CH-6 Perception and Individual Decision Making – Organizational Behavior : Chapter Notes

CHAPTER6 Perception and individual Decision making LEARNING OBJECTIVES After studying this chapter, your students should be able to: Explain the factors that influence perception. Describe attribution theory. Explain the link between perception and decision making. Contrast the rational model of decision making with bounded rationality and intuition. Explain how individual differences and organizational constraints affect decision making. Contrast the three ethical decision criteria. Describe the three-stage model of creativity. INSTRUCTOR RESOURCES Instructors may wish to use the following resources when presenting this chapter. Text Exercises Career Objectives: So What If I’m A Few Minutes Late to Work? Myth or Science?: “All Stereotypes Are Negative” An Ethical Choice: Choosing to Lie Personal Inventory Assessments: How Creative Are You? Point/Counterpoint: Stereotypes Are Dying Questions for Review Experiential Exercise: Good Liars and Bad Liars Ethical Dilemma: Cheating Is a Decision Text Cases Case Incident 1:Too Much of a Good Thing Case Incident 2: The Youngest Billionaire Instructor’s Choice This section presents an exercise that is NOT found in the student's textbook. Instructor's Choice reinforces the text's emphasis through various activities. Some Instructor's Choice activities are centered on debates, group exercises, Internet research, and student experiences. Some can be used in class in their entirety, while others require some additional work on the student's part. The course instructor may choose to use these at anytime throughout the class—some may be more effective as icebreakers, while some may be used to pull together various concepts covered in the chapter. Web Exercises At the end of each chapter of this Instructor’s Manual, you will find suggested exercises and ideas for researching OB topics on the Internet. The exercises “Exploring OB Topics on the Web” are set up so that you can simply photocopy the pages, distribute them to your class, and make assignments accordingly. You may want to assign the exercises as an out-of-class activity or as lab activities with your class. Summary and Implications for Managers 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. 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. We find individuals looking for solutions that satisfice rather than optimize, injecting biases and prejudices into the decision process, and relying on intuition. Managers should encourage creativity in employees and teams to create a route to innovative decision making. Specific implications for managers are below: 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. 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. Adjust your decision-making approach to the national culture you’re operating in and to the criteria your organization values. If you’re in a country that doesn’t value rationality, don’t feel compelled to follow the rational decision-making model or to try to make your decisions appear rational. Adjust your decision approach to ensure compatibility with the organizational culture. Combine rational analysis with intuition. These are not conflicting approaches to decision making. By using both, you can actually improve your decision making effectiveness. 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. This chapter begins with an introduction to Palmer Luckey, inventor of the Oculus Rift virtual reality headset. The case illustrates how important—and perhaps rare—an individual’s creativity can be to an industry. As we will see later in the chapter, the creativity of individuals can lead to breakthroughs in innovation. To better understand what influences us and our organizations, we start at the roots of our thought processes: our perceptions and the way they affect our decision making. BRIEF CHAPTER OUTLINE What Is Perception? Perception is a process by which individuals organize and interpret their sensory impressions in order to give meaning to their environment. Why is this important to the study of OB? Because people’s behavior is based on their perception of what reality is, not on reality itself. Factors That Influence Perception (Exhibit 6-1) Factors that shape and can distort perception: Perceiver Target Situation When an individual looks at a target and attempts to interpret what he or she sees, that interpretation is heavily influenced by personal characteristics of the individual perceiver. Characteristics of the target also affect what we perceive. Context matters too. Person Perception: Making Judgments about Others Attribution Theory (Exhibit 6-2) 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: Distinctiveness Consensus Consistency Clarification of the differences between internal and external causation: Internally caused behaviors are those that are believed to be under the personal control of the individual. Externally caused behavior is what we imagine the situation forced the individual to do. Three determining factors: Distinctiveness refers to whether an individual displays different behaviors in different situations. Consensus occurs if everyone who is faced with a similar situation responds in the same way. Consistency in a person’s actions. Fundamental attribution error 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. Self-serving bias There is also a tendency for individuals to attribute their own successes to internal factors, such as ability or effort, while putting the blame for failure on external factors, such