The Growth Of The Takaful Industry Economics Essay

The Growth Of The Takaful Industry Economics Essay Takaful is derived from an Arabic word â€Å"Kafala† which means mutual guarantee, whereby a group of participants agree to mutually guarantee among themselves against a defined loss. This simple concept of takaful is the foundation of the takaful business, which is the present Shariah-compliant insurance Takaful is â€Å"a scheme based on brotherhood, solidarity and mutual assistance which provides for mutual financial aid and assistance to the participants in case of need whereby the participants mutually agree to contribute for that purpose† The contemporary jurists acknowledge that the foundation of Takaful was laid down in the system of â€Å"Aaqilah†, which was an arrangement of mutual help or indemnification customary in some tribes at the time of the Prophet (peace be upon him). Takaful provides solidarity in respect of any tragedy in human life and loss to the business or property. The elements present in the conventional insurance viz; Gharar (uncertainty), Riba (interest) and Maisir (gambling) are against the tenets of Islam. Muslim Scholars do not object to insurance per se but only to certain weaknesses in the insurance contract (which weaknesses render the insurance contracts fasid). It is for this reason, 1972 Fatwa by National Council for Islamic Religious Affairs of Malaysia that life insurance is not lawful as it contains gharar, Maisir and riba. Hence, takaful tries to remove all these facets present in the conventional insurance and works within the guidelines of Shariah. The concept of tabarru makes the transaction permissible and valid according to Islamic law. It changes the basis of contract from an exchange contract (muawadat) which is bilateral in nature, to a charitable contract, which is unilateral. 2.0 Takaful Industry overview Globally, the takaful industry has been growing rapidly, appealing to both Muslims and non-Muslims. Currently, there are more than 110 takaful operators worldwide. As per the Ernst Youngs World Takaful Report 2009, global Takaful contributions have risen to $3.4bn in 2007 as compared to $2.5bn in 2006 (36% Growth). The new projections for 2012 for Takaful Market are US$ 7.7 bn and US$ 11.0 bn by 2015. Saudi Arabia was the biggest market in the Gulf Cooperation Council (GCC), with contributions totaling USD 1.7 bn in 2007, and Malaysia the largest takaful market in Southeast Asia with contributions of USD 800 mn. Malaysia has achieved significant milestones in the development of its takaful industry. With the enactment of the Takaful Act 1984, the first takaful company was established in 1985. Since then, the industry has been gaining momentum and increasingly recognized as a significant contributor to Malaysias overall Islamic financial system. There are currently eight takaful operators and two re-takaful operators, with five foreign participations from the UK, Bahrain, Germany and Japan. These takaful operators conduct both domestic and foreign currency business. 2.1 Current Trends and Future prospects With the expanding demographics of Islamic countries and that of the Islamic population globally, the prospect of takaful looks promising. The Accounting Auditing Organization for Islamic Financial Institutions (AAOIFI) has been playing a key role in framing and reviewing the regulatory standards governing takaful companies. With improved standards of living and increasing awareness of Takaful, the market is expected to see steady growth in per capita spend on Takaful premiums and also in terms of market share in comparison with conventional insurance. 2.2 Strategic Issues and Challenges With projected growth as described above, the industry will experience much change. As with all new product offerings, success will depend on several factors, both internal and external. Highlighted below are a number of strategic issues and challenges that providers will contend with as the industry expands. Distribution Challenges New entrants should create synergies that can be used to leverage existing distribution channels, banc-Takaful and strategic alliances across geographies. This will also enable the operators to increase premium volumes to improve profitability; a key factor in surviving the ‘start-up years. Developing Innovative Products Developing attractive and competitive products that meet diverse customer needs will be a major challenge for Takaful operators. Though Takaful operators cater to a very specific and presently unsatisfied market, they still need to create product offerings that are as sophisticated and innovative as their conventional competitors. Improving Marketing and Branding Tactics The present brand value of Takaful is relatively limited particularly in non-Islamic countries. Analysts have suggested that Takaful has enormous potential for Islamic and non-Islamic populations, offering an ‘ethical insurance alternative. Experts also propose that Takaful can potentially be a useful mechanism for poverty alleviation. Raising the Standards in Customer Service As the industry grows and becomes more competitive, building customer service skills and developing best practices will become increasingly important. At present, general customer service standards are average among Takaful providers, relative to their conventional counterparts. IT Solutions for Takaful Issues such as innovative product development, time to market, servicing of policies and claims within acceptable time lines, accuracy of calculations, cost containment, and improvement in service standards can all be facilitated by the implementation of robust and flexible IT solutions. Takaful compliant IT solutions serve an important purpose from a regulatory compliance standpoint and can help operators avoid susceptibility to unfavourable regulatory decisions and the possibility of increased regulatory compliance costs. 3.0 Takaful Models A takaful model depicts the relationship between the company and the participants. Based on the nature of relationship between the company and the participants, there are various models like Wakalah (agency) Model, Mudarabah Model and the combination of agency and Mudarabah models. In Mudarabah model that is practiced mainly in the Asia Pacific region, the policyholders get profit on their part of funds only if Takaful Company earns profit. The sharing basis is determined in advance and is a function of the developmental stage and earnings of the Company. In Wakalahmodel, the surplus of policyholders funds investments net of the management fee or expenses goes to the policyholders. The shareholders charge Wakalah fee from contributions that covers most of the expenses. In order to give incentive for good governance, management fee is related to the level of performance. 