saunders Cornett, 2003), this theory is an extension of the expectancy theory i.e. it gives some importance to the expected future rates but give more importance to the risk preference of the finance executives or investors (Mishkin, 2006). If the market is uncertain then finance executive will make decision based on capital gain/loss, revenue generated (Kessel, 1965). This decision will be based on their willingness to take risk. Risk  [2]  causes the interest rates to be greater than the expected rates and this amount increases with the maturity. Long term interest rate includes the expected rates and premium for holding long term rates bond. This premium is known as liquidity premium (Mishkin, 2006), which is compensation to the finance executives or investors for holding long term securities. The theory assumes that bonds are substitutes but not perfect substitutes .Short term rates are of lower inflation and low interest rate risks (Mishkin, 2006). Investor prefers short term rates (Keynesian view) and hence be given premium for long term rates. Long rates will be less volatile as it is the average of the short term rates and risk premium will increase with the maturity, thus, yield curve will be upward sloping (Kessel, 1965). With the increase in the maturity, sensitivity to capital loss increases with decreasing rate (Saunders Cornett, 2003). Investor prefers short term rates as it is less prone to capital loss. It doesnt mean that they are risk averse; they may be unwilling to take the risk due to economic activity. As mentioned above, risk premium will increase with the term of maturity, upward sloping yield curve may reflect the expectation of investor that future short term rates will rise and therefore, the yield curve will also increase with the term to maturity (Saunders Cornett, 2003). Segmented market theory This Theory assumes that credit markets are segmented (Shelile, 2006). Investor has preference for specific maturity bonds and hence the market for these bonds are separated based on their maturity. This means that longer interest rate securities are completely different asset when compared to short term interest rate securities (Mishkin, 2006). As per this theory, Investors decide which term securities they want to hold. They dont prefer to change the market segment to take the advantage of the changing yields in other segment (Saunders Cornett, 2003). Investor preference depends on the asset and liability they hold. For example bank prefers short term interest rate due to their deposit liabilities and insurance company prefers long term interest rate due to their contractual liabilities. Thus, Demand and supply for particular securities, with in particular segment, determine the interest rates (Howells and Bain, 1998). This theory explains the fact 3 why the yield curves are usually upward sloping and assumes that Investor prefers liquid portfolio. Thus they prefer short term securities. Bonds/securities with shorter period have low risk and lower inflation, means yield will be lower and yield on long term bond will be higher (Shelile, 2006). This proves the fact that yield curve is usually upward sloping. However, as the market for the bond is segmented, it fails to prove why the yields of different term move together (Mishkin, 2006). Preferred habitat theory Moldigliani and Sutch (1966) recognised the limitation of market segment theory and gave preferred habitat theory, which is a combination of both expected theory and market segment theory. According to Mishkin, preferred habitat theory is closely related to liquidity premium theory. Preferred habitat investors invest in their preferred maturities and do not invest in across market segment. Movement in yield of different maturity has no effect in demand by preferred habitat (Doh, 2010). Finance executives will invest in outside of preferred maturity if they are compensated by higher expected return or term premium (Howells and Bain, 1998). Finance executives consider both expected return and maturity. However, understanding of determinant of term premium is difficult (John Cox et al, 1985). Below chart shows that there is close relationship between the risk premium and the yield curve. If risk premium is positive then yield curve tend to be upward sloping and vice versa. This proves that investor/ finance executives expect interest rate to rise when yield curve is upward sloping and require positive risk premium to compensate for future capital losses (Christopher Peacock, 2004) Source: Christopher Peacock, 2004, Bank of England: Deriving a market-based measure of interest rate expectations Why to have understanding of different theories Term structure inform about the expectation of other investors in the market. Expectation of other market investor will influence the current decision and these decisions will determine what will happen in the future. Thus knowledge of other market investor is helpful in determining the future forecast (Russell, 1992) Theories explain that changes in short term rates will affect long term rates. Short term rates have direct effect on long term interest rates and finance executive are concerned majorly with the long term interest rates as it help them to make the decisions about investments (Russell, 1992) Monetary policy has direct effect on short term rates. Fama (1990) and Mishkin (1990) study shows that term spread gives information about the future macroeconomic variables such as inflation. To control the inflation central bank tightens the monetary policy and tightening leads to rise in short term interest rates. These theories predict about the economic activity and to know about the economic activity is important as this will help in forecasting, budgeting and meeting the future demand (Dotsey, 1998). Investor/ financial executives are forward looking and thus yield spread between short term and long term interest rate predicts the future economic activity (Watson, 1989). However, 1990-91 economic downturn was not predicted by these theories. But later studies by Estrella and Mishkin (1997, 1998) determined that spread contain the significant amount of information about the future economic activity. Their conclusion was supported by Dueker (1997) and Plosser and Rouwenhorst (1994) studies. CONCLUSION Which Theory is most appropriate? The Liquidity Preference hypothesis, the Preferred Habitat hypothesis, and the Market Segmentation hypothesis all depend on an analysis of investor and firm preferences under certainty to conclude about the term structure premium under uncertainty. Liquidity Preference hypothesis suggests that it is the nature of risk aversion which mostly causes the forward rate to be far greater than the expected future rate. This view has been criticized for overtly emphasising on capital-value risk as opposed to income risk. Someone who wants future flow of income could simply make a long term investment and stay unconcerned about variations in interest rate, also for them, a yield premium might be necessary to induce them to hold shorter term structure. Preferred habitat theory advocates that due to variation in individuals notion of saving and investment, different investor would be view the investment risk