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After studying this chapter, you should be able

to:
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1. Define perception and explain the factors that

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influence it.
2. Identify the shortcuts individuals use in making
judgments about others.
PERCEPTION AND 3. Explain the link between perception and decision
making.
INDIVIDUAL DECISION 4. List and explain the common decision biases or errors.
MAKING 5. Contrast the three ethical decision criteria.
6. Define creativity and discuss the three-component
model of creativity.

Perception Why is perception important in the study of OB?

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A process by which individuals organize

and interpret their sensory impressions  Simply because people’s behavior is based on
in order to give meaning to their their perception of what reality is, not on reality
environment. itself.
The world as it is perceived is the world
that is behaviorally important.  The world as it is perceived is the world that is
behaviorally important.

 Factors influencing Perception  Factors influencing Perception

Factors in the perceiver Factors in the perceiver
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• Attitudes • Attitudes
• Motives • Motives
• Interests • Interests
• Experience • Experience
• Expectations • Expectations

Factors in the situation Factors in the situation

• Time Perception • Time Perception
• Work Setting • Work Setting
• Social Setting • Social Setting
Factors in the Target Factors in the Target
• Novelty • Novelty
• Motion • Motion
• Sounds • Sounds
• Size • Size
• Background • Background
• Proximity • Proximity
• Similarity • Similarity

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 Factors influencing Perception Person Perception: Making Judgments

Factors in the perceiver
About Others
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• Attitudes
• Motives
 The perception concepts most relevant to OB include
• Interests
• Experience person perceptions, or the perceptions people form
• Expectations about each other.
Factors in the situation
• Time Perception
• Work Setting
 Many of our perceptions of others are formed by first
• Social Setting impressions and small cues that have little
Factors in the Target supporting evidence.
• Novelty
• Motion
• Sounds
• Size  This is particularly troublesome but common when
• Background we infer another person’s morality.
• Proximity
• Similarity

Person Perception: Attribution Theory

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 Attribution theory tries to explain the ways we judge Suggests that when we observe an individual’s behavior,
people differently, depending on the meaning we we attempt to determine whether it was internally or
attribute to a behavior. externally caused:

 Internal – behavior is believed to be under the personal behavioral

 For instance, consider what you think when people smile at you. control of another individual
 We assign meaning to smiles and other expressions in many different
way  External –the person is forced into the behavior by outside
events/causes

 Attribution theory suggests that when we observe an  Example: If an employee is late for work, you might attribute that to
individual’s behavior, we attempt to determine his overnight partying and subsequent oversleeping. This is an
internal attribution. But if you attribute his lateness to traffic, you are
whether it was internally or externally caused. making an external attribution
determination depends largely on the following three
factors:

Determinants of Attribution Determination of Attribution

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Distinctiveness refers to whether an individual

displays different behaviors in different
situations. (the uniqueness of the act)
Consensus – does everyone who faces a similar
situation respond in the same way as the
individual did
Consistency – does the person respond the same way
over time

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Attribution Errors Shortcuts Used in Judging Others

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 Selective Perception – a perceptual filtering process

based on interests, background, and attitude. May allow
 Fundamental Attribution Error observers to draw unwarranted conclusions from an
The tendency to underestimate the influence of external ambiguous situation.
factors and overestimate that of internal factors.
 Halo Effect – drawing a general impression based on a
single characteristic.
 Self-Serving Bias
 Contrast Effects – our reaction is influenced by others
Occurs when individuals overestimate their own (internal) we have recently encountered (the context of the
influence on successes and overestimate the external observation).
influences on their failures.
 Stereotyping – judging someone on the basis of the
perception of the group to which they belong.

Specific Applications in Organizations Specific Applications in Organizations (cont’d)

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 Employment Interview  Performance Evaluations

 Perceptual biases of raters affect the accuracy of interviewers’
 Appraisals are often the subjective (judgmental) perceptions of
judgments of applicants.
appraisers of another employee’s job performance.
 Performance Expectations
 Self-fulfilling prophecy: The lower or higher performance of  Employee Effort
employees reflects preconceived leader expectations about employee
 Assessment of individual effort is a subjective judgment
capabilities.
subject to perceptual distortion and bias.
 Ethnic Profiling
 A form of stereotyping in which a group of individuals is singled
out—typically on the basis of race or ethnicity—for intensive inquiry,
scrutinizing, or investigation.

