eleventh edition organizational behavior 2005 Prentice Hall Inc

Chapter 3 Part II Perception and Individual Decision Making “The link between Perception and Individual Decision Making” ORGANIZATIONAL BEHAVIOR S T E P H E N P. R O B B I N S E L E V E N T H © 2005 Prentice Hall Inc. All rights reserved. E D I T I O N WWW. PRENHALL. COM/ROBBINS Power. Point Presentation by Charlie Cook

Highlights of the Previous Lecture No. 3 Ø Ø Ø Perception and why it is important Factors Influencing Perception(Perceiver, Target, Situation) Person Perception (Attribution Theory) Errors and Biases in Attributions Self-Serving Bias Selective Perception (interest, background, Experience & Attitude) Ø Frequently Used Shortcuts in Judging Others (Halo, Contrast, Projection & Stereotyping Affects) Ø Specific Application in Organizations (Employee Interviews, performance Expectations, Ethnic Profiling, Performance Evaluation, Employee Efforts) © 2005 Prentice Hall Inc. All rights reserved. 5– 2

OBJECTIVES LEARNING After studying this chapter 3 Part II, you should be able to: 1. Explain how two people can see the same thing and interpret it differently. 2. List three determinants of attribution. 3. Describe how shortcuts can assist in or distort our judgment of others. 4. Explain how perception affects the decisionmaking process. 5. Outline the six steps in the rational decisionmaking model. © 2005 Prentice Hall Inc. All rights reserved. 5– 3

O B J E C T I V E S (cont’d) LEARNING After studying this chapter, you should be able to: 6. Describe the actions of a boundedly rational decision maker. 7. Identify the conditions in which individuals are most likely to use intuition in decision making. 8. Describe four styles of decision making. 9. Define heuristics and explain how they bias decisions. 10. Contrast the three ethical decision criteria. © 2005 Prentice Hall Inc. All rights reserved. 5– 4

The Link Between Perceptions and Individual Decision Making Problem 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. Perception of the decision maker Outcomes © 2005 Prentice Hall Inc. All rights reserved. 5– 5

Assumptions of the Rational Decision-Making Model Rational Decision. Making Model Describes how individuals should behave in order to maximize some outcome. Model Assumptions • Problem clarity • Known options • Clear preferences • Constant preferences • No time or cost constraints • Maximum payoff © 2005 Prentice Hall Inc. All rights reserved. 5– 6

Steps in the Rational Decision-Making Model 1. Define the problem. 2. Identify the decision criteria. 3. Allocate weights to the criteria. 4. Develop the alternatives. 5. Evaluate the alternatives. 6. Select the best alternative. © 2005 Prentice Hall Inc. All rights reserved. E X H I B I T 5– 3 5– 7

The Three Components of Creativity The ability to produce novel and useful ideas. Three-Component Model of Creativity Proposition that individual creativity requires expertise, creative-thinking skills, and intrinsic task motivation. © 2005 Prentice Hall Inc. All Source: T. M. Amabile, “Motivating Creativity in Organizations, ” California Management Review, Fall 1997, p. 43. rights reserved. E X H I B I T 5– 4 5– 8

How Are Decisions Actually Made in Organizations Bounded Rationality Individuals make decisions by constructing simplified models that extract the essential features from problems without capturing all their complexity. © 2005 Prentice Hall Inc. All rights reserved. 5– 9

How Are Decisions Actually Made in Organizations (cont’d) Ø How/Why problems are identified – Visibility over importance of problem • Attention-catching, high profile problems • Desire to “solve problems” – Self-interest (if problem concerns decision maker) Ø Alternative Development – Satisficing: 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. © 2005 Prentice Hall Inc. All rights reserved. 5– 10

Common Biases and Errors Ø Overconfidence Bias – Believing too much in our own decision competencies. Ø Anchoring Bias – Fixating on early, first received information. Ø Confirmation Bias – Using only the facts that support our decision. Ø Availability Bias – Using information that is most readily at hand. Ø Representative Bias – Assessing the likelihood of an occurrence by trying to match it with a preexisting category. © 2005 Prentice Hall Inc. All rights reserved. 5– 11

Common Biases and Errors Ø Escalation of Commitment – Increasing commitment to a previous decision in spite of negative information. Ø Randomness Error – Trying to create meaning out of random events by falling prey to a false sense of control or superstitions. Ø Hindsight Bias – Falsely believing to have accurately predicted the outcome of an event, after that outcome is actually known. © 2005 Prentice Hall Inc. All rights reserved. 5– 12

Intuition Ø Intuitive Decision Making – An unconscious process created out of distilled experience. Ø Conditions Favoring Intuitive Decision Making – – – – A high level of uncertainty exists There is little precedent to draw on Variables are less scientifically predictable “Facts” are limited Facts don’t clearly point the way Analytical data are of little use Several plausible alternative solutions exist Time is limited and pressing for the right decision © 2005 Prentice Hall Inc. All rights reserved. 5– 13

Decision-Style Model Source: A. J. Rowe and J. D. Boulgarides, Managerial Decision © 2005 Prentice Hall Inc. All Making, (Upper Saddle River, NJ: Prentice Hall, 1992), p. 29. rights reserved. E X H I B I T 5– 5 5– 14

Organizational Constraints on Decision Makers Ø Performance Evaluation – Evaluation criteria influence the choice of actions. Ø Reward Systems – Decision makers make action choices that are favored by the organization. Ø Formal Regulations – Organizational rules and policies limit the alternative choices of decision makers. Ø System-imposed Time Constraints – Organizations require decisions by specific deadlines. Ø Historical Precedents – Past decisions influence current decisions. © 2005 Prentice Hall Inc. All rights reserved. 5– 15

Cultural Differences in Decision Making Ø Ø Ø Problems selected Time orientation Importance of logic and rationality Belief in the ability of people to solve problems Preference for collect decision making © 2005 Prentice Hall Inc. All rights reserved. 5– 16

Ethics in Decision Making Ø Ethical Decision Criteria – Utilitarianism • Seeking the greatest good for the greatest number. – Rights • Respecting and protecting basic rights of individuals such as whistleblowers. – Justice • Imposing and enforcing rules fairly and impartially. © 2005 Prentice Hall Inc. All rights reserved. 5– 17

Ethics in Decision Making Ø Ethics and National Culture – There 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. © 2005 Prentice Hall Inc. All rights reserved. 5– 18

Ways to Improve Decision Making 1. Analyze the situation and adjust your decision making style to fit the situation. 2. Be aware of biases and try to limit their impact. 3. Combine rational analysis with intuition to increase decision-making effectiveness. 4. Don’t assume that your specific decision style is appropriate to every situation. 5. Enhance personal creativity by looking for novel solutions or seeing problems in new ways, and using analogies. © 2005 Prentice Hall Inc. All rights reserved. 5– 19