4.0 Takaful Categories 4.1 General takaful The general takaful provides protection on a short-term basis, normally covering a period of one year. It commonly provides protection for property loss or damage, liability arising from damage. In general Takaful, the company raises a fund, which called as ‘tabarru fund or account, where the participants pay to the fund. The company will invest the remainder of the fund after deducting the operational cost of the scheme. Any profit or return from the investment will be returned back to the fund. If there is any participant who faced loss or damage to his property or belonging, then the particular participant will be compensated from this fund. 4.2 Family takaful The family takaful is a combination of protection and long-term savings, usually covering a period of more than one year. It provides benefits if the insured is inflicted by a tragedy as well as potential profits. Risks covered include premature death, illness and permanent disability, and regular income during retirement. 5.0Shariah issues in Takaful: As is the case with any industry in its nascent stages, the takaful industry too is facing its own set of teething problems. Whenever we go to conferences (or) read the literature and article related to takaful, the general and the most common allegation (or) complaint is that, â€Å"Inconsistency in the interpretations of certain Shariah rules or standards is said to be an issue of the Takaful Industry†.Some of the commonly discussed Shariah issues relating to takaful are: which is the right model to follow?, who are the real owners of the takaful fund?, the methodology and the process to be adopted to share the surplus between the participants, the issue of hibah (gift) in a takaful policy, the issue of insurable interest and whether underwriting in concordant with the principles of maqaasid as-Shariah etc. So, let us analyse these issues in the light of Shariah to understand the arguments for and against each of these issues to get a clear idea on the issue. Finally, we will also try to analyze if the issue of inconsistency is as serious as it is being projected and what are the areas which need to be standardized, if at all it is required. 6.0 Issue #1: The dilemma of choosing the right takaful model In many of the takaful conferences and literature available, the question that is manifested is regarding the different takaful models existing in the world market. Some people express a desire towards a standardisation of takaful products as this will avoid confusion, facilitate regulation etc. Before we analyze the pros and cons of this thought, let us understand the modus operandi of the mudarabah model. Some people, usually criticize the mudarabah model since the operator too shares the underwriting surplus which should ideally belong to the participant. 6.1The modus operandi of the mudarabah model Generally, many Takaful companies (especially those using the Mudaraba principle) claim that their operations are based on the concept of mutual or co-operative insurance as approved by the Muslim jurists. This claim is on the basis that: They receive the premium or contribution from the insured on the basis of the Mudaraba principle, whereby the company becomes the entrepreneur (Mudarib) and the insured party the capital provider (Rab al-Mal). The insured party agrees to donate a certain percentage (or in some cases as in General Takaful the whole of the amount paid) of the premium/contribution to a special fund used to pay compensation or benefits to contributors. Any surplus left in the fund after settlement of all claims is shared by the company and the insured as profit in a ratio as agreed in the contract. An insured party who has received compensation, the amount of which is greater than what he could have received as a share of the surplus had he made no claim, is not entitled to share such a surplus. The company uses normal actuarial principles to calculate risk and premium. 6.2The industry practice Until recently, the Mudaraba model adopted by Malaysian takaful operators refers to profit as the underwriting surplus, which is the excess of premiums over claims, plus investment returns. This arrangement marks a departure from the original Mudaraba model, which will entitle the takaful operator a ratio in the investment returns, without sharing in the underwriting surplus. The modified Mudaraba model justified the sharing of the underwriting surplus on the grounds that such an arrangement would allow takaful operators to withstand competition and avoid overpricing, which may eventually sway takaful participants from takaful, and be attracted to conventional insurance, with all its non-Shariah compliant elements. This is further justified by the fact that there is nothing haram in sharing the underwriting surplus, in the view of the absence of any textual or general Shariah principle disapproving such a practice. 6.3Modes of surplus distribution Generally the surplus which is generated after paying all the claims and other expenses is distributed in the following ways. Pro-rata mode: Whether the surplus is underwriting surplus plus profit or underwriting surplus only, it is distributed in proportion to the premium paid by the participants, without differentiating between claimable and non-claimable accounts. Selective mode: This mode tends to indemnify non-claimable accounts only. Takaful operators tend to deprive claimable accounts, so that they become more prudent in the future. 0ff-setting mode: This mode tends to offset the rate of underwriting surplus from the amount claimed. This is applicable only on accounts whose underwriting surplus less than the claims. If the underwriting surplus is equal or more than the claims, then the participant does not share in the surplus. 