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a)
II. What about Ethics in Decision Making?
A. Introduction
1. Ethical considerations should be an important criterion in organizational
decision making.
B. Three Ethical Decision Criteria
consequences.
2. Focus on rights—calls on individuals to make decisions consistent with
of Rights.
a) This criterion protects whistleblowers when they reveal an organization’s
free speech.
4. This criterion is often approached from a deonance standpoint (employees
feel as if they ought to behave in a certain way, as laid out in rules, laws,
representation.
b) The use of rights protects individuals from injury and is consistent with
freedom and privacy, but it can create a legalistic environment that hinders
productivity and efficiency.
taking, innovation, and productivity.
5. Increasingly, researchers are turning to behavioral ethics—an area of study
dilemmas.
a) Their research tells us that while ethical standards exist collectively
and we sometimes violate our own standards.
6. How might we increase ethical decision making in organizations?
a) First, seemingly superficial aspects of the environment—such as lighting,
standards, to be of the highest importance. Second, managers should
encourage conversations about moral issues; they may serve as a reminder
and increase ethical decision making.
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they are.
7. Behavioral ethics research stresses the importance of culture to ethical
decision making.
West illustrate.
b) What is ethical in one culture may be unethical in another.
8. Lying
a) Lying is one of the top unethical activities we may indulge in daily, and it
undermines all efforts toward sound decision making.
behaviors.
c) Lying is a big ethical problem as well.
IX. Creativity, Creative Decision Making, and Innovation in Organizations
A. Introduction
1. Creativity is the ability to produce novel and useful ideas. These are ideas
to the problem.
B. Creative Behavior
1. Creative behavior occurs in four steps, each of which leads to the next:
a) Problem formulation: any act of creativity begins with a problem that the
behavior is designed to solve.
unknown.
b) Information gathering: given a problem, the solution is rarely directly at
hand. We need time to learn more and to process that learning.
time to translate that knowledge into ideas.
i. Idea generation: the process of creative behavior in which we
develop possible solutions to a problem from relevant information and
knowledge.
generated.
i. Idea evaluation: the process of creative behavior in which we
evaluate potential solutions to identify the best one.
C. Causes of Creative Behavior
1. Creative potential
2. Is there such a thing as a creative personality?
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the higher our creative potential.
i. Intelligence and Creativity
ii. Personality and Creativity
iii. Expertise and Personality
iv. Ethics and Creativity
3. Creative environment
4. What environmental factors affect whether creative potential translates into
creative behaviors?
creative work.
c) A recent nation-level study suggests that countries scoring high on
Hofstede’s culture dimension of individuality are more creative.
d) Good leadership matters to creativity too.
certain conditions.
5. Creative outcomes (Innovation)
6. We can define creative outcomes as ideas or solutions judged to be novel and
useful by relevant stakeholders.
a) Novelty itself does not generate a creative outcome if it isn’t useful. Thus,
“off-the-wall” solutions are creative only if they help solve the problem.
b) Softs skills help translate ideas into results.
X. Summary and Implications for Managers
A. Individuals base their behavior not on the way their external environment actually
is, but rather on the way they see it or believe it to be.
B. An understanding of the way people make decisions can help us explain and
predict behavior, but few important decisions are simple or unambiguous enough
for the rational model’s assumptions to apply.
C. We find individuals looking for solutions that satisfice rather than optimize,
injecting biases and prejudices into the decision process, and relying on intuition.
D. Managers should encourage creativity in employees and teams to create a route to
innovative decision making.
E. Specific implications for managers are below:
1. Behavior follows perception, so to influence behavior at work, assess how
people perceive their work. Often behaviors we find puzzling can be
explained by understanding the initiating perceptions.
2. Make better decisions by recognizing perceptual biases and decision-making
errors we tend to commit. Learning about these problems doesn’t always
prevent us from making mistakes, but it does help.
3. Adjust your decision making approach to the national culture you’re operating
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Adjust your decision approach to ensure compatibility with the organizational
culture.
making effectiveness.
5. Try to enhance your creativity. Actively look for novel solutions to problems,
attempt to see problems in new ways, use analogies, and hire creative talent.
Try to remove work and organizational barriers that might impede your
creativity.
EXPANDED CHAPTER OUTLINE
I. What Is Perception?
on reality itself.
II. Factors That Influence Perception (Exhibit 6-1)
A. Factors that shape and can distort perception:
1. Perceiver
2. Target
3. Situation
the individual perceiver.
C. The more relevant personal characteristics affecting perception of the perceiver
are attitudes, motives, interests, past experiences, and expectations.
