Chapter 6

What is Perception?
Perception is the process by which we organize and interpret sensory information,
like sights, sounds, or smells, to make sense of our environment. Importantly,
perception is subjective; it can differ from person to person based on how they
see the world. This is significant in organizations because people's actions are
based not on the actual reality but on how they perceive it.
Example: Imagine that all employees in a company think it’s a great place to work,
even if it has some issues. This shows how their perception of the company
shapes their behavior, not necessarily the objective reality of the workplace.

Why is Perception Important in Organizational Behavior

(OB)?
In OB, perception is crucial because it drives behavior. How employees perceive
their work environment, colleagues, or managers directly affects how they
behave. Even if a situation is objectively different, how individuals interpret that
situation will determine how they act.

Factors That Influence Perception

Several factors shape and sometimes distort perception. These can be categorized
into three areas:
1. The Perceiver: This is the person making the observation. Personal
characteristics like attitudes, personality, past experiences, and expectations
influence what the perceiver sees.
Example: If a manager is an early riser, they might perceive employees who come
in early as more hardworking, even if this is not necessarily true.
2. The Target: The object or person being perceived. The characteristics of the
target can also influence perception. We tend to group similar things or
people together.
Example: If a professor wears a casual T-shirt in class instead of formal clothes,
students may perceive the professor as more individualistic or relaxed.
 3. The Situation: The context in which the perception occurs also matters.
Factors like time, location, or lighting can impact what we notice.
Example: A person wearing flashy clothes at a club on Saturday night might blend
in, but the same person dressed that way in a business meeting on Monday would
stand out.

Attribution Theory
Attribution theory is a framework used to explain how people make judgments
about others' behavior. It suggests that we try to figure out if a person's behavior
is caused by internal factors (personal traits) or external factors (the situation).
Three factors help us determine the cause:
1. Distinctiveness: Does this person act the same way in different situations?
Example: If an employee is late to work but is also late to meetings and other
commitments, this might be seen as an internal problem (lack of responsibility).
2. Consensus: Do other people in the same situation behave the same way?
Example: If all employees who took the same traffic route were late, then we may
attribute the cause to external factors (traffic), not the person.
3. Consistency: Does the person behave this way over time?
Example: If someone is consistently late to work, it’s more likely to be attributed
to an internal factor like poor time management.

Errors and Biases in Attribution

1. Fundamental Attribution Error: We often underestimate external factors
and overestimate internal factors when judging others.
Example: A manager might think a sales agent is performing poorly because they
are lazy, rather than considering external reasons like increased competition.
2. Self-Serving Bias: We tend to attribute our successes to internal factors (like
hard work) and failures to external factors (like bad luck).
Example: If someone gets a promotion, they might believe it’s due to their skills.
But if they are passed over, they may blame office politics.

Common Shortcuts in Judging Others

1. Selective Perception: We tend to notice things that align with our interests
or beliefs while ignoring others.
Example: If you are interested in sports cars, you'll probably notice more sports
cars on the road than others.
2. Halo Effect: We form an overall impression of someone based on a single
characteristic, good or bad.
Example: If a colleague is always friendly, you might assume they are also
competent at their job, even if that’s not true.
3. Contrast Effect: Our perception of someone can be influenced by
comparisons to others we have just encountered.
Example: If a job applicant follows an exceptionally talented candidate in an
interview, they might seem less impressive in comparison, even if they’re good.
4. Stereotyping: We judge someone based on the group they belong to, often
using generalizations.
Example: Assuming someone is good at math just because they belong to a
certain ethnicity.

