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Perception and Individual Decision Making

individuals organize and interpret their sensory impressions in order to give meaning to their environment. However, what one perceives can be substantially different from objective reality. People’s behavior is based on their perception of what reality is, not on reality itself. Perceptions have implications for the following in an organization: employment interview, performance expectations, performance evaluation, and employee effort.

A number of factors operate to shape and sometimes distort perception. The factors can reside in the perceiver, in the object or target being perceived, or in the context in which the perception is made. The details are given below:

Factors in the Perceiver: Attitudes, Motives, Interests, Experience, Expectations.

Factors in the situation: Time, Work Setting, Social Setting.

Factors in the Target: Novelty, Motion, Sounds, Size, Background, Proximity, Similarity.

Attribution Theory

When we observe an individual’s behavior, we attempt to determine whether it was internally or externally caused. That determination, however, depends largely on three factors: distinctiveness, consensus, and consistency.

Internally caused behaviors are those that are believed to be under the personal control of the individual. Externally caused behavior is seen as resulting from outside cause, that is, the person is seen as having been forced into the behavior by the situation.

Distinctiveness refers to whether an individual displays different behaviors in different situations. If everyone who is faced with a similar situation responds in the same way, we can say the behavior shows consensus.

Finally, an observer looks for consistency in a person’s actions. Does the person respond the same way over time? The more consistent the behavior, the more the observer is inclined to attribute it to internal causes.

When we make judgments about the behavior of other people, we have a tendency to underestimate the influence of external factors and over estimate the influence of internal or personal factors. This is called the fundamental attribution error. There is also a tendency for individuals to attribute their own success to internal factors such as ability or effort while putting the blame for failure on external factors such as bad luck or unproductive co-workers. This is called the self-serving bias.

The Shortcuts Used in Judging Others

An understanding of the following shortcuts used in judging others can be helpful in recognizing when they result in significant distortions.

Selective Perception: Any characteristic that makes a person, object, or event standout will increase the probability that it will be perceived. Because we cannot observe everything going on around us, we engage in selective perception. Because we cannot assimilate all that we observe, we take in bits and pieces.

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

Contrast Effect: We do not evaluate a person in isolation. Our reaction to one person is influenced by other person we have recently encountered. This is called contrast effect.

Projection: The tendency to attribute one’s own characteristics to other people-called projection-can distort perception made about others. People who engage in projection tend to perceive others according to what they themselves are like rather than according to what the person being observed is really like.

Stereotyping: When we judge someone on the basis of our perception of the group he belongs, we are using the shortcut called stereotyping.

The Decision Making Models

Individuals think and reason before they act. It is because of this that an understanding of how people make decisions can be helpful in explaining and predicting their behavior. There are three decision making models. These are: rational decision making model, bounded rationality model, and intuitive decision making model.

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Under some decision situations, people follow the rational decision making model (a decision making model that describes how individuals should behave in order to maximize some outcome). But for most people, this is probably more the exception than the rule. Few important decisions are simple enough for the rational model’s assumptions to apply.

Individuals make decisions by constructing simplified models that extract the essential features from problems without capturing all the complexity. This is called the bounded rationality model, which is characterized by the following biases and prejudices.

Anchoring bias: A tendency for fixate on initial information as a starting point.

Confirming bias: A specific case of selective perception; we seek out information that reaffirms our past choices, and we discount information that contradicts past judgment.

Availability bias: The tendency for people to base their judgments on information that is readily available to them.

Representative bias: Assessing the likelihood of an occurrence by trying to match it with a pre-existing category.

Escalation of commitment: An increased commitment to a previous decision in spite of negative information.

Hindsight bias: The tendency for us to believe falsely that we would have accurately predicted the outcome of an event, after that outcome is actually known.

The intuitive decision making model is an unconscious process created out of distilled experience. It does not necessarily operate independently of rational analysis; rather, the two complement each other.

We offer the following five suggestions for the managers to improve their decision making:

First, analyze the situation

Second, be aware of biases

Third, combine rational analyses with intuition

Fourth, do not assume that your specific decision style is appropriate for your job

Finally, try to enhance your creativity (the ability to produce novel and useful ideas)

A–Foundations of Group Behavior

Classification of Groups

A group is defined as two or more individuals, interacting and interdependent, who have come together to achieve particular objectives.

Groups differ in their cohesiveness, that is, the degree to which members are attracted to each other and are motivated to stay in the group.

Groups can be either formal or informal. By formal groups, we mean those defined by the organization structure, with designated assignments establishing tasks. In contrast, informal groups are alliances that are neither formally structured nor organizationally determined. These groups are natural formation in the work environment that appear in response to the need for social contact.

It is further possible to sub classify groups as command, task, interest, and friendship groups.

Command and task groups are dictated by the formal organization while interest and friendship groups are informal alliances.

A command group: is determined by the organization chart. It is composed of the individuals who report directly to a given manger.

A task group: represents those working together to complete a job task. However, a task group’s boundaries are not limited to its immediate hierarchical superior; it can cross command relationships.

People who may or may not be aligned into common command or task group may affiliate to a specific objective with which each is concerned. This is an interest group.

Groups often develop because the individual members have one or more common characteristics. We call these social formation friendship groups. Social formations can be based on similar age or ethnic heritage, or holding of similar political views. Social groups provide a very important service by satisfying their members’ social needs.

The Five Stage Model of Group Development

The five Stage group- development model characterizes groups as proceeding through five distinct stages: forming, storming, norming, performing, and adjoining.

