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Chapter 3

Perception & Individual Decision

Making

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Individuals & Perception

Perception: Process by which we organize and interpret our sensory input to give our environment meaning.

(The world we perceive is the worldthat’s meaningful and important.)

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Managers and Perception

Mgmt. jobs require (among other things):

– Observing people and situations

– Gathering and interpreting information

– Making decisions based on:

• factual information (ideal)

• subjective interpretations (reality)

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The Three Stages of Perception

Stage 1: Attention

Stage 2: Organization

Stage 3: Judgment and Interpretation

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Stage 1: Attention

Perceptual Filters

Selective Attention

Salient Cues

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The Use of Schemas

Stage 2: Organization

PositiveAspects?

NegativeAspects?

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Stage 3: Judgmentand Interpretation

Internal(or Personal)

External(or Situational)

The Attribution Process

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Biases (or “shortcuts” to judging)

• Attribution (self-serving bias)

• Stereotyping

• Selectivity, Contrast

• Halo (and Horn)

• Projection

• Similar-to-me

• Primacy, Recency

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Management ActivitiesAffected by Perceptual Biases

• Interviews• Hiring• Training• Raises• Promotions• Discipline• Performance Evaluations• (anything requiring info. processing!)

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Forces Working to Increase Biases

• Need for Consistency:We unconsciously push for “data” that confirm our assumptions and beliefs; we “force” information to fit expectations.

• Phenomenal Absolutism:“What I see is objective reality; what you see is perceived bias.”

• Channeling:Self-reinforcing cycle (we perceive people a certain way and never give them a chance to show otherwise; we thus always see them how we perceived them).

• Pygmalion Effect:Self-fulfilling prophecy (we perceive people a certain way, treat them accordingly and they become what we believed them to be (i.e., they develop the very KSAOs, etc.)

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Strategies to Decrease Biases

• Recognition: The first step is to admit you don’t objectively see “reality” (ask: “What else could be true?”)

• Awareness: What are the areas in which your biases typically operate? What are your implicit cognitive schema? What are your culturally-based mental models?

• Support: Ask for reminders, solicit help and seek for open and honest feedback.

• Contact: Spend time with people from groups you stereotype and actively seek all the “disconfirming”

evidence you can (avoid the “exception” hypothesis).

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Link betweenPerception and Decision

Making

• Decision making occurs as a reaction to a problem situation

• Perception influences:– Awareness that a problem exists

– Interpretation and evaluation of information

– Bias in analyses and conclusions

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Individual Decision Making

What makes a decision “good”?

• Follows a “rational” process

• Achieves the intended goal or objective

• It is ethical (or morally sound)

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Rational Decision-Making Model

1. Define the Problem

2. Identify the Criteria

3. Weight the Criteria

5. Evaluate Alternatives

4. Develop Alternatives

6. Select “Best” Option

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Assumptions of theRational Decision-Making Model

• Managers have complete info. about:– the situation– the alternatives– the consequences

• Managers want to make “best” decision• There are clear and constant preferences

• There’s no interference from perceptual biasesor interpersonal conflicts

• There are no time or cost constraints

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Bounded Rationality Model

Attention

Organization

Interpretationand Judgment

Bounded Rationality(or, the quest to “suffice”)

Behaviors

Task andSituation Constraints

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Implications of Bounded Rationality

• Limited info-processing capabilities means use of all information to optimize, is impossible.

• Limited list of criteria, based on more obvious choices.

• We quickly accept satisficing choices (first acceptable), rather than “work” for optimal.

• All biases from human perception readily come into play.

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Intuition and Decision Making

Intuition: Unconscious process created out of deep expertise, resulting in rapid decisions with apparently very limited info.

When do we typically see effective Intuition used?1) High uncertainty exists2) Little precedent to draw on

3) Variables are less predictable

4) Facts/data are limited

5) Facts/data don’t clearly point the way

6) Analytical data of little use

7) Several plausible solutions to choose from

8) Limited time with high pressure for right decision

(effective use of the above assumes high expertise)

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Common Decision-Making Individual

Biases/Errors• Escalation of commitment• Overconfidence bias• Anchoring bias• Confirmation bias• Availability bias• Representative bias• Randomness error• Hindsight bias• Attribution/Self-serving bias

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Common Organization-Level Constraints

• Performance evaluations

• Reward/punishment systems

• Formal regulations and policies

• System-imposed time andresource constraints

• Historical precedents

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Three Components of Creativity

Expertise CreativitySkills

TaskMotivation

Creativity

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Characteristics of Creative People

• Self-confidence and perseverance in the face of obstacles

• Willingness to take risks

• Openness to new experiences (“lateral” thinkers) and a willingness to grow

• Tolerant with ambiguity

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Org. Factors Affecting Creativity

• Attitudes toward divergent views, opinions and questioning

• Cultural value placed on tradition and conformity versus innovation

• Leadership attitudes toward dissent

• Degree of formality in org. structures

• Acceptance of risk and failure

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Org. Factors Impeding Creativity

1) Expected evaluation

2) Surveillance

3) External motivators

4) Competition

5) Constrained choice

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Impact of Cultural Differences

• Cultural background significantly influences:- Selection of problems

- What constitutes “acceptable” criteria

- Depth of analysis

- Importance placed on logic and rationality

- Whether decisions should be made:• Autocratically (by one person, manager), or

• Collectively (by groups)

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Implications for Managers

Six suggestions to improve decision making:1) Analyze the situation and adjust to the national

culture and criteria of the organization

2) Be aware of, and work past, your personal biases

3) Recognize that your specific decision style is *not* always appropriate for every job or situation

4) Combine rational analysis with intuition

5) Use creativity-enhancing techniques

6) Be prepared to take a stand for your ethics/beliefs