Perception & Decision Making

Perception Vs Reality

Perception is defined as the process of acquiring, interpreting, selecting and organizing

sensory information. The word perception comes from a Latin “capere”, meaning to take the
prefix per meaning “completely”.

Perception is basically the image of the reality, in short, perception is a very complex
cognitive process that yields a unique picture of the world, a picture that may be quite
different from reality. In terms or organizational psychology, perception plays the role of
creating a picture for the employee based on his or her own thinking. Therefore, the same
situations/stimuli may produce very different reactions and behaviours from different
employees. Understanding the difference between this perceived image and the real image is
imperative to understand behaviour of employees. The perceptual image of the manager may
be quite different from the perceptual image of the employee, and both may be very different
from reality.

Factors affecting the perception

Perception is the process by which an individual select, organizes, and interprets information
to create a meaningful picture. Perception depends not only on the physical stimuli but also
on the stimuli’s relation to the surrounding field and on conditions within the individual.
Perception is a process by which individuals organize and interpret their sensory perceives in
order to give meaning to their environment.

However, what one perceives can be substantially different from objective reality. It is the
process through which the information from the outside environment is selected, received,
organized and interpreted to make it meaningful.

This input of meaningful information results in decisions and actions. A number of factors
operate to shape and sometimes distort perception. These factors can reside in the perceiver
in the object or target being perceived, or in the context of the situation in which the
perception is made.

 Perceiver

When an individual looks at a target and attempts to interpret what he or she sees, that
interpretation is heavily influenced by the personal characteristics of the individual perceiver.
Personal characteristics that affect perception include a person’s attitudes, personality,
motives, interests, past experiences, and expectations. There are some factors that influence
the target such as- novelty, motion, sounds, size, background, proximity, similarity, etc.

 Target

Characteristics of the target being observed can affect what is perceived. Because targets are
not looked at in isolation, the relationship of a target to its background also influences
perception, as does our tendency to group close things and similar things together.

 Situation

There are also some situational factors like the time of perceiving others, work settings, social
settings, etc. which influence the perception process. Besides these, there are some other
factors like perceptual learning which is based on past experiences or any special training that
we get, every one of us learns to emphasize some sensory inputs and to ignore others.
Another factor is the mental set, which refers to preparedness or readiness to receive some
sensory input. Such expectancy keeps the individual prepared with good attention and
concentration. The level of knowledge we have may also change the way we perceive his or
her behaviors.

For example;

If a person knows that her friend is stressed out over family problems, then she might
overlook her snappy comments. Learning has a considerable influence on perception.

It creates expectancy in people. The nature of the things which have to be perceived is also an
influential factor. By nature, we mean, whether the object is visual or auditory, and whether it
involves pictures, people or animals. Perception is determined by both physiological and
psychological characteristics of the human being whereas sensation is conceived with only
the physiological features. Thus, perception is not just what one sees with the eyes it is a
much more complex process by which an individual selectively absorbs or assimilates the
stimuli in the environment, cognitively organizes the perceived information in a specific
fashion and then interprets the information to make an assessment about what is going on in
one’s environment.

When an individual looks at a target and attempts to interpret what he or she sees, that
interpretation is heavily influenced by the personal characteristics of the individual perceiver.
Personal characteristics that, affect perception included a person’s attitudes, personality
motives interest, past experiences, and expectations.

Perceptual Process

The perceptual process allows us to experience the world around us.

In this overview of perception and the perceptual process, we will learn more about how we
go from detecting stimuli in the environment to actually taking action based on that
information and it can be organized into our existing structures and patterns, and are then
interpreted based on previous experiences. Although the perception is a largely cognitive and
psychological process, how we perceive the people and objects around us affects our
communication.

Rationality Vs Emotions

Rational or logical thinking is both a conscious and a non-conscious process. The non-

conscious processes of the human brain are part of the genius and greatness of the human
mind.  Emotions may best be defined as “feelings.” Emotions or feelings can be conscious or
non-conscious, just like rational thinking.

Moods Vs Emotions
Sources of/ Factors affecting Moods and Emotions

Emotions and moods can be caused by many reasons.

