Chapter 6: org. mgmt

"Why is perception important in the study of OB?

Simply because people's behav-ior is based on their perception of what reality is, not on reality itself. The world as it is perceived is the world that is behaviorally important. In other words, our perception becomes the reality from which we act"

"Another distortion that creeps into decisions is

a tendency to escalate commitment, often for increasingly nonrational reasons."

"One outcome of bounded rationality is

a tendency to satisfice, or seek solutions that are satisfactory and sufficient"

"To use the rational model, you need to gather

a great deal of informa-tion about all the options, compute applicable weights, and then calculate values across a huge number of criteria. All these processes can cost time, energy, and money. If there are many unknown weights and preferences, the fully rational model may not be any more accurate than a best guess."

"Shortcuts for judging others often

allow us to make accurate perceptions rapidly and pro-vide valid data for making predictions"

"Continuing with a strategy that has worked in the past minimizes

risk, but it will lead to stagnation. "

"All but the smallest organizations create

rules and policies to program decisions and get individuals to act in the intended manner. In doing so, they limit decision choices."

"Internally caused behaviors are

those an observer believes to be under the personal behavioral control of another individual."

Reducing Biases and errors

-focus on goals -look for info that disconfirms your beliefs -dont try to create meaning out of random events -increase your options

Contrast effect

" contrast effect can distort perceptions. We don't evaluate a person in isolation. Our reaction is influenced by other people we have recently encountered."

Anchoring bias

"Anchoring bias is a tendency to fixate on initial information and fail to adequately adjust for subsequent information"

Attribution theory

"Attribution theory tries to explain the ways we judge people differently, depend-ing on the meaning we attribute to a behavior"

Availability bias

"Availability bias is our tendency to base judgments on readily available informa-tion. "

Bounded rationality

"Because we cannot formulate and solve complex problems with full rationality, we operate within the confines of bounded rationality. We construct simplified models that extract the essential features from problems without capturing all their complexity. "

Confirmtion bias

"Confirmation bias represents a case of selective perception: we seek out information that reaffirms our past choices, and we discount information that contradicts them."

Problem

"Decision making occurs as a reaction to a problem. That is, a discrepancy ex-ists between the current state of affairs and some desired state, requiring us to consider alternative courses of action. "

Escalation of commitment

"Escalation of commitment refers to our staying with a decision even if there is clear evidence it's wrong."

Hindsight bias

"Hindsight bias is the tendency to believe falsely, after the outcome is known, that we would have accurately predicted it."

Utilitarianism

"Hindsight bias is the tendency to believe falsely, after the outcome is known, that we would have accurately predicted it."

4

"Idea evaluation. Finally, it's time to choose from the ideas we have generated. Thus, idea evaluation is the process of creative behavior in which we evaluate potential solutions problems to identify the best one"

3

"Idea generation. Idea generation is the process of creative behavior in which we develop possible solutions to a problem from relevant information and knowledge. Sometimes we do this alone, when tricks like taking a walk65 and doodling66 can jump-start the process. Increasingly, though, idea generation is collaborative."

Behavioral ethics

"Increasingly, researchers are turning to behavioral ethics—an area of study that analyzes how people behave when confronted with ethical dilemmas."

Decision

"Individuals make decisions, choices from among two or more alternatives"

2

"Information gathering. Given a problem, the solution is rarely directly at hand. We need time to learn more and to process that learning. Thus, information gath-ering is the stage of creative behavior when knowledge is sought and possible solu-tions to a problem incubate in an individual's mind. Information gathering leads us to identifying innovation opportunities."

Randomness error

"Our tendency to believe we can predict the outcome of random events is the randomness error."

Perception

"Perception is a process by which we organize and interpret sensory impressions in order to give meaning to their environment."

Intuitive decision

"Perhaps the least rational way of making decisions is intuitive decision making, an unconscious process created from distilled experience"

"Creative behavior occurs in four steps, each of which leads to the next"

"Problem formulation. Any act of creativity begins with a problem that the be-havior is designed to solve. Thus, problem formulation is the stage of creative behavior in which we identify a problem or opportunity that requires a solution that is as yet unknown"

Self-serving bias

"Similarly, people tend to attribute ambiguous information as relatively flattering, accept positive feedback, and reject negative feedback. This is called self-serving bias."

Whistleblower

"This criterion protects whistle-blowers58 when they reveal an organization's unethical practices to the press or government agencies, using their right to free speech"

Risk adversion

"This tendency to prefer a sure thing over a risky outcome is risk aversion."

Rational

"We often think the best decision maker is rational and makes consistent, value-maximizing choices within specified constraints.2"

Halo effect

"When we draw an impression about an individual on the basis of a single characteristic, such as intelligence, sociability, or appearance, a halo effect is operating."

Stereotyping

"When we judge someone on the basis of our perception of the group to which he or she belongs, we are stereotyping."

Selective perception

"because we can't observe everything going on around us, we use selective perception. We dont choose randomly: we select according to our interest, background, experience, and attitudes"

Three-stage model of creativity

"three-stage model of creativity in organizations. The core of the model is creative behavior, which has both causes (predictors of creative behavior) and effects (outcomes of creative behavior)."

"That determination depends largely on three factors:

(1) distinctiveness, (2) consensus, and (3) consistency."