as luck. Cultural differences The evidence on cultural differences in perception is mixed, but most suggest there are differences across cultures in the attributions people make. Common Shortcuts in Judging Others The shortcuts for judging others often allow us to make accurate perceptions rapidly and provide valid data for making predictions. However, they can and do sometimes result in significant distortions. Selective perception Any characteristic that makes a person, object, or event stand out will increase the probability that it will be perceived. Since we can’t observe everything going on about us, we engage in selective perception. Halo effect The halo effect occurs when we draw a general impression on the basis of a single characteristic. Contrast effects We do not evaluate a person in isolation. Our reaction to one person is influenced by other persons we have recently encountered. Contrast effect can distort perception. For example, an interview situation in which one sees a pool of job applicants can distort perception. Stereotyping Stereotyping—judging someone on the basis of our perception of the group to which he or she belongs. 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. Specific Applications of Shortcuts in Organizations Employment interview Evidence indicates that interviewers make perceptual judgments that are often inaccurate. Interviewers generally draw early impressions that become very quickly entrenched. Studies indicate that most interviewers’ decisions change very little after the first four or five minutes of the interview. Performance Expectations Evidence demonstrates that people will attempt to validate their perceptions of reality, even when those perceptions are faulty. Self-fulfilling prophecy, or the Pygmalion effect, characterizes the fact that people’s expectations determine their behavior. Expectations become reality. Performance Evaluation An employee’s performance appraisal is very much dependent on the perceptual process. Although the appraisal can be objective, many jobs are evaluated in subjective terms. Subjective measures are problematic because of selective perception, contrast effects, halo effects, and so on. The Link Between Perception and Individual Decision Making Individuals in organizations make decisions; they make choices from among two or more options. A discrepancy between the current state of affairs and some desired state. Every decision requires interpretation and evaluation of information. The perceptions of the decision maker will address these two issues. Decision Making in Organizations The Rational Model, Bounded Rationality, and Intuition Introduction In OB, there are generally accepted constructs of decision making that each of us employs to make determinations: rational decision making, bounded rationality, and intuition. There are times when one strategy may lead to a better outcome than another in a given situation. Rational decision making We often think the best decision maker is rational and makes consistent, value-maximizing choices within specified constraints. These decisions follow a six-step rational decision making model listed in Exhibit 6-3 Step 1: Define the problem. Step 2: Identify the decision criteria. Step 3: Allocate weights to the criteria. Step 4: Develop the alternatives. Step 5: Evaluate the alternatives. Step 6: Select the best alternative. The rational decision-making model assumes that the decision maker has complete information, is able to identify all the relevant options in an unbiased manner, and chooses the option with the highest utility. Most decisions in the real world don’t follow the rational model. Bounded Rationality When faced with a complex problem, most people respond by reducing the problem to a level at which it can be readily understood. People satisfice—they seek solutions that are satisfactory and sufficient. Individuals operate within the confines of bounded rationality. They construct simplified models that extract the essential features. How does bounded rationality work? Once a problem is identified, the search for criteria and options begins. 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. Once this limited set of options is identified, the decision maker will begin reviewing it until we identify one that is “good enough” – that meets an acceptable level of performance. Thus ends our search. Therefore, the solution represents a satisficing choice—the first acceptable one we encounter—rather than an optimal one. To use the rational model in the real world, you need to gather a great deal of information about all the options, compute applicable weights, and then calculate values across a huge number of criteria. Intuition Perhaps the least rational way of making decisions is intuitive decision making, an unconscious process created from distilled experience. It occurs outside conscious thought; it relies on holistic associations, or links between disparate pieces of information; is fast; and is affectively charged, meaning it usually engages the emotions. While intuition isn’t rational, it isn’t necessarily wrong. Nor does it always contradict rational analysis; rather, the two can complement each other. The key is to neither abandon nor rely solely on intuition, but to supplement it with evidence and good judgment. Common Biases and Errors in Decision Making Introduction (Exhibit 6-4) Decision makers allow systematic biases and errors to creep into their judgments. People tend to rely on experience, impulses, gut feelings, and rules of thumb. These can lead to