6.4Do Takaful models need to converge? While the positive desire towards a standardisation of takaful products to avoid confusion, facilitate regulation etc, are welcome, the other side of the coin is that takaful is an Islamic phenomenon and should be viewed through the prism of fiqh and socio-cultural context. We should realise that takaful per se is not a product, and thus should not be equated with insurance. It is described as a system, rather than a product, which aims at the joint-guarantee between the contributors in a risk-covering scheme. We should not lose focus of the source of the inspiration of takaful. It is primarily to spread a risk to alleviate financial burden when it inflicts a person in a spirit of humanism. Unlike in the past, presently money is contributed in advance. This element of philanthropy should also be reflected in takaful to differentiate it with insurance, which is a pure tug of war between maximising premium to be paid and minimising the compensation to be paid. If one adulterates the spirit of takaful and treats it as a pure standardised commercial venture then the Shariah spirit may be lost. The different models in fact create a space to reactivate the juristic acumen. For any legal system to survive, especially in an era of globalisation and universalism, one should allow the system to evolve. This evolution is in turn influenced by many external factors such as politics, schools of law, tax implication etc, which differ from country to country. For instance, many multinational banks offer different home financing products in different jurisdictions. May be in one country Ijarah (lease) will best suit everybody while in another country the Murabaha (differed payment). This shows the versatility of Islamic law. The same spirit should prevail for takaful. One cannot replicate these products on the basis of Islamic law and then try to standardize the Islamic products developed on the premise of conventional products. This should not be the case, a change in mind set is required because Islamic financial products should have its own features ultimately. Standardization is good in a way as it brings in more certainty. However, one should ponder on Imam Maliks attitude towards standardization of Islamic law when Ibn Muqaffa asked the caliph of that time to standardize Islamic law. But he refused on the basis that the jurisprudence developed by other imams also had their proofs from Shariah. Hence one cannot accept only Maliki school of law. In other words Islamic law must preserve its legal elasticity. By standardizing Islamic finance one will lose the legal beauty inherent in Shariah. Therefore by accommodating various models different branch of fiqh is revived. 7.0 Issue #2:The issue of surplus distribution The most critical issue in takaful is the issue of surplus distribution. Being a taawuni instrument to provide a mutual guarantee for possible risks, surplus arises as an issue of what to do with it if such risks are dealt with through risk transfer or indemnification. A recorded surplus at the end of the financial year of a particular takaful operator is an issue that invokes both Shariah and legal scrutiny. As far as surplus distribution is concerned, two juristic views have surfaced and dominated the takaful industry in the Middle East and Malaysia. The first one categorically prohibits the sharing of the underwriting surplus between the takaful operator and the participants, but the other view validates the sharing, based on ratios that differ according to the line of products offered. The opponents of sharing the underwriting surplus back their contention by decisions taken by highly acclaimed institutions, such as AAOIFI, whose standard on takaful reads: â€Å"The Takaful operator does not share in the (underwriting surplus)†. The AAIOFI Standard on takaful states: â€Å"The underwriting surplus and its returns, less expenses, and payment of claims, remain the property (milk) of the policyholders, which is the distributable surplus. This is not applied in commercial insurance, where the premiums become the property of the (insurance) company, by virtue of contract and acquisition, which would make it revenue and a profit for commercial insurance† This statement by AAOIFI raises the issue of ownership claimed on the premium paid. On one hand, the participant has donated the premium as tabarru, hence, losing title over it, as prescribed by the rules of hibah in the Shariah, but on the other hand, he still holds claim over it in the form of getting the whole underwriting surplus or a part thereof. Hence, let us analyse the ownership issue element in hibah and the extent of its Shariah compliancy. There are a number of jurists who emphasized that pure hibah leads the wahib to relinquish his ownership over the object of hibah. Ibn Qudamah asserts that â€Å"al-hibah tamalik†- a hibah which requires the wahib to enable the beneficiary to claim title of the object of hibah. Al Imam al- Shirazi points out that â€Å"Al-hibah tamlik bighayri ‘iwadd â€Å"- a hibah which enables the beneficiary to own the object of hibah without an exchange. In such a case, the juristic implications of hibah, as Ibn Nujaym al- Hanafi asserts, will be the transfer of hibah to the beneficiary, entitling him to hold title over the object of hibah (thubut al-Milk lil mawhubi lahu). Generally speaking, the Shafi‟is view hibah as transferring the ownership of an asset without exchange during ones lifetime, on a voluntary basis. The other mazahib (schools of jurisprudence) refer to the same meaning, with a special emphasis on the element of â€Å"no exchange†, i.e.: bi ghayri ‘Iwadd. This transfer of ownership would be effective, either by way of acquisition (qabd) on the part of the beneficiary, which is the view of the Shafi‟is and Hanafis, or by way of ijab and qabul (offer and acceptance),, which is the view of the Malikis. This juristic approach is an evidence that tabarru requires the relinquishing of ownership over the object of hibah. Since the latter entitles tamlik to the beneficiary, we can rightly say that the mutabarri (donor) does not hold any legal right or claim over the asset donated. Having said so, the takaful operators are at liberty to stipulate conditions on how the underwriting surplus should be distributed, invoking the doctrine of shurut (conditions) in contracts, as articulated in Islamic jurisprudence. The only shroud of right that the donor may still enjoy to hold title of his hibah is when he donates it in exchange for a counter value, a principle known as â€Å"hibah al-thawab† Contemporary scholars like al-Qurdaghi are of the view that the principle of hibah al-thawab (a gift for on exchange) is a good premise to justify the confinement of surplus to the participants only. It is true that some of the Prophetic hadiths referring to hibah al-thawab have secured some right of ownership to the donors after donation. Abu Hurairah narrated that the Prophet (s.a.w.) said: â€Å"The donor holds an exclusive right of ownership over his hibah, provided he is not rewarded for it†. This hadith is the only piece evidence attesting to a conditional ownership of the hibah by the wahib, allowing him to retract his hibah if he is not rewarded or satisfied with the reward. However, as clearly understood from the hadith, this evidence