differently. Preferred Habitat Theory is the most consistent theory to analyse daily changes in the term structure. However, in the long run, expectations of future interest rates and liquidity premiums are vital elements of the shape and position of the yield curve. Why should finances executive have understanding of term structure of interest rate? While analyzing project proposals, the finance executives obviously expect stable cash flow or income generation for companys economic viability. As discussed above, the term structure of interest rate predicts the economic condition. So, instead of erratic cash flows of increasing flow in one cycle and decreasing in another, they expect stable value for their money. Hence, future growth can be forecasted by the term structure of the interest rates. While borrowing money for investments, both assets and liabilities are at interest rate risk. If liabilities have greater risk than assets, then there is a risk that an increase in interest rate might result in financial ruin. Financial executives can alter the risk by their choice of duration of portfolios. Risk aversion, investment alternatives, anticipations and preferences about the timing of investment all have a vital role in determining the term structure. Therefore, Finance executives should have good understanding of term structure. REFERENCES Cox, John C., J. E. Ingersoll, and S. A. Ross (1985). A Theory of the Term Structure of Interest Rates. Econometrica, 53, P. 385-408 Christopher Peacock, 2004. Deriving a market-based measure of interest rate expectations. Bank of England Quarterly Bulletin: Summer 2004. P. 142- 152 Dias, J. c., Shacklenton, M. B. (2005). Investment hysteresis under stochastic interest rates. Dotsey, Michael (1998). The Predictive Content of the Interest Rate Term Spread for Future Economic Growth, Federal Reserve Bank of Richmond Economic Quarterly. Fama, E.F. (1990): Term-structure forecasts of interest rates, inflation and real returns. Journal of Monetary Economics, 25 (1), January, P. 59-76. Goodfriend, Marvin. Using the Term Structure of Interest Rates for Monetary Policy. Federal Reserve Bank of Richmond Economic Quarterly Volume 84/3 Summer 1998 Hicks, John R., 1939, Value and capital, Reprinted 1968 (Oxford University Press, New York). HOWELLS, P. and BAIN, K., 1998. The Economics of Money, Banking and Finance, A European Text. Essex, England. Pearson Educational Limited. Jorion, P. and F. Mishkin (1991): A multicountry comparison of term-structure forecasts at long horizons. Journal of Financial Economics, 29 (1), March, pp. 59-80. Kessel, R. A. (1965). WHY LIQUIDITY PREFERENCE EXISTS. In The Cyclical Behavior of the Term Structure of Interest (pp. 44 58). National Bureau of Economic Research. Modigliani. F., and R. Sutch: Innovations in Interest rate policy, American Economic Review, 56(1966), P. 178-197 Mishkin, F. (2006). Money, Banking, and Financial. Pearson. McInish, Thomas H., 2000, Capital Markets: A Global Perspective. Oxford: Blackwell. Russell, S. (1992). Understanding the Term Structure of Interest Rates: The Expectations Theory. 36-50. Saunders, A., Cornett, M. M. (2003). Financial Institution Management. McGraw Hill. Taeyoung Doh , 2010. The efficacy of large scale asset purchase at the zero lower bound, Economic review, second quarter. Watson, M. , Stock, J., New Indices of Coincident and Leading Indicators, In O. Blanchard and S. Fischer ed. NBER Macroeconomic Annual, Cambridge, MIT Press.1989.

Internal Competition A Curse for Team Performance

Table of Content Introduction1 Question 1: What are the dysfunctional characteristics of the FIS project? 1 Question 2: What type(s) of conflict did the team experience? Explain your answer. 3 Question 3: Is the poor team development process a consequence of dysfunctional characteristics? Explain your answer. 6 Question 4: What course concepts contributed to the team’s performance failure? Explain your answer. 8 Question 5: What should the new team leader do? 9 Bibliography12 Introduction – Internal competition – A curse for a team performance.As the title indicates this assignment describes in essence a prehistoric dilemma that dates back to the origins of the human being. The individual and his eternal struggle for a better life. How individual goals are achieved and the question weather to go alone or to be a part of a team? What is the best way forward?. This is a case about the ego. The backdrop is the Indian company called FIS, a business process outsourcin g unit specialized in consulting and financial advisory. It is working on a project for a US based client designing and creating training modules for ERP implementation.The FIS team performance management is largely grounded in a three level appraisal system that is obviously designed to increase the effectiveness of the team. The outcome is to ensure solid project completion and customer satisfaction. Needless to say that did not happen and the project becomes plagued by internal rivalry, poor leadership, poor coordination among other things that ultimately leads to a failure. Our mission is in short to explain in relevant terms why we think this happened and finally describe how it could be prevented to happen again.Working in a group and striving for a common goal can be challenging as this paper will demonstrate. We as a group did clearly experience many of the same concepts that characterize the FIS case when working on this assignment. However as this paper demonstrates, we dr ew on the recently gained organizational behavior (OB) knowledge and resolved it in peace and harmony. The context of the case is described in the following paragraph and organizational chart. Steven Fernandez is the Human Resources Manager who is shortly introduces in the beginning of the case.He is playing a minor role with regard to the team conflicts due to the fact that he is not within the team at the clients site. His subordinate is Pete Philly who is described as an easygoing project manager. As a team leader was Sai Rishi selected who is lower ranked than Philly but is the boss of the other four team members Nirmal Sara, Shri Shalini, Lia Aarthi as well as Abey Sidharth. The following sections will introduce into the numerous types of conflicts and their consequences. Question 1: What are the dysfunctional characteristics of the FIS project?In order to point out the main problem one can say that the team neither works efficiently nor effectively. The result is an inadequate group development process. In the following paragraphs we want to show a lot of examples in order to explain which dysfunctional characteristics of the FIS project cause the bad team performance and why these aspects lead to the failure of the project. The first thing to mention is the intra-group competitiveness. In our opinion the reason for this internal competition is the evaluation system.Employees’ promotion, wages and future prospects depend on the ratings and feedback from the project manager. There are three levels in an appraisal – (a) below expectations, (b) met expectations and (c) exceeded expectations. This over simplified grading system does not work because it only focuses on the individual performances of each team member