Robbins: Organizational Behavior

Chapter Five

PERCEPTION AND INDIVIDUAL DECISION MAKING

LEARNING OBJECTIVES After studying this chapter, students should be able to: 1. 2. 3. ". $. &. '. *. +. 1,. Explain how two people can see the same thing and interpret it differently List the three determinants of attribution escribe how shortcuts can assist in or distort our !udgment of others Explain how perception affects the decision ma#ing process %utline the six steps in the rational decision ma#ing model escribe the actions of the boundedly rational decision ma#er (dentify the conditions in which indi)iduals are most li#ely to use intuition in decision ma#ing escribe four styles of decision ma#ing efine heuristics, and explain how they bias decisions -ontrast the three ethical decision criteria

CHAPTER OVERVIEW Perception (ndi)iduals beha)e in a gi)en manner based not on the way their external en)ironment actually is but, rather, on what they see or belie)e it to be. An organi.ation may spend millions of dollars to create a pleasant wor# en)ironment for its employees. /owe)er, in spite of these expenditures, if an employee belie)es that his or her !ob is lousy, that employee will beha)e accordingly. (t is the employee0s perception of a situation that becomes the basis for his or her beha)ior. 1he employee who percei)es his2her super)isor as a hurdle reducer who helps him2her do a better !ob and the employee who sees the same super)isor as 3big brother, closely monitoring e)ery motion, to ensure that ( #eep wor#ing4 will differ in their beha)ioral responses to their super)isor. 1he difference has nothing to do with the reality of the super)isor0s actions5 the difference in employee beha)ior is due to different perceptions. 1he e)idence suggests that what indi)iduals percei)e from their wor# situation will influence their producti)ity more than will the situation itself. 6hether or not a !ob is actually interesting or challenging is irrele)ant. 6hether or not a manager successfully plans and organi.es the wor# of his or her employees and actually helps them to structure their wor# more efficiently and effecti)ely is far less important than how employees percei)e the manager0s efforts. 7imilarly, issues li#e fair pay for wor# performed, the )alidity of performance appraisals, and the ade8uacy of wor#ing conditions are not !udged by employees in a way that assures common perceptions, nor can we be assured that indi)iduals will interpret conditions about their !obs in a fa)orable light. 1herefore, to be able to influence producti)ity, it is necessary to assess how wor#ers percei)e their !obs. Absenteeism, turno)er, and !ob satisfaction are also reactions to the indi)idual0s perceptions. issatisfaction with wor#ing conditions or the belief that there is a lac# of promotion opportunities in the organi.ation are !udgments based on attempts to ma#e some meaning out of one0s !ob. 1he employee0s conclusion that a !ob is good or bad is an interpretation. 9anagers must spend time understanding how each indi)idual interprets reality and, where there is a significant difference between what is seen and what exists, try to eliminate the distortions. :ailure to deal with the differences when indi)iduals percei)e the !ob in negati)e terms will result in increased absenteeism and turno)er and lower !ob satisfaction. Indi id!"# Deci$ion M"%in& (ndi)iduals thin# and reason before they act. (t is because of this that an understanding of how people ma#e decisions can be helpful for explaining and predicting their beha)ior. ;nder some recent decision situations, people follow the rational decision<ma#ing model. =ut for most people, and most non<routine decisions, this is probably more the exception than the rule. :ew important decisions are simple or unambiguous enough for the rational model0s assumptions to apply, so we find indi)iduals loo#ing for solutions that satisfice rather than optimi.e, in!ecting biases and pre!udices into the decision process, and relying on intuition. 1

Robbins: Organizational Behavior

Chapter Five

>i)en the e)idence we ha)e described on how decisions are actually made in organi.ations, what can managers do to impro)e their decision<ma#ing? 6e offer fi)e suggestions. :irst, analy.e the situation. Ad!ust your decision ma#ing style to the national culture you are operating in and to the criteria your organi.ation e)aluates and rewards. :or instance, if you are in a country that does not )alue rationality, do not feel compelled to follow the rational decision ma#ing model or e)en to try to ma#e your decisions appear rational. 7imilarly, organi.ations differ in terms of the importance they place on ris#, the use of groups, and the li#e. Ad!ust your decision style to ensure it is compatible with the organi.ation0s culture. 7econd, be aware of biases. 6e all bring biases to the decisions we ma#e. (f you understand the biases influencing your !udgment, you can begin to change the way you ma#e decisions to reduce those biases. 1hird, combine rational analysis with intuition. 1hese are not conflicting approaches to decision ma#ing. =y using both, you can actually impro)e your decision<ma#ing effecti)eness. As you gain managerial experience, you should feel increasingly confident in imposing your intuiti)e processes on top of your rational analysis. :ourth, do not assume that your specific decision style is appropriate for e)ery !ob. @ust as organi.ations differ, so do !obs within organi.ations. And your effecti)eness as a decision ma#er will increase if you match your decision style to the re8uirements of the !ob. :or instance, if your decision<ma#ing style is directi)e, you will be more effecti)e wor#ing with people whose !obs re8uire 8uic# action. 1his style would match well with managing stoc#bro#ers. An analytic style, on the other hand, would wor# well managing accountants, mar#et researchers, or financial analysts. :inally, try to enhance your creati)ity. %)ertly loo# for no)el solutions to problems, attempt to see problems in new ways, and use analogies. Additionally, try to remo)e wor# and organi.ational barriers that might impede your creati)ity.

WEB E'ERCISES At the end of each chapter of this instructor0s manual, you will find suggested exercises and ideas for researching the 666 on %= topics. 1he exercises 3Exploring %= 1opics on the 6eb4 are set up so that you can simply photocopy the pages, distribute them to your class, and ma#e assignments accordingly. Aou may want to assign the exercises as an out<of<class acti)ity or as lab acti)ities with your class. 6ithin the lecture notes the graphic will note that there is a 666 acti)ity to support this material.

The chapter opens introducing Bob Lutz currently with General Motors !n the "#$%s he was president o& Chrysler when it was highly criticized as 'brain dead() 'technologically dated() and &or building cars that were 'uninspiring ) *uring a +oy ride in his Ford,-ade Cobra Roadster he had an idea( which lead to a decision that changed the public.s perception o& Chrysler &orever /se the new ten,cylinder engine in develop-ent &or a new *odge truc0 and put it into a sports car -odel 1e -et with critics &ro- within the co-pany( but he was unwavering in his resolve The result was the *odge 2iper Ma0ing decisions is an i-portant part o& everyday organizational li&e( and do not always care&ully &ollow a &or-ulated process as we see in this e3a-ple &ro- Mr Lutz

Robbins: Organizational Behavior CHAPTER OUTLINE 6hat (s Berception, and 6hy (s (t (mportant? De(inition: Berception is a process by which indi)iduals organi.e and interpret their sensory impressions in order to gi)e meaning to their en)ironment. 4otes:

Chapter Five

6hy is this important to the study of %=? =ecause people0s beha)ior is based on their perception of what reality is, not on reality itself.

Factors !n&luencing 6erception

1. :actors that shape Cand can distort perceptionD: Bercei)er 1arget 7ituation

2. 6hen an indi)idual loo#s at a target and attempts to interpret what he or she sees, that interpretation is hea)ily influenced by personal characteristics of the indi)idual percei)er. 3. 1he more rele)ant personal characteristics affecting perception of the percei)er are attitudes, moti)es, interests, past experiences, and expectations. ". -haracteristics of the target can also affect what is being percei)ed. 1his would include attracti)eness, gregariousness, and our tendency to group similar things together. :or example, members of a group with clearly distinguishable features or color are often percei)ed as ali#e in other, unrelated characteristics as well. $. 1he context in which we see ob!ects or e)ents also influences our attention. 1his could include time, heat, light, or other situational factors. Berson Berception: 9a#ing @udgments about %thers 5 5ttribution Theory 783hibit 9,:; 4otes:

1. %ur perceptions of people differ from our perceptions of inanimate ob!ects.

6e ma#e inferences about the actions of people that we do not ma#e about inanimate ob!ects. Eonli)ing ob!ects are sub!ect to the laws of nature. Beople ha)e beliefs, moti)es, or intentions.

2. %ur perception and !udgment of a person0s actions are influenced by these assumptions.

Robbins: Organizational Behavior 3. Attribution theory suggests that when we obser)e an indi)idual0s beha)ior, we attempt to determine whether it was internally or externally caused. 1hat determination depends largely on three factors: 4otes:

Chapter Five

istincti)eness -onsensus -onsistency

". -larification of the differences between internal and external causation: (nternally caused beha)iors are those that are belie)ed to be under the personal control of the indi)idual. Externally caused beha)ior is seen as resulting from outside causes5 that is, the person is seen as ha)ing been forced into the beha)ior by the situation.

$. *istinctiveness refers to whether an indi)idual displays different beha)iors in different situations. 6hat we want to #now is whether the obser)ed beha)ior is unusual.

(f it is, the obser)er is li#ely to gi)e the beha)ior an external attribution. (f this action is not unusual, it will probably be !udged as internal.