only gives conditional retraction of the same gift, not a surplus of it. In the case of Islamic insurance (takaful), this hadith is not applicable to surplus distribution, rather it is about retraction of hibah. Another hadeeth which is given as an argument for confining the surplus distribution to the participants only is the hadith of Nahd/Nihd. It has been mentioned in Saheeh Al-Bukhari, (Book of Sharikah) that â€Å"Muslims did not see any harm in Nahd†. The latter, as Ibn Hajar explains, is â€Å"The allocation of a fund in proportion to the number of participants (in the fund)†. Although this arrangement was more useful and practical in journeys to provide mutual coverage of expenses, it has been viewed as a mechanism to transfer risks, whether in a journey or otherwise. After citing the same hadith, the appendix of AAOIFI Standard on Takaful provides an explanation to Ibn Hajar‟s definition of Nahd. The Standard states that Ibn Hajars definition of Nahd refers to the underwriting surplus, which should be redistributed to the participants, so that it could be used in another journey. Revising Ibn Hajars view in his Fath al-Bari, it can be hardly understood that Ibn Hajars definition and explanation of Nahd does not refer in any way to surplus redistribution to the same participants. The hadith, is thus, completely silent about surplus, opening the doors for ijtihad to be exercised, in view of the maqasid al-Shariahand general Islamic financial principles. Another issue raised by those who oppose the sharing of surplus to the takaful operator is that Sharing in the underwriting surplus is a kind of taking peoples property unjustly. This contention is held by prominent scholars like Hussein Hamid Hassan and Al-Qurgaghi. The contention seems to go beyond the accepted parameters of justice. Although there could be plausible grounds for such a view, in light of the practices of some takaful operators that seize the lions share of the underwriting surplus, there should not be any shred of doubt that, in light of our earlier juristic analysis, sharing the underwriting surplus is Shariah-compliant as long as it falls within the parameters of accepted conditions (shurut), as well as the principle of the rida (satisfaction), featuring such contracts. With the existence of sound regulatory framework that caps the percentage of the distributable surplus, takaful operators will not be in a position to take peoples property unjustly. 8.0 Issue #3: Distribution of death benefit in family takaful Another Shariah issue (or) concern raised is in family takaful on to whom should be the death benefit is paid after the death of the participant. One group of scholars and Takaful operators say that it should be given entirely given to the beneficiary as in the case of conventional insurance and the other group feels that the beneficiary should act as a executor of the deceased and the benefit should be distributed to the legal heirs of the deceased. So, let us analyse the arguments put forth by the two sides in the light of Shariah. 8.1The concept of mal in the light of Takaful benefit The Arabic word mÄ l, or property, originates from the root word mawala that literally means to finance. ZuhaylÄ « defines mal literally as being anything a man owns that is in his actual possession and this includes corporeal and usufruct. The classification of mÄ l by Dr. Muhammad Daud Bakar, which is suitable to the modern context, appears to adopt the majoritys definition. According to him, mÄ l or property can be classified into three types: Tangible assets like landed property, present items and stock including Islamic bonds that are asset-based such as ijÄ rah, musyÄ rakah and mudarabah bonds. Intangible assets such as copyright and royalty, trade name, trademark etc Financial rights (haqq mÄ liyy) such as rights to receive (receivable) that include Islamic bonds, deferred dowry maintenance, right to damages, the right to takaful compensation, etc. In the modern application, takaful benefit is also treated as mal (property). According to Sec.2 Takaful Act 1984, takaful benefit includes any benefit, pecuniary or not which is secured by a takaful certificate, and â€Å"pay† and other expressions. In family takaful, there are two accounts, namely the Participant Account and the Special Participant Account. The premium is paid into both accounts based on a ratio agreed by the takaful operator and the participant. The Participant Account is considered to be the deposit account of the participant whereas the Special Account is for the sole purpose of making donations. When a participant dies, there is no question regarding the heritability of the money in the Participant Account as it is part of the deceaseds estate. However, the money payable by the takaful operator taken from the Special Participant Account for the death benefit is still questionable. It is a standard practice in Malaysia that the payment of the money by the takaful operator to the nominee appointed by the deceased participant is subsequently distributed among the participants legal heirs in accordance with the farÄ `id law. The distribution of the proceeds among the legal heirs of the deceased participant has seemingly become standard practice in Malaysia. Section 65(1) of the Malaysian Takaful Act, 1984 stipulates that the payment of takaful benefits is made to the proper claimant. Section 65(4) explains that the ‘proper claimant is a person who claims to be entitled to the sum in question as executor of the deceased or who claims to be entitled to that sum under the relevant law. 8.2The concept of ownership in Takaful benefit Islamic law provides four legitimate means for acquiring absolute ownership[13]: (i) The contract of exchange such as trading and leasing contracts, and unilateral contracts such as wasiyyah, hibah and waqf, (ii) the replacement, or khalafiyyah, i.e. inheritance, the payment of diyyah and compensation, (iii) the control over permissible things such as fish in the sea and birds in the sky and (iv) The growth and the production of things owned such as eggs, milk, etc. Takaful benefit falls under the second part of the first category, i.e. unilateral contract (tabarruat). It could be contended that without the participation of the policyholder, the takaful operator would never pay the money. In other words, it is the contract entered into by the policyholder for family takaful, which generates the benefits. This contention is based on the fact that ones effort becomes a justification for ownership. As a result, the money is divisible among the heirs of the policyholder according to the law of farÄ `id. 8.3The