D. Target: Characteristics of the target can also affect what is being perceived. This
would include attractiveness, gregariousness, and our tendency to group similar
well.
E. Context: The context in which we see objects or events also influences our
attention. This could include time, heat, light, or other situational factors.
III. Person Perception: Making Judgments about Others
A. Attribution Theory (Exhibit 6-2)
assumptions.
3. Attribution theory suggests that when we observe an individual’s behavior,
we attempt to determine whether it was internally or externally caused. That
determination depends largely on three factors:
a. Distinctiveness
b. Consensus
c. Consistency
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personal control of the individual.
b. Externally caused behavior is what we imagine the situation forced the
individual to do.
5. Three determining factors
a. Distinctiveness refers to whether an individual displays different behaviors
behavior is unusual.
b. If it is, the observer is likely to give the behavior an external attribution.
c. If this action is not unusual, it will probably be judged as internal.
d. Consensus occurs if everyone who is faced with a similar situation
responds in the same way. If consensus is high, you would be expected to
inclined to attribute it to internal causes.
6. Fundamental attribution error
a. There is substantial evidence that we have a tendency to underestimate the
influence of external factors and overestimate the influence of internal or
personal factors.
7. Self-serving bias
bias” and suggests that recipients will distort feedback provided to
employees.
8. Cultural Differences
a. The evidence on cultural differences in perception is mixed, but most
suggest there are differences across cultures in the attributions people
make.
i. One study found Asian managers less likely to use the self-serving
bias.
ii. On the other hand, Asian managers are more likely to blame
institutions or whole organizations.
iii. This tendency to make group-based attributions also explains why
individuals from Asian cultures are more likely to make group-based
stereotypes.
b. Differences in attribution tendencies don’t mean the basic concepts of
attribution and blame completely differ across cultures, though.
i. Self-serving biases may be less common in East Asian cultures, but
evidence suggests they still operate across cultures.
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ii. Studies indicate Chinese managers assess blame for mistakes using the
same distinctiveness, consensus, and consistency cues Western
managers use.
i They also become angry and punish those deemed responsible for
failure, a reaction shown in many studies of Western managers.
B. Common Shortcuts in Judging Others
1. Introduction
a. We use a number of shortcuts when we judge others. An understanding of
these shortcuts can be helpful toward recognizing when they can result in
significant distortions.
2. Selective Perception
a. Any characteristic that makes a person, object, or event stand out will
increase the probability that it will be perceived.
b. Since we can’t observe everything going on about us, we engage in
selective perception.
3. Halo and Horns Effect
a. The halo effect occurs when we draw a general impression on the basis of
a single characteristic. The horns effect, on the other hand, is when we
draw a negative impression from a single characteristic.
4. Contrast Effects
a. We do not evaluate a person in isolation. Our reaction to one person is
influenced by other persons we have recently encountered.
b. Contrast effect can distort perception.
c. For example, research on 22 teams in a Chinese hospitality organization
that was undergoing radical organizational change (and new leader
appointments) suggests that transformational leadership (see Chapter 12)
is more effective in improving support for the changes amongst followers
when the former leader was not transformational—when the former leader
was transformational, they knew leader behaviors were not as effective.
5. Stereotyping
a. Stereotyping—judging someone based on one’s perception of the group
to which he or she belongs.
b. Generalization is not without advantages. It is a means of simplifying a
complex world, and it permits us to maintain consistency. The problem, of
course, is when we inaccurately stereotype.
c. One problem of stereotypes is that they are widespread generalizations,
though they may not contain a shred of truth when applied to a particular
person or situation.
i. We have to monitor ourselves to make sure we’re not unfairly applying
a stereotype in our evaluations and decisions.
C. Specific Applications of Shortcuts in Organizations
1. Employment Interview
often inaccurate.
b. Interviewers generally draw early impressions that become very quickly
entrenched.
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2. Performance Expectations
a. Evidence demonstrates that people will attempt to validate their
perceptions of reality, even when those perceptions are faulty.
b. Self-fulfilling prophecy, or the Pygmalion effect, characterizes the fact
that people’s expectations determine their behavior. Expectations become
reality.
3. Performance Evaluation
perceptual process.
b. Although the appraisal can be objective, many jobs are evaluated in
subjective terms.
c. Subjective measures are problematic because of selective perception,
contrast effects, and so on.
or more options.
B. Decision making occurs as a reaction to a problem.
1. There is a discrepancy between some current state of affairs and some desired
state, requiring consideration of alternative courses of action.