&. Consensus occurs if e)eryone who is faced with a similar situation responds in the same way. (f consensus is high, you would be expected to gi)e an external attribution to the employee0s tardiness, whereas if other employees who too# the same route made it to wor# on time, your conclusion as to causation would be internal. < Consistency in a person0s actions. oes the person respond the same way o)er time? 1he more consistent the beha)ior, the more the obser)er is inclined to attribute it to internal causes.

*. :undamental Attribution Error

1here is substantial e)idence that we ha)e a tendency to underestimate the influence of external factors and o)erestimate the influence of internal or personal factors. 1here is also a tendency for indi)iduals to attribute their own successes to internal factors such as ability or effort while putting the blame for failure on external factors such as luc#. 1his is called the 3self<ser)ing bias4 and suggests that feedbac# pro)ided to employees will be distorted by recipients.

+. Are these errors or biases that distort attribution uni)ersal across different cultures? 6hile there is no definiti)e answer there is some preliminary e)idence that indicates cultural differences:

Forean managers found that, contrary to the self<ser)ing bias, they tended to accept responsibility for group failure. Attribution theory was de)eloped largely based on experiments with Americans and 6estern Europeans. 1he Forean study suggests caution in ma#ing attribution theory predictions in non<6estern societies, especially in countries with strong collecti)ist traditions.

Robbins: Organizational Behavior B Fre=uently /sed >hortcuts in ?udging Others 4otes:

Chapter Five

1. 6e use a number of shortcuts when we !udge others. An understanding of these shortcuts can be helpful toward recogni.ing when they can result in significant distortions. 2. 7electi)e Berception

Any characteristic that ma#es a person, ob!ect, or e)ent stand out will increase the probability that it will be percei)ed. (t is impossible for us to assimilate e)erything we seeGonly certain stimuli can be ta#en in. A classic example: a. earborn and 7imon performed a perceptual study in which 23 business executi)es read a comprehensi)e case describing the organi.ation and acti)ities of a steel company.

b. 1he results along with other results of the study, led the researchers to conclude that the participants percei)ed aspects of a situation that were specifically related to the acti)ities and goals of the unit to which they were attached. c. A group0s perception of organi.ational acti)ities is selecti)ely altered to align with the )ested interests they represent. d. 7electi)ity wor#s as a shortcut in !udging other people by allowing us to 3speed<read4 others, but not without the ris# of drawing an inaccurate picture. =ecause we see what we want to see, we can draw unwarranted conclusions from an ambiguous situation. 3. /alo Effect

1he halo effect occurs when we draw a general impression on the basis of a single characteristic: a. 1his phenomenon fre8uently occurs when students appraise their classroom instructor. b. 7tudents may gi)e prominence to a single trait such as enthusiasm and allow their entire e)aluation to be tainted by how they !udge the instructor on that one trait.

1he reality of the halo effect was confirmed in a classic study. a. 7ub!ects were gi)en a list of traits such as intelligent, s#illful, practical, industrious, determined, and warm, and were as#ed to e)aluate the person to whom those traits applied. 6hen the word 3warm4 was substituted with 3cold4 the sub!ects changed their e)aluation of the person. b. 1he experiment showed that sub!ects were allowing a single trait to influence their o)erall impression of the person being !udged. c. Hesearch suggests that it is li#ely to be most extreme when the traits to be percei)ed are ambiguous in beha)ioral terms, when the traits ha)e moral o)ertones, and when the percei)er is !udging traits with which he or she has had limited experience.

Robbins: Organizational Behavior B Fre=uently /sed >hortcuts in ?udging Others 7cont ; ". -ontrast Effects 4otes:

Chapter Five

6e do not e)aluate a person in isolation. %ur reaction to one person is influenced by other persons we ha)e recently encountered. :or example, an inter)iew situation in which one sees a pool of !ob applicants can distort perception. istortions in any gi)en candidate0s e)aluation can occur as a result of his or her place in the inter)iew schedule. 1his tendency to attribute one0s own characteristics to other peopleGwhich is called pro!ectionGcan distort perceptions made about others. 6hen managers engage in pro!ection, they compromise their ability to respond to indi)idual differences. 1hey tend to see people as more homogeneous than they really are. 7tereotypingG!udging someone on the basis of our perception of the group to which he or she belongs >enerali.ation is not without ad)antages. (t ius a means of simplifying a complex world, and it permits us to maintain consistency. 1he problem, of course, is when we inaccurately stereotype. (n organi.ations, we fre8uently hear comments that represent stereotypes based on gender, age, race, ethnicity, and e)en weight. :rom a perceptual standpoint, if people expect to see these stereotypes, that is what they will percei)e, whether or not they are accurate.

$. Bro!ection

&. 7tereotyping

In$tr!ctor Note) At this point in the lecture you may want to introduce the B%(E1G-%;E1EH B%(E1: @hen 1iring 8-ployees 8-phasize the 6ositive found in the text and at the end of these chapter notes. A suggestion for a class exercise follows. C >peci&ic 5pplications in Organizations 4otes:

1. Employment (nter)iew

E)idence indicates that inter)iewers ma#e perceptual !udgments that are often inaccurate. (n addition, agreement among inter)iewers is often poor. ifferent inter)iewers see different things in the same candidate and thus arri)e at different conclusions about the applicant. (nter)iewers generally draw early impressions that become )ery 8uic#ly entrenched. 7tudies indicate that most inter)iewers0 decisions change )ery little after the first four or fi)e minutes of the inter)iew. =ecause inter)iews usually ha)e so little consistent structure and inter)iewers )ary in terms of what they are loo#ing for in a candidate, !udgments of the same candidate can )ary widely.

Robbins: Organizational Behavior C >peci&ic 5pplications in Organizations 7cont ; 2. Berformance Expectations 4otes:

Chapter Five

E)idence demonstrates that people will attempt to )alidate their perceptions of reality, e)en when those perceptions are faulty. 7elf<fulfilling prophecy or Bygmalion effect characteri.es the fact that people0s expectations determine their beha)ior. Expectations become reality. A study was underta#en with 1,$ soldiers in the (sraeli efense :orces who were ta#ing a fifteen<wee# combat command course. 7oldiers were randomly di)ided and identified as ha)ing high potential, normal potential, and potential not #nown. (nstructors got better results from the high potential group because they expected it confirming the effect of a self< fulfilling prophecy.

3. Berformance E)aluation

An employee0s performance appraisal is )ery much dependent on the perceptual process. Although the appraisal can be ob!ecti)e, many !obs are e)aluated in sub!ecti)e terms. 7ub!ecti)e measures are, by definition, !udgmental. 1o the degree that managers use sub!ecti)e measures in appraising employees, what the e)aluator percei)es to be good or bad employee characteristics or beha)iors will significantly influence the outcome of the appraisal.

". Employee Effort

An indi)idual0s future in an organi.ation is usually not dependent on performance alone. An assessment of an indi)idual0s effort is a sub!ecti)e !udgment susceptible to perceptual distortions and bias. 4otes:

1he Lin# between Berception and (ndi)idual ecision 9a#ing 1. (ndi)iduals in organi.ations ma#e decisions5 they ma#e choices from among two or more alternati)es.

1op managers determine their organi.ation0s goals, what products or ser)ices to offer, how best to finance operations, or where to locate a new manufacturing plant. 9iddle< and lower<le)el managers determine production schedules, select new employees, and decide how pay raises are to be allocated. Eon<managerial employees also ma#e decisions including whether or not to come to wor# on any gi)en day, how much effort to put forward once at wor#, and whether or not to comply with a re8uest made by the boss. A number of organi.ations in recent years ha)e been empowering their non<managerial employees with !ob<related decision<ma#ing authority that historically was reser)ed for managers.

Robbins: Organizational Behavior 1he Lin# between Berception and (ndi)idual ecision 9a#ing 2. ecision<ma#ing occurs as a reaction to a problem. 4otes:

Chapter Five

1here is a discrepancy between some current state of affairs and some desired state, re8uiring consideration of alternati)e courses of action. 1he awareness that a problem exists and that a decision needs to be made is a perceptual issue.

3. E)ery decision re8uires interpretation and e)aluation of information. 1he perceptions of the decision ma#er will address these two issues.

ata are typically recei)ed from multiple sources. 6hich data are rele)ant to the decision and which are not? Alternati)es will be de)eloped, and the strengths and wea#nesses of each will need to be e)aluated. ecisions =e 9ade? 4otes:

/ow 7hould 5

The Rational *ecision,Ma0ing 6rocess

1. 1he optimi.ing decision ma#er is rational. /e or she ma#es consistent, )alue< maximi.ing choices within specified constraints. 2. 1he Hational 9odelGsix steps listed in 83hibit 9,A 3. >tep ": efining the problem

A problem is a discrepancy between an existing and a desired state of affairs. 9any poor decisions can be traced to the decision ma#er o)erloo#ing a problem or defining the wrong problem.

". >tep :: (dentify the decision criteria important to sol)ing the problem.

