Management, Organizational Policies & Practices Lecture 16 Dr. Amna Yousaf PhD (HRM) University of...

Management, Organizational Policies & Practices

Lecture 16Dr. Amna Yousaf

PhD (HRM)University of Twente, the

Netherlands

Recap Lecture 15• What is personality and personality traits?• Measuring Personality• Determinants of Personality• The Myers-Briggs Type Indicator• Big-Five Personality Traits• Personality Traits and outcomes• Core self-evaluations• Other personality traits

– Self-Monitoring– Risk-Taking– Type A and Type B personality– Proactive Personality– Self-Efficacy– Political Skills

• Person-Job Fit

Perception and Individual Decision Making

Lecture 16

Lecture Outline (1)• What Is Perception, and Why Is It Important?• Factors That Influence Perception• Attribution Theory• Errors and Biases in Attributions• Frequently Used Shortcuts in Judging Others

– Selective Perception– Halo Effect– Contrast effect– Projection– Stereotyping

• Specific Applications in Organizations– Employment Interview– Performance Expectations– Ethnic Profiling– Performance Evaluations

Lecture Outline (2)• The Link Between Perceptions and Individual Decision Making• Assumptions of the Rational Decision-Making Model• The Three Components of Creativity• How Are Decisions Actually Made in Organizations?• Common Biases and Errors• Intuition• Individual Differences in Decision Making• Organizational Constraints on Decision Making• Cultural Differences in Decision Making• Ethics and Decisions Making • Ways to Improve Decision Making• Toward Reducing Bias and Errors

© 2007 Prentice Hall Inc. All rights reserved.

What Is Perception, and Why Is It Important?

•People’s behavior is based on their perception of what reality is, not on reality itself.

•The world as it is perceived is the world that is behaviorally important.

•People’s behavior is based on their perception of what reality is, not on reality itself.

•The world as it is perceived is the world that is behaviorally important.

Perception

A process by which individuals organize and interpret their sensory impressions in order to give meaning to their environment.


Factors ThatInfluence

Perception

E X H I B I T 5–1

E X H I B I T 5–1


Person Perception: Making Judgments About Others

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.

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

When individuals observe behavior, they attempt to determine whether it is internally or externally caused.


Attribution TheoryE X H I B I T

5–2

E X H I B I T 5–2


Errors and Biases in AttributionsFundamental 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. In general, we tend

to blame the person first, not the situation.


Errors and Biases in Attributions (cont’d)Self-Serving Bias

The tendency for individuals to attribute their own successes to internal factors while putting the blame for failures on external factors.

Thought: When student gets an “A” on an exam, they often say they studied hard. But when they don’t do well, how does the self serving bias come into play?

Hint: Whose fault is it usually when an exam is “tough”?


Frequently Used Shortcuts in Judging Others

Selective Perception

People selectively interpret what they see on the basis of their interests, background, experience, and attitudes.

Research on 23 business executives

Car colors



Halo Effect

Drawing a general impression about an individual on the basis of a single characteristic

Former CEO of HP

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

Job interviews



Stereotyping

Judging someone on the basis of one’s perception of the group to which that person belongs. Gender, age, ethnicity etc

Asian people hardworking

Older people cant learn skills

Men cant do child care


Specific Applications in Organizations

• Employment Interview– Perceptual biases of raters affect the accuracy of

interviewers’ judgments of applicants. Women cant sit late• Performance Expectations

– Self-fulfilling prophecy (Pygmalion effect): The lower or higher performance of employees reflects preconceived leader expectations about employee capabilities.

• 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.


Specific Applications in Organizations (cont’d)

• Performance Evaluations– Appraisals are often the subjective (judgmental)

perceptions of appraisers of another employee’s job performance.

– Especially where performance is not objective, selection bias, stereo typing contrast and halo effect are expected


The Link Between Perceptions and Individual Decision Making

Perception of the decision

maker

Perception of the decision

maker

Outcomes

ProblemA perceived discrepancy between the current state of affairs and a desired state.

DecisionsChoices made from among alternatives developed from data perceived as relevant.


Assumptions of the Rational Decision-Making Model

Model Assumptions• Problem clarity• Known options• Clear preferences• Constant preferences• No time or cost

constraints• Maximum payoff

Model Assumptions• Problem clarity• Known options• Clear preferences• Constant preferences• No time or cost

constraints• Maximum payoff

Rational Decision-Making Model

Describes how individuals should behave in order to maximize some outcome.


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.

