3 Perception and Individual Decision Making Chapter 5Muslims are terrorist!Hindus are transferring assets to IndiaAborigines make trouble……..Perception andIndividual Decision Making
4 What Is Perception, and Why Is It Important? People’s behavior is based on their perception of what reality is, not on (objective) reality itself.RealityBehaviorA great org. to work for
5 Factors Influencing Perception PersonalCharacteristicsContextRelationship to background-GroupingShapeDistort
6 Person Perception: Making Judgments About Others Judging:Why people act the way they do?What is causing it?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.
10 Frequently Used Shortcuts in Judging Others Comprehensive Case StudyImportant problemsBoss reprimand certain people and not others
11 Frequently Used Shortcuts in Judging Others HP CEO- FiorinaArticulate, decisive, charismatic … Vs. unproven, egotistical, inflexibleHalo EffectDraw a general impression about others on the basis of a single attribute/characteristicintelligence, appearancean instructor, a student who comes in late in the first classContrast EffectContrast effects (can) distort perceptionsDo we evaluate a person in isolation? Or influenced by other persons we have recently encountered.Interviewer sees a pool of job applicants.Children, Animal and You
12 Frequently Used Shortcuts in Judging Others- Stereotyping Judge someone on the basis of our perception of the group to which he or she belongsGeneralization has advantages!Success in the pastWomen Vs. MenRelocation, ChildcareProfiling- Arab descant!Balance
13 Shortcuts in Organizations Employment Interview (1/10th Second, 4/5 mins)Perceptual biases affect the accuracy of interviewers’ judgmentsPerformance ExpectationsBehave according to Expectation (Students)Self-fulfilling prophecy (pygmalion effect): The lower or higher performance of employees reflects preconceived leader expectations about employee capabilities.Performance Evaluations (Promotion, Pay)Appraisals are subjective perceptions. (Vs. Objective)Assessment is a subjective judgment subject to perceptual distortion and biasEmployee EffortErrorsSelectiveHaloContrast
14 The Link Between Perceptions and Individual Decision Making Empowerment make the issue even more criticalReactionPerceptions of the decision makerIs this a problem?What is acceptable ?Outcomes
16 Rational Decision-Making Model Step follows in a logical/rational orderbased on thinking through and weighing up the alternativesGoalMaximize outcomeAssumptionsProblem clarityKnown optionsClear preferencesConstant preferencesNo time or cost constraintsMaximum payoffSteps
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.Optimize
19 How Are Decisions Actually Made in Organizations
20 How Are Decisions Actually Made in Organizations … PitfallsIdentify problemsVisibility over importance of problemAttention-catching, high profile problemsDesire to “solve problems”Self-interest (if problem concerns decision maker)Alternative DevelopmentSatisficing: seeking the first alternative that solves problem.Engaging in incremental rather than unique problem solving through successive limited comparison of alternatives to the current alternative in effect.
21 Common Biases and Errors Overconfidence BiasBelieving too much in our own ability to make good decisions.Anchoring BiasUsing early, first received information as the basis for making subsequent judgments.Confirmation BiasUsing only the facts that support our decision.
22 Common Biases and Errors Availability BiasUsing information that is most readily at hand.Recent , VividRepresentative Bias“Mixing apples with oranges”Assessing the likelihood of an occurrence by trying to match it with a preexisting category using only the facts that support our decision.Winner’s CurseHighest bidder pays too muchLikelihood of “winner’s curse” increases with the number of people in auction.
24 Common Biases and Errors Randomness ErrorCreating meaning out of random eventsHindsight BiasLooking back, once the outcome has occurred, and believing that you accurately predicted the outcome of an event9/11 Prediction
26 Intuition Intuitive Decision Making An unconscious process created out of distilled experience.Conditions Favoring Intuitive Decision MakingA high level of uncertainty existsThere is little precedent to draw onVariables are less scientifically predictable“Facts” are limitedFacts don’t clearly point the wayAnalytical data are of little useSeveral plausible alternative solutions existTime is limited and pressing for the right decision
27 Making Choices … Individual Differences ErrorsBounded RationalityCommon Biases & ErrorsIntuitionPersonalityEscalation of commitmentFacets of ConscientiousnessAchievement StrivingForestall failureDutifulnessBest for the organizationSelf serving biasHigh self esteemGenderRuminationAnalyzing decisionOver-thinkingAge
28 Organizational Constraints Decision makers make action choices that are favored by the organizationManagers’ DecisionsPerformance Evaluation (Evaluation criteria)Division manager Vs. Negative informationReward SystemsRisk aversion at GM (Low profile managers)Formal RegulationsRules and policies limit the alternative- FranchiseSystem-imposed Time ConstraintsDeadlines- New product developmentHistorical PrecedentsPast decisions influence current decisions- Budget
29 Ethics in Decision Making Utilitarianism- Outcomes and consequencesSeeking the greatest good for the greatest numberMaximizing profit- firing decision (Questionable!)RightsRespecting and protecting basic rights of individualsProtecting Whistle blowersJusticeImposing/enforcing rules fairly and impartially.Equitable distribution of benefits and cost
30 Ways to Improve Decision Making Analyze situation and adjust decisionBe aware of biases- limit their impact.Rational analysis with intuition –effectiveEnhance personal creativity by looking for novel solutions or seeing problems in new ways, and using analogiesReducing Bias and ErrorsNovel and Useful Idea
31 Reducing Bias and Errors Focus on goals.Clear goalsDecision making easierEliminate options inconsistent w/interestsLook for information that disconfirms beliefsConsidering ways we could be wrongwe’re smarter than we actually areDon’t try create meaning off randomness/coincidenceIncrease your options.Number and diversityBe Creative
33 Chapter Check-Up: Perception It’s your little sister’s senior school party, and she notices that everyone is wearing the same dress she has on! Which perceptual shortcut may be occurring?Escalation of commitmentRepresentative biasAvailability BiasHindsight BiasAvailability Bias
34 Chapter Check-Up: Perception 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.Diversity Training
35 Decision Making … Example Rashid 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 theprofessor teaching this semesterthe time of the class, andthe classes his friends are taking.when you can take each class againcosts and benefits for taking each this semester versus later next year.He then makes his decision. You just engaged in _____________________ ?