1he decision ma#er determines what is rele)ant in ma#ing the decision. Any factors not identified in this step are considered irrele)ant to the decision ma#er. 1his brings in the decision ma#er0s interests, )alues, and similar personal preferences.

$. >tep A: 6eight the pre)iously identified criteria in order to gi)e them the correct priority in the decision. &. >tep B: >enerate possible alternati)es that could succeed in resol)ing the problem. '. >tep 9: Hating each alternati)e on each criterion.

-ritically analy.e and e)aluate each alternati)e 1he strengths and wea#nesses of each alternati)e become e)ident as they are compared with the criteria and weights established in the second and third steps.

*. >tep C: 1he final step is to compute the optimal decision:

E)aluating each alternati)e against the weighted criteria and selecting the alternati)e with the highest total score. 8

Robbins: Organizational Behavior

Chapter Five

Robbins: Organizational Behavior 5 The Rational *ecision,Ma0ing 6rocess 7cont ; +. Assumptions of the 9odel 4otes:

Chapter Five

6roble- clarity 1he decision ma#er is assumed to ha)e complete information regarding the decision situation. Dnown options. (t is assumed the decision ma#er is aware of all the possible conse8uences of each alternati)e. Clear pre&erences -riteria and alternati)es can be ran#ed and weighted to reflect their importance. Constant pre&erences 7pecific decision criteria are constant and the weights assigned to them are stable o)er time. 4o ti-e or cost constraints 1he rational decision ma#er can obtain full information about criteria and alternati)es because it is assumed that there are no time or cost constraints. Ma3i-u- payo&& 1he rational decision ma#er will choose the alternati)e that yields the highest percei)ed )alue.

!-proving Creativity in *ecision Ma0ing

De(inition) -reati)ity is the ability to produce no)el and useful ideas. 1hese are ideas that are different from what has been done before, but that are also appropriate to the problem or opportunity presented.

1. -reati)e Botential
9ost people ha)e creati)e potential. Beople ha)e to get out of the psychological ruts most of us get into and learn how to thin# about a problem in di)ergent ways.

2. Beople differ in their inherent creati)ity.

A study of lifetime creati)ity of "&1 men and women found that fewer than one percent were exceptionally creati)e. 1en percent were highly creati)e, and about sixty percent were somewhat creati)e.

3. 1hree<component model of creati)ity. 1his model proposes that indi)idual

creati)ity essentially re8uires expertise, creati)e<thin#ing s#ills, and intrinsic tas# moti)ation. 7>ee 83hibit 9,B ;

83pertise is the foundation for all creati)e wor#. 1he potential for creati)ity is enhanced when indi)iduals ha)e abilities, #nowledge, proficiencies, and similar expertise in their field of endea)or. Creative thin0ing s0ills. 1his encompasses personality characteristics associated with creati)ity, the ability to use analogies, as well as the talent to see the familiar in a different light. !ntrinsic tas0 -otivation 1he desire to wor# on something because it0s interesting, in)ol)ing, exciting, satisfying, or personally challenging. 1his turns creati)ity potential into actual creati)e ideas. (t determines the extent to which indi)iduals fully engage their expertise and creati)e s#ills.

10

Robbins: Organizational Behavior /ow Are ecisions Actually 9ade in %rgani.ations? 1. Are decision ma#ers in organi.ations rational? 4otes:

Chapter Five

6hen decision ma#ers are faced with a simple problem ha)ing few alternati)e courses of action, and when the cost of searching out and e)aluating alternati)es is low, the rational model is fairly accurate.

2. 9ost decisions in the real world do not follow the rational model.

ecision ma#ers generally ma#e limited use of their creati)ity. -hoices tend to be confined to the neighborhood of the problem symptom and to the neighborhood of the current alternati)e.

Bounded Rationality

1. 6hen faced with a complex problem, most people respond by reducing the problem to a le)el at which it can be readily understood.

1his is because the limited information<processing capability of human beings ma#es it impossible to assimilate and understand all the information necessary to optimi.e. Beople satis&iceGthey see# solutions that are satisfactory and sufficient.

2. (ndi)iduals operate within the confines of bounded rationality. 1hey construct simplified models that extract the essential features. 3. /ow does bounded rationality wor#?

%nce a problem is identified, the search for criteria and alternati)es begins. 1he decision ma#er will identify a limited list made up of the more conspicuous choices, which are easy to find, tend to be highly )isible, and they will represent familiar criteria and pre)iously tried<and<true solutions. %nce this limited set of alternati)es is identified, the decision ma#er will begin re)iewing it. a. 1he decision ma#er will begin with alternati)es that differ only in a relati)ely small degree from the choice currently in effect. b. 1he first alternati)e that meets the 3good enough4 criterion ends the search.

1he order in which alternati)es are considered is critical in determining which alternati)e is selected. Assuming that a problem has more than one potential solution, the satisficing choice will be the first acceptable one the decision ma#er encounters. Alternati)es that depart the least from the status 8uo are the most li#ely to be selected.

11

Robbins: Organizational Behavior B !ntuition 4otes:

Chapter Five

1. (ntuiti)e decision<ma#ing has recently come out of the closet and into some respectability. 2. 6hat is intuiti)e decision ma#ing?

(t is an unconscious process created out of distilled experience. (t operates in complement with rational analysis. 7ome consider it a form of extrasensory power or sixth sense. 7ome belie)e it is a personality trait that a limited number of people are born with.

3. Hesearch on chess playing pro)ides an excellent example of how intuition wor#s.

1he expert0s experience allows him or her to recogni.e the pattern in a situation and draw upon pre)iously learned information associated with that pattern to 8uic#ly arri)e at a decision choice. 1he result is that the intuiti)e decision ma#er can decide rapidly with what appears to be )ery limited information. Eight conditions when people are most li#ely to use intuiti)e decision ma#ing: a. b. c. d. e. f. g. when a high le)el of uncertainty exists when there is little precedent to draw on when )ariables are less scientifically predictable when 3facts4 are limited when facts do not clearly point the way to go when analytical data are of little use when there are se)eral plausible alternati)e solutions to choose from, with good arguments for each h. when time is limited, and there is pressure to come up with the right decision

Although intuiti)e decision ma#ing has gained in respectability, don0t expect peopleGespecially in Eorth America, >reat =ritain, and other cultures where rational analysis is the appro)ed way of ma#ing decisionsG to ac#nowledge they are using it. Hational analysis is considered more socially desirable in these cultures.

In$tr!ctor Note) At this point in the lecture you may want to introduce the %= (E 1/E EE67: Fire&ighters /se !ntuition to Ma0e the Right Choices box found in the text. 1he purpose of the exercise is to help students better understand how intuition and experience are lin#ed. A suggestion for a class exercise follows the introduction of the material below. %nce you ha)e completed the exercise, refer students to the -A7E (E-( EE1: ?ohn 4eill at /nipart for another )iewpointGthis time from the -E% perspecti)e. A summary of the case and 8uestions can be found at the end of this chapter.

12

Robbins: Organizational Behavior

Chapter Five

OB IN THE NEWS I Fire&ighters /se !ntuition to Ma0e the Right Choices o fire commanders use the rational model to ma#e life<and<death decisions? Eo. 1hey rely on their intuition, built on years of experience, and intuition begins with recognition. 1he following illustrates how that recognition process wor#s. A -le)eland, %hio, fire commander and his crew encountered a fire at the bac# of a house. 1he commander led his hose team into the building. 7tanding in the li)ing room, they blasted water onto the smo#e and flames that appeared to be consuming the #itchen, but the fire roared bac# and continued to burn. 1he men doused the fire again, and the flames briefly subsided, but then they flared up again with an e)en greater intensity. As the firefighters retreated and regrouped, the commander was gripped by an uneasy feeling. /e ordered e)eryone to lea)e. @ust as the crew reached the street, the li)ing<room floor ca)ed in. /ad the men stayed in the house, they would ha)e plunged into a bla.ing basement. 6hy did the commander gi)e the order to lea)e? =ecause the fire0s beha)ior did not match his expectations. 9uch of the fire was burning underneath the li)ing<room floor, so it was unaffected by the firefighters0 attac#. Also, the rising heat made the room extremely hotGtoo hot for such a seemingly small fire. Another clue that this was not !ust a small #itchen fire was that the sounds it emitted were strangely 8uiet. /ot fires are loud. 1he commander was intuiti)ely sensing that the floor was muffling the roar of the flames that were raging below. Jeteran firefighters ha)e accumulated a storehouse of experiences and they subconsciously categori.e fires according to how they should react to them. 1hey loo# for cues or patterns in situations that direct them to ta#e one action o)er another. Experienced people whose !obs re8uire 8uic# decisionsGfirefighters, intensi)e<care nurses, !et<fighter pilots, 76A1 team membersGsee a different world than no)ices in those same !obs do, and what they see tells them what they should do. ;ltimately, intuition is all about perception. 1he formal rules of decision<ma#ing are almost incidental.
>ource: =ased on =. =reen, 36hat0s Aour (ntuition?4 Fast Co-pany, 7eptember 2,,,, pp. 2+,I3,,.