Specific Applications of Shortcuts in Organizations

1. Employment Interviews: Interviewers often make quick judgments that
shape the entire interview process, sometimes in just a few minutes.
Example: An applicant might be judged positively or negatively based on their first
impression, regardless of what they say later.
2. Self-Fulfilling Prophecy: This occurs when a person’s expectations about
another lead to behaviors that cause the expectations to come true.
Example: If a manager expects an employee to fail, the employee might sense this
and not perform well, fulfilling the manager's expectation.
 3. Performance Evaluations: Perceptions also affect how managers evaluate
employee performance. Biases like the halo effect or contrast effect can
lead to unfair evaluations.
Example: If a manager likes one aspect of an employee (such as punctuality), they
might overlook other areas where the employee is underperforming.
The Link Between Perception and Individual Decision Making
Perception plays a crucial role in individual decision making, influencing how
individuals interpret problems, evaluate alternatives, and ultimately choose
among options. This relationship is essential to understand, as decisions made at
all levels of an organization are impacted by subjective perceptions rather than
purely objective data. Here’s a breakdown of how perception affects decision
making:
1. Understanding Problems through Perception
 Definition of a Problem: A problem arises when there is a discrepancy
between the current state of affairs and a desired state. Individuals are
required to make decisions in response to this discrepancy.
 Subjectivity of Problems: Not every individual perceives problems in the
same way. For instance, a manager facing a 2% decline in sales may view
this as a critical issue needing immediate action, while another manager
might see it as an acceptable fluctuation. This variability highlights that
perception can shape what is considered a problem.
2. Interpreting and Evaluating Information
 Data Processing: Decision making involves interpreting information from
various sources. The effectiveness of this process largely depends on an
individual's perception of the data's relevance.
 Relevance of Data: Individuals must screen and evaluate data to identify
what is pertinent to their decisions. Their perceptions influence which
information they deem significant and which they disregard.
3. Generating and Evaluating Alternatives
  Perceptual Bias: When developing alternatives, an individual’s perception
can lead to biases in evaluating the strengths and weaknesses of each
option.
 Evaluation Process: If an individual has a negative perception of a particular
alternative, they may overlook its potential benefits, while overvaluing
alternatives they favor.
4. Influence of Perception on Decision-Making Behavior
 Decision-Making Comfort Levels: Perception also affects how comfortable
individuals feel with making decisions. For example, research has shown
that many individuals find it uncomfortable to say "no" to requests, leading
them to agree to unethical behaviors or requests they would typically
decline.
 Example of Social Pressure: In a study, participants were asked to write
"pickle" in library books, and half complied due to discomfort in refusing.
This indicates how perceptions of social norms and personal obligations can
skew decision making.

Decision Making in Organizations

Contrast the Rational Model of Decision Making with Bounded Rationality and
Intuition
Rational Decision-Making Model
The rational decision-making model represents an idealized approach where
individuals make consistent, value-maximizing choices based on complete
information. This model is characterized by a structured six-step process:
1. Define the problem: Clearly identify the issue that requires a decision.
2. Identify the decision criteria: Determine what factors will influence the
decision.
3. Allocate weights to the criteria: Prioritize the criteria based on their
importance.
 4. Develop alternatives: Generate a list of possible solutions or courses of
action.
5. Evaluate the alternatives: Assess each alternative against the established
criteria.
6. Select the best alternative: Choose the option that provides the highest
utility.
While this model provides a systematic way to make decisions, it assumes that
decision-makers have complete information and can evaluate all options
impartially. However, real-world decision-making is often more complex and does
not follow this rational model due to various limitations.
Bounded Rationality
Bounded rationality acknowledges the limitations of human information-
processing capabilities. In practice, individuals often operate under constraints
such as limited information, cognitive overload, and time pressure. As a result,
people tend to:
 Satisfice: Instead of searching for the optimal solution, individuals look for a
satisfactory or acceptable option that meets a threshold of adequacy.
 Simplify: Complex problems are often reduced to simpler forms that are
easier to understand and analyze, leading to a decision that is "good
enough."
This model recognizes that decision-makers use mental shortcuts and rely on
familiar solutions rather than comprehensively evaluating all possible alternatives.
Bounded rationality is often more pragmatic, especially when the cost of
exhaustive information gathering outweighs the benefits.
Intuitive Decision-Making
Intuition represents a more subconscious approach to decision-making, relying on
gut feelings and instinct rather than formal analysis. Key characteristics of intuitive
decision-making include:
 Unconscious Process: Decisions are made quickly, often without conscious
deliberation.
  Experience-Based: Intuition draws from past experiences, allowing
individuals to make judgments based on patterns and emotional responses.
 Holistic Associations: Intuition can integrate various pieces of information,
leading to insights that may not be immediately apparent through analytical
thinking.
While intuition can be useful, especially in familiar contexts, it is often criticized
for being less reliable than rational analysis. Experts caution that while intuitive
hunches can generate hypotheses, they should always be tested against objective
data.

