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### Problem solving

1. 1. PROBLEM SOLVING - DEMAND HOME AM GOV ECONOMICS AP GOV AP ECON SPECIAL EVENTS ASSIGNMENT BOARDHaving studied the concepts behind demand, it’s time to apply them to realdecisions. With a small group, work through each of the following problemsolving activities - but, in all you do, make sure that the concepts are usedappropriately to arrive at your answers.A. Demand at the Grocery Store
2. 2. Use the Weis flyer (or other provided store flyer) to locate examples of eachof the following demand concepts. Cut out the portion of the flyer (pictureor actual ad) that provides the appropriate example, post it on the givenpaper, and write a brief explanation on the paper of how it exemplifies theconcept. When each have been completed, staple the the posted examplestogether as a packet. (15 points total - accurate examples & completeexplanations)1. Change in price of a substitute 2. 2. Change in price of a complement3. Diminishing marginal utility4. Change in income (inferior vs. normal goods)5. Greater concern for health 2. B. Sell More Tickets - For the Same PriceYour group has become the officers for the Econ Club. You are sellingtickets (\$10) for an upcoming fundraising dance and sales are not what youhoped. How can you sell more tickets without dropping the price of theticket? Create a plan that can be used to increase sales considering theconcepts of demand. Explain your plan in a paragraph as a group and beable to share the idea.We propose that problem-solving demand (PSD) is an important job attribute for employeescreative performance. Applying job design theory, we examined the relationship between PSDand employee creativity. The theorised model was tested with data obtained from a sample of270 employees and their supervisors from three Chinese organisations. Regression resultsrevealed that PSD was positively related to creativity, and this relationship was mediated bycreative self-efficacy. Additionally, intrinsic motivation moderated the relationship between PSDand creative self-efficacy such that the relationship was stronger for individuals with high ratherthan low intrinsic motivation. We discuss our findings, implications for practice, and futureresearch.We propose that problem-solving demand (PSD) is an important job attributefor employees’ creative performance. Applying job design theory, we examinedthe relationship between PSD and employee creativity. The theorised modelwas tested with data obtained from a sample of 270 employees and theirsupervisors from three Chinese organisations. Regression results revealed that
3. 3. PSD was positively related to creativity, and this relationship was mediated bycreative self-efﬁcacy. Additionally, intrinsic motivation moderated the relationship between PSD andcreative self-efﬁcacy such that the relationship wasstronger for individuals with high rather than low intrinsic motivation. Wediscuss our ﬁndings, implications for practice, and future research.INTRODUCTIONIncreasing global competition, ﬁnancial crises, job restructuring, and theﬂattening of organisational hierarchies have dramatically increased the creative problem-solvingrequirements of employees’ jobs (Shalley, Gilson, &Blum, 2009). These trends have increased the velocity and frequency ofchange (Eisenhardt & Tabrizi, 1995), reducing structure, predictability, andsupervision within the work environment (Moreland & Argote, 2003). As aconsequence, there has been a greater need for creativity at all levels andacross different types of jobs (Shalley et al., 2009). Reﬂecting the signiﬁcanceof employee creativity, a growing body of literature has investigated individual and contextualinﬂuences on employee creativity (Oldham & Cummings, 1996; Shalley, Zhou, & Oldham, 2004). Yetdespite these advances,* Address for correspondence: Qin Zhou, ISCTE Business School, ISCTE-Instituto Universitário deLisboa, 1649-026 Lisboa, Portugal. Email: qin.zhou@iscte.ptAPPLIED PSYCHOLOGY: AN INTERNATIONAL REVIEW, 2012, 61 (1), 56–80doi: 10.1111/j.1464-0597.2011.00455.x© 2011 The Authors. Applied Psychology: An International Review © 2011 InternationalAssociation of Applied Psychology. Published by Blackwell Publishing Ltd, 9600 GarsingtonRoad, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA.few studies haveexamined how basic elements of an employee’s job designinﬂuence his or her creativity. There has, however, been an increasing recognition that creative ideasmay be stimulated by employees’ workexperiences—and in particular aspects of job design (e.g. Mumford, Whetzel,& Reiter-Palmon, 1997; Ohly, Sonnentag, & Pluntke, 2006; Oldham & Cummings, 1996; Tierney &Farmer, 2002). Further, a small but promising line ofresearch has found that a job’s design may be a potent source of creativity