C#"$$ E*erci$e) -onduct as a K L A for the entire class: 1. 6hat is intuition? 6as the commander using intuition or utili.ing his experience and training, or both? 2. /a)e there been times when you needed to ma#e a decision 8uic#ly? 6as it intuition, a reaction, or something else? C:or example, a)oiding hitting another car, during a sports match, etc.D 6hat resources do you thin# you used when ma#ing that decision? 3. o you use a decision ma#ing process when ma#ing a 3big4 decision in your life? C:or example, when buying a car, selecting a roommate, etc.D 6hy or why not? /a)e you made a decision recently that you could ha)e done better had you used a formal decision ma#ing process?

6roble- !denti&ication

4otes:

1. Broblems that are )isible tend to ha)e a higher probability of being selected than ones that are important. 6hy?

Jisible problems are more li#ely to catch a decision ma#er0s attention. 7econd, remember we are concerned with decision ma#ing in organi.ations. (f a decision ma#er faces a conflict between selecting a problem that is important to the organi.ation and one that is important to the decision ma#er, self<interest tends to win out. 1he decision ma#er0s self interest also plays a part. 6hen faced with selecting a problem important to the decision ma#er or important to the organi.ation, self interest tends to win out. 13

Robbins: Organizational Behavior * 5lternative *evelop-ent 4otes:

Chapter Five

1. 7ince decision ma#ers see# a satisficing solution, there is a minimal use of creati)ity in the search for alternati)es. Efforts tend to be confined to the neighborhood of the current alternati)e. 2. E)idence indicates that decision<ma#ing is incremental rather than comprehensi)e. ecision ma#ers ma#e successi)e limited comparisons. 1he picture that emerges is one of a decision ma#er who ta#es small steps toward his or her ob!ecti)e. 8 Ma0ing Choices

1. (n order to a)oid information o)erload, decision ma#ers rely on heuristics or !udgmental shortcuts in decision ma#ing.

1here are two common categories of heuristicsGa)ailability and representati)eness. Each creates biases in !udgment. Another bias is the tendency to escalate commitment to a failing course of action.

2. A)ailability heuristic

1he availability heuristic is 3the tendency for people to base their !udgments on information that is readily a)ailable to them.4 E)ents that e)o#e emotions, that are particularly )i)id, or that ha)e occurred more recently tend to be more a)ailable in our memory. :ore example, many more people suffer from fear of flying than fear of dri)ing in a car.

3. Hepresentati)e heuristic

1o assess the li#elihood of an occurrence by trying to match it with a preexisting category, managers fre8uently predict the performance of a new product by relating it to a pre)ious product0s success.

". Escalation of commitment

Escalation of commitment is an increased commitment to a pre)ious decision in spite of negati)e information. (t has been well documented that indi)iduals escalate commitment to a failing course of action when they )iew themsel)es as responsible for the failure. (mplications for the organi.ations: a. An organi.ation can suffer large losses when a manager continues to in)est in a failed plan !ust to pro)e his or her original decision was correct. b. -onsistency is a characteristic often associated with effecti)e leaders. 9anagers might be reluctant to change a failed course of action to appear consistent.

In$tr!ctor Note) At this point in the lecture you may want to introduce the 1EA9 EMEH-(7E: Biases in *ecision Ma0ing box found in the text and at the end of these chapter notes. 1he purpose of the exercise is to help students better understand what their own decision ma#ing biases might be. 14

Robbins: Organizational Behavior F !ndividual *i&&erences: *ecision,Ma0ing >tyles 4otes:

Chapter Five

1. Hesearch on decision styles has identified four different indi)idual approaches to ma#ing decisions. 2. Beople differ along two dimensions. 1he first is their way of thin#ing.

7ome people are logical and rational. 1hey process information serially. 7ome people are intuiti)e and creati)e. 1hey percei)e things as a whole.

3. 1he other dimension is a person0s tolerance for ambiguity 7ome people ha)e a high need to minimi.e ambiguity. %thers are able to process many thoughts at the same time.

". 1hese two dimensions, diagrammed, form four styles of decision ma#ing. 7>ee 83hibit 9,9 ;

irecti)e: a. Low tolerance for ambiguity and see# rationality b. Efficient and logical c. ecisions are made with minimal information and with few alternati)es assessed. d. 9a#e decisions fast and focus on the short<run. Analytic a. >reater tolerance for ambiguity b. esire for more information and consideration of more alternati)es c. =est characteri.ed as careful decision ma#ers with the ability to adapt to or cope with new situations -onceptual a. 1end to be )ery broad in their outloo# and consider many alternati)es b. 1heir focus is long range, and they are )ery good at finding creati)e solutions to problems. =eha)ioral a. -haracteri.es decision ma#ers who wor# well with others b. -oncerned with the achie)ement of peers and subordinates and are recepti)e to suggestions from others, relying hea)ily on meetings for communicating c. 1ries to a)oid conflict and see#s acceptance

$. 9ost managers ha)e characteristics that fall into more than one. (t is best to thin# in terms of a manager0s dominant style and his or her bac#up styles.

=usiness students, lower<le)el managers, and top executi)es tend to score highest in the analytic style. :ocusing on decision styles can be useful for helping you to understand how two e8ually intelligent people, with access to the same information, can differ in the ways they approach decisions and the final choices they ma#e.

15

Robbins: Organizational Behavior G Organizational Constraints 4otes:

Chapter Five

1. 1he organi.ation itself constrains decision ma#ers. 1his happens due to policies, regulations, time constraints, etc. 2. Berformance e)aluation

9anagers are strongly influenced in their decision ma#ing by the criteria by which they are e)aluated. 1heir performance in decision ma#ing will reflect expectation.

3. Heward systems

1he organi.ation0s reward system influences decision ma#ers by suggesting to them what choices are preferable in terms of personal payoff.

". Brogrammed routines

All but the smallest of organi.ations create rules, policies, procedures, and other formali.ed regulations in order to standardi.e the beha)ior of their members. =y programming decisions, organi.ations are able to get indi)iduals to achie)e high le)els of performance without paying for the years of experience.

$. 7ystem<imposed time constraints

%rgani.ations impose deadlines on decisions. ecisions must be made 8uic#ly in order to stay ahead of the competition and #eep customers satisfied. Almost all important decisions come with explicit deadlines.

&. /istorical Brecedents

ecisions ha)e a context. (ndi)idual decisions are more accurately characteri.ed as points in a stream of decisions. ecisions made in the past are ghosts which continually haunt current choices. (t is common #nowledge that the largest determining factor of the si.e of any gi)en year0s budget is last year0s budget. 4otes:

Cultural *i&&erences

1. 1he rational model ma#es no ac#nowledgment of cultural differences. 6e need to recogni.e that the cultural bac#ground of the decision ma#er can ha)e significant influence on:

a. selection of problems
b. depth of analysis c. the importance placed on logic and rationality d. whether organi.ational decisions should be made autocratically by an indi)idual manager or collecti)ely in groups 2. -ultures, for example, differ in terms of time orientation, the importance of rationality, their belief in the ability of people to sol)e problems, and preference for collecti)e decision ma#ing.

16

Robbins: Organizational Behavior

Chapter Five 4otes:

7ome cultures emphasi.e sol)ing problems, while others focus on accepting situations as they are. ecision ma#ing by @apanese managers is much more group<oriented than in the ;nited 7tates. ecision 9a#ing?

6hat about Ethics in

Ethical considerations should be an important criterion in organi.ational decision ma#ing. 5 Three 8thical *ecision Criteria

2. ;tilitarian criterionGdecisions are made solely on the basis of their outcomes

or conse8uences. 1he goal of utilitarianism is to pro)ide the greatest good for the greatest number. 1his )iew tends to dominate business decision ma#ing.

3. :ocus on rightsGcalls on indi)iduals to ma#e decisions consistent with

fundamental liberties and pri)ileges as set forth in documents such as the =ill of Hights.

An emphasis on rights means respecting and protecting the basic rights of indi)iduals, such as the right to pri)acy, to free speech, and to due process.

3. :ocus on !usticeGre8uires indi)iduals to impose and enforce rules fairly and impartially. 1here is an e8uitable distribution of benefits and costs. ". Ad)antages and liabilities of these three criteria:

;tilitarianism a. Bromotes efficiency and producti)ity b. (t can result in ignoring the rights of some indi)iduals, particularly those with minority representation in the organi.ation. Hights a. Brotects indi)iduals from in!ury and is consistent with freedom and pri)acy b. (t can create an o)erly legalistic wor# en)ironment that hinders producti)ity and efficiency. @ustice a. Brotects the interests of the underrepresented and less powerful b. (t can encourage a sense of entitlement that reduces ris# ta#ing, inno)ation, and producti)ity. c. ecision ma#ers tend to feel safe and comfortable when they use utilitarianism. 9any critics of business decision ma#ers argue that this perspecti)e needs to change.

$. (ncreased concern in society about indi)idual rights and social !ustice suggests the need for managers to de)elop ethical standards based solely on non< utilitarian criteria.