Comparison of the Models

Rational Decision- Bounded

Aspect Intuition
Making Rationality

Limited
Information Assumes complete Relies on subconscious
information
Processing information and experience
processing

Decision Structured, step- Satisficing, Quick, holistic

Approach by-step simplified solutions judgments

Acceptable Emotional and

Outcome Focus Maximizes utility
outcomes experiential responses

Minimal biases Systematic biases Susceptible to

Bias and Errors
assumed present emotional influences
Influences on Decision Making: Individual Differences
and Organizational Constraints.

The decision-making process within organizations is influenced by a multitude of

factors, including individual differences and organizational constraints. This
section explores these influences, highlighting the implications they have for
decision-making effectiveness.
Individual Differences
1. Personality Traits:
o Conscientiousness: Individuals with high conscientiousness may
show varying behaviors in decision-making. Those with strong
achievement-striving tendencies might escalate their commitment to
decisions to avoid failure, while those demonstrating high dutifulness
are more inclined to prioritize organizational well-being, potentially
leading to less commitment escalation.
o Self-Esteem: People with high self-esteem may engage in self-serving
biases, attributing successes to their abilities while blaming failures
on external factors. This can distort decision-making by emphasizing
personal reputation over objective outcomes.
2. Gender Differences:
o Decision quality between men and women may vary based on the
context. In non-stressful situations, both genders tend to perform
equally, but men may become more risk-seeking under stress, while
women may approach decisions with increased empathy.
o Women are often more reflective, which can lead to over-analysis
and increased regret, while men might act more impulsively.
3. Mental Ability:
o Higher mental ability typically allows individuals to process
information faster and make more accurate decisions. However,
 intelligent individuals may still fall victim to biases like overconfidence
and anchoring due to emotional defensiveness.
4. Cultural Differences:
o Cultural backgrounds shape decision-making approaches, affecting
problem identification, analysis depth, and preferences for collective
versus individual decision-making. For example, cultures with a long-
term orientation may approach decisions more slowly compared to
those with a short-term focus.
o In collectivist cultures, like Japan, decision-making often emphasizes
group consensus, while individualistic cultures, like the United States,
might favor rapid individual decisions.
5. Nudging:
o Organizations often employ "nudging" techniques to influence
decision-making subtly. This can involve altering the presentation of
choices to promote better decisions, such as automatic enrollment in
retirement plans.
Organizational Constraints
1. Performance Evaluation Systems:
o The criteria by which managers are evaluated can significantly shape
their decision-making processes. If managers are incentivized to avoid
negative feedback, they may suppress critical information that could
inform better decisions.
2. Reward Systems:
o Organizational rewards can create bias in decision-making by favoring
certain behaviors over others. For instance, a culture that rewards
risk aversion may lead managers to avoid necessary but risky
decisions, ultimately stifling innovation.
3. Formal Regulations:
o Extensive rules and policies guide decision-making within
organizations, often limiting the freedom of choice for individuals.
 Managers may find their options constrained by compliance
requirements and operational procedures.
4. Time Constraints:
o Decision-making is often influenced by deadlines that require quick
choices, potentially compromising the quality of information
gathering and analysis.
5. Historical Precedents:
o Past decisions create a context that can influence current choices.
Managers may find themselves constrained by established practices
and budgets, impacting their ability to innovate or change direction.
Ethical Considerations
1. Utilitarianism:
o Decisions made from a utilitarian perspective focus on outcomes that
provide the greatest good for the greatest number. This approach can
lead to justifying ethically questionable actions in the name of
efficiency and profit.
2. Rights-Based Decision Making:
o This approach emphasizes respecting fundamental rights, such as
privacy and free speech, which is crucial for protecting
whistleblowers who report unethical practices.
3. Justice-Based Decision Making:
o Decisions should be made fairly and impartially, ensuring an
equitable distribution of benefits and costs. This perspective can help
avoid discriminatory practices within the organization.
4. Behavioral Ethics:
o Behavioral ethics examines how people act when faced with ethical
dilemmas. Research indicates that environmental cues, open
discussions about moral issues, and awareness of moral blind spots
can enhance ethical decision-making.
Impact of Lying
 Lying undermines effective decision-making by distorting the facts and
motivations underlying choices. Although detecting lies can be challenging,
organizations must be vigilant against misinformation to maintain sound
decision-making practices.
 Ethical behavior is crucial in fostering trust and ensuring that decisions are
based on accurate information. The challenge lies in creating an
organizational culture that prioritizes honesty and transparency over self-
interest.
In conclusion, understanding the individual and organizational factors influencing
decision-making is essential for fostering effective and ethical practices within
organizations. By recognizing these influences, organizations can create an
environment that encourages better decision-making outcomes while navigating
the complexities of human behavior and organizational dynamics.