4. 4. (Oldham & Cummings, 1996; Unsworth, Wall, & Carter, 2005). Thesestudies illustrate that the cognitive requirements of a job, in combinationwith individual characteristics, predict creative performance.Extending previous research, the present study seeks to understand howand when a job’s problem-solving demands inﬂuence employee creativity.Drawing upon job design theory (Hackman & Oldham, 1975) and research(Dean & Snell, 1991; Wall, Corbett, Clegg, Jackson, & Martin, 1990), thisstudy introduces and applies the concept of problem-solving demand (PSD)to examine its inﬂuence on employee creativity. PSD refers to the extent towhich a job requires employees to actively utilise their knowledge and skillsto “diagnose and solve problems” at work (Wall et al., 1990, p. 208),thereby challenging employees to develop new solutions to problemsstretching their knowledge and skill bases. PSD is a speciﬁc aspect of jobcomplexity (Campbell, 1988; Dean & Snell, 1991). Job complexity refers tothe level of stimulating and challenging demands associated with a particular job (Valcour, 2007) andencompasses many different facets. Complexjobs may require individuals to juggle different tasks, learn a great deal ofprocedural knowledge, as well as engage in challenging problem-solving toprovide solutions to applied problems. It is this latter aspect, involving ﬂuidcognitive functioning (Horn & Noll, 1997), that we are most interested in,since it captures the extent to which the job requires the individual todevelop new and useful solutions to problems. In our view, PSD differsfrom the extent to which employees are motivated to engage in creativeprocesses. Such “creative engagement” refers to an employee’s motivationto develop creative problem solutions, while PSD pertains to the extent towhich the job design “stretches” the individual to develop skills and newsolutions to problems.PSD provides employees with opportunities to apply their skills and
5. 5. stretch their capabilities. We propose that PSD may promote creative selfefﬁcacy in several ways.First we propose, consistent with social learningperspectives (e.g. Bandura, 1986; Davis & Luthans, 1980; Sims, 1983;Wood & Bandura, 1989), that employees develop and acquire new skillsand insights about their tasks through this experience. In turn, as a consequence of skill acquisitionand potentially mastering new tasks, employeesdevelop conﬁdence and a greater belief that they are able to solve problemscreatively (i.e. creative self-efﬁcacy; Gong, Huang, & Farh, 2009; Tierney &PROBLEM-SOLVING DEMAND AND CREATIVITY 57© 2011 The Authors. Applied Psychology: An International Review © 2011 InternationalAssociation of Applied Psychology.Farmer, 2002). Thus, we propose and test whether PSD is relatedto creativity through creative self-efﬁcacy.When seeking to understand the effects of PSD on employee beliefs andbehavior, it is important to understand the individual’s motivation, as not allemployees will respond similarly to challenging job demands. Theory(Amabile, 1996) and research (Tierney, Farmer, & Graen, 1999) highlightthat the extent to which an individual is intrinsically motivated to perform aparticular task plays an important role in understanding how the individualreacts to PSD (as evidenced by the extensiveness of problem-focused strategies adopted to resolvethese challenges). Intrinsic motivation is one’s interestin activities because of the inherent learning, stimulation, and enjoyment ofthese activities (Deci & Ryan, 1985). Individuals who are intrinsically motivated will be morepredisposed to invest effort and persist when they facedifﬁculties, thereby leveraging the knowledge-related beneﬁts of challengingwork conditions. Furthermore, they are more likely than those low in intrinsic motivation tocapitalise on the opportunities provided by PSD anddevelop higher levels of creative self-efﬁcacy. Thus a further objective of thisresearch is to examine the moderating effects of intrinsic motivation on therelationship between PSD and creative self-efﬁcacy.This research contributes to the creativity literature in at least three ways.