17

Robbins: Organizational Behavior

Chapter Five

In$tr!ctor Note) At this point in the lecture you may want to introduce the E1/(-AL (LE99A EMEH-(7E: Five 8thical *ecisions: @hat @ould Eou *oF found in the text and at the end of these chapter notes. 1he purpose of the exercise is to help students better understand what their reactions might be when faced with )arious ethical decisions. A suggestion for a class exercise follows the introduction of the material. %r, you may want to introduce the 9A1/ %H 7-(EE-E: '8thical 6eople *on.t *o /nethical Things) box found in the text Cand belowD. A suggested class exercise follows within the boxed text.

M+TH OR SCIENCE, I 38thical 6eople *on.t *o /nethical Things) 1his statement is mostly true. Beople with high ethical standards are less li#ely to engage in unethical practices, e)en in organi.ations or situations in which there are strong pressures to conform. 1he essential issue that this statement addresses is whether ethical beha)ior is more a function of the indi)idual or the situational context. 1he e)idence indicates that people with high ethical principles will follow them in spite of what others do or the dictates of organi.ational norms, but when an indi)idual0s ethical and moral de)elopment are not of the highest le)el, he or she is more li#ely to be influenced by strong cultures. 1his is true e)en when those cultures encourage 8uestionable practices. =ecause ethical people essentially a)oid unethical practices, managers should be encouraged to screen !ob candidates Cthrough testing and bac#ground in)estigationsD to determine their ethical standards. =y see#ing out people with integrity and strong ethical principles, the organi.ation increases the li#elihood that employees will act ethically. %f course, unethical practices can be further minimi.ed by pro)iding indi)iduals with a supporti)e wor# climate. 1his would include clear !ob descriptions, a written code of ethics, positi)e management role models, the e)aluating and rewarding of means as well as ends, and a culture that encourages indi)iduals to openly challenge 8uestionable practices. C#"$$ e*erci$e) 1. Brior to class prepare 3 x $ index cards with )arious 3e)ents,4 which might lead to an emotional response or the possibility of ma#ing an decision Chopefully in an ethical mannerND. :or example the cards should ha)e the statements li#e: Aou are firedN, lunch with )endor, transfer to (ndia, ( 8uitN, double insurance refund, unpaid o)ertime, business tra)el to Las Jegas, etc. 2. =rea# students into teams and as# them write a short scenario around the e)ent listed. :or example: 3( recei)ed a refund from the health insurer for twice the amount ( was expecting. Eo one will #now if ( #eep it.4 %r, 3hey they fired meGthey don0t remember (0)e got their laptop<<(0m #eeping itN 3 3. /a)e the student teams switch cards with another team. 1he team should now come to a decision as how they would resol)e the CnewD situation. As# them to loo# at it from se)eral different perspecti)es: the employee, co<wor#ers, management, and customers. o different perspecti)es create a different outcome for the decision? 6ho carries the most weight when the final decision is made? C(s it self<ser)ing or for the greater good?D ". As a class, discuss what they learned when faced with these situations, and the perspecti)es and decision process they underwent.

18

Robbins: Organizational Behavior B 8thics and 4ational Culture 4otes:

Chapter Five

1. 1here are no global ethical standards. 2. -ontrasts between Asia and the 6est illustrate:

=ribery is commonplace in countries such as -hina. 7hould a 6estern business professional pay a bribe to secure business if it is an accepted part of that country0s culture? A manager of a large ;.7. company operating in -hina caught an employee stealing. 7he fired him, turned him o)er to the local authorities, only to learn later that the employee had been summarily executed. 6hile ethical standards may seem ambiguous in the 6est, criteria defining right and wrong are actually much clearer in the 6est than in Asia. :ew issues are blac#<and<white there5 most are gray. 4otes:

!ndividual *ecision Ma0ing rather than optimi.e. 6hat can managers do to impro)e their decision ma#ing?

1. 9ost people do not follow the rational decision<ma#ing modelGbut satisfice

2. =e aware of these fi)e strategies:

5nalyze the situation: Ad!ust to national culture, the criteria the organi.ation e)aluates and rewards. Be aware o& biases: ;nderstanding how they influence !udgment can help to reduce their impact. Co-bine rational analysis with intuition: ;sing both can impro)e decision ma#ing effecti)eness. Realize that no speci&ic decision style is appropriate &or every +ob: %rgani.ations differ, as do !obs. 9atching decision style to the situation is the most effecti)e strategy.

19

Robbins: Organizational Behavior -UESTIONS .OR REVIEW "

Chapter Five

*e&ine perception An$/er I Berception is a process by which indi)iduals organi.e and interpret their sensory impressions in order to gi)e meaning to their en)ironment. 6hat one percei)es can be substantially different from ob!ecti)e reality. Berception is important in the study of %= because people0s beha)ior is based on their perception of what reality is, not on reality itself. @hat is attribution theoryF @hat are its i-plications &or e3plaining organizational behaviorF An$/er I Attribution theory suggests that when we obser)e an indi)idual0s beha)ior, we attempt to determine whether it was internally or externally caused. 1hat determination depends largely on three factors: distincti)eness, consensus, and consistency. 1ow are our perceptions o& our own actions di&&erent &ro- our perceptions o& the actions o& othersF An$/er I %ne of the more interesting findings from attribution theory is that there are errors or biases that distort attributions. 1here is substantial e)idence that we ha)e a tendency to underestimate the influence of external factors and o)erestimate the influence of internal or personal factors. 1his is the fundamental attribution error. 1here is also a tendency for indi)iduals to attribute their own successes to internal factors, such as ability or effort, while putting the blame for failure on external factors such as luc#. 1his is the self< ser)ing bias and suggests that feedbac# pro)ided to employees will be distorted by recipients. 1ow does selectivity a&&ect perceptionF Give an e3a-ple o& how selectivity can create perceptual distortion An$/er 0 7electi)e perceptionGAny characteristic that ma#es a person, ob!ect, or e)ent stand out will increase the probability that it will be percei)ed. (t is impossible for us to assimilate e)erything we seeGonly certain stimuli can be ta#en in. 7electi)ity wor#s as a shortcut in !udging other people by allowing us to 3speed<read4 others, but not without the ris# of drawing an inaccurate picture. =ecause we see what we want to see, we can draw unwarranted conclusions from an ambiguous situation. @hat is stereotypingF Give an e3a-ple o& how stereotyping can create perceptual distortion An$/er I 7tereotypingG!udging someone on the basis of our perception of the group to which he or she belongs. >enerali.ation is not without ad)antages. (t is a means of simplifying a complex world, and it permits us to maintain consistency. 1he problem, of course, is when we inaccurately stereotype. :rom a perceptual standpoint, if people expect to see these stereotypes, that is what they will percei)e, whether they are accurate or not. %ne of the problems of stereotypes is that they are widespread. Give so-e positive results o& using shortcuts when +udging others An$/er I 1hey sa)e us time and they help us process o)erloads of information effecti)ely, but the drawbac#s may out weigh such ad)antages. Employment inter)iewGE)idence indicates that inter)iewers ma#e perceptual !udgments that are often inaccurate. =ecause inter)iews usually ha)e so little consistent structure and inter)iewers )ary in terms of what they are loo#ing for in a candidate, !udgments of the same candidate can )ary widely. Berformance expectationsGE)idence demonstrates that people will attempt to )alidate their perceptions of reality, e)en when those perceptions are faulty. Berformance e)aluationGAn employee0s performance appraisal is )ery much dependent on the perceptual process. Employee effortGAn indi)idual0s future in an organi.ation is usually not dependent on performance alone. An assessment of an indi)idual0s effort is a sub!ecti)e !udgment susceptible to perceptual distortions and bias. @hat is the rational decision,-a0ing -odelF /nder what conditions is it applicableF An$/er I 1he optimi.ing decision ma#er is rational. /e2she ma#es consistent, )alue<maximi.ing choices within specified constraints. 1he Hational 9odelGsix steps listed in Exhibit $<". efine the problem. (dentify the decision criteria important to sol)ing the problem. 6eight the pre)iously identified criteria in order to gi)e them the correct priority in the decision. >enerate possible alternati)es that could succeed in resol)ing the problem. -ritically analy.e and e)aluate each alternati)e. -ompute the optimal decision. E)aluate each alternati)e against the weighted criteria, and select the alternati)e with the highest total score. 20

<

Robbins: Organizational Behavior $

Chapter Five

*escribe organizational &actors that -ight constrain decision -a0ers An$/er I 1D 1he lac# of problem clarityG1he decision ma#er is assumed to ha)e complete information regarding the decision situation. 2D Eot #nowing all the optionsG(t is assumed the decision ma#er is aware of all the possible conse8uences of each alternati)e. 3D Eot being able to ma#e clear preferencesG-riteria and alternati)es can be ran#ed and weighted to reflect their importance. "D -onstant preferencesG6hen specific decision criteria are constant and the weights assigned to them are stable o)er time. $D (f there are important time or cost constraintsG1he rational decision ma#er can obtain full information about criteria and alternati)es because it is assumed that there are no time or cost constraints. &D 6hen there is no maximum payoff alternati)eG1he rational decision ma#er will choose the alternati)e that yields the highest percei)ed )alue. %ther organi.ational constraints: Berformance e)aluation 9anagers are strongly influenced in their decision ma#ing by the criteria by which they are e)aluated. 9anagers bloc#ing negati)e information Heward systems 1he organi.ation0s reward system influences decision ma#ers by suggesting to them what choices are preferable in terms of personal payoff. Brogrammed routines =y programming decisions, organi.ations are able to get indi)iduals to achie)e high le)els of performance without paying for the years of experience. 7ystem<imposed time constraints %rgani.ations impose deadlines on decisions. ecisions must be made 8uic#ly in order to stay ahead of the competition and #eep customers satisfied. Almost all important decisions come with explicit deadlines. /istorical precedents ecisions ha)e a context. (ndi)idual decisions are more accurately characteri.ed as points in a stream of decisions. ecisions made in the past are ghosts which continually haunt current choices. (t is common #nowledge that the largest determining factor of the si.e of any gi)en year0s budget is last year0s budget.