Ethical Decision Criteria

1. Utilitarianism
o Decisions are made based on their outcomes, aiming to achieve the
greatest good for the greatest number.
o While common in business for promoting efficiency and profit,
utilitarianism is subjective and influenced by cultural contexts.
o Research indicates that people's ethical decisions can vary based on
emotional distance and situational factors.
2. Rights-Based Approach
o This approach emphasizes respecting and protecting individuals'
basic rights (e.g., privacy, free speech).
o It safeguards whistle-blowers who report unethical practices, aligning
with fundamental liberties.
3. Justice Approach
 o Focuses on fairness and equitable distribution of benefits and costs.
o This perspective can lead to practices such as uniform pay for equal
work and seniority-based layoffs.
Challenges in Ethical Decision-Making
 Many decision-makers prioritize utilitarian principles, which can justify
questionable actions for profit.
 Critics argue for non-utilitarian ethics, emphasizing individual rights and
social justice, which can complicate decision-making due to their
ambiguous nature.
Corporate Social Responsibility (CSR)
 CSR promotes ethical practices and social responsibility, influencing
consumers' purchasing choices and enhancing an organization's image.
 Companies with strong CSR initiatives tend to attract talent and receive
governmental incentives, blending ethics with business interests.
Behavioral Ethics
 Examines actual behaviors in ethical dilemmas, highlighting that individuals
often deviate from organizational ethical standards.
 Environmental factors, such as status displays and cleanliness, can affect
ethical behavior, suggesting that managers should foster discussions on
moral issues to enhance ethical decision-making.
Lying and Decision-Making
 Lying undermines decision-making by obscuring facts and motives. Most
individuals struggle to detect lies effectively, with traditional techniques
yielding unreliable results.
 Research suggests that while people may not consciously detect lies, they
often sense dishonesty at an intuitive level.
 To combat lying, organizations should create environments that discourage
dishonest behavior and promote transparency.
The three-stage model of creativity in organizations outlines the process of how
creative potential is transformed into innovative outcomes. Here's a breakdown of
each stage:
1. Causes of Creative Behavior
This stage focuses on the factors that foster creativity. It encompasses two main
components:
 Creative Potential: This includes individual traits such as intelligence,
personality (particularly openness to experience), expertise in a relevant
field, and sometimes, unconventional traits associated with mental health.
Those with higher creative potential possess characteristics such as
proactive personality, self-confidence, risk-taking, tolerance for ambiguity,
and perseverance. Intelligence, in particular, plays a significant role in
enhancing creative problem-solving abilities.
 Creative Environment: The organizational culture and atmosphere greatly
influence creativity. An environment that promotes intrinsic motivation,
recognizes and rewards creative efforts, and encourages open
communication and idea sharing will facilitate creativity. Leadership style
also matters; supportive leaders tend to foster higher levels of creativity
among their teams. Furthermore, access to diverse perspectives and
knowledge is crucial, as collaboration can spark innovative ideas.
2. Creative Behavior
Creative behavior occurs in a structured manner, often progressing through four
steps:
 Problem Formulation: Creativity begins with identifying a problem or
opportunity that requires a novel solution. This initial stage is crucial for
setting the context for creative thinking.
 Information Gathering: Once a problem is identified, individuals gather
relevant information and allow potential solutions to incubate in their
 minds. This step involves expanding knowledge and considering different
angles related to the problem.
 Idea Generation: In this phase, individuals or teams develop potential
solutions based on the information collected. This can occur through
individual brainstorming or collaborative efforts, with techniques like
brainstorming sessions or mind mapping often used to facilitate idea
generation.
 Idea Evaluation: After generating ideas, the next step is to assess these
solutions to identify the most effective one. This evaluation process is
critical, as it involves filtering through ideas to find those that are both
novel and useful.
3. Creative Outcomes (Innovation)
The final stage evaluates the results of the creative process. Creative outcomes
are the innovative ideas or solutions that are deemed novel and useful by relevant
stakeholders. It's important to note that not all creative behaviors result in
innovation; for an idea to be successful, it must be shared and implemented. The
translation of creative ideas into tangible outcomes often requires strong
interpersonal skills, networking ability, and motivation to bring those ideas to
fruition.
Summary
In summary, the three-stage model of creativity emphasizes the interrelationship
between the causes of creativity (both individual and environmental factors), the
processes of creative behavior, and the ultimate creative outcomes. This model
highlights the importance of fostering a conducive environment for creativity and
the necessity of supportive leadership to nurture innovative thinking within
organizations.