takaful benefit to sole beneficiary vs. to the legal heirs Takaful contracts realize the obligation upon the company to pay. They do not create wealth in the insureds ownership, but rather they create an obligation to ease the burden suffered due to the losses of fellow participants. The participants contribution is his or her donation for the good of others, not for himself. The proceeds payable belong to the fund of the participants, not the takaful operator. Therefore, even though it is the deceaseds effort, the money is more appropriately to be regarded as an obligation upon the takaful tabarru fund to pay on behalf of other participant as financial assistance to the insureds family in case of death. This is the importance of considering a legal and financial entity for the fund. This monetary obligation is directly based on the agreement or promises of mutual assistance stated in the contract. In other words, the tabarru fund managed by the takaful operator on behalf of the participants agrees to pay the proceeds, and the matter of to whom they are paid should be freely and totally left to the agreement or the stipulation made by the policyholder to the company. This is similar with the condition made by the performer of wakf as he stipulated condition is binding. The primary objective of takaful is to provide financial assistance to the participants family. If the payment is payable strictly only to the heirs of the participants or insured, it implies that it is the property of the deceased. If this is so, the money is subject to the fulfilment of certain rights that must be carried out before distribution to the heirs, such as the payment of burial expenses, the deceaseds debts. This would mean that the compensation is not being used to ease the burden of the family but rather it seems that other fellow participants are under an obligation to settle the debts of the dead participants. In this regard, the creditors would have prior rights over the participants dependants. The dependants would only receive the benefits after the creditors claims have been satisfied. As such, inserting a clause legally and strictly imposing a duty on the appointed nominee to distribute the money among the legal heirs of the dead participant seems to contradict the objective of both the takaful. Inserting such a clause as currently practiced in Malaysia is not based on valid arguments. Furthermore, by considering it an estate for inheritance purposes, the takaful and insurance activity becomes a source of income. This is contradictory to the purpose of takaful i.e. mutual cooperation to ease a burden. Interestingly there are a number of contemporary fatwas allowing the distribution of takaful benefit to a particular beneficiary which is the common practice in the conventional insurance. The SAC of Bank Negara in its 34 meeting held on 21st April 2003 resolved: Takaful Benefit can be used for hibah since it is the right of the participants. Therefore the participants should be allowed to exercise their rights according to their choice as long as it does not contradict with Shariah. The status of hibah in takaful plan does not change into will (wasiah) since this type of hibah is a conditional hibah, in which the hibah is an offer to the recipient of hibah for only a specified period. In the context of takaful, the takaful benefit is both associated with the death of the participant as well as maturity of the certificate. If the participant remains alive on maturity, the takaful benefit is owned by the participant but of he dies within such period, then hibah shall be executed. A participant has the right to revoke the hibah before the maturity date because conditional hibah is only deemed to be completed after delivery is made (qabd). The Participant has the right to revoke the hibah to one party and transfer it to other parties or terminate the takaful participation if the recipient of hibah dies before maturity The takaful denomination form has to be standardized and must stipulate clearly the status of the nominee either as a beneficiary or an executor (wasi) or a trustee

Organizational Behavior Chapter 5 Summary

Chapter 5 Perception is a process by which individuals organize and interpret their sensory impressions in order to give meaning to their environment. †¢People’s behavior is based on their perception of what reality is, not on reality itself. †¢The world as it is perceived is the world that is behaviorally important. Attribution Theory: Judging Others Our perception and judgment of others are significantly influenced by our assumptions of the other people’s internal states.When individuals observe behavior, they attempt to determine whether it is internally or externally caused. Internal causes are under that person’s control. External causes are not – person forced to act in that way. Causation judged through: Distinctiveness — Shows different behaviors in different situations. Consensus — Response is the same as others to same situation. Consistency — Responds in the same way over time. Errors and Biases in AttributionsFund amental Attribution Error – Blame on people first, then situation. Self Serving Bias – If won, it’s our success, if failed, their fault. Selective Perception – selectively interpret what they see on basis of their interest, background, exp and attitude. Halo/Devil Effect – draw general impression on one of their trait. XX Contrast Effect — evaluation of someone’s characteristics that are affected by comparing with other who rank higher or lower on the same characteristic Another Shortcut: StereotypingProfiling – form of stereotyping which member of a group based on a single, usually racial traits Specific Shortcut Applications in Organization Employment Interviews – perceptual biases raters affect the accuracy of interviewers’ judgments, formed in a glance, 1/10 of a second Performance Expectation Self-fulfilling prophecy (Pygmalion effect) — lower or higher expectation of leader leads to productivity of em ployees, critical impact for employees. Perception and Individual Decision Making Problem is a perceived discrepancy between the current state of affairs and esired state Decisions are made from among alternatives developed from data Therefore, problems must be recognized and data must be selected and evaluated. Decision Making Models in Organizations Rational Decision Making – the â€Å"perfect world† model, assumes complete information, all options known and max payoff Bounded Reality – â€Å"real world† model, seek satisfactory and sufficient solutions from limited data and alternatives Intuition – a non-conscious process created from distilled