The Role of Perception in Business

Perception and Decision Making

Gregory

Webb, Yahoo

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May 20, 2009 "Share your voice on Yahoo websites. Start Here." MORE: Organizational Behavior Decision Making Process FlagPost a comment

Organizational behavior is influenced by many factors. The many factors that influence organizational behavior are in fact variable. Variable meaning OB (organizational behavior) influencers change depending on the circumstance and situation. One OB influencer that is critically important for all business managers to understand is perception. Perception should play a crucial role in the daily decision making process for all managers. Simply put, "...people's behavior is based on their perception of what reality is, not on reality itself" (Robbins, Stephen P, 2005). With that said, how does a manager effectively manage a cohort group that base decisions on perception opposed to reality? What is perception? According to Organizational Behavior (11th edition)"Perception is a process by which individuals organize and interpret their sensory impressions in order to give meaning to their environment" (Robbins, Stephen P, 2005). Individuals are unique in that they possess their own lens to form conclusions about the very same situation. People see things differently and depending on their background, education, the current situation, and mood are all prone to make different rational interpretations of the exact same situation. A disgruntled employee will likely not see a new ambitious manager through the same lens as a happy veteran employee. Perception is reality and all managers must factor in this fact when making crucial business decisions regarding people. If a manager perceives something in one way or another and bases an important business decision on the perception; the organization will either benefit or not benefit from the decision. Managers should understand the facts along with the situation in order to conclude with an appropriate decision. A manager's perception and decisions will affect the organizations behavior. Ones perception and decision will trickle down and may initiate several other decisions decided by the organizational associates. People, especially subordinates base decisions off of one individual's perception and decisions. Perceptive shortcuts are often used when judging other individuals. What does "perceptive shortcut" mean? Perceptive shortcut simply put is making a quick assumption based on the results of specific behavioral evaluation techniques. There are a few behavioral evaluation techniques. To name a few, there is the selective perception technique which refers to the collection of bits and pieces of information and interpreting them based on interest, background, experience, and attitude. There's the halo effect which refers to drawing a general impression based on a single characteristic (i.e., intelligence). The contrast effect refers to the comparison of particular characteristics that are influenced by the actions of recently encountered groups (higher or lower in

rank). Projecting is tying ones very own characteristics with those of another. Finally, stereotyping is a common evaluation technique that often leads to misinterpretations. Each of the listed perceptive shortcuts has respective pros and cons. Selective perception may provoke one to jump to conclusions before the entire picture has been drawn. Focusing on certain points of interest will certainly alter the ability to conclude with an accurate picture. The halo effect may lead an individual to make a judgment due to lack of knowledge. Projection clouds the ability to see key differences which will essentially generate an uninformed perception / decision. The positive of all of these techniques is that they can in fact help manage and generate informed decisions (with the proper approach). There are many different types of biases that affect the decision making process and what one perceives of another. In the real world, decisions are generally made by judgment opposed to following a complex decision making model. According to Organizational Behavior (11th edition), "Decision making in practice is characterized by bounded rationality, common human biases and errors, and the use of intuition" (Robbins, Stephen P, 2005). Human beings cannot possibly absorb and process information in the same way a Google search engine can. In other words, human beings are subjected to bounded rationality. Optimization is task that human beings simply cannot achieve (at the level of say a Google SEO can). When managers are faced with complex situations they must drill down on the best possible alternatives and act on the one that satisfies or the one that is acceptable to the masses. There is just no possible way a manager can optimize a decision deriving from a complex scenario. In summary, bounded rationality is interpreted as saying "humans cannot be optimizers; rather they seek solutions that are sufficient". Common human biases and errors such as overconfidence bias, anchoring bias, confirmation bias, availability bias, representative bias, commitment error, randomness error, and hindsight bias can lead to heavily distorted judgments relative to reality. Decision makers use these shortcuts to make the process of judging more efficient. These approaches can be useful but can also be very dangerous. It is important for managers not to rely too heavily on intuition, experience, and gut feelings. All situations present uniqueness and each deserve adequate evaluation prior to conclusion. Intuition decision making is commonly used in scenarios that provide small of amounts of information and when decisions are needed quickly. Intuitive ability is a valuable asset for managers in today's business world. In general, intuition is a disguised process that managers like to "dress up" prior to presenting to superiors. Today's managers use intuition decision making probably more than any other process. It still important, however, for managers to absorb the entire picture as much as possible prior to concluding with a decision. Perception of business results can contribute to business decisions that may or may not seem ethical. For example, if a manager decides to lay off twenty percent of the workforce in an effort to boost profits he or she may be making a not so ethical decision in some people's eyes. It is important for managers to factor in the rights and justice system when making business decisions. Employees and managers base decisions on perception. Perception is a force that is very complex, but crucial for managers to acknowledge and understand. Managers may need to help bring things to light for employees in an effort to change a clearly distorted view point. Perception is reality.