@hat role does intuition play in e&&ective decision -a0ingF An$/er 0 (ntuiti)e decision ma#ing has recently come out of the closet and into some respectability. 6e define intuiti)e decision ma#ing as an unconscious process created out of distilled experience. (t operates in complement with rational analysis. 1he expert0s experience allows him or her to recogni.e the pattern in a situation and draw upon pre)iously learned information associated with that pattern to 8uic#ly arri)e at a decision choice. 1he result is that the intuiti)e decision ma#er can decide rapidly with what appears to be )ery limited information. Eight conditions when people are most li#ely to use intuiti)e decision ma#ing: 6hen a high le)el of uncertainty exists 6hen there is little precedent to draw on 6hen )ariables are less scientifically predictable 6hen 3facts4 are limited 6hen facts do not clearly point the way to go 6hen analytical data are of little use 6hen there are se)eral plausible alternati)e solutions to choose from, with good arguments for each 6hen time is limited and there is pressure to come up with the right decision

"% 5re unethical decisions -ore a &unction o& the individual decision -a0er or the decision -a0er.s wor0 environ-entF 83plain An$/er I 1his is an opinion 8uestion. (n many ways, it parallels earlier 8uestions whether heredity or en)ironment shape personality.

21

Robbins: Organizational Behavior -UESTIONS .OR CRITICAL THINKING "

Chapter Five

1ow -ight the di&&erences in e3periences o& students and instructors a&&ect their perceptions o& students. written wor0 and class co--entsF An$/er I 6hen an indi)idual loo#s at a target and attempts to interpret what he or she sees, that interpretation is hea)ily influenced by personal characteristics of the indi)idual percei)er. 1he more rele)ant personal characteristics affecting perception are attitudes, moti)es, interests, past experiences, and expectations. ;nsatisfied needs or moti)es stimulate indi)iduals and may exert a strong influence on their perceptions. As interests narrow one0s focus, so do one0s past experiences. Aou percei)e those things to which you can relate. :inally, expectations can distort your perceptions in that you will see what you expect to see. 5n e-ployee does an unsatis&actory +ob on an assigned pro+ect 83plain the attribution process that this person.s -anager will use to &or- +udg-ents about this e-ployee.s +ob per&or-ance An$/er I Attribution theory suggests that when we obser)e an indi)idual0s beha)ior, we attempt to determine whether it was internally or externally caused. 1hat determination depends largely on three factors: distincti)eness, consensus, and consistency. :irst, clarification of the differences between internal and external causation (nternally caused beha)iors are those that are belie)ed to be under the personal control of the indi)idual Externally caused beha)ior is seen as resulting from outside causes5 that is, the person is seen as ha)ing been forced into the beha)ior by the situation. istincti)eness refers to whether an indi)idual displays different beha)iors in different situations. 6hat we want to #now is whether the obser)ed beha)ior is unusual. (f it is, the obser)er is li#ely to gi)e the beha)ior an external attribution. (f this action is not unusual, it will probably be !udged as internal. (f e)eryone who is faced with a similar situation responds in the same way, we can say the beha)ior shows consensus. (f consensus is high, you would be expected to gi)e an external attribution to the employee0s tardiness, whereas if other employees who too# the same route made it to wor# on time, your conclusion as to causation would be internal. -onsistency in a person0s actions. oes the person respond the same way o)er time? 1he more consistent the beha)ior, the more the obser)er is inclined to attribute it to internal causes. Exhibit $<3 summari.es the #ey elements in attribution theory.

'For the -ost part( individual decision -a0ing in organizations is an irrational process ) *o you agree or disagreeF *iscuss An$/er I 7tudents may argue either side, but they need to understand bounded rationality and the role of intuition in decision<ma#ing. 6hen decision ma#ers are faced with a simple problem ha)ing few alternati)e courses of action, and when the cost of searching out and e)aluating alternati)es is low, the rational model is fairly accurate. ecision ma#ers generally ma#e limited use of their creati)ity. -hoices tend to be confined to the neighborhood of the problem symptom and to the neighborhood of the current alternati)e. 6hen faced with a complex problem, most people respond by reducing the problem to a le)el at which it can be readily understoodGbounded rationality. 1he capacity of the human mind for formulating and sol)ing complex problems is far too small to meet the re8uirements for full rationality. (ntuiti)e decision ma#ing as an unconscious process created out of distilled experienceGit operates in complement with rational analysis. 1he expert0s experience allows him or her to recogni.e the pattern in a situation and draw upon pre)iously learned information associated with that pattern to 8uic#ly arri)e at a decision choice. 1he result is that the intuiti)e decision ma#er can decide rapidly with what appears to be )ery limited information. @hat &actors do you thin0 di&&erentiate good decision -a0ers &ro- poor onesF Relate your answer to the si3, step rational -odel An$/er I 1he optimi.ing decision ma#er is rational. /e or she ma#es consistent, )alue<maximi.ing choices within specified constraints. 1he rational modelGsix steps listed in Exhibit $<". efine the problemG9any poor decisions can be traced to the decision ma#er o)erloo#ing a problem or defining the wrong problem.

22

Robbins: Organizational Behavior Chapter Five (dentify the decision criteria important to sol)ing the problem. 1his brings in the decision ma#er0s interests, )alues, and similar personal preferences. Any factors not identified in this step are considered irrele)ant to the decision ma#er. 6eight the pre)iously identified criteria in order to gi)e them the correct priority in the decision. >enerate possible alternati)es that could succeed in resol)ing the problem. -ritically analy.e and e)aluate each alternati)e. -ompute the optimal decision. 9 1ave you ever increased your co--it-ent to a &ailed course o& actionF !& so( analyze the &ollow,up decision to increase your co--it-ent( and e3plain why you behaved as you did An$/er 0 Escalation of commitment is an increased commitment to a pre)ious decision in spite of negati)e information. (t has been well<documented that indi)iduals escalate commitment to a failing course of action when they )iew themsel)es as responsible for the failure. 7tudents0 analysis will )ary with their experience.

POINT1COUNTERPOINT 0 @hen 1iring 8-ployees( 8-phasize the 6ositive POINT /iring new employees re8uires managers to become salespeople. 1hey ha)e to emphasi.e the positi)e, e)en if it means failing to mention the negati)e aspects in the !ob. 6hile there is a real ris# of setting unrealistic expectations about the organi.ation and about the specific !ob, that is a ris# managers ha)e to ta#e. As in dealing with any salesperson, it is the !ob applicant0s responsibility to follow the dictum caveat e-ptorGlet the buyer beware. 6hy should managers emphasi.e the positi)e when discussing a !ob with a prospecti)e candidate? 1hey ha)e no choice. :irst, there is a dwindling supply of 8ualified applicants for many !ob )acancies5 and second, this approach is necessary to meet the competition. -orporate layoffs ha)e recei)ed a lot of attention in recent years. 6hat has often been o)erloo#ed in this process is the growing shortage of 8ualified applicants for literally millions of !obs. 1hrough the foreseeable future, managers will find it increasingly difficult to get 8ualified people who can fill !obs such as legal secretary, nurse, accountant, maintenance mechanic, computer<repair specialist, software programmer, social wor#er, physical therapist, en)ironmental engineer, and telecommunications specialist. 9anagers will also find it harder to get 8ualified people to fill entry<le)el, minimum<wage !obs. 1here may be no shortage of physical bodies, but finding indi)iduals who can read, write, perform basic mathematical calculations, and ha)e the proper wor# habits to effecti)ely perform these !obs is not so easy. 1here is a growing gap between the s#ills wor#ers ha)e and the s#ills employers re8uire, so managers need to sell !obs to the limited pool of applicants. 1his means presenting the !ob and the organi.ation in the most fa)orable light possible. Another reason management is forced to emphasi.e the positi)e with !ob candidates is that this is what the competition is doing. %ther employers also face a limited applicant pool. As a result, to get people to !oin their organi.ations, they are forced to put a positi)e 3spin4 on their descriptions of their organi.ations and the !obs they see# to fill. (n this competiti)e en)ironment, any employer who presents !obs realistically to applicantsGthat is, openly pro)ides the negati)e aspects of a !ob along with the positi)eGris#s losing many of the most desirable candidates. COUNTERPOINT Hegardless of labor<mar#et conditions, managers who treat the recruiting and hiring of candidates as if the applicants must be sold on the !ob and exposed to only positi)e aspects set themsel)es up to ha)e a wor#force that is dissatisfied and prone to high turno)er. E)ery applicant ac8uires, during the selection process, a set of expectations about the organi.ation and about the specific !ob he or she hopes to be offered. 6hen the information an applicant recei)es is excessi)ely inflated, a number of things happen that ha)e potentially negati)e effects on the organi.ation. :irst, mismatched applicants who will probably become dissatisfied with the !ob and soon 8uit are less li#ely to select themsel)es out of the search process. 7econd, the absence of negati)e information builds unrealistic expectations. 1hese unrealistic expectations often lead to premature resignations. 1hird, new hires are prone to become disillusioned and less committed to the organi.ation when they come face<to<face with the negati)es in the !ob. Employees who feel they were tric#ed or misled during the hiring process are unli#ely to be satisfied wor#ers. 1o increase !ob satisfaction among employees and reduce turno)er, applicants should be gi)en a realistic !ob pre)iewGpro)ided both unfa)orable and fa)orable informationGbefore an offer is made. :or example, in 23