three-stage model of creativity in organizations:

1. Causes of Creative Behavior
This stage is about what makes creativity happen. It has two parts:
  Creative Potential: This refers to the qualities that people have which help
them be creative. Important traits include:
o Intelligence: Smart people often come up with better solutions to
complex problems.
o Personality: Being open to new experiences helps creativity. Creative
people are usually more willing to take risks and try new things.
o Expertise: Having knowledge and skills in a specific area is key. For
example, a software engineer needs to know programming to be
creative in that field.
 Creative Environment: This is about the setting where people work. A good
environment for creativity includes:
o Motivation: People need to feel excited and interested in what
they’re doing.
o Support: Organizations should reward creative efforts and allow
freedom to share ideas.
o Leadership: Good leaders encourage creativity and help their teams
feel comfortable sharing their thoughts.
2. Creative Behavior
Creative behavior is the actual process of being creative. It usually happens in four
steps:
1. Problem Formulation: This is where you find a problem or an opportunity
that needs a new solution. For example, if you notice that current paints are
unsafe, that’s a problem you want to solve.
2. Information Gathering: Once you know the problem, you need to collect
information about it. This means doing research and thinking about
different ways to solve it. Sometimes you just let ideas sit in your mind for a
while.
3. Idea Generation: Now it's time to come up with ideas for solving the
problem. You can brainstorm alone or with a team. It's about generating as
many ideas as possible.
 4. Idea Evaluation: After generating ideas, you need to judge which ones are
the best. This involves looking at each idea to see how useful and practical it
is.
3. Creative Outcomes (Innovation)
This stage is about the results of the creative process. Creative outcomes are the
new and useful ideas that come from the previous steps.
 Not every creative thought turns into something useful. For an idea to
become successful, it must be shared and put into action.
 Sometimes, creative ideas need other people to help bring them to life, and
you need skills like networking and motivation to make that happen.
Summary
In simple terms, the three-stage model of creativity shows how ideas are created
in organizations. It starts with the reasons why people can be creative (their traits
and the environment), goes through the process of being creative (identifying
problems, gathering information, generating and evaluating ideas), and ends with
the results (innovative ideas that can solve problems). A good environment and
supportive leadership play a big role in making creativity happen.