regardless of the team performance as a whole. For a group project it should be more relevant to highlight the result or rather the success of the task and the customer satisfaction.Another issue in this case is that the evaluation s ystem is based on only three categories. Hence every team member tries to reach the highest category (exceeded expectations) in order for promotion and higher wages. This leads to that each individual team member tries to lower the performance of the other team members to highlight his or her own performance. All together it constricts team development and performance as well as project success. Achieving individual goals is seen as more important to some team members than the team goal – finishing the task reaching the best outcome as possible.Therefore it grows a information filtering between team members. Some team mates hesitate to share information and restrain their work results in order to have advantages against their colleagues. As an example Sara needs information from Sidharth, but he puts her off claiming it took him a long time to find this documents and Sara should spent the same time of searching on it. Otherwise he shares the information with one of his group mates. Finally some of the team members or rather small groups of the team stuck in a rivalry mindset.For this reason the team is not able to create a common vision or a feeling of corporate identity and to share common ideals. In general for every project a new team has to be set up. Team members have to get acquainted to each other. This can lead to bad team performance. In this case the problem is that if people have worked together and know each other well, they tend to form smaller groups within the groups which cause a kind of group thinking. As well as if the size of the team changes over time it is hard for new people to integrate into the existing group.For example those team mates who have worked together in previous projects, separate themselves from the team through being together without involving other members into their small group during the breaks. It is especially a problem in this case because after two month of already working on the project, several new members joint the team. To sum up one can say that there is a lack of group activities and finally very low cohesiveness between the team members. A further fundamental factor causing the bad performance of the team and the failure of the project is a lack of behavioral norms.Members of the group gossip about other team mates. It can be seen in the case that the team leader Rishi is talking to the project manager Philly and claims that Sara is not talented enough to prepare courses curriculums. Besides the gossiping there is also a way of bullying existing. For instance Philly accuses Sara in front of the whole team by stating that she misses deadlines although that actually is not true. In addition to that he corners Sara through advancing deadline dates. Relating to the lack in behavioral norms it is also important to bring up the differences in attitude of working.Philly seems very lax to answer emails, to take important phone calls and to take care of the needs of the team. This attitud e costs the team late hours in the office to meet the deadlines. As a consequence the team feels irritated which has a bad influence on the motivation and causes frustration. The main task or function of the project manager or at least of the team leader is representing a role model and avoiding the problems mentioned before. However they reinforce the trouble because of a huge lack of leadership. As outlined before the attitude of Philly`s work is not appropriate as well as his behavior to Sara.Regarding convenient communication and coordination Philly and Rishi fail. The poor coordination arises through a wrong composition of the team. The performance as individuals is high but the team performance is low due to the reasons that are explained above. Concerning to the case the proper execution of Philly’s and Rishis tasks is not ensured. Instead of focusing on his team leading topic Rishi always does Philly’s work. Philly relies on the results given by Rishi in place of checking the work and to pay attention to success of the whole project.One of the reasons for the low level of communication for example is that a few members are even reluctant to reveal the details about their own work and do not integrate new team members. All in all the lack of guidance, low cohesiveness and all the other dysfunctional characteristics lead to misunderstandings, suspicion and disagreements among the team. Question 2: What type(s) of conflict did the team experience? Explain your answer. Regarding to question one we now want to show the different types of conflicts that took place. At first we have to define what is meant when we talk about conflict. Conflict is an expressed struggle between at least two or more independent parties who perceive incompatible goals, scare resources, and interference from others in achieving their goals. † A conflict can have either positive or negative effects. Constructive conflicts are helpful to achieve goals; dysfunctio nal conflicts are likely more destructive due to emotions and differences between two parties. In the explanation below we focus on different types of dysfunctional conflicts and the reasons for these conflicts which we can find in the case study.The first important conflict arises from the organizational structure which causes a structural conflict. Those types of conflicts result from either structural or process characteristics of an organization. Further it can be divided into two different categories, vertical and horizontal. The latter one occurs between groups at the same organizational level. Vertical conflicts take place between employees on different hierarchical levels. The evaluation system in the case causes vertical conflicts on the one hand and horizontal conflicts on the other hand. The feedback system is not well rganized because there are only three appraisal categories that can be achieved. Only one of them is probably seen as a positive assessment by employees. R ishi’s promotion depends on Philly’s feedback to him and simultaneously he is concerned of the performance of Sara. Hence, he tries to lower down her performance to highlight his own work. That can be seen as a vertical structural problem as well as the matter of fact that he always show compliance to Philly or even do Philly’s tasks. The evaluation system also causes horizontal conflicts. The internal competition increases due to the lack of differentiation of appraisal categories.Employees might have only a low chance to get promotion or wage rises because they are probably not able to reach the only positive feedback. This is a reason for frustration and strategic behavior. Instead of working together for the team success some team members try to highlight individual performance through undermining the work of their colleagues. This structural horizontal conflict is also observable for the example of Sara. Her position is a junior developer, but actually she seems to have more experiences than other team members. This is probably one reason that other team members try to