What

do you
hear?
DO WE SHARE THE SAME
REALITY??
PERCEPTION
Perception
• Perception is a process by which individuals organize and
interpret their sensory impressions to give meaning to their
environment.
• The set of processes by which an individual becomes aware of
and interprets information about the environment
• An individual converts the stimuli into meaningful picture of the
environment
• The world as it is perceived is the world that is behaviorally important.
• It is important to the study of OB because people’s behaviors are based
on their perception of what reality is, not on reality itself.
Perceptual process
Selecting stimuli – external
(location, size, contrast, Organizing (Figure
Receiving stimuli – external
movement, repetition, background, perceptual
and internal
similarity) and internal factors grouping,
(need, learning, interest)

Interpretation (Attribution, Response (Covert – attitude,

halo effect, stereotyping, motivation, feeling; overt –
projection) behaviour)
Factors that influence perception
Situation
We see what we expect to see and don’t see what we don’t expect to see
(Perceiver expectations)

Also, we see what we want to see and don’t see what we don’t want to see
(Perceiver experience, motives, interest)
Perceptual set

What is seen in the center figures depends on the order in

which one looks at the figures:
If scanned from the left, a man’s face is seen.
If scanned from the right, a woman’s figure is seen.
Closure, Figure Background
Similarity
SOCIAL PERCEPTION
• Social perception is how people form impressions and make inferences about
other people
• Kelley’s Attribution theory: The theory explains our behavior and the behavior of
others by assigning causes or attributes to these behaviors.
• Attribution theory suggests that when we observe an individual’s behavior, we
attempt to determine whether it was internally or externally caused.
• Internal factors – Personal characteristics that cause behavior (e.g., ability, effort) E.g.,
Because the employee overslept and could not wake up to be ready for the office on
time.
• External factors – Environmental characteristics that cause behavior (e.g., task difficulty,
good/bad luck) E.g., Because there was a general strike, and since there was no public
transport, the employee could not reach the office on time.
Dimensions of behavior
• Determination depends on three factors:
• Distinctiveness – whether an individual displays different behaviors in different
situations - Does the individual act the same way in other situations?

• Consensus – does everyone who faces a similar situation respond in the same
way as the individual did - Does the individual act the same as others in same
situation?

• Consistency – does the person respond the same way over time - Does the
individual act the same way over time?
Attribution theory
Attribution theory
Type of Information/ Attribution
Example of Organizational Behavior
Observation Made
Coworkers are also performing
High consensus
poorly on this task
External
The subordinate does not do
(situational or
well on this task during only Low consistency
environmental
one time period
factors)
The subordinate does well on
High distinctiveness
other tasks, but not this one

Coworkers are performing

Low consensus
very well on this task
Internal
The subordinate does not do (personal
High consistency
well on this task at any time or dispositional
factors)
The subordinate does
poorly on other tasks as Low distinctiveness
well as this one
Attribution errors
• Fundamental Attribution Error
• The tendency to underestimate external factors and overestimate
internal factors when making judgments about others’ behaviour.
• E.g., poor performance attributed to lack of ability rather than competitors
better product or lack of support
• Your performance is caused by you

• Self-Serving Bias
• The tendency to attribute one’s successes to internal factors while
putting the blame for failures on external factors.
• Deny personal responsibility for performance problems but accept
personal responsibility for success
• My success is because of my effort/ability, My poor performance is caused
by something else (difficulty; bad luck)
Common Shortcuts in Judging Others
• Selective perception - Any characteristic that makes a person, object,
or event stand out will increase the probability that it will be
perceived.
• Since we can’t observe everything going on around us, we engage
in selective perception.
• E.g., one supervisor may selectively perceive an employee to be loyal, while
another supervisor may selectively perceive that same employee to be too
conforming and insincere.
• Halo effect - tendency to draw a general impression about an
individual on the basis of a single characteristic.
• E.g., Amit is perceived to be more attractive so assumed to have other
positive personality traits and abilities.
Common Shortcuts in Judging Others
• Contrast effect - Evaluation of a person’s characteristics that is
affected by comparisons with other people recently encountered who
rank higher or lower on the same characteristics.
• E.g., a candidate is likely to receive a more favorable evaluation if preceded by
mediocre applicants and a less favorable evaluation if preceded by strong
applicants.
• Stereotyping - Judging someone on the basis of one’s perception of
the group to which that person belongs.
• E.g., Age, gender, Community, disability etc
• Heuristics are shortcuts used to make decisions quickly
• Projection – Attributing one’s own characteristics to other people.
• Think that others act, feel and think like they do
Applications in Organizations
• Employment Interviews
• Perceptual biases of raters affect the accuracy of interviewers’ judgments of
applicants.
• Formed in a single glance – 1/10 of a second!
• Performance Expectations
• Self-fulfilling prophecy : A situation in which a person inaccurately perceives a
second person, and the resulting expectations cause the second person to behave in
ways consistent with the original perception.
• The lower or higher performance of employees reflects preconceived leader
expectations about employee capabilities.
• Pygmalion effect: is a phenomenon in which high expectations lead to improved
performance in a given area
• Performance Evaluations
• Appraisals are often the subjective (judgmental) perceptions of appraisers of another
employee’s job performance.
• Critical impact on employees.
Perceptions and individual decision making
• Problem
• A perceived discrepancy between the current state of affairs and a desired state
• Decisions
• Choices made from among alternatives developed from data
• Decision-Making Process
• The process of recognizing and defining the nature of a decision situation, identifying
alternatives, choosing the “best” alternative, and putting it into practice.
• Perception Linkage:
• All elements of problem identification and the decision-making process are
influenced by perception.
• Problems must be recognized
• Data must be selected and evaluated
Rational Model of Decision Making
• Rational Decision-Making Model - A decision-making model that
describes how individuals should behave in order to maximize some
outcome.
• Underlies traditional economic theory