Personality

As all individuals, we must have built-in tendencies to experience certain moods and
emotions more frequently than others do. We also differ in how intensely we experience the
same emotion, while those who are affectively intense, experience good and bad moods and
emotions more deeply.

Day of the week or time of the day

You will have guessed by now that people tend to be in their worst moods early in the week
and in their best moods late in the week. Monday morning is therefore not the best time to
reveal bad news or ask someone for a favour.

Weather

Have you heard of illusory correlation? It is the tendency of people to associate two events
when in reality there is no connection. Many people think so, but the weather has little
influence on our mood.

Stress

Stress can affect our moods and emotions negatively. The effects build over time and
constant levels of stress can worsen our moods and emotions.

Social activities

For most us, social activities increase positive mood and have little effect on negative mood.
Positive mood seeks out social interactions. Physical, informal and epicurean activities are
more strongly related to positive moods than formal and sedentary events.

Sleep

Sleep is by far your favourite source! Indeed, sleep quality does affect mood. If you are tired,
you are more likely to feel fatigue, anger and hostility, and therefore, it can impair decision-
making and make it difficult to control emotions.

Exercise
Another favourite, no? It should be! In fact, exercise enhances our positive mood. This is
especially good for depressed people.

Work Load

Workload creates stress due to which your moods become off and work family conflict are
also created.

Age

Negative emotions seem to occur less, as people get older. Highly positive moods last longer
for older individuals while bad moods fade more quickly than for younger people. Emotional
experience improves with age.

Gender

Women are more emotionally expressive than men. They experience them more intensely
and hold onto emotions longer than men. They display more frequent expressions of positive
and negative emotions, except anger. This is because men are taught to be tough and brave.
Women are social and nurturing, so they show more positive moods.

Emotional Intelligence

Emotional Intelligence, also called EI, describes an ability, capacity, or skill to perceive,
assess, and manage the emotions of one's self, of others, and of groups. However, being a
relatively new area, the definition of emotional intelligence is still in a state of flux. It may
also be defined as the ability to recognize and monitor our own emotions and those of others
and to use this information as a guide to thinking and actions.

Therefore, emotional intelligence is the ability to use emotional information and emotional
energy to understand and motivate self and others for personal and professional development,
and to create an environment of harmony with fellow persons to achieve success.

Emotionally intelligent people are capable of diagnosing, perceiving, and monitoring the
internal environment of their own and others’ minds and show remarkable skills in managing
mutually beneficial relationships with others.

Using awareness of one's own emotions and the emotions of others to manage relationships
to a successful outcome

Emotional Quotient
An intelligence quotient or IQ is a score derived from one of several different standardized
tests attempting to measure intelligence. IQ tests are generally designed and used because
they are found to be predictive of later intellectual achievement, such as educational
achievement. IQ also correlates with job performance and income, although in all cases other
factors explain most of the variance. Recent work has demonstrated links between IQ and
health.

 Perceiving (knowing emotions of him/herself)

Being aware of your emotions and their strengths and weaknesses and Using awareness of
your emotions to manage your response to different situations and people. Motivating self for
doing job and achieving success.

 Empathy (knowing emotions of others)

Understanding the perspectives of other people including their motivations, their emotions,
and the meaning of what they do and say.

 Organization
Means that controlling your emotions and then moulding your emotions and use them in a
certain way in which the emotions are required. Each emotion expresses a quantity or
magnitude in a positive/negative scale. This way, we experience positive and negative
emotions in different degrees and with diverse intensity. We can experience abrupt or gradual
changes of emotional intensity, either towards the positive or negative side. That is to say, all
emotion represents a magnitude or measurement along a continuum that can take positive or
negative values. Positive emotions are emotions such as: Love, joy, surprise, etc., while
negative emotions are Fear, sadness, anger, disgust, shame, etc.

Intelligence is a property of mind that encompasses many related mental abilities, such as the
capacities to reason, plan, solve problems, think abstractly, comprehend ideas and language,
and learn.

 Regulation
Means that regulating your emotions in the person’s own command to achieve the required
results or objectives and it is the highest form of EI.