Decision Making in Organizations

The Link Between Perception and Decision Making
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Decision making occurs as a reaction to a Rational Decision-Making Model

perceived problem
1. Define the problem.
 Perception influences: 2. Identify the decision criteria.
 Awareness that a problem exists 3. Allocate weights to the criteria.
 The interpretation and evaluation of information
4. Develop the alternatives.
 Bias of analysis and conclusions
5. Evaluate the alternatives.
6. Select the best alternative.
Seldom actually used: more of a goal than a practical
method

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Assumptions of the Model Bounded Rationality

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 Complete knowledge of the situation The limited information-processing capability of

 All relevant options are known in an unbiased human beings makes it impossible to assimilate and
manner understand all the information necessary to optimize
 The decision-maker seeks the highest utility
So people seek solutions that are satisfactory and
sufficient, rather than optimal
Bounded rationality is constructing simplified
models that extract the essential features from
problems without capturing all their complexity

Decision Making in Bounded Rationality Intuitive Decision Making

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Simpler than rational decision making, composed of

three steps:  A non-conscious process created
out of distill experience
1. Limited search for criteria and alternatives – familiar
 Increases with experience
criteria and easily found alternatives
2. Limited review of alternatives – focus alternatives, similar  Can be a powerful complement to
to those already in effect rational analysis in decision
3. Satisficing – selecting the first alternative that is “good making
enough”

Common Biases and Errors Common Biases and Errors

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 Overconfidence Bias  Availability Bias

As managers and employees become more knowledgeable The tendency to base judgments on information that is
about an issue, the less likely they are to display readily available
overconfidence
 Escalation of Commitment
 Anchoring Bias
A tendency to fixate on initial information and fail to Staying with a decision even when there is clear evidence
adequately adjust for subsequent information that it is wrong

 Confirmation Bias  Hindsight Bias

Seeking out information that reaffirms our past choices The tendency to believe falsely that we could have
and discounting information that contradicts past accurately predicted the outcome of an event after that
judgments outcome is already known

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Influences on Decision Making: Individual Influences on Decision Making: Individual

Differences and Organizational Constraints Differences and Organizational Constraints
Individual Differences Individual Differences

Personality Conscientiousness may affect escalation of commitment

Employees with high level of mental ability are quick, more able to solve
Mental Ability problems, learn faster

Achievement strivers are likely to increase commitment

Still the fall in errors like anchoring bias, overconfidence, and escalation of
commitment

Dutiful people are less likely to have this bias

But they are better able to avoid logical errors

High self-esteem people are susceptible to self-serving bias

There are probably important cultural differences in decision making, but not
Cultural Differences yet much research to identify them
Gender Women analyze decisions more than men
Cultures differ in their time orientation, the importance of rationality, their
belief in the ability of people to solve problems, and their preference for
Women are twice as likely to develop depression collective decision making.
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Organizational Constraints on Decision Makers Ethical Frameworks for Decision Making

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 Performance Evaluation Utilitarian

 Evaluation criteria influence the choice of actions.  Provide the greatest good for the
 Reward Systems greatest number
 Decision makers make action choices that are favored by the Rights
organization.
 make decisions consistent with
 Formal Regulations
 Organizational rules and policies limit the alternative choices of
fundamental liberties and
decision makers. privileges
 System-imposed Time Constraints Justice
 Organizations require decisions by specific deadlines.  impose and enforce rules fairly
 Historical Precedents and impartially so that there is
 Past decisions influence current decisions. equal distribution of benefits and
costs
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Creativity in Decision Making

What About Ethics in Decision Making? 3-
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Three Ethical Decision Criteria The ability to produce novel and

useful ideas
Utilitarianism Decisions made based solely on the outcome
 Helps people to:
Promotes efficiency and Can ignore individual rights,
productivity especially minorities  Better understand the problem
 See problems others can’t see
Rights Decisions consistent with fundamental liberties and privileges  Identify all viable alternatives

 Identify alternatives that aren’t

Protects individuals from harm, Creates an overly legalistic work
preserves rights environment readily apparent

Justice Imposing and enforcing rules fairly and impartially

Protects the interests of weaker 29

Encourages a sense of entitlement
members

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Creative behavior occurs in four steps, Intelligence and Creativity