6. 6. First, the study extends a promising and growing body of literature thatapplies learning derived from job design theory to the creativity literature.Second, by testing the mediating inﬂuence of creative self-efﬁcacy, we specifythe processes by which a job’s design stimulates creativity. Further, we shedlight on the inconsistent association between intrinsic motivation and creativity, by testing Shalleyand colleagues’ prediction that motivation may bea necessary but not sufﬁcient condition to promote creativity (Shalley et al.,2004). Consistent with our focus that creativity is increasingly important in awide array of jobs, we obtained data from a multi-organisational samplecomprising a variety of work functions and job types in the People’s Republicof China. This sampling strategy also allowed us to examine the predictiveutility of European/American theory in a different cultural context—a keydirection for future research (Drazin & Shoonhoven, 1996; Farmer, Tierney,& Kung-McIntyre, 2003; Shalley et al., 2004). Figure 1 depicts the relationships examined in thisstudy.LITERATURE REVIEW AND HYPOTHESESPSD and CreativityWe deﬁne creativity as employees’ generation of novel and useful ideasconcerning products, procedures, and processes at work (Amabile, 1988;Oldham & Cummings, 1996; Shalley et al., 2004). Reﬂecting calls by scholars58 ZHOU ET AL.© 2011 The Authors. Applied Psychology: An International Review © 2011 InternationalAssociation of Applied Psychology.that creativity research should focus not just on contexts wherecreativity isanticipated (e.g. R&D teams) but also on contexts where creativity is notnecessarily expected as a matter of course (Ford & Gioia, 2000; Mumford &Gustafson, 1988; Tierney & Farmer, 2002), we examine creative performancethat involves incremental developments or adjustments, which are commonin a context where creativity is not an expected outcome (Mumford &
7. 7. Gustafson, 1988).According to Amabile (1996), when tasks are complex and intellectuallydemanding, employees are likely to experience “interest, involvement, curiosity, satisfaction, orpositive challenge” (p. 115). This, in turn, leads tocreativity. The positive relationship between complex job demands, such asjob complexity, and creativity has received some empirical support in extantliterature (see Shalley et al., 2004, for a review). PSD (Jackson, Wall, Martin,& Davids, 1993; Wall et al., 1990; Wall, Jackson, & Mullarkey, 1995) isdeﬁned as the extent to which individuals perceive their work to be challenging, exposing them tonovel and unexpected events. PSD also relates towhether the job requires the individual to apply job-speciﬁc accumulatedknowledge as well as adopting new approaches to develop solutions to problems. More importantly,however, we propose that PSD stands out as aparticularly important job attribute for creativity within a work context wherecreativity is not explicitly required. It is arguable that creativity is not anatural option in such a context. Employees may prefer familiar and routineoptions and forsake novel creative options (Ford, 1996). While we acknowledge employees’motivation as important in inﬂuencing their response tochallenging situations, we expect that on average PSD will “jolt” employeesout of their routines and point them in new directions (Csikszentmihalyi,1993). When PSD is high, employees have to deal with problems that theyhave not encountered before. In order to diagnose and solve these newproblems, employees are prompted to seek new information, knowledge, andskills. Thus, PSD provides opportunities for employees to be open to possibilities and to let go oftheir usual ways of doing things. At the same time, theCreativityProblemsolving demandCreativeself-efficacy
8. 8. IntrinsicmotivationFIGURE 1. Hypothesised model for the relationship between PSD andcreativity.PROBLEM-SOLVING DEMAND AND CREATIVITY 59© 2011 The Authors. Applied Psychology: An International Review © 2011 InternationalAssociation of Applied Psychology.extended knowledge base of jobs where PSD exists is likely to leadto creativeperformance (Amabile, 1996). In contrast, when PSD is low, employees haveeasy access to solutions. They will resort to routine approaches which consequently inhibit creativeperformance. Therefore, we hypothesised that:Hypothesis 1: PSD is positively related to creativity.The Mediating Inﬂuence of Creative Self-EfﬁcacyReacting to the notion that one’s judgment of capability is domain speciﬁc(Bandura, 1997), Tierney and Farmer (2002) developed the construct ofcreative self-efﬁcacy for applicability in a creativity context. Creative selfefﬁcacy refers to “the beliefthat one has the ability to produce creativeoutcomes” (Tierney & Farmer, 2002, p. 1138). It is a relatively new theoretical construct; even so,research evidence suggests that creative self-efﬁcacy isan important source of creativity (Gong et al., 2009; Tierney & Farmer, 2002,2004). We hypothesise that creative self-efﬁcacy is also a mediator of theassociation between PSD and employee creativity.PSD seems conducive to the formation and maintenance of employeecreative self-efﬁcacy for several reasons. First, the experience of grapplingwith complex problems will provide employees with greater conﬁdence intheir capacity to deal with obstacles (Wood & Bandura, 1989), promotingresilience and a sense of belief in one’s ability. Compared with low PSD tasks,high PSD tasks stimulate employees to try new approaches to reducedemands rather than follow established methods. Since these processes