The first stage, forming, is characterized by a great deal of uncertainty about the group’s purpose, structure, and leadership. This stage completes when members have begun to think of themselves a part of a group.

The storming stage is one of intra-group conflict. Members accept the existence of the group, but there is resistance to the constraints that the group imposes on individuals. When this stage is complete, there will be relatively clear hierarchy of leadership within the group. The third stage is one in which close relationships develop and the group demonstrates cohesiveness.

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This norming stage is complete when the group structure solidifies and the group has assimilated a common set of expectation of what defines correct member behavior.

The fourth stage is performing. The structure at this point is fully functional and accepted. Group energy has moved from getting to know and understand each other to performing the task at hand.

For permanent work groups, performing is the last stage in their development. However, for temporary committees, teams, task forces, and similar groups, there is an adjoining stage. In this stage the group prepares for its disbandment.

Different Techniques of Group Decision Making

The most common form of group decision making takes place in interacting groups. In these groups, members meet face to face and rely on both verbal and non verbal interactions to communicate with each other. But interacting groups often censor themselves and pressure individual members towards conformity of opinion. Brainstorming, the nominal group technique, and electronic meetings have been proposed as ways to reduce many of the problems inherent in the traditional interacting groups.

Brainstorming is meant to overcome pressure for conformity in the interacting group that retard the development of creative alternatives. It does this by utilizing an idea generation process that specifically encourages any and all alternatives, while withholding any criticism of those alternatives.

The nominal group technique restricts discussion or interpersonal communication during the decision making process. The chief advantage of the nominal group technique is that it permits the group to meet formally but does not restrict independent thinking as does the interacting group.

In electronic meeting issues are presented to participants and they type their responses onto their computer screen. Individual comments as well as aggregate votes are displayed on projection screen. The proposed advantages of electronic meeting are anonymity, honesty and speed.

Each of these four group decision techniques has its own set of strengths and weaknesses. The interacting group is good for achieving a commitment to a solution, brainstorming develops good cohesiveness, the nominal group techniques is an inexpensive means for generating a large number of ideas, and electronic meetings minimize social pressures and conflicts.


1) Definition of Conflict: We can define conflict as a process that begins when one party perceives that another party has negatively affected, or is about to negatively affect, something that the first party cares about.

2) Three Schools of Thought on Conflict:

i) One school of thought has argued that conflict must be avoided. We call this the Traditional view.

ii) Another school of thought, the human relations view, argues that conflict is a natural and inevitable outcome in any group and that it need not be evil but rather has the potential to be a positive force in determining group performance.

iii) The third, and most recent perspective, proposes not only that conflict can be a positive force in group but explicitly argues that some conflict is absolutely necessary to perform effectively. We label this third school the interactionist approach. The interactionist view does not propose that all conflicts are good. Rather, some conflicts support the goals of the group and improve its performance; these are functional, constructive form of conflict. In addition, there are conflicts that hinder group performance; these are dysfunctional or destructive forms of conflict.

3) The stages involved in the process of conflict

i) Stage 1- Potential Opposition or Incompatibility: The first step is the conflict process is the presence of conditions that create opportunities for conflict to arise. These conditions have been condensed into three general categories: communications, structure, and personal variables.

ii) Stage II- Cognition and Personalization: If the conditions cited in Stage-I, negatively affect something that one party cares about, then the potential for opposition or incompatibility becomes actualized in the second stage. The antecedent conditions can lead to conflict only when one party or more is affected by, and aware of, the conflict. One or more of the parties must be aware of the existence of the antecedent conditions. However, because a conflict is perceived does not mean that it is personalized.

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iii) Stage III- Intentions: Intentions intervene between people’s perceptions and emotions and their overt behavior. These intentions are decisions to act in a given way. The following are the primary conflict handling intentions

Competing: When one person seeks to satisfy his interests, regardless of the impact on the other parties to the conflict, he is competing.

Collaborating: When the parties to conflict each desire to fully satisfy the concerns of all parties, we have cooperation and the search for mutually beneficial outcomes.

Avoiding: A person may recognize that a conflict exists and want to withdraw from it or suppress it.

Accommodating: When one party seeks to appease an opponent, that party may be willing to place the opponent’s interests above his or her own. In other words, in order for the relationship to be maintained, one party is willing to be self-sacrificing. We refer to this intention as accommodating.

Compromising: When each party to the conflict seeks to give up something, sharing occurs, resulting in a compromised outcome. In compromising, there is no clear winner or loser.

Stage IV-Behavior:

The behavior stage includes the statements, actions, and reactions made by the conflicting parties. It helps to think of stage-IV, as a dynamic process of interaction. For example, you make a demand on me; I respond by arguing; you threaten me; I threaten you back; and so on.

Stage V- Outcome:

The action-reaction interplay between the conflicting parties result in consequences. These outcomes may be functional in that the conflict results in an improvement in the group’s performance, or dysfunctional in that it hinders group performance.

4) Definition of “Negotiation” and the different bargaining strategies

We define negotiation as a process in which two or more parties exchange goods or services and attempt to agree on the exchange rate for them.

Bargaining Strategies: There are two general approaches to negotiation-distributive bargaining and integrative bargaining.

Distributive Bargaining: The most identifying feature of distributive bargaining is that it operates under zero-sum conditions. That is, any gain I make is at your expense; and vice versa.

Integrative Bargaining: In contrast to distributive bargaining, integrative problem solving operates under the assumption that there exist one or more settlements that can create a win-win solution.

All things being equal, integrative bargaining is preferable to distributive bargaining, because the former builds long-term relationships and facilitates working together in the future.

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