 Emotional Labor
Emotional labor is the process of managing feelings and expressions artificially to fulfil the
emotional requirements of a job. More specifically, workers are expected to regulate their
emotions during interactions with customers, co-workers and superiors. This includes
analysis and decision making in terms of the expression of emotion, whether actually felt or
not, as well as its opposite: the suppression of emotions that are felt but not expressed. E.g.
front desk officers, customer representatives etc.

 Surface Acting
Arlie Hochschild's foundational text divided emotional labor into two components: surface
acting and deep acting. Surface acting occurs when employees artificially display the
emotions required for a job without changing how they actually feel. Deep acting is an
effortful process through which employees change their internal feelings artificially to align
with organizational expectations, producing more natural and genuine emotional displays.
Although the underlying processes differ, the objective of both is typically to show positive
emotions, which are presumed to impact the feelings of customers and bottom-line outcomes
(e.g. sales, positive recommendations, and repeat business). However, research generally has
shown surface acting is more harmful to employee health. Without a consideration of ethical
values, the consequences of emotional work on employees can easily become negative.
Business ethics can be used as a guide for employees on how to present feelings that are
consistent with ethical values, and can show them how to regulate their feelings more easily
and comfortably while working.

 Emotional Dissonance

Emotional dissonance is a feeling experienced when one is forced to fake or artificial an

emotion. For example, air hostesses are expected to have an upbeat disposition at all times,
regardless of their actual emotional state. Many people comedians for example have a
significant degree of emotional adaptability.

 Burnout

Burnout is a state of emotional, mental, and often physical exhaustion brought on by

prolonged or repeated stress. Though it’s most often caused by problems at work, it can also
appear in other areas of life, such as parenting and caretaking.

AET (Affective Event Theory)

Affective Events Theory (AET) is a psychological model designed to explain the connection
between emotions and feelings in the workplace and job performance, job satisfaction and
behaviours. AET is underlined by a belief that human beings are emotional and that their
behaviour is guided by emotion.

The theory is based on the following elements.

Work environment features

These are the relationships between components associated with work (characteristics of the
job, job demands and requirements for emotional labour) and the impact they have on job
outcomes job enrichment and job enlargement. The autonomy and flexibility to determine
one’s own work schedule impacts job satisfaction.

Work events

These are the different types of emotional events at work more work load, new tasks, increase
in stress that can have a psychological impact on an employee’s job satisfaction. There are
two types of work events: positive inducing events and negative inducing events.

Personal dispositions (traits)

This explains the relationship between an employee’s personality and mood and the influence
it has on events that occur at work, and how they affect performance and job satisfaction.

The five-factor model of personality; openness to experience, conscientiousness,

extraversion, agreeableness and neuroticism, illustrates the variation in individual differences,
and the impact that such differences can have on performance and satisfaction at work

While negative events are reported less often than positive events, they have more impact on
mood than positive events.

Emotional reactions to work events

These can be positive and/or negative. Emotions have a stronger influence than attributions or
expectancies in predicting intentions toward poor-performing employees. E.g. burnout,
aggression, cynicism etc.

Attribution theory
“Attribution theory deals with how the social perceiver uses information to arrive at causal
explanations for events in order to decide something.  It examines what information is
gathered and how it is combined to form a causal judgment”.

Dispositional Attribution

Dispositional attribution assigns the cause of behavior to some internal characteristic of a

person, rather than to outside forces.

When we explain the behavior of others we look for enduring internal attributions, such as
personality traits. This is known as the fundamental attribution error.

For example, we attribute the behavior of a person to their personality, motives or beliefs.

2. Situational Attribution

The process of assigning the cause of behavior to some situation or event outside a person's
control rather than to some internal characteristic.

When we try to explain our own behavior we tend to make external attributions, such as
situational or environment features.

Self-serving bias

A self-serving bias is any cognitive or perceptual process that is distorted by the need to
maintain and enhance self-esteem, or the tendency to perceive oneself in an overly favourable
manner. It is the belief that individuals tend to ascribe success to their own abilities and
efforts, but ascribe failure to external factors. When individuals reject the validity of negative
feedback, focus on their strengths and achievements but overlook their faults and failures, or
take more responsibility for their group's work than they give to other members, they are
protecting their ego from threat and injury. These cognitive and perceptual tendencies
perpetuate illusions and error, but they also serve the self's need for esteem. For example, a
student who attributes earning a good grade on an exam to their own intelligence and
preparation but attributes earning a poor grade to the teacher's poor teaching ability or unfair
test questions might be exhibiting the self-serving bias. Studies have shown that similar
attributions are made in various situations, such as the workplace, interpersonal
relationships, sports, and consumer decisions.