9. 9. promote ﬂexibility and creativity in analyzing and identifying solutions,employees working in high PSD situations will be more likely to experienceincreased creative self-efﬁcacy. Furthermore, challenging work offers opportunities to acquire newskills and task-related knowledge, enhancing thearsenal of skills an individual possesses (cf. McCauley, Ruderman, Ohlott, &Morrow, 1994). This, in turn, promotes self-belief, as well as the capacity todevelop creative solutions to problems. Further, researchers have concludedthat employees are unlikely to learn new skills and knowledge in repetitiveand restricted jobs (e.g. Frese, 1982) . When PSD is high, employees do nothave easy access to solutions. Rather, employees need to undergo extendedsearches to obtain relevant information. For example, they may need to getto know the operations of other work areas in order to diagnose and generatesolutions to problems that occur in their work area. PSD, therefore, engenders useful learningexperiences which eventually lead to individuals’ belief intheir work abilities.Finally, the deﬁnition and measurement of PSD in terms of the cognitiveproblem-solving requirements of the task relates directly to an employee’sperception of the extent to which the job encourages skill acquisition and60 ZHOU ET AL.© 2011 The Authors. Applied Psychology: An International Review © 2011 InternationalAssociation of Applied Psychology.ultimately mastery of particular activities (as opposed to anevaluation oftheir difﬁculty or non-job-related obstacles such as organisational politics).In turn, development promotes a greater sense of capability. Empiricalresearch supports this hypothesised association, illustrating that morebroadly deﬁned challenging job attributes such as task complexity have beenshown to be conducive to creative self-efﬁcacy, in turn enhancing employeecreativity (Tierney & Farmer, 2002). Thus we hypothesised that:Hypothesis 2a: PSD is positively related to creative self-efﬁcacy.
10. 10. Theorists have suggested that self-efﬁcacy constitutes an indispensabledimension of the motivational process important for individual creativity(Bandura, 1997; Ford, 1996). As Bandura stated, “Effective personal functioning is not simply amatter of knowing what to do and be motivated todo”. Rather, one needs to have efﬁcacy beliefs which “activate cognitive,motivational and affective processes that govern the translation of knowledge and abilities intoproﬁcient action” (1997, pp. 36–37). Only when individuals are conﬁdent about their ability to becreative will they engage in theactivities leading to creative performance (Bandura, 1997; Ford, 1996) .Tierney and Farmer (2002) provide two reasons why creative self-efﬁcacymay be related to employee creativity. First, they argue that creative selfefﬁcacy constitutes amotivational mechanism important for creativity. Creative performance involves challenges, risks,and potential failures. It isimportant for one to be persistent in the face of difﬁculties (Amabile, 1983).When individuals have high levels of creative self-efﬁcacy, they hold astrong belief in their ability to be successful in spite of difﬁculties. Thisbelief will help them to set creative goals, to be persistent, and to put inmore effort in their creative endeavors (Bandura, 1997). Second, creativeself-efﬁcacy also serves as a cognitive mechanism important for creativity.Creativity requires creativity relevant processes as well as domain-relevantknowledge (Amabile, 1983, 1996). When individuals have high levels ofcreative self-efﬁcacy, they will sustain effort at seeking work-related information (Bandura, 1997),leading to a better understanding of work-relatedknowledge. Furthermore, individuals who hold a strong belief in their creativity abilities will not besatisﬁed with ordinary and routine ideas or solutions (Ford, 1996). Rather, they will put in moreeffort to use cognitiveresources (e.g. knowledge, memory, analytic skills) to come up with uniqueideas. This is consistent with the notions of “divergent thinking” andbreaking “mental set”, which are inherent in creativity relevant processes(Amabile, 1983). Such notions are consistent with research evidence thatcreative self-efﬁcacy is positively related to creativity (Tierney & Farmer,