undermine her performance.This is especially illustrated in the fact that Sidharth and other colleagues reveal important information which will be explained in detail later on in this chapter. To sum up in this case there is a lack of explanation of feedback as well as unsuitable and not well differentiated appraisal categories. Due to those examples one could easily imagine that the most of all other types of conflicts are related to these aspects explained before in some way. A conflict of interest occurs because of incompatible needs or competition over resource constraints.This type can be subdivided into three different sources – substantive, procedural and psychological issues. Our case deals with time, physical resources and in the broader sense with money which are substantive aspects. The individual interest like promotion, pay hike and own reputation of Rishi are more important for him than the team success. Hence, he always humors Philly and does Philly’s work rather than using his time appropriately through focusing on his main duty leading the team to success and looking after the needs and tasks of the team members.This is also a kind of task conflict which is illustrated in the next step. Concerning the physical resources one can discover that people refuse to share resources and critical information. Not only that Sidharth refuses to share his documents with Sara but also some members of the team are even averse to reveal their working results, because they are afraid that other team members get the laurels for their work. A task conflict occurs over a disagreement about tasks or goals. Referring to the FIS project the employees expect appropriate work from project manager Philly.However Philly is very lax in managing his tasks. As expressed above he needs a lot of time to answer emails and is often refused to take si gnificant phone calls to the customers. Besides he is very careless checking the course material before it is submitted to clients. Nevertheless it can also be classified as a differing process goal when people have for example a disagreement about how to accomplish a task. Otherwise this topic is also interrelated to a conflict regarding different values which accrue when individuals or teams have an unequal understanding of values, worldviews or certain other aspects.As one can see from the example explained above the project manager and the team members seems to have diverse attitude concerning accomplishing their work. Sara and Shalini are very committed to the project whereas Philly seems to be not very much engaged. This causes long working hours and struggling to meet deadlines which lead to frustration and demotivation among the team. This matter of fact can be dangerous for the success of the project. An organization needs high motivated employees which are more likely prod uctive in doing their work faster and in higher quality.Besides the different values and attitudes to work there is another big disagreement about a process goal. This so-called process conflict takes place because the first draft of the results of the course material reaches the client. However this is not the correct procedure. Regarding the process description the first draft is only an overview or a sketch. It is not a final version and therefore it should not be handed over to the client. After reworking the first draft, the second draft should be send to the team leader, Rishi, for review.Afterwards the final draft has to be checked by project manager, Philly. When the final review is completed the the material is delivered to the training leader. First mistake is that Rishi send the first draft to Philly, even though he should have only submitted the second draft to Philly. The second huge failure is that Philly deliver the first draft to the client without checking the mater ial. In this aspect there is also a task as well as the value conflict included. As explained beforehand Philly always relies on Rishis working results and he has a lax attitude of work concerning fulfilling his tasks.Another reason that could have happened is poor communication because if the team members as well as the superiors would exchange data and talk to each other in an appropriate way they could avoid such mistakes. The result of the poor communication within the team is that there are many information conflicts. This type of disputes occurs when needed information is missing, misinterpreted or rather interpreted differently, not correct or when there are disagreements about the relevance of certain data. As a role model Philly should not take so much time to answer emails. Sidharth refuse to share an important document with Sara.As already mentioned as well a few members are even reluctant to reveal the details about their own work. These examples for informational confli cts are also reasons for debates, arguments due to confusion in the integration issue of their individual work results. At least it leads to misunderstandings, clashes and finally chaos. All these issues are drivers of several relationship conflicts. Interpersonal differences arise due to inconsistencies or controversies between people within teams. Referring to the FIS project there are many examples of interpersonal differences.One of the momentous issues are that a small group of team members knowing each other in advance are not willing to integrate new people into the team. That leads to formation of subgroups and finally to a lack of inclusion and cohesiveness. A second example is the dysfunctional characteristic that for some team members the individual success expressed in the appraisal rating is more important than project development, team success and customer satisfaction. For instance Rishi claims about Sara’s weak work to Philly, to emphasize his own work. Howeve r Sara’s commitment to the project is very high.Philly trusts and believes in Rishi’s opinion and statements, though he also begins to bully Sara. He passes the buck to Sara blaming her in front of the whole team she would always miss deadlines. Actually struggling to meet deadlines is caused through Philly’s lackadaisical attitude to work. However Sara first tries to avoid the conflict and concentrate on her job but she is inwardly frustrated and demotivated. Later she tries to talk to Rishi about Philly’s behavior expecting him to help her as a team leader. But he shows compliance to Philly and denies supporting her. Again this is a ack of leadership; he does not take care to needs of his team. All in all it seems to be clear that the organizational structure of the evaluation system is responsible for the most of the dysfunctional conflicts. Some of the team members are working more as individuals or in mini-groups within a team not realizing that this project requires integrating individual’s work to one big picture. Though all stuck in a rivalry mindset and the possible failure of the project is predictable. Question 3: Is the poor team development process a consequence of dysfunctional characteristics? Explain your answer.In the previous chapters was outlined that the project team had to face a lot of different conflicts. The sum of these conflicts led to the low team performance and a team development which