Locus of Control
Locus of control is one of the main influences of attribution style. Individuals with an internal
locus of control believe that they have personal control over situations and that their actions
matter. Those with an external locus of control believe that outside forces, chance, and luck
determine situations and that their actions cannot change anything. Individuals with an
external locus of control are more likely to exhibit a self-serving bias following failure than
those with an internal locus of control. The difference in attribution style between individuals
with internal and external loci of control, however, is not as marked in successful outcomes,
as individuals with both types attribution style have less need to defend their self-images in
success. Airplane pilots with an internal locus of control were likely to exhibit a self-serving
bias in regard to their skill and levels of safety.

Rationality/ Expected Utility Maximization Hypothesis (deal)

Rationality is the quality or state of being rational – that is, being based on or agreeable to
reason. Rationality implies the conformity of one's beliefs with one's reasons to believe, and
of one's actions with one's reasons for action. All the information is revealed all the
alternatives are evaluated in a best possible way to get the maximum utility which is not
available.

Bounded Rationality

Keeping in view the current restrictions it accepts that people have limited information,
solutions knowledge and limited resources then evaluating available resource choose the best
option but it is closer to reality.

Prospect theory

Prospect theory is very useful for explaining people’s apparent irrational behavior stating that
we value our loses more than chances of profit. Kahneman and Tversky found that losses had
more emotional impact than the equivalent amount of gain for people.For example, in a
traditional way of thinking, we should gain the same amount of utility (pleasure, satisfaction)
if we received $100, or first received $200 and then lost $100, because the end result would
be the same – a $100 net gain.

Intuition

Based on logics, feelings, expertise, knowledge, information, unconscious, facts you take
decision.
Heuristics(shortcuts) and Implications for HRM

Selective Perception

Selective perception is the tendency not to notice and more quickly forget stimuli that cause
emotional discomfort and contradict our prior beliefs. For example, a teacher may have a
favourite student because they are biased by in-group favouritism. The teacher ignores the
student's poor attainment.

Halo Effect

The tendency for an impression created in one area to influence opinion in another area.

Contrast Effect

The contrast effect is a cognitive bias that distorts our perception of something when we
compare it to something else, by enhancing the differences between them. This comparison
can be either explicit or implicit, simultaneous or at separate points in time, and can apply to
various traits, judging the next person in comparison to others.

Stereotyping

In social psychology, a stereotype is an over-generalized belief about a particular category of

people. It is an expectation that people might have about every person of a particular group.
The type of expectation can vary; it can be, for example, an expectation about the group's
personality, preferences, or ability.

Biases in decision making

1. Recency bias

Definition
When reviewing an employee’s performance, managers tend to focus on the most recent time
period instead of the total time period. 
You can also call this the “What have you done for me lately?” bias. If someone recently
rocked a presentation or flubbed a deal, that recent performance is going to loom larger in a
manager’s mind. Why? Because it’s easier to remember things that happened recently.

Prevention strategy
So how do we help others and ourselves overcome this bias? It’s important to document
performance at different points in time throughout the time period. Did someone just
complete a 3-month project? Great, send their peers a request for feedback so you can get
some data on how well they did. Did someone just complete internal training? Awesome,
request feedback from the instructor about their participation. This way, at the end of the
year, you have more frequent data points from throughout the entire time period. 

2. Halo/Horns Effect Bias

Definition
Allowing one good or bad trait to overshadow others, i.e. letting an employee’s congenial
sense of humor override their poor communication skills.

We all have our own pet peeves and turn-ons. Sometimes those quirks can overshadow our
ability to assess people overall. This is why attractive people are much more likely to be rated
as trustworthy. However, if/when they fail to live up to those higher expectations, attractive
people also suffer a penalty for not living up to the presumptions of others.