exp that results in quick decision. (usually are good decisions) Common Biases and Errors in Decision-Making:Overconfidence Bias – believing too much in own ability to make good decision, especially outside of own expertise Anchoring Bias — Using early, first received info as basis for makin g subsequent judgments Confirmation Bias – selecting and using only facts that support our decision Availability Bias — emphasizing info that mostly readily at hand Escalation of Commitment – Increasing commitment to a decision in spite of evidence that it’s wrong Randomness Error – creating meaning out of random event, superstitions Winner’s Curse – higher bidder pay too much due to overestimation Hindsight Bias – believe it could be accurately predicted beforehand after outcome is known Individual Differences in Decision Making Personality: Conscientiousness may affect escalation of commitment. Achievement strivers are likely to increase commitment, while dutiful people are less to have this bias. High self-esteem people are susceptible to self-serving bias. Gender: Women analyze decisions more than men (rumination), and twice likely to develop depression. These differences develop early. Organizational ConstraintsPerformance Evaluation – managerial evaluation criteria influence actions Reword Systems – managers will make the decision with the greatest personal payoff for them Formal Regulation – limit the alternative choices of decision makers System-imposed Time Constraints—Restrict ability to gather or evaluate info Historical Precedents – past decision influence current decisions Ethics in Decision Making Ethical Decision Criteria Utilitarianism – decisions made based solely on the outcome, seek the greatest good for greatest number, mostly used by business people. Pro: promote efficiency and productivity Con: ignore individual rights, esp. minority Rights – decision consistent with fundamental liberties and privileges, respect and protects rights of individuals Pro: protect individual from harm, preserve rightsCon: create overly legalistic work environment Justice – imposing and enforcing the rules fairly and impartially, equitable distributio n of benefit and costs Pro: protect the interests of weaker members Con: sense of entitlement rises Improving Creativity in Decision Making: Creativity – ability to produce novel and useful ideas. People who score high in â€Å"Openness to Exp†, intelligent, independent, self-confident, risk-taking, have an internal locus-of-control, tolerant of ambiguity, low need for structure and preserve the frustration face The Three-Component Model of Creativity – proposition that individual creativity results from a mixture of three components Expertise – foundationCreative – Thinking Skills – personality characteristics associated with creaticity Intrinsic Task Motivation – The desire to do the job because of its characteristics Global Implications Attributions – cultural differences in the ways people attribute cause to observed behavior Decision Making – no research on the topic, assumption of â€Å"no difference† and ba sed on awareness of cultural differences in traits that affect decision making, this assumption suspect Ethics – No global ethical standards exist, Asian countries tend not to see ethical issues in â€Å"black and white† but as shades of gray. Global Companies need global standards for managers.

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Latino Developmen Of Type - Free Essay Example

Sample details Pages: 8 Words: 2449 Downloads: 1 Date added: 2019/05/17 Category Health Essay Level High school Tags: Diabetes Essay Did you like this example? Abstract The objective of the research proposal in this paper is to analyze the development of type two diabetes in Latinos born in the United States, and/ or living in the United States for 3-5 years, and how it compares to the development of type two diabetes in Latinos born/ living outside the United States. Type two diabetes is described by the American Diabetes Association as follows, [when] your body does not use insulin properly. This is called insulin resistance. Don’t waste time! Our writers will create an original "Latino Developmen Of Type" essay for you Create order [T]he pancreas makes extra insulin to make up for it. But, over time your pancreas isnt able to keep up and cant make enough insulin to keep your blood glucose levels normal. Type 2 is treated with lifestyle changes, oral medications (pills), and insulin. A solution will be proposed accordance with the findings of how lifestyle choices based on birthplace enable or prohibit the development of type two diabetes. The research methods used will be utilizing the Arizona State University Online Library Data-Base to find primary sources as well as other well credited online secondary resources, and research papers, to gather information needed for the analysis. The class text Health Issues in the Latino Community will also be used as a source for information research. Introduction It is well known amongst many Latino families that diabetes, specifically type two diabetes, is a disease that afflicts many families, and the Center for Disease Control (The CDC) says that as much as up to 50% if Latinos are likely to die due to diabetes, when compared to a white person. The CDC has also noticed that it makes a difference if a Latino person was born in the United States, or outside of the United States. It can be hypothesized that the disease would be prevalent in America, where dietary habits/ nutrition issues are a known problem, and an academic journal/ review by Sim?n Barquera, et al. entitled, Collaborative research and actions on both sides of the US-Mexico border to counteract type 2 diabetes in people of Mexican origin makes this hypothesis one of the research points the article focuses on. A quote from the article that demonstrates this can be seen here: Diverse factors have been hypothesized to underlie these vulnerabilities [to diabetes], including genetic susceptibility, perinatal conditions including malnutrition and breast-feeding practices, adverse dietary and lifestyle patterns related to acculturation (high consumption of sugar-sweetened beverages, processed foods and low physical activity), food insecurity and lower socioeconomic status, poor access to health services, receipt of poor quality healthcare services, communication barriers (such as limited literacy and limited English proficiency) [19, 20] and sub-optimal adherence to treatment recommendations. The root of the diabetes epidemic in the United States seems to be theoretically based on acculturation and healthcare access barriers, the