cannot be seen as exemplary. The advent of this poor team development process can be seen in the selection of the several team members. Based on communication skills, experience, appraisal and fitting to the project requirements a global team is set up (out of Americans and Indians), regardless if the team members fit to each other or not. When people have to work in a group there are two possible forms possible: workgroups and teams.They differ in various aspects. Workgroups tend to follow individual goals and are focused on their individual tasks. The interdependence is low and social skills are rather not important. Whereas team members are following a common goal and are focused on their collective goal. Analyzing the project team of FIS Consulting services it seems to be rather a workgroup than a team. Team members differ in their individual working styles. Sara and Shri Shalini are very well performing employees with excellent appraisals. Their senior Philly had a different approach to get work done.For instance he refused important inquiries from clients also his long response time. This differing process goals, differing values as well as interpersonal differences are one cause for the dysfunctional conflict which supports the team development process in a negative way. Any process gain which can be derived out of the team work will be offset through these differences. In the end all the advantages which team work implicate (better performance for instance) have vanished. Another sourc e of dysfunctional conflict is the resource constraints. Specific team members refused sharing resources as well as crucial data.What also happened was the duration of information gathering. As mentioned above it takes several days to get an answer of Philly and Abey Sidharth required two days to obtain critical data. These kinds of action are not beneficial if a team has to complete a task. Instead of collaborating they undermine each others work. On one site this hinders an efficient goal attainment and on the other hand it offends other team members. If the work of one team member is questioned causelessly time and again the performance and enthusiasm of this person will decrease significantly. In the worst case this behavior will be acquired by other colleagues.This is especially fostered group formation. This means that within the whole group several smaller groups are formed. In the company FIS Project Services this happens a lot due to previous project work. If for instance a duo has worked together for a long time and then is integrated into an existing team consisting out of six people. The duo tends to stick together and is reluctant to integrate other team mates. This group forming is very well illustrated in the case. Certain subgroups have lunch together but not the team as a whole. The entire project lacks team building events, like going to movies or a common breakfast at the hotel.Furthermore it is essential for effective teams that they have or develop group cohesiveness which is very beneficial if the team targets a common goal. Group cohesiveness ensures that team members have the feeling that their character and their work is appreciated within the team. That increases the performance because the employee has an intrinsic motivation to push the project forward. People can count on each other and work hand-in-hand very efficient. For the FIS project team this example is unfortunately not the case. People cannot rely on others and they do not have the feeling that they are going into the same direction.The team is not cohesive, they rather push each other away. If a manager wants to develop a well-functioning team in our opinion a team contract is a requirement. In this contract all the rules and procedures are written down and are open to scrutiny for everyone. Most beneficial would be if the team contract is set up during the first meeting in which everyone can contribute to it. A further benefit is that the team contract prevents the omission error and therefore unethical behavior. Due to the fact that the FIS project team lacks such a contract it is no surprise that the problems and the conflicts escalates.If Rishi would have been a good leader he would set up a team contract. Furthermore the team leader Rishi lacks a lot of leadership capabilities. One of the most important tasks of a team leader is that he has to care for his team. Only when this task is properly performed the project goal (development of ERP trai ning materials) can be reached. But as described above he failed in his duties miserably. Instead of fostering team cohesiveness he started bullying his team mates, especially Sara. When other team members hampered each other he did nothing to end this destructive decision.He could have been a mediator and facilitate as a third party between the two opposite parties. But he made it even worse and fueled the disputes. Question 4: What course concepts contributed to the team’s performance failure? Explain your answer. As outlined in the previous chapters the project team faced a lot of conflicts which led to the low team performance and a team development. For a team to become successful they must share common goals and responsibilities for specific outcomes. The job of the team leader is to set these goals and establish behavioral norms within the team.As pointed out it was believed that the project team members of the FIS project possessed substantial individual technical exp ertise, but lacked the skill to perform together successfully, meaning that the team had all the potential to be efficiently as a team. Philly seemed to lack effort, approvals were delayed which led to frustration amongst the team members, the team was working long hours and struggled to meet deadlines. Philly failed at setting a common goal and responsibilities with specific outcomes and a direction and he did not have an enabling structure that facilitated teamwork.Philly also failed in managing the diversity, observable and unobservable similarities amongst the team. Diversity can cause misunderstanding, suspicion, and conflict in the workplace that can result in absenteeism, poor quality, low morale and loss of competitiveness as well as lowered workgroup cohesiveness. In simple terms this is exactly what happened in the case. As a result the team lacked cohesiveness, to the degree to which members are attracted to the team and to its members and how loyal team members are to th e team and to each other.This lack of cohesiveness reached its lowest point in absolute bullying. Nirmal Sara is a victim of workplace bullying by Rishi and Philly, manifested in repeated mistreatment, verbal abuse and humiliation. Teams typically progress through a series of developmental stages before performing effectively. The FIS team underwent an inadequate team development According to Tuckman’s model there are five-stages for a team to form successfully. Forming; in which members learn about each other and the team’s goals, purpose, and lifespan. Storming; team members begin establishing goals, work processes, and individual roles.Norming; the team becomes more cohesive and clarifies members’ roles and responsibilities, team goals, and team processes. Performing; the