Chapter 6: Perception and Individual Decision Making

• Chapter focuses on perception and decision-making. Perception is how individuals organize and interpret sensory impressions to give meaning to their environment, and decision-making refers to choices made between two or more alternatives.

Employability Skills Matrix

• Includes skills such as Critical Thinking & Creativity, Communication, Collaboration, Self-Management, Social Responsibility, Leadership, and Career Management, all with direct relevance to the modern business.

Individual Intuition

• Richard Branson, Sir James Dyson, and Ella Woodward all made key business decisions based on intuition, and"gut feeling; however, analytical skills and knowledge also contributed to success.

What is Perception?

• Perceptions can lead to bias, especially when stereotyping others.
• People's behaviors and decisions are based on perceptions, not necessarily objective reality.
• Understand the factors influencing perception to understand interpretations of reality.

Factors That Influence Perception

• Factors that shape and distort perception reside in the perceiver, the target, or the situation.
• Perceiver: Interpretation is influenced by attitudes, personality, motives, interests, experiences, and expectations.
• Target: Characteristics also affect perception, including the relationship to a background or grouping similar things together.
• Context: The time at which an object or event is seen, as well as location, light, heat, or situational factors impacts perception.

Person Perception: Making Judgments About Others

• The perception concepts most relevant to organizational behavior are person perceptions, the perceptions people form about each other.
• Formed through first impressions and small cues.

Attribution Theory

• Tries to explain how individuals judge people differently based on the meaning attributed to their behavior.
• The determination of whether behavior is internally or externally caused depends on distinctiveness, consensus, and consistency.
• Behaviors that are internally caused an observer believes to be under the personal behavioral control of another individual.
• Externally caused behavior is what is imagined to be in place as a result of a situation that forced the individual to do it. Distinctiveness refers to whether an individual displays different behavior in different situations.
• Consensus: does everyone who faces a similar situation respond in the same way?
• Consistency: Does the person respond the same way over time?

Errors and Biases in Attribution

• When judging behavior, there is a tendency to underestimate the influence of external factors while overestimating internal or personal factors.
• Self-serving bias: The tendency to attribute successes to internal factors while blaming failures on external factors.
• Collectivist cultures are more likely to make external attributions.

Common Shortcuts in Judging Others

• Shortcuts for judging others allow perceptions to be made rapidly but can result in distortions.
• Selective perception involves choosing what to interpret based on interests, background, and motivation.
• The halo effect is drawing a positive impression based on a single characteristic, while the horns effect draws a negative one.
• Contrast effects occur when evaluating a person's characteristics, which is affected by comparisons with other people recently encountered.
• Stereotyping involves judging someone based on the perception of the group they belong to.

Specific Applications of Shortcuts in Organizations

• People in organizations are constantly judging each other.
• During Employment Interviews, interviewers form perceptual judgements that are often drawn from early impressions.
• People attempt to validate their perceptions of reality, even when faulty, which is referred to as self-fulfilling prophecy.
• Using social media to screen applicants can result in biased decision-making.

All Stereotypes Are Negative?

• Positive stereotypes affect performance when individuals feel pressure to conform.

The Link Between Perception and Individual Decision Making

• Decision-making is often subjective due to the influence of perceptions.
• Making decisions occurs as a reaction to a problem, requiring consideration of how to address the discrepancy.

Decision Making in Organizations

• Rational decision making characterized by making consistent, value-maximizing choices within specified constraints.
• Bounded rationality: individuals often operate within a simplified view of problems, making satisfactory rather than optimal decisions.
• Intuitive decision making relies on unconscious, distilled experience.

Common Biases and Errors in Decision Making

• Overconfidence bias: Being too confident about abilities can hinder effective decision-making.
• Anchoring bias: Fixating on initial information and failing to adjust for subsequent information.
• Confirmation bias: Seeking out information that reaffirms past choices while discounting contradictory information.
• Availability bias: Basing judgments on readily available information.
• Escalation of commitment: Tendency to persist with a decision, despite evidence it is wrong.
• Randomness error involves creating meaning out of random events.
• Risk aversion involves preferring a sure gain to a riskier outcome, even if the riskier one has a higher expected payoff.
• Hindsight bias: Believing falsely, after an outcome is known, that one would have accurately predicted it.
• Outcome bias: Judging the quality of a decision based on the desirability or believability of its outcome.

Influences on Decision Making: Individual Differences and Organizational Constraints

• Personality impacts decision-making strategies.
• Men are more prone to sensation seeking and risk-taking than women which dictates decision making patterns.
• Having a higher level of general mental ability also translates to efficient and quick decision-making.
• Organizational constraints can include performance evaluation systems, regulations, time constraints, and historical precedents.

Ethics in Decision Making

• Utilitarianism involves making decisions based on outcomes, providing the greatest good for all.
• Making decisions consistent with fundamental liberties and privileges.
• Enforcing regulations fairly and impartially to ensure justice.
• Behavioral ethics studies how people behave when confronted with ethical dilemmas.

Are We as Ethical as We Think We Are?

• To avoid misconduct, focus on raising awareness, communication consequences, encourage employees to, and create formal and informal misconduct protection systems.

Creativity, Creative Decision Making, and Innovation in Organizations

• There is a three-stage model of creativity. The core of creativity revolves around creative behavior.
• First, Problem formulation is identifying a problem or opportunity requiring a solution yet unknown.
• Secondly, Information gathering is where possible solutions to a problem incubate.
• Thirdly, Idea generation process develops possible solutions to a problem.
• Finally, Idea evaluation process evaluates potential solutions to identify the best one.