next hypothesis would be to test if these common factors affect those across the border as much as it does to us in the US? Literature review of Diabetes research in Mexico and the US Mexicans that originate from Mexico have statistically lower rates of documented diabetes in the US, however this is in part due to the state of public health in Mexico is drastically different from that of the United States. According to the CDC, in an online web page titled, Vital Signs/ Hispanic Health published May 2015, Compared with US-born Hispanics, foreign-born Hispanics have: About half as much heart disease; 48% less cancer; 29% less high blood pressure; 45% more high total cholesterol. Meanwhile a quote from the Sim?n Barquera journal review describes the state of health in Mexico as such, While age-standardized death rates per 100,000 inhabitants due to T2D and cardiovascular diseases are similar in the US and Mexico (248.7 vs 199.9 /100,000 inhabitants), T2D mortality is much higher in Mexico (69.2 vs 16.6 /100,000 inhabitants) [5]. T2D has been increasing in Mexico since the 1980s and has become the leading cause of all-age mortality since 2000 [7]. Without having an average diet to examine for either group, it is be difficult to infer what specific lifestyle changes cause the increase in diabetes in Latinos. The affect of acculturation upon moving to the US has been mentioned in both the Barquera text, and the Health Issues in the Latino Community chapter written by Jose Alejandro Luchsinger, which is quoted as saying, Less acculturated Latinos were more likely to eat fruits, rice, beans, meat, fried foods, and whole milk than more acculturated Latinos. This change in diet attributed to acculturation, can be possibly connected to the ever-rising cost of living overall in the United States which creates a healthcare barrier for Latinos to avoid type 2 diabetes. Latinos born in the United States are born into a world of cheap unhealthy food, and even more food that advertises itself as healthy, but in reality, is no more nutritional than the alternative. The United States has also made efforts to help their Latino population diagnose and treat their diabetes with the National Diabetes Surveillance System. According to the United States Census Bureau official website, a population estimate for the year of 2017, published July 1st of that year, claimed that the total population of the United States was about 325,719,178 (about 325.7 million) people, and about 18.1% of the population are documented as Hispanic or Latino origin.[D] This 18.1% of Latinos are the population most likely to be acculturated into United States culture, and arguably the biggest contributor to diabetes in the United States culture is the Standard American Diet (SAD). The Standard American Diet (also called the Western Pattern Diet (WPD)) is described in The American Journal of Clinical Nutrition as, a modern dietary pattern that is generally characterized by high intakes of red meat, processed meat, pre-packaged foods, butter, fried foods, high-fat dairy products, eggs, refined grains, potatoes, corn (and High-fructose corn syrup) and high-sugar drinks.[E] The consumption of these processed, fried, and prepackaged foods results in weight gain, especially during early childhood, to the point of obesity and pre-diabetes. Research journals which support this thesis, published by their respective individuals Kant (2004), Drewnowski (2007), and Yang (2012), state the following in relation to consumption of foods in the Standard American Diet: [F, G, H] There is a positive correlation between a Western pattern diet and several plasma biomarkers that may be mediators of obesity, such as HDL cholesterol, fasting insulin, and leptin.[F] Relative to a diet high in fruits, vegetables, legumes, and fish, a Western diet is associated with increased risk of being overweight among adolescents.[H] Meta-analyses have also shown that, compared to a healthy diet, a Western pattern diet is linked to increased weight gain among females.[G] This affects acculturated Latinos who may already have a genetic predisposition to diabetes, as processed foods exist everywhere, even in food insecure areas. Fast food is cheap and convenient, and many fast food restaurants even have a lower-budget menu to service those families that have lower incomes. Many prepackaged foods sold in grocery stores are processed to point that the original components of the food had to be re-fortified with nutrients in order to be considered healthy. A healthy diet is no easier to attain; a healthy diet is defined by Lean (2015) and the World Health Organization (2004) as a diet that helps to maintain or improve overall health. A healthy diet provides the body with essential nutrition: fluid, macronutrients, micronutrients, and adequate calories.[L] and a healthy diet is not complicated and contains mostly fruits, vegetables, and whole grains, and includes little to no processed food and sweetened beverages.[K] So why arent Latinos buying these whole foods instead of processed foods? A possible explanation can be found in an online article written by Claypoole, in this article Claypoole explains that there is a price barrier that is at play: Produce is perishable. In fact, about 20 percent of all apples, oranges, lettuce and other fresh fruits and vegetables must be thrown away before even reaching shelves, according to Daily Finance. As a result, produce markups average 50 to 75 percent. Markup on products such as berries, which are easily bruised and have a short shelf life, may range even higher. And these price barriers to healthy food could be overcome, despite the markups many whole foods still remain affordable to those with even minimum wage paying jobs, however in the research journal published by Towers, there are also psychological barriers that have arisen Though the Latino participants found diet to be an important determinant of their risk for diabetes, they found their own diet to be less changeable than did their European American counterparts. The shared belief in the importance of diet accompanied by a difference in belief in the changeability of diet in their own lives suggests the presence of a perceived barrier to dietary changes specific to Latinos This effect can be magnified for Latinas, who have been cited as being less likely to make dietary changes to reduce diabetes risk in an effort not to inconvenience their families dietary habits (Carbone, Rosal, Torres, Goins, Bermudez, 2007). There is not as much immediately available information about the standard diet of Mexican people in Mexico, however the cost of living difference