team is cohesive, productive, and makes progress toward its goals and at last adjourning; when the team disbands. Referring to the previous chapters the FIS consulting team only got through the first two stages, forming and got stuck in storming. As also explained beforehand the team began forming groups within the team and was reluctant to involve other members. The team was working as individuals in mini groups, which escalated into intra-group competitiveness, the groups compete against each other.From the start the team began focusing on achieving a high performance appraisal rating rather than working together as a team. Team members commonly formed their suggestions as in small groups separating themselves from other team members. The groups provided suggestions without consulting or briefing the rest of the team members prior to the meetings resulting in team members promoting their own agenda for the sake of a personal benefit. The team members did not seem to realize that that the project required integrating each individuals work into a cohesive whole as they were stuck in rivalry mindset.The team was assigned with designing different courses, training materi al and preparation tasks. Each of these tasks were performed by different team members and these components would later require alignment and integration to complete the final module. So it should be obvious that resource sharing was very important to the project. Different groups of the team started refusing to share resources and critical information with the rest of the team. This eventually led to misunderstandings and disagreements amongst team members.They did not succeed in developing cohesiveness to the degree to which members were loyal to the team and to each other. So the team never got to the point of performing due to intra-group competitiveness. Because members of the team lacked cohesiveness and were not committed to the team or its goals the team performance suffered as a result. These factors led to process loss as a consequence where the team performs worse than the individual members would have if they would have worked alone. This failure of the team development and therefore the FIS project ultimately led to a negative impact on the company’s image.Question 5: What should the new team leader do? It seems quite obvious that before the new team leader does anything, he must analyze in detail what really happened at the FIS project in North America. When he has established a clear picture of what went wrong he should form a plan to prevent it from happening again and aim to increase customer and employee satisfaction in the process. One of the most striking things when reading the case is the level of autonomy the off-shore team has. How bad things could get before they were identified and dealt with at the FIS HQ.So the first thing the new team leader (and the HR department at FIS) needs to establish is clarity and a strong quality protocol for each project. He needs to integrate a detailed project roadmap that has frequent internal reviews, process definition, milestones and performance accountability. This system has to be redundant , so if one link in the chain fails an alarm goes off and there is a B-plan to fall back on. For major milestones like a client demo a quality assurance manager has to approve that the product meets delivery qualifications and client expectations.We assume that in this analytical exercise the same core concepts as we have highlighted in answers one to four would surface. In short, how the evaluation system generated a destructive intra-group competiveness and low cohesiveness as a result. How the poor leadership and work ethics on both senior and mid level affected motivation and caused frustration in the ranks below. How the vertical and horizontal structural conflicts generated task, goal and process conflicts that combined with poor communications nearly drove this project to the ground.So the first thing would be to assess the pros and cons of the current evaluation system. The rather crude three level individual appraisal system does seem to foster internal competition and indi vidual goal orientation that in the end is not aligned with the company goals. Without the scoring details of the internal evaluation system the result; below, met or exceeded expectations seem a bit granular parameters given the complexity of the task and the size of the group.The second thing would improve it by preventing that a direct sabotage or conflicting interests like holding back information or resources could benefit individual appraisal. Then make a strong effort to align individual goals with the company ones through task performance and integrity. In addition the team leader needs to add more focus on the collective group effort and task completion as well as client and employee satisfaction. Thirdly he needs to make sure there is much higher cohesiveness in the group to generate better working morale, motivation, team spirit, performance and employee satisfaction.One of the things that affected the FIS project was that the group grew from a small workgroup to fully fl edged team with the relevant differences in their interdependence, accountability, decision making and leadership. Sadly the cohesiveness of the team diminished relative to the increased size of the group. As a group leader he needs to give those growing pains special attention and lead by example. He should instigate and structure various team building exercises and events to foster good group communications. This can be as simple as a group breakfast at the hotel or even just a walk in the park.And on the topic of communications, to prevent the omission and commission errors from the past the team leader needs to create a secure communication process where employees can report misconduct (either under name or anonymous) or and seek consultation or mediation at early stages of a potential conflict. This communication system needs to be able to feed up to a higher source at FIS consulting HQ in some instances, as one of the major source of problems and dysfunctional behavior were th e former team leaders Philly and Rishi.Lastly the new team leader should also form a doctrine with code of ethics and behavioral norms that reflect the FIS company values, vision and culture. This document should be presented to all employees at say a team offsite event, and be proactively introduced to all new employees so they understand how their actions, big or small have an important social impact. If those conditions mentioned above were met, we believe the offshore department at FIS would be capable of taking on and completing big and complex projects and pass with flying colors.But in essence the dilemma of the new leader is the same that every team leader is faced with. To motivate his team in physiological, behavioral, cognitive and social context to curb the individuals effort into a strong team effort and strive for a common goal. To quote Al Pacino in the movie â€Å"Any given Sunday†: â€Å"And, either we heal, now, as a team, or we will die as individuals. â⠂¬  ? Bibliography Phillips, J. M. , & Gully, S. M. (2011). Organizational Behavior. Mason, OH: South-Western/Cengage Learning.