6 steps in rational decision-making model

Define the problem, identify the decision criteria, allocate the weights to the criteria, develop the alternatives, evaluate the alternatives, select the best alternative

"Often, we don't follow the rational decision-making model for a reason:

Our limited information-processing capability makes it impossible to assimilate all the information necessary to optimize, even if the information is readily obtainable."

"Decision makers engage in bounded rationality, but systematic biases and errors can creep into their judgments.

To minimize effort and avoid trade-offs, people tend to rely too heavily on experience, impulses, gut feelings, and convenient rules of thumb. Shortcuts can distort rationality. "

"Individuals and organizations tend to

attribute their own successes to internal factors such as ability or effort, while blaming failure on external factors such as bad luck or difficult coworkers. "

"Managers are influenced

by the criteria on which they are evaluated. "

"As we discussed, decision making in practice is

characterized by bounded rationality, common biases and errors, and the use of intuition"

"Almost all important decisions

come with explicit deadlines. "

"an observer looks for

consistency in a person's actions. Does the person respond the same way over time? "

"The organization's reward systems influence

decision makers by suggesting which choices have better personal payoffs"

"In OB, there are generally accepted constructs of

decision making each of us employs to make determinations: rational decision making, bounded rationality, and intuition"

"Many of our perceptions of others are formed by

first impressions and small cues that have little supporting evidence."

"A third criterion is to

impose and enforce rules fairly and impartially to ensure justice or an equitable distribution of benefits and costs."

"Cultures differ

in time orientation, the value they place on rationality, their belief in the ability of people to solve problems, and their preference for collective decision making. "

"The time at which we see an object or event can

influence our attention, as can location, light, heat, or situational factors.

"Commercials represent one of the most outright forms of an organization's attempt to

influence our perceptions (of a product) and our decision (to acquire that product). Nudging has also been used positively in the development of corporate social responsibility (CSR; see Chapter 3) initiatives to change people's expectations for organizations.55 People differ in their susceptibility to suggestion, but it is probably fair to say we are all receptive to nudging to some degree"

"Innovation is one of the top organizational goals for leaders, with the facets of"

intelligence and creativity personality and creativity expertise and creativity ethics and creativity

"Every decision requires us to

interpret and evaluate information. We typically receive data from multiple sources that we need to screen, process, and interpret. "

"Choices made today are

largely a result of choices made over the years"

" but the way individuals make deci-sions and the quality of their choices are

largely influenced by their perceptions."

"Also, the sharing of decision authority—such as when others review the choice we made—can

lead to higher escalation."

"A second ethical criterion is to

make decisions consistent with fundamental liber-ties and privileges, as set forth in documents such as the U.S. Bill of Rights."

"OB improves the way we

make decisions in organizations by addressing the decision-making errors people commit in addition to the perception errors we've discussed."

"Of the many environmental factors, perhaps most important is

motivation."

"We tend to be overconfident about

our abilities and the abilities of others; also, we are usually not aware of this bias."

"Individuals whose intellectual and interpersonal abilities are weakest are most likely to

overestimate their performance and ability.33 There's also a negative relation-ship between entrepreneurs' optimism and performance of their new ventures: the more optimistic, the less successful.3"

"The characteristics of the target also affect what we perceive. Because we don't look at targets in isolation, the relationship of a target to its background influences

perception, as does our tendency to group close things and similar things together."

"The perception concepts most relevant to OB include

person perceptions, or the percep-tions people form about each other"

" Intuitive decision making occurs outside conscious thought;

relies on holistic associations, or links between disparate pieces of information; is fast; and is affectively charged, meaning it engages the emotions"

"A number of factors shape and sometimes distort perception. These factors can

reside in the perceiver, the object or target being perceived, or the situation in which the percep-tion is made."

"public pressure on organizations to behave responsibly has meant

sustainability issues now affect the bottom line: consumers increasingly choose to purchase goods and services from organizations "

"Our perception and judgment of a person's actions are influenced by

the assumptions we make about that person's state of mind."

"Having defined creative behavior, the main stage in the three-stage model, we now look back to

the causes of creativity: creative potential and creative environment."

"The final stage in our model of creativity is

the outcome. We can define creative out-comes as ideas or solutions judged to be novel and useful by relevant stakeholders. "

"Any characteristic that makes a person, an object, or an event stand out will increase

the probability we will perceive it. Why? Because it is impossible for us to assimilate everything we see; we can only take in certain stimuli."

"We deal with the unmanageable number of stimuli of our complex world by

us-ing stereotypes or shortcuts called heuristics to make decisions quickly"

"We even tend to seek sources most likely to tell us what we

want to hear, and we give too much weight to supporting information and too little to that which is contradictory. Fortunately, those who feel there is a strong need to be accurate in making a decision are less prone to confirmation bias"

"If everyone who faces a similar situation responds in the same way,

we can say the behavior shows consensus."

"The rational decision-making process assumes

we objectively gather information. But we don't. We selectively gather it. "

"Errors or biases distort attributions. When we make judgments about the behavior of other people,

we tend to underestimate the influence of external factors and overestimate the influence of internal or personal factors.

"Externally caused behavior is

what we imagine the situation forced the individual to do."

"Attribution theory suggests that

when we observe an individual's behavior, we attempt to determine whether it was internally or externally caused."

"Distinctiveness refers to

whether an individual displays different behaviors in different situations."

"Anchors are

widely used by people in professions in which persuasion skills are importan"

"When you look at a target, your interpretation of what you see is influenced by

your personal characteristics—attitudes, personality, motives, interests, past experiences, and expectations"