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

2. 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.

3. 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

4. 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

5. 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.

6. 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

8. 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

9. 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

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

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

12. 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

13. 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

14. 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

15. 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.

16. 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

17. 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.

18. 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

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

20. 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

21. 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.

22. 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”

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

24. 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.

25. 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

26. 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.

27. 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

28. 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

29. 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

30. 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

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

32. 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.

33. 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

34. 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

35. 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?

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

37. 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

38. 3 Sections
Section A – MCQ
[15 marks]
Section B – Case Study
[25 marks]
Section C – Structured Questions
[60 marks]