Prevention strategy
Make sure to evaluate performance on multiple dimensions of performance instead of leaving
it open to interpretation. Are you rating individual achievement, but failing to look at the way
people contribute to the success of others? Does this person happen to have a particular set of
highly sought after technical skills, but they don’t finish their work on time? Make sure at
least 2-3 different aspects of performance to get a holistic view so that one awesome or awful
trait or skill doesn’t overshadow everything else.

3. Stereotyping Bias

It is related to directly targeting someone on the basis race, gender, religion, ethnicity etc in
decision making it creates a lot of issues of validity and reliability. When giving feedback,
individuals tend to focus more on the personality and attitudes of women. Contrarily, they
focus more on behaviors and accomplishments of men. This exacerbates gender bias,
growth/promotion opportunities, and the pay gap.

Prevention strategy
Sometimes unstructured feedback allow bias to creep in. So, without some criteria, people
will redefine the criteria for success in their own image. The big takeaway, as Stanford
researchers have put it, is that open boxes on feedback forms make feedback open to bias.
That’s why it helps to take a “mad libs” approach to feedback – help raters by giving them a
format and then allowing them to fill in the blanks. Nudge managers into specifically talking
about situations, behaviors, and impacts rather than personality or style.

4. Locus of control

Locus of control is a psychological concept that refers to how strongly people believe they
have control over the situations and experiences that affect their lives. A person attributes its
failures on external causes and achievements as its internal factors. We should control this
bias to fairly judge others.

5. Escalation of commitment

Escalation of commitment is a human behavior pattern in which an individual or group facing

increasingly negative outcomes from a decision, action, or investment nevertheless continues
the behavior instead of altering course. A good manager has to rectify if he does something
wrong instead sticking to the wrong decision and pouring more time and effort to make it
right which only cause mess at the end.

6. Confirmation of evidence bias

Confirmation bias (or confirmatory bias) is a tendency to search for or interpret information

in a way that confirms one's preconceptions, leading to statistical errors. As such, it can be
thought of as a form of selection bias in collecting evidence. Availability of case and on the
basis of just available resources you make evidence that are available.

7. Hindsight bias

Hindsight bias is a term used in psychology to explain the tendency of people to overestimate
their ability to have predicted an outcome that could not possibly have been predicted. Tip of
the ice berg means that only taking decision on appeared facts instead of in depth
circumstances

8. Overconfidence bias

The overconfidence bias is the tendency people have to be more confident in their own
abilities, such as driving, teaching, or spelling, than is objectively reasonable. For example, at
job a person performing duties for a reasonable amount of time thinks that he has become a
mastery in it and becomes over confident.
 9. Cognitive Blind-spot

Blind Spot Bias is the tendency to see oneself as less biased than other people, or to be able to
identify more cognitive biases in others than in oneself.

The best way to overcome your own blind spots is to recruit someone else to look for them,
and (this part is important!) believe them when they tell you what's going on. That “someone
else” needs to know what to look for, and be candid with you when they see a blind spot in
action.

10. Introspection bias

The introspection illusion is a cognitive bias in which people wrongly think they have direct

insight into the origins of their mental states, while treating others' introspections as
unreliable.

Ethics and decision making

In confining ethical decision making to a business or group context, decisions on ethics are
necessarily limited to actions and words (e.g., no deceit in sales promotion, use words to
manipulate performance, ...). Right behavior can be evaluated though actions and words, but
there is no way to know one's thoughts. Per our distinction, thoughts and beliefs (e.g., I want
to help and benefit my customer as opposed to I want their money without regards to what is
right, personal gain at the cost of someone else's reputation, ...) will be confined to moral
decisions that are part of personal decision making.

Clearly our thoughts affect our words and deeds, and in a group context, ethics in decision
making can be evaluated through the tangible evidence and outcomes from words and
actions. Again, thoughts and motivation are left to the personal realm. As a consequence,
evaluation of appropriate ethical behavior will have limitations. In all outcomes there are the
following possibilities:

 Right motivation with right action

 Right motivation with wrong action
 Wrong motivation with right action
 Wrong motivation with wrong action

Whistle blowing
Whistle-blowing is the act of telling the authorities or the public that the organization you
are working for is doing something immoral or illegal. In Pakistan people don’t whistle blow
wrong practices because they are of the view that our relations with others will become
worse.