E X H I B I T 5–3

E X H I B I T 5–3


The Three Components of CreativityCreativity

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. E X H I B I T

5–4

E X H I B I T 5–4Source: T.M. Amabile, “Motivating Creativity in Organizations,” California Management Review, Fall 1997, p. 43.


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.


Common Biases and Errors• Overconfidence Bias

– Believing too much in our own ability to make good decisions. • Belief that 100% right is actually only 75 to 80.• Study in US…

• Anchoring Bias– Using early, first received information as the basis for making

subsequent judgments.• Business versus economy• Anchoring previous salary as negotiation point

• Confirmation Bias– Using only those facts that support our pre established

decision/beliefs/arguments/approaches.


Common Biases and Errors• Availability Bias– Using information that is most readily at hand.• Recent • Vivid– Security locks in US

• Winner’s Curse– Highest bidder pays too much– Likelihood of “winner’s curse” increases with the number

of people overbidding in auction.


Common Biases and Errors

• Escalation of Commitment– In spite of new negative information, commitment actually increases!

• Managers tend to support their prior decisions

• Randomness Error– Creating meaning out of random events. Superstitious beliefs such as

don’t go out on Friday..

• Hindsight Bias– Looking back, once the outcome has occurred, and believing that you

could accurately predict the outcome of an event - it was most likely occurrence.


Intuition

• Intuitive Decision Making– An unconscious process created out of distilled experience.

• 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


Individual Differences in Decision Making

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

Personality Aspects of conscientiousness; dutifulness and

achievement striving and escalation of commitment.

Self Esteem positively related to self serving bias Gender

Rumination: Women tend to analyze decisions more than men.


Organizational Constraints on Decision Makers

• Performance Evaluation– Evaluation criteria influence the choice of actions.

• Reward Systems– Decision makers make action choices that are favored by the

organization.• Formal Regulations

– Organizational rules and policies limit the alternative choices of decision makers.

• System-imposed Time Constraints– Organizations require decisions by specific deadlines.

• Historical Precedents– Past decisions influence current decisions.


Cultural Differences in Decision Making

• Problems selected• Time orientation• Importance of logic and rationality• Belief in the ability of people to solve

problems• Preference for collective decision making


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.


Ethics in Decision Making

• 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.


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.


Toward Reducing Bias and Errors

• Focus on goals.– Clear goals make decision making easier and help to eliminate

options inconsistent with your interests.• Look for information that disconfirms beliefs.

– Overtly considering ways we could be wrong challenges our tendencies to think we’re smarter than we actually are.

• Don’t try to create meaning out of random events.– Don’t attempt to create meaning out of coincidence.

• Increase your options.– The number and diversity of alternatives generated increases

the chance of finding an outstanding one.E X H I B I T

5–5

E X H I B I T 5–5

Source: S.P. Robbins, Decide & Conquer: Making Winning Decisions and Taking Control of Your Life (Upper Saddle River, NJ: Financial Times/Prentice Hall, 2004), pp. 164–68.


It’s your little sister’s senior Prom night, and she notices

that everyone is wearing the same dress she has on!

Which perceptual shortcut may be occurring?

• Escalation of commitment • Representative bias• Availability Bias • Hindsight Bias

Chapter Check-Up: Perception


It’s your little sister’s senior Prom night, and she notices that everyone is

wearing the same dress she has on! Which perceptual shortcut may be

occurring?


• Escalation of commitment • Representative bias• Availability Bias

• Hindsight Bias

Discuss with your neighbor what the answer would be if your sister

came home and said “I just knew that everyone would buy that dress!”


If all of these perceptual shortcuts

happen unconsciously, how can we

keep the stereotypes we have from

interfering with the way we work in

group projects? Identify two specific

things you could do to help prevent

stereotypes from inhibiting effective

group relationships. Discuss with a

neighbor.



Michael has just discovered he is double registered for two classes at

the same time and must make a decision about which one to take this

semester. He considers the professor teaching this semester, the time

of the class, and the classes his friends are taking. He then considers

his options for when he can take each class again, as well as the costs

and benefits for taking each this semester versus later next year. He

then makes his decision. Michael has just engaged in what?

Chapter Check-Up: Decision Making


In making his decision, Michael forgot to consider the implications of the color of paint in the room where each class was being offered. Given that room color can influence mood, which can influence performance, why didn’t Michael consider it?



Michael engaged in the

rational decision making model,

and didn’t consider the paint color of the rooms because he operates under the

confines of

bounded rationality.



Chapter Checkup: What biases might have affected Martha Stewart’s judgment?

Discuss with a classmate.

Thank You


Management, Organizational Policies & Practices Lecture 16 Dr. Amna Yousaf PhD (HRM) University of...

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