Organisational

Behaviour

Lecture 4 –
Perception and
Individual Decision
Making (Chapter 6)
Learning objectives

 1. Explain how two people can see the same thing and interpret it differently.

2. Explain perception and appreciate the importance of recognising perceptual differences.

3. Explain the components of attribution theory.

4. Outline the difference between the rational decision-making model, bounded rationality

and satisficing decision-making.

 Independent & Dependent
variables

 Individuals are different in

Productivity

Turnover

Job satisfaction

 Needs to consider independent variables:

perception, individual decision making, learning &
motivation
 What is perception, and Why is it
Important

 Perception - a process by which individuals organise

and interpret their sensory impressions in order to give

meaning to their environment – hear/see/become aware
of something through the senses
 People’s behavior is based on their perception of

what reality is, not on reality itself.

 The world as it is perceived, is the world that is

behaviourally important.
The basic Perceptual framework
Factors that Influence Perception
 The Perceiver (Internal factors)

 When you look at a target and attempt to interpret what

you see, the interpretation is heavily influenced by:
Needs or motives
Experience
Expectations
Values & Attitudes
Personality
Interests
 The Target (External factors)

 Characteristics of the target also affect what we perceive

Background
Contrast
Intensity—sound, light, colour
Size
Motion
Repetition/novelty
Similarity

=> They lead us to focus on one aspect, not others, because we don’t
look at targets in isolation.
 The Setting

 Physical (time)
Social setting
Organisational/work setting

 Context matters in Perception. The time at which we

see an object or event can influence our attention, as
can location, light, heat, or any number of situational
factors.
Example
 Notice how you read this phrase:
One very high way.
and this one:
On every highway.
 In both phrases, the same letters appear in exactly the same sequence:
Oneveryhighway.
Yet because of the way the letters are grouped together, you read the phrases differently.
 Attribution Theory
When individuals observe behaviour, they attempt to
Person determine whether it is internally or externally caused.
Perception –
Making Internally caused behaviours are those we believe to be
under the individual’s personal control.
Judgments
About Others
Externally caused behaviour is what we imagine the
situation forced the individual to do.

Eg: If a person is late for work, his boss attributes that to

his overslept, it is internal attribution; but if his boss
attribute the lateness due to traffic issues, it is external
attribution.
Attribution Theory
 The determination depends mainly on three
factors:

Distinctiveness: shows different behaviours in

different situations, whether this behaviour is
unusual. Eg: The one that come late today is also
the one break other rules?
Consensus: response is the same as others to same
situation. Do others behave in the same way?
Consistency: responds in the same way over time.
Attribution Errors
  Fundamental attribution error
– Underestimate effect of external factors (situational) factors
– Overestimate effect of internal causes

  Self-serving bias
– Deny failures - failure is attributable to external factors
– Attribute success - own success is attributable to internal factors
Perceptual Errors  Stereotyping - label or categorise people
– Shortcuts in according to subjective frameworks obscure

Evaluation individual differences

Halo Effect - occurs when one attribute of a
person or situation is used to develop an overall
impression of the individual or situation’ impact
on performance appraisal process
Perceptual Errors   Selective Perception: see what we want to see
and hear what we want to hear
 Projection: attribute our own characteristics,
favourable or unfavourable, to other people
 Contrast effects: evaluation of self/others
influenced by contrast with other objects or people
Linking Perception and Individual Decision Making
 Perceptions affect
day-to-day relations
selection, counselling, coaching,
performance appraisal
judgement--promotion, transfer, dismissals
external relations--customers, suppliers
Steps in the Rational Decision – Making Model
 Rational Decision Making
– The ‘perfect world’ model: assumes complete information, all options known, and maximum payoff
Describes how individuals should behave in order to maximize some outcome.
1. Define the problem.
2. Identify the decision criteria.
3. Allocate weights to the criteria.
4. Develop the alternatives.
5. Evaluate the alternatives.
6. Select the best alternative.
• You are to purchase a car. What are the steps to conduct in the purchase using this model?
Bounded rationality ‘satisficing’model
 The “real world” model: seeks satisfactory and sufficient solutions from limited data and
alternatives
Complexity of problem--limited capacity of decision makers to process information--capture
essential features
Imperfect and incomplete information—managers make choices that are "good enough“
Time available for decision-making process
Conflicting preferences with respect to goals
Satisficing rather than optimising decisions = Most managers happy with a satisfactory
return
Maximising –  Satisficing to obtain an outcome that is good
Satisficing - enough.

Optimising Maximising action, which seeks the biggest

Optimising action, which seeks the best.
Argued, it is often rational to seek to satisfice i.e.
to get a good result that is good enough although
not necessarily the best.
Intuitive Model  Intuition ; A non-conscious process created from
distilled experience that results in quick decisions
Relies on holistic associations
Affectively charged – engaging the emotions
Common Biases and Errors in Decision Making
  Overconfidence Bias
– Believing too much in our own ability to make good decisions – especially when outside of own expertise
 Anchoring Bias
– Using early, first received information as the basis for making subsequent judgments
 Confirmation Bias
– Selecting and using only facts that support our decision
 Availability Bias
– Emphasizing information that is most readily at hand
• Recent
• Vivid
Individual Differences in Decision Making
  Personality
– Conscientiousness may effect escalation of commitment
l Achievement strivers are likely to increase commitment
l Dutiful people are less likely to have this bias
– Self-Esteem
l High self-esteem people are susceptible to self-serving bias
• Gender
• Women analyse decisions more than men – rumination
• Differences develop early
 Mental Ability
Organisational Constraints
  Performance Evaluation
– Managerial evaluation criteria influence actions
 Reward Systems
– Managers will make the decision with the greatest personal payoff for them
 Formal Regulations
– Limit the alternative choices of decision makers
 System-Imposed Time Constraints
– Restrict ability to gather or evaluate information
 Historical Precedents
– Past decisions influence current decisions
Summary and Conclusions
Managers who are skilled in influencing the perception process will try to:

 Have a high level of self awareness

 Seek information from various sources to confirm or disconfirm personal impressions of a

decision situation

 Be empathetic--be able to see a situation as it is perceived by other people

Summary and Conclusions
 Avoid common perceptual distortions that bias our views of people and situations

 Be aware of various kinds of schemas and their possible impact

 Be aware of attribution theory and its implications

 Avoid inappropriate actions

 Influence the perceptions of other people