Psychological and Ethical Egoism Essay

Egoism is a general term for the acknowledgement of human self-interest as a basis of action. There are several proponents of this theory. Basically it is a philosophical notion that was popularized by Hobbes. Whatever action that an individual would take is pursuant of his/her own self. This theory has famously been separated into two types. The first one is ethical egoism and the second is called psychological egoism. Ethical egoism talks about morality as the basis of action in order to uplift the person himself, while psychological egoism states that all of our actions are basically rooted on self-interest. Accordingly, psychological egoism is devised out of observation of common human behavior. A clear demarcation between the two lies on its structure, Ethical egoism is more prescriptive. On the other hand, Psychological egoism is descriptive or observational (Rachels, 2003). The Fallacy in Psychological Egoism Although Psychological egoism seems to be perfectly valid, it was widely refuted with respect to the fallacies that it had committed. One of the fallacies that can be found in the principles of psychological egoism, upon critical examination, would be the fallacy of â€Å"hasty generalization or converse accident†. According to some critics, the fallacy was rooted on confirming that indeed all human acts are self-interested due to the different instances that prove otherwise. This includes the fact that most people do actions that would damage or harm themselves such as smoking, self-mutilation and sometimes suicide. Also there are several altruistic behaviors that do not really come from self-interest. There are other things or notions such as conscience which also have an effect on one’s action. If those who supports psychological egoism would argue that all actions whether it be an act of conscience or an act that hurts oneself is also form of psychological egoism in itself, then there are no actions whatsoever that is not a form of psychological egoism (Rachels, 2003). Thus, it will result to a fallacy of tautology. It cannot be verified or established if an action is indeed a form of psychological egoism because there are no other actions aside from a psychologically egoistic act. Two Sides of Ethical Egoism The weak version of ethical egoism takes on the side of the probability of â€Å"altruistic behavior†. However, they have specified that although they acknowledge that the person does benevolent actions, nevertheless, they maintain that the action is still in accordance to or made with respect to the individuals’ own interest. One would like to do good because doing good makes him/her feels good. The strong version denies the presence of altruistic behavior. It asserts that in any circumstances, the individual would act in accordance to his/her self-interest despite the fact that it is in the form of benevolence. (Lander University, 2006) Major Similarities and Their Differnces Thus, as presented above, ethical egoism differs from psychological egoism in the sense that ethical egoist incorporates morality as a basis for human actions. It expresses the human self-interest in the sense of the goodness or the rightness of the act. Psychological egoism, do not try to tell us what we should do, but instead states that whatever actions that we have is basically an expression of our self-interest, the individual does not need to be moral or does not have to subscribe to morality (Rachels, 2003). Motivations In ethical egoism, the motivation lies on the person’s desires to do or aspire for something good or right. This is applicable when one is acting in able to help other people because it is in his nature to do so, as explained by David Hume. On the other hand, in psychological egoism, the motivation rest on the person’s or individual’s preference for self-interest. Psychologically egoistic behavior can best be interpreted when the individual is doing something in exchange of something that would benefit or would be in reference to his/her personal interest. Largely, those actions that are psychologically egoistic are selfish acts while those that fall under the ethical egoist are actions from self-interest. (Mosley, 2006) Selfishness versus Self-interest Selfishness is manifested through personal advantages, mostly sacrificing others in favor of one’s own self. Self-interest is promoting one’s interest either for the benefit of himself or of other people as well. Self-interest differs from selfishness in the sense that self-interest does not necessarily points toward selfishness because certain actions that would benefit one or would comprise self-interest may actually be altruistic actions. There are instances wherein you have to be helpful to other people in order for you to proceed towards your egoistic goals. Also there are some actions whether it is for oneself or for the sake of others that are not relevant basis in suggesting that it is selfish act or a self-interested act. For instance there were actions such as eating or drinking that can be classified as either a form of selfishness or a form of self-interest. As presented, the major key in understanding the points and relevance of each position lies on the individuals understanding of the term selfishness and acting for or out of self-interest. (Mosley, 2003) Reference http://philosophy.lander.edu/ethics/egoism.html

What is anthropology and why we should study it - 1857 Words

There are lots of areas of study out there but the one field that intrigues peoples and civilizations is the actual study of themselves and how they interact with other human cultures. I dont think that I would have enrolled for this class if it hadnt been for the minor requirement in my business major. Although this class started early in the morning and required a lot from me, I am glad that I took it. I grew up in two cultures simultaneously and the experiences I incurred have made me the person I am today. I think that it is important to familiarize yourself with other cultures not just in business but it will aid in smoother business transactions. In the following paragraphs I will discuss the breadth of cultural anthropology.