• Steps
• Define the problem.
• Identify the decision criteria.
• Allocate weights to the criteria.
• Develop the alternatives.
• Evaluate the alternatives.
• Select the best alternative.
Rational Model of Decision Making vs. Bounded Rationality
• Assumptions of the Rational Model
• The decision maker…
• Has complete information.
• Is able to identify all the relevant options in an unbiased manner.
• Chooses the option with the highest utility.
• Most decisions in the real world don’t follow the rational model.
• Bounded Rationality
• Most people respond to a complex problem by reducing it to a level at which
it can be readily understood.
• People satisfice – they seek solutions that are satisfactory and sufficient.
• Individuals operate within the confines of bounded rationality.
• They construct simplified models that extract the essential features.
 Bounded Rationality and intuition
• How does bounded rationality work?
• Once a problem is identified, the search for criteria and options begins.
• A limited list of the more conspicuous choices is identified.
• The decision maker then reviews the list, looking for a solution that is
“good enough.”
• Satisfice - seek solutions that are satisfactory and sufficient.
• Intuition
• Intuitive decision making occurs outside conscious thought; it relies on
holistic associations, or links between disparate pieces of information, is fast,
and is affectively charged, meaning it usually engages the emotions.
• The key is neither to abandon nor rely solely on intuition, but to supplement
it with evidence and good judgment.
 Common Biases and Errors in Decision Making
• Heuristics are simple, efficient rules people use to form judgments and make
decisions. These can also lead to errors called biases.
• Overconfidence Bias: individuals whose intellectual and interpersonal abilities are
weakest are most likely to overestimate their performance and ability.
• Anchoring Bias: fixating on initial information as a starting point and failing to
adequately adjust for subsequent information.
• Confirmation Bias: type of selective perception.
• Seek out information that reaffirms past choices, and discount information that
contradicts past judgments.
• Availability Bias: tendency for people to base judgments on information that is
readily available.
• Escalation of Commitment: staying with a decision even when there is clear evidence
that it’s wrong.
– Likely to occur when individuals view themselves as responsible for the outcome.
 Common Biases and Errors in Decision Making
• Randomness Error: our tendency to believe we can predict the outcome of
random events.
• Decision making becomes impaired when we try to create meaning out
of random events.
• Risk Aversion: the tendency to prefer a sure thing instead of a risky outcome.
– Ambitious people with power that can be taken away appear to be
especially risk averse.
– People will more likely engage in risk-seeking behavior for negative
outcomes, and risk-averse behavior for positive outcomes, when under
stress.
• Hindsight Bias: the tendency to believe falsely that one has accurately predicted
the outcome of an event, after that outcome is actually known.
 Ethical Decision Criteria
1. Utilitarianism: decisions are made solely on the basis of their
outcomes or consequences.1. A system in which decisions are
made to provide the greatest good for the greatest number.
2. Focus on rights: calls on individuals to make decisions
consistent with fundamental liberties and privileges
• Protects whistle-blowers.
3. Impose and enforce rules fairly and impartially to ensure
justice or an equitable distribution of benefits and costs.
Reducing Biases and Errors
1. Focus on Goals.

2. Look for Information That Disconfirms Your Beliefs.

3. Don’t Try to Create Meaning out of Random Events.

4. Increase Your Options.

 Implications for Managers
• Behavior follows perception, so to influence behavior at work, assess how people perceive
their work. Often behaviors we find puzzling can be explained by understanding the initiating
perceptions.
• Make better decisions by recognizing perceptual biases and decision-making errors we tend to
commit. Learning about these problems doesn’t always prevent us from making mistakes, but
it does help.
• Adjust your decision-making approach to the national culture you’re operating in and to the
criteria your organization values. If you’re in a country that doesn’t value rationality, don’t feel
compelled to follow the rational decision-making model or to try to make your decisions
appear rational. Adjust your decision approach to ensure compatibility with the organizational
culture.
• Combine rational analysis with intuition. These are not conflicting approaches to decision
making. By using both, you can improve your decision making effectiveness.
• Try to enhance your creativity. Actively look for novel solutions to problems