 Intelligence is related to creativity. Smart people are more creative
because they are better at solving complex problems.
1. Problem formulation. Any act of creativity begins with a problem
that the behavior is designed to solve. Thus, problem formulation is  Intelligent individuals may also be more creative because they have
the stage of creative behavior in which we identify a problem or greater “working memory,” that is, they can recall more information
opportunity that requires a solution as yet unknown related to the task at hand.
 Along the same lines, recent research in the indicates that an
2. Information gathering is the stage of creative behavior when individual’s high need for cognition (desire to learn) is correlated with
knowledge is sought and possible solutions to a problem incubate in greater creativity
an individual’s mind. Information gathering leads us to identifying
innovation opportunities. Personality and Creativity
 The Big Five personality trait of openness to experience correlates
3. Idea generation. Idea generation is the process of creative with creativity, probably because open individuals are less conformist
behavior in which we develop possible solutions to a problem from in action and more divergent in thinking.
relevant information and knowledge. Sometimes we do this alone,  Other traits of creative people include proactive personality, self-
when tricks like taking a walk confidence, risk taking, tolerance for ambiguity, and perseverance.
and doodling can jumpstart the process
 Research in China suggests that people with high core self-evaluations
are better able than others to maintain creativity in negative
4. Thus, idea evaluation is the process of creative behavior in which situations
we evaluate potential solutions to identify the best one. Sometimes the
method of choosing can be innovative.

Expertise and Creativity Creative environment

 Expertise is the foundation for all creative work and thus is the Most of us have creative potential we can learn to apply, but
single most important predictor of creative potential. as important as creative potential is, by itself it is not enough.
 The potential for creativity is enhanced when individuals have
abilities, knowledge, proficiencies, and similar expertise to their We need to be in an environment where creative potential can
field of endeavor. be realized. What environmental factors affect whether
creative potential translates into creative behaviors?
 The expertise of others is important, too. People with larger social • First and perhaps most important is motivation. If you are not motivated
networks have greater exposure to diverse ideas and informal to be creative, it is unlikely you will be.
access to the expertise and resources of others. • It is also valuable to work in an environment that rewards and recognizes
creative work.
• You may be wondering about the link between organizational resources
and creativity. While it is said that “necessity is the mother of invention,”
Ethics and Creativity recent research indicates that creativity can be inspired by an abundance
ofresources as well
 Although creativity is linked to many desirable individual
• Some cultures are more creative on average and there is always strong
characteristics, it is not correlated with ethicality. variation within cultures
• Good leadership matters to creativity too
 People who cheat may actually be more creative than those who
behave ethically, according to recent research.
 It may be that dishonesty and creativity can both stem from a rule-
breaking desire

Three-Component Model of Creativity

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Creative Outcome
 creative outcomes as ideas or solutions judged to be
novel and useful by relevant stakeholders. Expertise
 Novelty itself does not generate a creative outcome if it
isn’t useful.
 Thus, “off-the-wall” solutions are creative only if they
help solve the problem.
 The usefulness of the solution might be self-evident, or it Creative- Intrinsic
might be considered successful by only the stakeholders Thinking Task
initially Skills Motivation

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Global Implications
Creativity in Decision Making 3-
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The Three-Component Model of Creativity

Attributions:
Expertise This is the foundation  Cross-cultural differences exist – especially in
collectivist traditions
Creative-
Thinking Skills
The personality characteristics associated with creativity
Decision Making:
Intrinsic Task
The desire to do the job because of its characteristics
 Cultural background of the decision maker can
Motivation
have significant influence on decisions made
Ethics:
International Differences  No global ethical standards exist
 Need organizational-level guidance
There are no global ethical standards
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Implications for Managers Keep in Mind…

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Perception: 1. People have inherent biases in perception

 To increase productivity, influence workers’ and decision making
perceptions of their jobs  Understanding those biases allows for better prediction
of behavior
To improve decision making: 2. Biases can be helpful
1. Analyze the situation  Managers must determine when the bias may be
counterproductive
2. Adjust your decision approach
3. Be aware of biases and minimize their impact 3. Creativity aids in decision making
 Helps to appraise, understand, and identify problems
4. Combine rational analysis with intuition
5. Try to enhance your creativity