11. 11. 2002, 2004).As discussed, PSD prompts employees to develop and apply problemsolving knowledge and skills bydirectly dealing with work-related problems.PROBLEM-SOLVING DEMAND AND CREATIVITY 61© 2011 The Authors. Applied Psychology: An International Review © 2011 InternationalAssociation of Applied Psychology.The resulting attainments or mastery experiences will lead toelevated creative self-efﬁcacy. Since creative self-efﬁcacy is related to creativity (Tierney& Farmer, 2002, 2004), it constitutes an underlying motivational mechanismthrough which PSD is related to creativity. Accordingly, we hypothesisedthat:Hypothesis 2b: Creative self-efﬁcacy mediates the relationship between PSD andcreativity.The Moderating Inﬂuence of Intrinsic MotivationIntrinsic motivation relates to whether individuals are internally driven tocomplete a task due to a personal interest in the task itself. Thus, intrinsicmotivation refers to the motivational state in which employees are attractedto and energised by the task itself, rather than the external outcomes thatdoing the task might yield (Deci & Ryan, 1985). Intrinsic motivation isrelated to other stable personality traits, such as learning goal orientation(Dweck & Leggett, 1988), mastery orientation (Kagan, 1972), and growthneed strength (GNS; Hackman & Oldham, 1975). However, intrinsic motivation is conceptuallydistinct from these individual differences. For sometasks, individuals may have an orientation to learn, grow, and achieve (i.e.high learning goal orientation, high mastery orientation, or high GNS), andyet they may not enjoy working on the task (i.e. low intrinsic motivation)(Shalley et al., 2009).To date, to our knowledge no study has examined the moderatinginﬂuence of intrinsic motivation on the relationship between demanding job attributes (e.g. PSD)and individual outcomes. However, there is
12. 12. strong evidence that when individuals are intrinsically as opposed toextrinsically motivated they are more willing to tackle difﬁcult tasks orgoals (cf. Meyer, Becker, & Vandenberghe, 2004), and persist at these (Vallerand, Pelletier, Blais,Briere, Senecal, & Vallieres, 1992; Ryan & Connell,1989). Therefore, they are less likely to be affected by the failure and dif-ﬁculties entailed by challenging tasks, e.g. PSD. We argue that the relationship between PSD andcreative self-efﬁcacy may be a function of anindividual’s intrinsic motivation: those with higher levels of intrinsic motivation will respond morefavorably to PSD situations. Individuals high inintrinsic motivation are more likely to accept difﬁcult problems and bepersistent when they encounter difﬁculties and challenges in looking forsolutions.Furthermore, individuals high in intrinsic motivation are likely to seePSD in terms of the opportunities it presents for them to fully apply capabilities and develop betterproblem-solving skills. Such positive attitudestowards PSD will help them achieve better learning outcomes and higher62 ZHOU ET AL.© 2011 The Authors. Applied Psychology: An International Review © 2011 InternationalAssociation of Applied Psychology.creative self-efﬁcacy. In contrast, low intrinsic motivationindividuals mayfeel threatened by PSD situations. Instead of trying to overcome problemsituations and develop problem-solving skills, individuals low in intrinsicmotivation are likely to avoid problems or not take advantage of opportunities to apply and developtheir knowledge and skills. Consequently,individuals low in intrinsic motivation are less likely to experience increasedcreative self-efﬁcacy. On the basis of these arguments, we hypothesisedthat:Hypothesis 3a: Intrinsic motivation will moderate the relationship between PSDand creative self-efﬁcacy such that the relationship between PSD and creativeself-efﬁcacy will be stronger for individuals with high rather than low intrinsic
13. 13. motivation.If creative self-efﬁcacy mediates the relationship between PSD and creativity, as predicted inHypothesis 2b, and the impact of PSD on creative selfefﬁcacy is dependent on intrinsic motivation,as predicted in Hypothesis 3a,it is likely that intrinsic motivation may moderate the strength of the mediated relationship betweenPSD and creativity via creative self-efﬁcacy, suchthat the mediated relationship will be stronger for individuals high ratherthan low in intrinsic motivation. This effect pattern is referred to as moderated mediation (Muller,Yzerbyt, & Judd, 2005; Preacher, Rucker, &Hayes, 2007).Hypothesis 3b: Intrinsic motivation will moderate the mediated effect of PSD oncreativity via creative self-efﬁcacy such that the mediated effect will be stronger forindividuals with high rather than low intrinsic motivation.METHODSample and ProcedureThree issues were considered