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ORGANIZATIONAL BEHAVIORS T E P H E N P. R O B B I N SE L E V E N T H E D I T I O NW W W . P R E N H A L L . C O M / R O B B I N S

2005 Prentice Hall Inc. All rights reserved.PowerPoint Presentation by Charlie Cook

Chapter 5Perception and Individual Decision Making

After studying this chapter,you should be able to:Explain how two people can see the same thing and interpret it differently.List three determinants of attribution.Describe how shortcuts can assist in or distort our judgment of others.Explain how perception affects the decision-making process.Outline the six steps in the rational decision-making model.L E A R N I N G O B J E C T I V E S

After studying this chapter,you should be able to:Describe the actions of a boundedly rational decision maker.Identify the conditions in which individuals are most likely to use intuition in decision making.Describe four styles of decision making.Define heuristics and explain how they bias decisions.Contrast the three ethical decision criteria.L E A R N I N G O B J E C T I V E S (contd)

What Is Perception, and Why Is It Important?Peoples 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.PerceptionA process by which individuals organize and interpret their sensory impressions in order to give meaning to their environment.

Factors ThatInfluence PerceptionE X H I B I T 51

Person Perception: Making Judgments About OthersDistinctiveness: shows different behaviors in different situations.Consensus: response is the same as others to same situation.Consistency: responds in the same way over time.Attribution TheoryWhen individuals observe behavior, they attempt to determine whether it is internally or externally caused.

Attribution TheoryE X H I B I T 52

Errors and Biases in AttributionsFundamental Attribution ErrorThe tendency to underestimate the influence of external factors and overestimate the influence of internal factors when making judgments about the behavior of others.

Errors and Biases in Attributions (contd)Self-Serving BiasThe tendency for individuals to attribute their own successes to internal factors while putting the blame for failures on external factors.

Frequently Used Shortcuts in Judging OthersSelective PerceptionPeople selectively interpret what they see on the basis of their interests, background, experience, and attitudes.

Frequently Used Shortcuts in Judging OthersHalo EffectDrawing a general impression about an individual on the basis of a single characteristicContrast EffectsEvaluation of a persons characteristics that are affected by comparisons with other people recently encountered who rank higher or lower on the same characteristics.

Frequently Used Shortcuts in Judging OthersProjectionAttributing ones own characteristics to other people.StereotypingJudging someone on the basis of ones perception of the group to which that person belongs.

Specific Applications in OrganizationsEmployment InterviewPerceptual biases of raters affect the accuracy of interviewers judgments of applicants.Performance ExpectationsSelf-fulfilling prophecy (pygmalion effect): The lower or higher performance of employees reflects preconceived leader expectations about employee capabilities.Ethnic ProfilingA form of stereotyping in which a group of individuals is singled outtypically on the basis of race or ethnicityfor intensive inquiry, scrutinizing, or investigation.

Specific Applications in Organizations (contd)Performance EvaluationsAppraisals are often the subjective (judgmental) perceptions of appraisers of another employees job performance.Employee EffortAssessment of individual effort is a subjective judgment subject to perceptual distortion and bias.

The Link Between Perceptions and Individual Decision MakingPerception of the decision makerOutcomesProblem A perceived discrepancy between the current state of affairs and a desired state.Decisions Choices made from among alternatives developed from data perceived as relevant.

Assumptions of the Rational Decision-Making ModelModel AssumptionsProblem clarityKnown optionsClear preferencesConstant preferencesNo time or cost constraintsMaximum payoffRational Decision- Making ModelDescribes how individuals should behave in order to maximize some outcome.

Steps in the Rational Decision-Making ModelDefine the problem.Identify the decision criteria.Allocate weights to the criteria.Develop the alternatives.Evaluate the alternatives.Select the best alternative.E X H I B I T 53

The Three Components of CreativityCreativityThe ability to produce novel and useful ideas.Three-Component Model of CreativityProposition that individual creativity requires expertise, creative-thinking skills, and intrinsic task motivation.E X H I B I T 54Source: T.M. Amabile, Motivating Creativity in Organizations, California Management Review, Fall 1997, p. 43.