Robbins: Organizational Behavior Chapter Five addition to positi)e comments, the candidate might be told that there are limited opportunities to tal# with co< wor#ers during wor# hours, or that erratic fluctuations in wor#loads create considerable stress on employees during rush periods.

24

Robbins: Organizational Behavior

Chapter Five

Hesearch indicates that applicants who ha)e been gi)en a realistic !ob pre)iew hold lower and more realistic expectations about the !ob they will be doing and are better prepared for coping with the !ob and its frustrating elements. 1he result is fewer unexpected resignations by new employees. Hemember that retaining 8ualified people is as critical as hiring them in the first place. Bresenting only the positi)e aspects of a !ob to a recruit may initially entice him or her to !oin the organi.ation, but it may be a marriage that both parties will 8uic#ly regret.
>ource: (nformation in this argument comes from @. 9. Bhillips, 3Effects of Healistic @ob Bre)iews on 9ultiple %rgani.ational %utcomes: A 9eta<Analysis,4 5cade-y o& Manage-ent ?ournal, ecember 1++*, pp. &'3I+,5 and @. A. =reaugh and 9. 7tar#e, 3Hesearch on Employee Hecruitment: 7o 9any 7tudies, 7o 9any Hemaining Kuestions,4 ?ournal o& Manage-ent, )ol. 2&, no. 3, 2,,,, pp. "1$I1'.

HR
C#"$$ E*erci$e) 1. =efore doing this exercise, sit down and write out a realistic !ob pre)iew for your position. 7how it to colleagues for their input and to help tone it down or up Odepending P. 9a#e copies to hand out in class. %ne cautionG o not put anything down you are not willing to ha)e the ean or a parent read. =rainstorm with the students about a realistic !ob pre)iew for being a college professor teaching business. Aou may ha)e to encourage participation5 students may feel somewhat intimidated describing your !ob to you. List on the board what students thin# a professor does, how he2she uses his2her time, etc. =efore handing our your H@B, as# students how they 3#now4 these things, first<hand experience, obser)ation, etc. As# students if any ha)e first<hand #nowledge of one of these professions. /and out your H@B5 ha)e students compare it with theirs. /ow are they the same or different? 6hy are they different? 6hat are the implications?

2. 3. ". $. &. '.

TEAM E'ERCISE 0 Biases in *ecision Ma0ing 7tep 1. /a)e students answer each of the following problems on their own. C1hey can be found in the text.D 1. 1he following ten corporations were ran#ed by Fortune maga.ine to be among the $,, largest ;nited 7tates< based firms according to sales )olume for 1++*. >roup A: =.:. >oodrich, /ershey :oods, 9attel, 9aytag, Kua#er %ats >roup =: -onagra, Enron, (ngram 9icro, ;nited 1echnologies, ;7M a. 6hich group of fi)e organi.ations listed CA or =D had the larger total sales )olume? An$/er 0 >roup = had the larger total, with combined sales of Q12'.& billion. >roup A had combined sales of Q22.1 billion. 7tudents often choose this group because of the a)ailable heuristicGthe companies are better #nown. =y what percentage C1,R, $,R, 1,,R, or ?D do you thin# the higher group0s sales exceeded the lower group? An$/er 0 $,,R. >roup = has $ times the sales but is less well #nown and is comprised of industrial firms. 2. 1he best student in my introductory 9=A class this past semester writes poetry and is rather shy and small in stature. 6hat was the student0s undergraduate ma!or: -hinese studies or psychology? An$/er I (llustrates representati)e heuristic. 9ost students would offer 3-hinese studies,4 o)erloo#ing that psychology ma!ors outnumber -hinese studies ma!ors $,:1. 3. 6hich of the following causes more deaths in the ;nited 7tates each year? An$/er 0 7tomach cancer. 1wice as many as from motor )ehicle accidents, but this represents a)ailable heuristic because of the emphasis in the media on car accidents. 25

Robbins: Organizational Behavior ". 6hich would you choose? a. A sure gain of Q2", b. A 2$R chance of winning Q1,,,, and a '$R chance of winning nothing. $. 6hich would you choose? a. A sure loss of Q'$, b. A '$R chance of losing Q1,,,, and a 2$R chance of losing nothing. &. 6hich would you choose? a. A sure loss of Q3,,,, b. An *,R chance of losing Q",,,, and a 2,R chance of losing nothing.

Chapter Five

7tep 2: =rea# into groups of three<to<fi)e. -ompare your answers. Explain why you chose the answers that you did. 7tep 3: Aour instructor will gi)e you the correct answers to each problem. Eow discuss the accuracy of your decisions, the biases e)ident in the decisions you reached, and how you might impro)e your decision ma#ing to ma#e it more accurate. Te"c2in& note$ 1. Answer found in instructions abo)e. 2. Answer found in instructions abo)e. 3. Answer found in instructions abo)e. ". 6hich would you choose? An$/er I O1he percentage of responses come from the author0s experience. 1he percentages are not important but the general pattern in your class is. (n all li#elihood, your class will parallel the author0s experience.P (n a test, *" percent of students chose 3b4Ga sure gain. 7ixteen percent chose 3a4Ga 2$ percent chance. 1his exemplifies our tendency to be ris#<a)erse concerning gains and positi)ely framed 8uestions. $. 6hich would you choose? An$/er 0 O1he percentage of responses come from the author0s experience. 1he percentages aren0t important but the general pattern in your class is. (n all li#elihood, your class will parallel the author0s experience.P Eighty<se)en percent chose 3b4G'$ percent chance, and 13 percent chose 3a4Ga sure loss. 1his demonstrates our tendency to be ris#<see#ing concerning losses and negati)ely framed 8uestions. &. 6hich would you choose? An$/er 0 O1he percentage of responses come from the author0s experience. 1he percentages aren0t important but the general pattern in your class is. (n all li#elihood, your class will parallel the author0s experience.P 1his is the same 8uestion as number fi)e, but the amounts will probably shift students to choosing 3a4Gthe sure loss because 3b4Gthe *, percent loss is much greater, if they calculate the percentages.
O1hese problems are based on examples pro)ided in 9./. =a.erman, ?udg-ent in Managerial *ecision Ma0ing( 3rd ed. CEew Aor#: 6iley, 1++"D.P

26

Robbins: Organizational Behavior ETHICAL DILEMMA EXERCISE Five 8thical *ecisions: @hat @ould Eou *oF