2. One person’s problem is another’s satisfactory state of affairs.
V. Decision Making in Organizations
A. The Rational Model, Bounded Rationality, and Intuition
1. Introduction
a. In OB, there are generally accepted constructs of decision making each of
us employs to make determinations: rational decision making, bounded
rationality, and intuition.
another in a given situation.
2. Rational decision making
a. We often think the best decision maker is rational and makes consistent,
value-maximizing choices within specified constraints.
b. These decisions follow a six-step rational decision making model listed
in Exhibit 6-3.
i. Step 1: Define the problem.
ii. Step 2: Identify the decision criteria.
iii. Step 3: Allocate weights to the criteria.
iv. Step 4: Develop the alternatives.
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v. Step 5: Evaluate the alternatives.
vi. Step 6: Select the best alternative.
ii. Choices tend to be limited to the neighborhood of the problem
symptom and the current alternative.
iii. As one expert in decision making put it, “Most significant decisions
are made by judgment, rather than by a defined prescriptive model.”
B. Bounded Rationality
1. When faced with a complex problem, most people respond by reducing the
problem to a level at which it can be readily understood.
a. This is because the limited information-processing capability of human
beings makes it impossible to assimilate and understand all the
information necessary to optimize.
3. How does bounded rationality work?
a. Once a problem is identified, the search for criteria and options begins.
b. The decision maker will identify a limited list made up of the more
conspicuous choices, which are easy to find and tend to be highly visible,
and they will represent familiar criteria and previously tried-and-true
solutions.
reviewing it.
i. The decision maker will begin with options that differ only in a
relatively small degree from the choice currently in effect.
ii. The first option that meets the “good enough” criterion ends the
search.
ii. If there are many unknown weights and preferences, the fully rational
model may not be any more accurate than a best guess. Sometimes a
fast-and-frugal process of solving problems might be your best option.
e. Bounded rationality can also be of concern in ethical-decision making (as
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we have the freedom or right to behave in a particular way are bounded by
our duties toward the people our actions affect.
C. Intuition
1. Perhaps the least rational way of making decisions is intuitive decision
making, an unconscious process created from distilled experience.
2. It occurs outside of conscious thought; it relies on holistic associations, or
links between disparate pieces of information; it’s fast; and it’s affectively
charged, meaning it usually engages the emotions.
complement each other.
5. The key is to neither abandon nor rely solely on intuition, but to supplement it
with evidence and good judgment.
VI. Common Biases and Errors in Decision Making
A. Introduction (Exhibit 6-4 shows how to reduce biases and errors)
judgments.
2. People tend to rely on experience, impulses, gut feelings, and rules of thumb.
These can lead to distortions.
B. Overconfidence Bias
1. Individuals whose intellectual and interpersonal abilities are weakest are most
likely to overestimate their performance and ability.
working with.
C. Anchoring Bias
1. Anchoring bias involves fixating on initial information as a starting point and
failing to adequately adjust for subsequent information.
D. Confirmation Bias
1. Confirmation bias is a type of selective perception: we seek out information
that reaffirms past choices, and discount information that contradicts past
judgments.
E. Availability Bias
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that is readily available.
F. Escalation of Commitment
1. Escalation of commitment occurs when we stay with a decision even when
there is clear evidence that it’s wrong.
2. When is escalation most likely to occur?
responsible for the outcome.
G. Randomness Error
1. Decision making becomes impaired when we try to create meaning out of
random events.
2. Our tendency to believe we can predict the outcome of random events is the
randomness error.
H. Risk Aversion
aversion.
2. Overall, the framing of a decision has an effect on whether or not people will
engage in risk aversive behavior—when decisions are framed positively, such
as a potential gain of $50, people will be more risk averse (conversely, when
the decision is framed in a negative manner, such as a loss of $50, people will
engage in riskier behaviors).
organization.
I. Hindsight Bias
a. Tendency to believe falsely that one has accurately predicted the outcome
of an event, after that outcome is actually known.
b. The hindsight bias reduces our ability to learn from the past.
Constraints
A. Individual Differences
1. Research suggests that personality does influence our decisions.
2. Personality
a. Specific facets of conscientiousness—rather than the broad trait itself—
may affect escalation of commitment.
i Achievement-striving
commitment, hoping to forestall failure.
(c) Achievement-striving individuals appear more susceptible to
the hindsight bias, perhaps because they have a greater need to
justify their actions.
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while taking credit for successes.
3. Gender
a. Rumination refers to reflecting at length. In decision making, it means
over-thinking about problems.
b. Evidence indicates that women analyze decisions more than men.
4. Mental ability
a. We know people with higher levels of mental ability are able to process
information more quickly, solve problems more accurately, and learn
faster, so you might expect them also to be less susceptible to common
decision errors.
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