ORGANIZATIONA

L BEHAVIOUR
(Book recommended: OB By
Robbins & Judge)
Course Code: MGMT 1032
By
DR. P.K. BHATTACHARYA
Sr. Professor, KIHE, BBA Program
 Schedule-5
Perception and Individual
Decision Making
What is Perception, and why is it Important?
People’s behavior is based on their perception
of what reality is.
• The world as it is perceived is the world that
is behaviorally important.
PERCEPTION is a process by which an individual
organize & interpret their impressions in order to give
meaning to their environment.
Dr. P.K.Bhattacharya/ OB (5) 2
Factors That Influence Perception

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 Person Perception: Making
Judgments About Others
Attribution Theory: When individuals observe behavior, they
attempt to determine whether it is internally (under personal control of indiv.)
or externally (resulting from outside causes/having been forced into the situation)
caused.
• Distinctiveness: shows different behaviors in different situations(displaying
different behavior at diff. situations, i)coming late to work ii) not sticking to commitments to
coworkers – if it is usual, it is external/ unusual, internal) .
• Consensus: response is the same as others to same situation (All facing
similar situation, it is consensus/if all taking same route & late to work, it is high & external/if
all came to work were in time & one is late, it is low and internal) .
• Consistency: responds in the same way over time (responding the same way –
coming late over time. If it is more consistent the behavior, it is high and internal/ else if it is
once in a while, it is inconsistent– it is low & external).

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Attribution Theory

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 Errors and Biases in Attributions
Fundamental 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( EX: Sales mgr. attributing low sales for salesman’s lack
rather than introduction of innovative product by competitor) .
• In general, we tend to blame the person first, not the situation.
Self-Serving Bias
• The tendency for individuals to attribute their own successes to internal
factors while putting the blame for failures on external factors. (EX:
Success/Failure in examinations…..taking credit in the former & discrediting the later
as tough/out-of-syllabus questions.)

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 Frequently Used Shortcuts in Judging Others
(perceiving & interpreting others---resulting in significant distortions)

Selective Perception: People selectively interpret what they see on the basis of their interests,
background, experience, and attitudes (Ex:Similar cars like your own, would be watched more than other make).
Halo Effect: Drawing a general impression about an individual on the basis of a single characteristic
(Ex: When an indiv. is rated on a single attribute viz. intelligence, appearance, sociability etc. A teacher may be knowledgeable,
highly qualified, but not well-dressed, may fetch low rating by the students).

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 (A person
receives a better evaluation if preceded by a mediocre one).

Projection: Attributing one’s own characteristics to other people(own likings of trust-worthiness & honesty
defy diff. in others).

Stereotyping: Judging someone on the basis of one’s perception of the group to which that person belongs
(All political personalities are corrupt is not substantiated) .

• ll

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 Specific Applications of Shortcuts in
Organizations
Employment Interview
– Perceptual biases of raters affect the accuracy of interviewers’ judgments of
applicants (Ex: diff. interviewers look diff. things in the same candidate,-----lead to
distortion).
Performance Expectations
– Self-fulfilling prophecy (Pygmalion effect): The lower or higher performance of
employees reflects preconceived leader expectations about employee
capabilities (Ex: High/low expectations, result in high/low outcomes) .
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
(Black Americans/ people from Ireland in UK are usually singled out for any offences) .
Performance Evaluations
– Appraisals are often the subjective (judgmental) perceptions of appraisers of
another employee’s job performance (Evaluator’s perception of good/bad influences
the outcomes of appraisals).

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 The Three Components of Creativity
• Creativity: The ability to produce novel and useful ideas.
• Three-Component of Model of Creativity: Proposition that
individual creativity requires expertise, creative-thinking skills, and
intrinsic task motivation

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 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 in mind (Capacity of human mind is too small in finding full
rationality. Ex: Looking for a good college for higher education).

How/Why problems are Identified:

– Visibility over importance of problem: i) Attention-catching, high profile
problems ii) Desire to “solve problems”
– Self-interest (if problem concerns decision maker)

Alternative Development:
– Satisfying: 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.

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 Common Biases / Errors
(Relying heavily on experience/impulses/gut feelings/convenient ‘rule of
thumb’----are shortcuts---leads to severe distortions from rationality)

1) Overconfidence Bias: Believing too much in one’s own ability

to make good decisions (Ex: an expression of ignorance--- more
knowledgeable would less likely show overconfidence).
2) Anchoring Bias: Using early emphasis on first received
information as the basis for making subsequent judgments
(Ex: When a prospective employer asks how much one was getting in his
prior job, answer typically anchors the employer’s offer).
3) Confirmation Bias: Using only the selective perception that
reaffirms our past choices and discounts info that contradicts
the past choices.
4) Availability Bias: Using information that is most readily at
hand. Recent & vivid/clear.
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 Common Biases / Errors (contd.)
(Decisional distortion)
5) Representative Bias: Assessing the likelihood of an occurrence by trying to
match it with a preexisting category using only the facts that support our
decision (Ex: three employees taken from a particular college were poor performers,
managers’ thought further intake from the same college will meet the same fate).
6) Winner’s Curse: - Highest bidder pays too much, - Likelihood of “winner’s
curse” increases with the number of people in auction.
7) Escalation of Commitment: -In spite of new negative information,
commitment actually increases! (Ex: Despite of slums in the demand of a course one
was undergoing, he still preferred to continue since he had invested a lot in the past in it.
8) Randomness Error: - The tendency to belief that we can predict the
outcome of random events (Ex: Despite stock-price changes are random, the financial
advisers belief they can influence stock to move up).
9) Hindsight Bias: -The tendency to believe falsely that we’d have accurately
predicted the outcome of an event, after the outcome is actually known.
(Ex: When one’s actual predictive accuracy is only 40 %, but he thinks it is 90% giving way to
becoming falsely overconfident and less vigilant in asking his predictive skills).

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 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 (probable) alternative solutions exist
– Time is limited and pressing for the right decision

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 Individual Differences in Decision Making

Individual-difference variables are : Personality and Gender

Personality : Aspects of conscientiousness and escalation of commitment. Self Esteem ,High self-
serving bias.
Gender : Women tend to analyze decisions more than men because of their rumination (thinking
quality ;Research findings).

ORGANIZATIONAL CONSTRAINTS ON DECISION MAKERS

Performance Evaluation: Evaluation criteria influence the choice of actions (When a boss is comfortable
with not hearing any negative report, the subordinates try to stop such information not to reach the boss) .
Reward Systems: Decision makers make action choices that are favored by the organization (Mgrs.
avert risks and take conservative decisions to be awarded by the organization) .
Formal Regulations: Organizational rules and policies limit the alternative choices of decision
makers (Limiting decision makers’ choices – Afs. 1000/mth for customer-meet).
System-imposed Time Constraints: Organizations require decisions by specific deadlines
(Restraining innovative decision making) .
Historical Precedents: Past decisions influence current decisions (Budget decisions are based on
previous years budget estimates).

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 Individual Differences in Decision Making (contd.)

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 (Ex: Japanese mgrs. are gr.-oriented than in US which is
authoritative. The Japanese value conformity and cooperation—needs consensus-forming).
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 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.
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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.

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 Toward Reducing Bias and Errors
Focusing on goals.
– Clear goals make decision making easier and help to eliminate options
inconsistent with your interests.
Looking for information that disconfirms beliefs.
– Overtly considering ways 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.

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