How Are Decisions Actually Made in OrganizationsBounded RationalityIndividuals make decisions by constructing simplified models that extract the essential features from problems without capturing all their complexity.

How Are Decisions Actually Made in Organizations (contd)How/Why problems are identifiedVisibility over importance of problemAttention-catching, high profile problemsDesire to solve problemsSelf-interest (if problem concerns decision maker)Alternative DevelopmentSatisficing: seeking the first alternative that solves problem.Engaging in incremental rather than unique problem solving through successive limited comparison of alternatives to the current alternative in effect.

Common Biases and ErrorsOverconfidence BiasBelieving too much in our own decision competencies.Anchoring BiasFixating on early, first received information.Confirmation BiasUsing only the facts that support our decision.Availability BiasUsing information that is most readily at hand.Representative BiasAssessing the likelihood of an occurrence by trying to match it with a preexisting category.

Common Biases and ErrorsEscalation of CommitmentIncreasing commitment to a previous decision in spite of negative information.Randomness ErrorTrying to create meaning out of random events by falling prey to a false sense of control or superstitions.Hindsight BiasFalsely believing to have accurately predicted the outcome of an event, after that outcome is actually known.

IntuitionIntuitive Decision MakingAn unconscious process created out of distilled experience.Conditions Favoring Intuitive Decision MakingA high level of uncertainty existsThere is little precedent to draw onVariables are less scientifically predictableFacts are limitedFacts dont clearly point the wayAnalytical data are of little useSeveral plausible alternative solutions existTime is limited and pressing for the right decision

Decision-Style ModelE X H I B I T 55Source: A.J. Rowe and J.D. Boulgarides, Managerial Decision Making, (Upper Saddle River, NJ: Prentice Hall, 1992), p. 29.

Organizational Constraints on Decision MakersPerformance EvaluationEvaluation criteria influence the choice of actions.Reward SystemsDecision makers make action choices that are favored by the organization.Formal RegulationsOrganizational rules and policies limit the alternative choices of decision makers.System-imposed Time ConstraintsOrganizations require decisions by specific deadlines.Historical PrecedentsPast decisions influence current decisions.

Cultural Differences in Decision MakingProblems selectedTime orientationImportance of logic and rationalityBelief in the ability of people to solve problemsPreference for collect decision making

Ethics in Decision MakingEthical Decision CriteriaUtilitarianismSeeking the greatest good for the greatest number.RightsRespecting and protecting basic rights of individuals such as whistleblowers.JusticeImposing and enforcing rules fairly and impartially.

Ethics in Decision MakingEthics and National CultureThere are no global ethical standards.The ethical principles of global organizations that reflect and respect local cultural norms are necessary for high standards and consistent practices.

Ways to Improve Decision MakingAnalyze the situation and adjust your decision making style to fit the situation.Be aware of biases and try to limit their impact.Combine rational analysis with intuition to increase decision-making effectiveness.Dont assume that your specific decision style is appropriate to every situation.Enhance personal creativity by looking for novel solutions or seeing problems in new ways, and using analogies.

Toward Reducing Bias and ErrorsFocus on goals.Clear goals make decision making easier and help to eliminate options inconsistent with your interests.Look for information that disconfirms beliefs.Overtly considering ways we could be wrong challenges our tendencies to think were smarter than we actually are.Dont try to create meaning out of random events.Dont attempt to create meaning out of coincidence.Increase your options.The number and diversity of alternatives generated increases the chance of finding an outstanding one.E X H I B I T 56Source: S.P. Robbins, Decide & Conquer: Making Winning Decisions and Taking Control of Your Life (Upper Saddle River, NJ: Financial Times/Prentice Hall, 2004), pp. 16468.