HND – 6. Perception & Individual Decision Making Lim Sei Kee @ cK

Perception 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.

Perception Perception is the process by which individuals make sense of their world. Individuals may look at the same thing, yet perceive it differently. Differences in perceptions can cause problems Communication Conflict Motivation Judgment Decision Making

FACTORS IN THE PERCEIVER FACTORS IN THE SITUATION Attitudes Motives Interests Experience Expectations FACTORS IN THE TARGET Motion Sounds Size Background Similarity PERCEPTION FACTORS IN THE SITUATION Time Work setting Social setting

Making Judgments About Others Attribution Theory When individuals observe behavior, they attempt to determine whether it is internally or externally caused. 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.

Attribution Theory Suggests that perceivers try to “attribute” the observed behavior to a type of cause: Internal – behavior is believed to be under the personal control of the individual External –the person is forced into the behavior by outside events/causes

Errors and Biases in Attributions 1. Fundamental attribution error The tendency to underestimate the influence of external factors and overestimate the influence of internal factors when making judgments about the behavior of others. The tendency to attribute others' bad performance to internal causes & Attribute their good performance to external causes

Errors and Biases in Attributions 2. Self-serving bias The tendency for individuals to attribute their own successes to internal factors while putting the blame for failures on external factors. attribute successes to ourselves – internal attribute failures to the environment – external

Shortcuts in judging others Selective perception Halo effect Contrast effect Projection Stereotyping

Frequently Used Shortcuts in Judging Others Selective Perception People selectively interpret what they see on the basis of their interests, background, experience, and attitudes.

Frequently Used Shortcuts in Judging Others Halo Effect Drawing a general impression about an individual on the basis of a single characteristic Contrast Effects Evaluation of a person’s 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 Others Projection Attributing one’s own characteristics to other people Stereotyping Judging someone on the basis of one’s perception of the group to which that person belongs

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

Rational decision-making process Making consistent, value-maximizing choices within specified constraints. Rational decision-making model – a decision-making model that describes how individuals should behave in order to maximize some outcome.

Assumptions of the 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

Steps in the Rational Decision-Making Model Define the problem. Identify the decision criteria. Allocate weights to the criteria. Develop the alternatives. Evaluate the alternatives. Select the best alternative.

Creativity in Decision Making The ability to produce novel and useful ideas Helps people to: Better understand the problem See problems others can’t see Identify all viable alternatives Identify alternatives that aren’t readily apparent

Three-Component Model of Creativity Expertise Intrinsic Task Motivation Creative-Thinking Skills

Three-component model of creativity Proposes that individual creativity requires expertise, creative-thinking skills and intrinsic task motivation Expertise – foundation for all creative work Creative-thinking skills – personality characteristics associated with creativity. Intrinsic task motivation - desire to work on something

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.

Decision Making in Bounded Rationality Simpler than rational decision making, composed of three steps: Limited search for criteria and alternatives – familiar criteria and easily found alternatives Limited review of alternatives – focus alternatives, similar to those already in effect Satisficing – selecting the first alternative that is “good enough”

Common Biases and Errors Overconfidence bias Anchoring bias Confirmation bias Availability bias Representative bias Escalation of Commitment bias Randomness Error Hindsight bias

Overconfidence bias; Anchoring bias Believing too much in our own ability to make good decisions ‘no problem in judgment and decision making’ Anchoring Bias Using early, first received information as the basis for making subsequent judgments a tendency to fixate on initial information as a starting point.

Confirmation bias; Availability bias Using only the facts that support our decision a specific case of selective perception; we seek out information that reaffirms our past choices, and we discount information that contradicts past judgments Availability Bias Using information that is most readily at hand the tendency for people to base their judgments on information that is readily available to them

Representative bias; Escalation of Commitment bias Assessing the likelihood of an occurrence by trying to match it with a preexisting category using only the facts that support our decision Escalation of Commitment In spite of new negative information, commitment actually increases Increasing commitment to a previous decision in spite of negative information.

Randomness Error; Hindsight bias Creating meaning out of random events difficulty dealing with chance. Hindsight Bias Looking back, once the outcome has occurred, and believing that you accurately predicted the outcome of an event Hindsight = ability to see, after the event, what should have been done

Intuitive Decision Making An non-conscious process created out of distilled experience Increases with experience Can be a powerful complement to rational analysis in decision making

Intuition Eight conditions for intuitive decision making – When high level of uncertainty exists When there is little precedent to draw on When variables are less scientifically predictable When ‘facts’ are limited When facts don’t clearly point the way When analytical data are of little use When there are several plausible alternative solutions from which to choose When time is limited and there is pressure

Decision making style Directive – low tolerance for ambiguity and seek rationality Analytic – greater tolerance for ambiguity Conceptual – tend to use data from multiple sources and consider many alternatives Behavioral – strong concern for the people in the organization and their development

Decision-Style Model Source: A.J. Rowe and J.D. Boulgarides, Managerial Decision Making, (Upper Saddle River, NJ: Prentice Hall, 1992), p. 29.

Ethics in Decision Making 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.

Ethical Decision Criteria @ Utilitarianism √ Promotes efficiency and productivity X Sideline the rights of some individuals @ Rights √ Protects individuals from injury and is consistent with freedom and privacy X It can create a legalistic environment that hinders productivity and efficiency

Ethical Decision Criteria @ Justice √ Protects the interests of the underrepresented and less powerful X It encourages a sense of entitlement that reduces risk taking, innovation, and productivity

Presentation Q 1. Define perception. 2. What is attribution theory? What are its implications for explaining organizational behavior? 3. How does selectivity affect perception? Give an example of how selectivity can create perceptual distortion. 4. What is the rational decision-making model? Under what conditions is it applicable?

People & Organization Phase Test 1 2nd December 2014 Tuesday, 2 PM  5PM CHAPTER 1 TO CHAPTER 7 3 SECTIONS

1. Introduction to P&O 2. Diversity in Organizations 3. Attitudes & Job Satisfaction 4. Motivation 5. Motivation: From Concepts to Applications 6. Perception & Individual Decision Making 7. Communication

3 Sections Section A – MCQ [15 marks] Section B – Case Study [25 marks] Section C – Structured Questions [60 marks]