Chapter Five

Assume you are a middle manager in a company with about a thousand employees. /ow would you respond to each of the following situations? 1. Aou are negotiating a contract with a potentially )ery large customer whose representati)e has hinted that you could almost certainly be assured of getting his business if you ga)e him and his wife an all<expense<paid cruise to the -aribbean. Aou #now the representati)e0s employer wouldn0t appro)e of such a 3payoff,4 but you ha)e the discretion to authori.e such expenditure. 6hat would you do? An$/er I 7tudents0 responses will )ary significantly. 1wo suggestions for discussing these 8uestions: :irst, do not show shoc# at the lac# of ethicality of the students. Hesearch shows, for some reason, business students ha)e far lower ethicality than practicing managers. 1he point of these 8uestions is to help the students de)elop their ethical framewor#s. 7econd, suggest the students analy.e the 8uestion based on the following criteria. (mpact on peopleG6ho are the #ey sta#eholders? 6hat is the potential for harm to them? %rgani.ational systemsG(n what way does the organi.ation0s way of doing business, policies and procedures contribute to the ethical conflict. -hoiceG6hat alternati)es do they ha)e? /ow much ris# do they face in doing the ethical thing? 2. Aou ha)e the opportunity to steal Q1,,,,,, from your company with absolute certainty that you would not be detected or caught. 6ould you do it? An$/er 0 7ee S1 abo)e. 3. Aour company policy on reimbursement for meals while tra)eling on company business is that you will be repaid for your out<of<poc#et costs, not to exceed Q&, a day. Aou do not need receipts for these expensesG the company will ta#e your word. 6hen tra)eling, you tend to eat at fast<food places and rarely spend in excess of Q1$ a day. 9ost of your colleagues put in reimbursement re8uests in the range of Q"$ to Q$, a day, regardless of what their actual expenses are. /ow much would you re8uest for your meal reimbursements? An$/er 0 7ee S1 abo)e. ". Another executi)e, who is part of a small planning team in which you are a member, fre8uently has the smell of alcohol on his breath. Aou ha)e noticed that his wor# has not been up to standard lately and is hurting your team0s performance. 1his executi)e happens to be the son<in<law of the company0s owner and is held in )ery high regard by the owner. 6hat would you do? An$/er 0 7ee S1 abo)e. $. Aou ha)e disco)ered that one of your closest friends at wor# has stolen a large sum of money from the company. 6ould you: o nothing? >o directly to an executi)e to report the incident before tal#ing about it with the offender? -onfront the indi)idual before ta#ing action? 9a#e contact with the indi)idual with the goal of persuading that person to return the money? An$/er 0 7ee S1 abo)e. O7e)eral of these scenarios are based on .H. Altany, 31orn between /alo and /orns,4 !ndustry @ee0( 9arch 1$, 1++3, pp. 1$I2,.P

CASE INCIDENT 0 @ohn Eeill at ;nipart 6hile most part suppliers for the ;nited Fingdom0s automobile industry struggle, one company is doing !ust fineG;nipart. 1his 2.3 billion<euro company has done well largely because of the decisions made by its -E%, @ohn Eeill. (n 1+'", at the youthful age of 2+, @ohn Eeill was made managing director of the ;nipart di)ision of =ritish Leyland C=LD. /e immediately began to ruffle feathers of conser)ati)e =L executi)es by de)eloping inno)ati)e mar#eting campaigns and focusing company attention on the parts business Cin contrast to its cars and truc#sD. 27

Robbins: Organizational Behavior Chapter Five /e increased the di)ision0s mar#eting budget six<fold, created a retail shop program, altered the pac#aging, and began promoting the di)ision0s parts on tele)ision.

28

Robbins: Organizational Behavior

Chapter Five

/is 3parts first4 pitch did not go down well with his bosses, who saw it as an attac# on the )iability of =L itself, but it was too late for =L0s top management to do much about it. Eeill had created a )iable business, while the rest of the company Cwhich later became part of the Ho)er >roupD labored along, losing mar#et share e)ery year. Almost from the beginning, Eeill en)isioned ma#ing ;nipart independent from =L. (n 1+*', he did !ust that. /e negotiated a *+.$ million euro management buyout of ;nipart from =L. /e then immediately began ta#ing actions that would allow ;nipart to stand on its own two feet. 36e #new the future would be worse,4 Eeill recalls, 3because today0s mar#et share was smaller than yesterday0s. 7o the parts business would go down unless we did something dramatically different.4 1hat 3something4 was to mo)e away from pro)iding original parts for Ho)er. (nstead, ;nipart would commit to creating a strong consumer brand built around replacement parts. 1oday, ;nipart has become a highly recogni.able consumer brand in the ;nited Fingdom. (t has also di)ersified into a range of other businesses. Broducing and selling automoti)e parts is still the company0s main acti)ity but it also runs a successful warehouse, a logistics business, and has created an (nternet trading platform. (n 1+*', when ;nipart became independent, sales to Ho)er represented +, percent of its business. (t is now down to 3 percent. Eo longer are ;nipart0s fortunes tied singularly to Ho)er. (n fact, one of ;nipart0s most profitable current businesses is running @aguar0s entire parts operation on a fee basis. espite Eeill0s success since the buy<out, ;nipart faces tough times ahead. 1he ;.F. auto industry suffers from massi)e o)ercapacity. (ntensi)e downward pricing pressure on suppliers is li#ely to eat away at ;nipart0s profits. (n response, Eeill has expanded ;nipart0s logistic business by paying 2+2 million euros for auto parts distributor Bartco. 1his ac8uisition ma#es ;nipart the biggest automoti)e parts distributor in the ;nited Fingdom. Eeill is also di)ersifying beyond ;nipart0s automoti)e parts roots, especially on the e<commerce front. -!e$tion$ " '?ohn 4eill is not s-artG he is +ust luc0y ) *o you agree or disagreeF 83plain 7tudents0 answers will )ary. Luc# may )ery well ha)e been a part of the outcome, howe)er, it appears Eeill0s intuition also may ha)e played a part. espite his youth, he had expertise in auto manufacturing business and #new that tying all the ;nipart0s fortunes to one manufacture could put you at ris#. /is willingness to ta#e a ris# and follow his 3hunch4 paid off for the organi.ation. *id intuition play a role in 4eill.s decisionsF *iscuss (t appears so since the scenario does not discuss any other decision process that he may ha)e gone through. /is ideas were not initially met with enthusiasm. 7ince he ignored the critics and mo)ed ahead anywayGit could ha)e 8uite possibly been intuition. Contrast the -a+or strategic decisions at /nipart and British Leyland ;nipart saw itself as a )iable business apart from =L. (t focused its mar#eting and sales on parts and became strong enough to split from =L and begin offering its ser)ices to other =ritish auto manufactures. =L continued to follow its plan despite shrin#ing mar#et share. (t was not enthusiastic about ;nipart0s direction and as a result missed an opportunity. *o you thin0 ?ohn 4eill would have been e=ually success&ul i&( bac0 in "#$<( he had been -ade head o& BLF 83plain Kuite possibly. /e was the head of the parts operation and which was where his performance was being e)aluated. 1ypically manager0s will focus their decisions based on what will bring the most benefits to him or her, not necessarily the organi.ation as a whole. /ad he been charged with the entire =L operation, he may ha)e had a different focus which could ha)e benefited =L more substantially.

>ource: =ased on 1. Hubython and A. 7ibillin, 31he Heality 9an,4 8uroBusiness, %ctober 2,,,, pp. '&I'*.

29

Robbins: Organizational Behavior

Chapter Five

Exploring OB Topics on the World Wide Web

7earch Engines are our na)igational tool to explore the 666. 7ome commonly used search engines are: www.goto.com www.google.com www.excite.com www.lycos.com www.hotbot.com www.loo#smart.com
1.

/ow can you impro)e your creati)ity? 1here are many strategies and most of the funN >o to: http:22members.o.email.com.au2Tca)eman2-reati)e21echni8ues2 and read how to impro)e your creati)ity. -hoose three or four techni8ues and write a short !ournal entry or paragraph comparing them. 1a#e one techni8ue and apply it to a 8uestion or decision you are in the process of ma#ing. 6rite about this also. =ring both paragraphs to class for discussion. Are you creati)e? 1a#e a creati)ity test to see how you compare to others. 1he -enter for the e)elopment of -reati)e 1hin#ing has a short test. >o to http:22www.cocd.be2eng2index.htm . =ring your short story to class so that we can share them with the class. Head more about ethics in the wor#place. A comprehensi)e guide to many topics confronting managers can be found at http:22www.mapnp.org2library2ethics2ethxgde.htm . (n particular loo# at the pages on the myths and benefits of managing ethics in the wor#place. Also loo# at the roles and responsibilities of managing ethics in the wor#place. 6rite three ma!or ideas you learned from reading this page and bring them to class for further discussion. Learn more about Attribution 1heory at http:22cognet.mit.edu29(1E-72Entry2morris . oes this information explain how we as humans can explain anything? %b)iously, there are accurate attributions and errors in attributions that we ma#e e)eryday. 6rite a paragraph or two about what you learned from this page. :or a 3spirited4 o)er)iew of decision ma#ing and intuition go to the following web site sponsored by the ;7 Army0s surgeon general http:22www.hooah"health.com2spirit2decisions.htm . Earlier we learned about personality indicators. 6hat role does our personality ha)e in our ability to problem sol)e and ma#e decisions. >o to a paper written by 6.>. /uitt on this topic at http:22chiron.)aldosta.edu2whuitt2files2prbsmbti.html . %nce you ha)e read the paper write a one page reaction paper on what you learned and how you thin# your personality influences the way you ma#e decisions. Are college students different than employees when it comes to ethics? >o to www.shrm.org2press2releases2+*,12*.htmS7napshot and http:22www.icce2,,1.org2cd2pdf2p,*2Au1,2.pdf to ma#e a comparison of why employees and students say they sometimes beha)e in unethical ways. 6rite a paragraph or two on what you belie)e are the similarities in reasons are between these two groups.

2.

3.

4.

5.

6.

7.

*. -onduct a web search on one of the topics from this chapter combined with the word culture. :or example, stereotyping and culture, ethics and culture, decision ma#ing and culture. 6rite a two page paper on the topic of your choice. =e sure to address how culture relates to the topic you chose.
30