in the selection of participating organisations.First, this study aims to examine creativity in an environment where therequirements for creativity are not salient. This is different from creativitystudies that focus on R&D teams, where creativity is the expected outcome(e.g. Amabile, Conti, Coon, Lazenby, & Herron, 1996; Scott & Bruce, 1994;Tierney et al., 1999). Second, it is important to have participants from different functional groups. Byso doing, a representative sample (of a generalwork environment) can be achieved. Lastly, like many other creativitystudies, supervisor ratings were used to measure employee creativity. Therefore, it is important toidentify supervisor–subordinate dyads, whereby thesupervisor is in an appropriate position to observe subordinates’ creativeperformance. Three organisations located in the city of Wuxi, the People’sPROBLEM-SOLVING DEMAND AND CREATIVITY 63© 2011 The Authors. Applied Psychology: An International Review © 2011 International
14. 14. Association of Applied Psychology.Republic of China satisﬁed the preceding requirements and wereinvited toparticipate in this study. In meetings with Human Resources (HR) managersof each of the companies, the ﬁrst and second authors explained the aims ofthe study and asked them to identify individual work units within thecompany for possible participation in the research. We made it clear that wewere not focusing speciﬁcally on work units with high creative performance,but instead examining job-related characteristics across all or most functional areas of the business.Units were selected in order to be representativeof the organisation as a whole.Employees in the identiﬁed units were informed of this survey throughthe HR department of each company before the questionnaires were distributed. A surveycoordinator was assigned by each HR department tohelp the ﬁrst author distribute questionnaire packages to respondents.Separate questionnaires were administered to subordinates and supervisors.Subordinate questionnaires were distributed to 320 employees whilesupervisor questionnaires were distributed to 60 immediate supervisors ofthe subordinates. Employees completed a questionnaire that includedmeasures of PSD, creative self-efﬁcacy, intrinsic motivation, and demographics variables. Separately,each supervisor was asked to rate the creativity of an average of ﬁve subordinates. A cover letterattached to each ofthe questionnaires informed respondents of the purpose of the survey.Respondents were assured of the conﬁdentiality of their responses and theirpersonal ID (provided at the top right hand corner of the questionnaire)would only be used to match their responses to the ratings provided bytheir supervisors.Completed and usable questionnaires from 270 supervisor–subordinatedyads were received. This represented a response rate of 84 per cent forsubordinates and 90 per cent for supervisors. Of the 270 respondents, 66
15. 15. per cent were male. Respondents reported an average age of 28.35 years(SD = 5.25) and average job tenure of 2.93 years (SD = 3.03). In terms ofhighest level of education achieved, 23 per cent (62) respondents had completed high school (12years of education), 50 per cent (135) college degree(15 years of education), 25.2 per cent (68) Bachelor’s degree (16 years ofeducation), and 1.9 per cent (5) Master’s degree (19 years of education). Itshould be noted that in China a college degree, “Da Zhuan”, is a qualiﬁ-cation lower than a bachelor degree, “Ben Ke”. The duration of a collegedegree is normally three years whereas that of a bachelor degree is normallyfour years. Participants were from different functions of the companies:administration and HR (88 respondents, 33.1%), production (78 respondents, 29.3%),ﬁnance/accounting department and quality control (57respondents, 21.4%), logistics (20 respondents, 7.5%), and sales and marketing and othersaccounted for 23 respondents (8.7%). Four respondentsdid not indicate their job function.64 ZHOU ET AL.© 2011 The Authors. Applied Psychology: An International Review © 2011 InternationalAssociation of Applied Psychology.MeasuresFollowing procedures suggested by Brislin (1980), the questionnaire wasdeveloped originally in English and translated into Chinese. The Chineseversion of the questionnaire was back-translated into English. A thirdperson, an English native speaker, compared the original version with theback-translation.PSD. A ﬁve-item scale originally developed by Jackson et al. (1993) andlater improved and validated by Wall et al. (1995) was used to measure PSD.Items include “To what extent are you required to deal with problems whichare difﬁcult to solve?” “To what extent do you have to solve problems whichhave no obvious correct answer?” “To what extent do you need to use yourknowledge of work processes to help prevent problems arising in your job?”