can allow one to infer that the majority of the immigrant population is most likely not making enough to eat take out every day. In an article written by Christopher Woody (2015), they explains that: The gap in wealth and in wages is visible across Mexicos economic strata. According to OECD figures, the countrys richest 10% earn more than 30 times what the poorest 10% make making it the most unequal of the organizations 34 countries. Mexicos bottom 20% doesnt make enough to eat three meals a day. That same year, the bottom 20% of Mexicans nearly 25 million people were worth an average of $80. Mexico has made multiple efforts on the national level to combat diabetes within the population, even giving its people who may not have healthcare opportunities as Barquera et al. (2018) explain, A number of national prevention policies have been implemented to curb the T2D epidemic in Mexico. Some of the more notable ones are 1) the 5 Pasos (Five Steps) national program in the 2006â€Å"2012 administration 2) the national healthy hydration recommendations, 3) healthy nutrition guidelines for the school environment, 4) a national agreement for healthy nutrition (2010), which subsequently became a national policy (2013), 5) the Ch ©cate, m ­dete, muvete (Check yourself, test yourself, and move) national program and 6) a national 10% excise tax on soda and sugar-sweetened beverages, which has been demonstrated to yield a substantial reduction in consumption and potential health benefits [8, 25â€Å"28]. The United States has also made efforts through to help Latinos overcome healthcare barriers and become more aware of diabetes and diagnosing those who may not know they already have the disease, as Barquera et al. (2018) go on to say: While not solely intended as a policy-level intervention to reduce the burden of T2D among Mexican-Americans, the Affordable Care Act (ACA) of 2010 (Obamacare) has made early diagnosis and management of T2D more accessible for Mexican-Americans in California. The first five years of the program yielded a reduction in the uninsured Hispanic-Americans from 26 to 16%. By comparison, among non-Hispanic whites, rates fell from 14 to 10% over the same time period. Conclusion The diabetes epidemic affects people on both sides of the border of the US and Mexico. While in the US there are multiple causes that require further examination, and preventative action by the United States government, the causes of diabetes in Mexico are not as clear. The most likely explanation is diet, and the Mexican government has taken multiple steps in creating programs to help their people become aware of what dietary patterns might be contributors to diabetes. Latinos who have become acculturated in the United States may have fallen into a pattern of eating unhealth foods, while not having access to health care. In response the US has made programs directed at Latinos such as the affordable care act in order to erase this barrier. References American Diabetes Association. Facts about Type 2. 2018 https://www.diabetes.org/diabetes-basics/type-2/facts-about-type-2.html?loc=db-slabnav Barquera, S., Schillinger, D., Aguilar-Salinas, C. A., Et Al. (2018). Collaborative Research and Actions on Both Sides of the US-Mexico Border to Counteract Type 2 Diabetes in People of Mexican Origin, 1-10. Retrieved October 07, 2018, from https://globalizationandhealth-biomedcentral-com.ezproxy1.lib.asu.edu/track/pdf/10.1186/s12992-018-0390-5. L., ,., Agne, A. A., A. K., Pavela, G., Carson, A. P., . . . Cherrington, A. L. ((2018)). Diabetes risk scores for Hispanics living in the United States: A systematic review. Diabetes Research and Clinical Practice, 142(120), 129th ser., 1-10. Retrieved October 09, 2018, from https://ac-els-cdn-com.ezproxy1.lib.asu.edu/S0168822717317643/1-s2.0-S0168822717317643-main.pdf?_tid=0384b858-9dff-4cea-9ab1-5bb9209b00afacdnat=1539135701_6c970405afabd1ddb7f26939f8679420. Towers, M. J. (n.d.). Evaluating Social Influence in Health: Diabetes Assessments among Latinos. Retrieved October 09, 2018, from https://repository.asu.edu/attachments/133379/content/Towers_M_Spring_2014.pdf Vital Signs Hispanic Health. (2015, May 05). Retrieved October 08, 2018, from https://www.cdc.gov/vitalsigns/hispanic-health/index.html Marilyn Aguirre-Molina;Carlos W. Molina;Ruth Enid Zambrana. Health Issues in the Latino Community (Public Health/Vulnerable Populations) (Kindle Location 30). Kindle Edition. D U.S. Census Bureau QuickFacts: UNITED STATES. (n.d.). Retrieved from https://www.census.gov/quickfacts/fact/table/US/PST045217 E Halton, Thomas L; Willett, Walter C; Liu, Simin; Manson, JoAnn E; Stampfer, Meir J; Hu, Frank B (2006). Potato and french fry consumption and risk of type 2 diabetes in women. The American Journal of Clinical Nutrition. 83 (2): 284â€Å"90. PMID 16469985 F Kant, Ashima K. (2004). Dietary patterns and health outcomes. Journal of the American Dietetic Association. 104 (4): 615â€Å"635. doi:10.1016/j.jada.2004.01.010. G Drewnowski, Adam (2007-01-01). The Real Contribution of Added Sugars and Fats to Obesity. Epidemiologic Reviews. 29 (1): 160â€Å"171. doi:10.1093/epirev/mxm011. ISSN 0193-936X. H Yang, Wai Yew; Williams, Lauren T; Collins, Clare; Swee, Chee Winnie Siew (2012). The relationship between dietary patterns and overweight and obesity in children of Asian developing countries: A Systematic Review. JBI Database of Systematic Reviews and Implementation Reports. 10 (58): 4568â€Å"4599. doi:10.11124/jbisrir-2012-407. I Cordain, Loren; Eaton, S. Boyd; Sebastian, Anthony; Mann, Neil; Lindeberg, Staffan; Watkins, Bruce A.; OKeefe, James H.; Brand-Miller, Janette (2005-02-01). Origins and evolution of the Western diet: health implications for the 21st century. The American Journal of Clinical Nutrition. 81 (2): 341â€Å"354. doi:10.1093/ajcn.81.2.341. ISSN 0002-9165. PMID 15699220. J Claypoole, Cheryl. (n.d.). How Do Supermarkets Determine Markup on Produce Cigarettes? Small Business Chron.com. Retrieved from https://smallbusiness.chron.com/supermarkets-determine-markup-produce-cigarettes-80905.html K Lean, Michael E.J. (2015). Principles of Human Nutrition. Medicine. 43 (2): 61â€Å"65. doi:10.1016/j.mpmed.2014.11.009. L World Health Organization, Food and Agricultural Organization of the United Nations (2004). Vitamin and mineral requirements in human nutrition (PDF) (2. ed.). Geneva: World Health Organization. ISBN 978-9241546126. M Woody, C. (2015, August 02). Mexicos wage crisis is so bad that it violates whats stipulated in the Constitution. Retrieved from https://www.businessinsider.com/mexicans-get-paid-less-for-their-work-than-any-other-developed-country-2015-7