†¦show more content†¦The clerk, who was a family member shot and killed the victim. When it went to trial and he was found not guilty of murder, the black community was outraged and thus the hatred of Koreans by African Americans was started. If b oth groups had been educated more about each others differences and culture this could have been prevented. Cultural Anthropologists seek to understand both the cultural and individual bases for behavior; and how political, economic, and social factors affect both the individuals and various groups. Although statistical and other quantitative methods are used, much of Cultural Anthropology is qualitative-descriptive. Classical anthropological fieldwork requires prolonged residence (of one or more years) with a particular group in order to understand their way of life. Until World War II, Cultural Anthropology focused especially on non-Western cultures, including Native American Indians, gaining a unique perspective on human life and behavior. More recently this perspective and fieldwork method have been applied as well to Western culture. People with anthropological training are actively employed in many fields in which their anthropological training and cross-cultural perspectives are valuable. Some of the fields are: investment banking; international and domestic merchandising; health ca re; personnel work; government; advertising; broadcasting; law; social work; and many areas ofShow MoreRelatedApplied Anthropology: Domains of Application Essay1502 Words   |  7 Pages Applied Anthropology is difficult to fully implement into a being’s existence. When using applied anthropology, many factors must be taken into account such as the Darwin approach, theological approach, or any other specialized field of anthropology. All can have an effect on human culture and relationships, but all have their benefits and harms that can behoove or dismay a human individual in their field of study. The study of humanity is unfortunately as fallible as humanity itselfRead MoreWhy Do We Study Anthropology?863 Words   |  4 PagesWhy Study Anthropology? Intro: The study of anthropology is important because it gives the public insight as to why people act the way they do. By studying anthropology the world can have a better understanding of different cultures and why people have different norms and values. If people have more insight on why individuals act the way they do we can appreciate and respect peoples’ choices more. For instance, instead of people looking at hijabs as a restricting clothing item that women in theRead MoreEssay about The Study of Anthropology and the Humanities1361 Words   |  6 Pagesmultidisciplinary field of study where its disciplines aren’t in just one department. Therefore, studying the humanities correlates to the study of anthropology. Simply put, anthropology is the study of humanity and the origins of human beings. Learning about the humanities can help those studying anthropology because the humanities looks into understanding and exploring the human condition. There is an idea of c ulture that is used to describe what humans do. Anthropology explores what culture is, how itRead MoreThe Between Mccutcheon, Marx, And Nietzsche s Theories On Religion921 Words   |  4 Pagesand â€Å"religious† should not be used by scholars when referring to the study of religion. McCutcheon even suggests these words should be abandoned and removed from our vocabulary all together. He claims studying social sciences like anthropology, sociology, and psychology and using appropriate terminology will lead to a more accurate understanding of why we as humans are religious and how our religion ultimately affects our behaviors. Feuerbach, Marx, and Nietzsche all suspect the study of religion isRead MoreVisual Anthropology And Cultural Anthropology1554 Words   |  7 Pagesperiod. Anthropologists have been able to study the differences in human cultures and how they have evolve. â€Å"There are now four major fields of anthropology: biological anthropology, cultural anthropo logy, linguistic anthropology, and archaeology† (Dennis O Neil). Within these fields are subfields, visual anthropology is a very important subfield of cultural anthropology. Visual anthropology is the study of the history of human customs and culture through what one sees or perceives in various typesRead MoreBook Report on Anthropology of Globalization by Lewellen1571 Words   |  7 Pages(11). o Today’s globalization was inherent in the birth of capitalism (11). o Neoliberalism required two changes: the end of superpwer rivarly and the acceptance of neoliberalism by the third world (15). o Neoliberalism, the idea that trade should be unfettered by government regulation, is crucial to the current definition of globalization (17). o Negative effects of neoliberalism favors the rich, undercuts domestic production prices, causes unemployment, forces to ultilize child and femaleRead MoreAnthropology : An Anthropological Perspective874 Words   |  4 Pages Anthropology is the study of humans throughout the world. It examines our ancestors, how we behave, adapt to different environments, communicate, socialize with one another, and more. The study of anthropology focuses on the features that make us human; our genetic makeup, the evolution of humans, and the physiology. It also focuses on language, religion, family, and more. The goal of anthropology is to be able to describe and analyze the different cultures. Anthropologist believes that the onlyRead MoreAn Analysis Of Nancy Scheper Hughes Article1270 Words   |  6 PagesCuba and Brazil where she encountered a challenge to sociocultural anthropology as she saw a transition from her using an objective model to a moral model. She has calls for an ethically grou nded, militant anthropology because she sees the importance of being fully involved in one’s own research rather than just simply being an observer. According to Hughes, acting primarily as a witness does not allow you to fully understand what you’re studying and reduces the â€Å"subject† to â€Å"objects†. Her approachRead MoreStudy questions Essay1333 Words   |  6 PagesAnthr 110 Gender, Age and Culture Instructor: Franà §ois Larose Study Questions Fall 2012 Instructions: In preparation for the exams, here is a list of study questions for each chapter. What you need to know from the text is covered in these questions. For all these chapters, you need to be familiar with the definitions (technical terms) highlighted in the text. Also, while there will be no direct questions on the grey boxes in these chapters, I strongly suggest you read them. They provideRead MoreGene Therapy And Human Genetic Engineering1646 Words   |  7 Pagesâ€Å"Although we are all members of a single species, we differ from one another in such visible traits as the color of our skin and the shape of our noses, and in biochemical factors such as our blood types and our susceptibility to certain diseases† (Sheridan College Institute of Technology and Advanced Learning, 2013, p. 34). To understand human physical development and evolution one has to understand biological anthropology as the focus on humans as biological organisms. Biological anthropologist