distortions. Overconfidence Bias Individuals whose intellectual and interpersonal abilities are weakest are most likely to overestimate their performance and ability. The tendency to be too confident about their ideas might keep some from planning how to avoid problems that arise. Investor overconfidence operates in a variety of ways. People think they know more than they do, and it costs them. Investors, especially novices, overestimate not just their own skill in processing information, but also the quality of the information they’re working with. Anchoring Bias Anchoring bias involves fixating on initial information as a starting point and failing to adequately adjust for subsequent information. Anchors are widely used by people in advertising, management, politics, real estate, and lawyers – where persuasion skills are important. Any time a negotiation takes place, so does anchoring. Confirmation Bias Confirmation bias is a type of selective perception: we seek out information that reaffirms past choices, and discount information that contradicts past judgments. Availability Bias Availability bias is the tendency for people to base judgments on information that is readily available. Escalation of Commitment Escalation of commitment occurs when we stay with a decision even when there is clear evidence that it’s wrong. When is escalation most likely to occur? Evidence indicates it occurs when individuals view themselves as responsible for the outcome. Randomness Error Decision making becomes impaired when we try to create meaning out of random events. Our tendency to believe we can predict the outcome of random events is the randomness error. Risk Aversion The tendency to prefer a sure thing instead of a risky outcome is risk aversion. Risk aversion has important implications. Risk-averse employees will stick with the established way of doing their jobs, rather than taking a chance on innovative methods. Ambitious people with power that can be taken away (most managers) appear to be especially risk averse, perhaps because they don’t want to lose on a gamble everything they’ve worked so hard to achieve. People will more likely engage in risk-seeking behavior for negative outcomes, and risk-averse behavior for positive outcomes, when under stress. Hindsight Bias Hindsight bias is the tendency to believe, falsely, that one has accurately predicted the outcome of an event, after that outcome is actually known. The hindsight bias reduces our ability to learn from the past. Influences on Decision Making: Individual Differences and Organizational Constraints Individual Differences Personality influences our decisions. Specific facets of conscientiousness—rather than the broad trait itself—may affect escalation of commitment. Achievement-striving Dutifulness People with high self-esteem are strongly motivated to maintain it, so they use the self-serving bias to preserve it. Gender Rumination refers to reflecting at length. In decision making, it means over-thinking about problems. Evidence indicates that women analyze decisions more than men. Mental ability 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. Cultural differences The rational model makes no acknowledgment of cultural differences, nor does the bulk of OB research literature on decision making. We need to recognize that the cultural background of a decision maker can significantly influence the selection of problems, the depth of analysis, the importance placed on logic and rationality, and whether organizational decisions should be made autocratically by an individual manager or collectively in groups. Cultures differ in their time orientation, the importance of rationality, their belief in the ability of people to solve problems, and their preference for collective decision making. While rationality is valued in North America, that’s not true elsewhere in the world. Some cultures emphasize solving problems, while others focus on accepting situations as they are. Because problem-solving managers believe they can and should change situations to their benefit, U.S. managers might identify a problem long before their Thai or Indonesian counterparts would choose to recognize it. Decision making by Japanese managers is much more group-oriented than in the United States. Nudging Commercials are 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) initiatives to change people’s expectations for organizations. People differ in their susceptibility to suggestion, but it is probably fair to say we are all receptive to nudging to some degree. Organizational Constraints Introduction The organization itself constrains decision makers, creating deviations from the rational model. Performance evaluation systems Managers are strongly influenced in their decision making by the criteria by which they are evaluated. Reward systems The organization’s reward system influences decision makers by suggesting to them what choices are preferable in terms of personal payoff. Formal regulations Organizations create rules, policies, procedures, and other formalized regulations to standardize the behavior of their members. System-imposed time constraints Organizations impose deadlines on decisions. Such conditions often make it difficult, if not impossible, for managers to gather all the information before making a final choice. Historical precedents Decisions have a context. Individual decisions are more accurately characterized as points in a stream of decisions. Decisions made in the past are ghosts that continually haunt current choices. It is common knowledge that the largest determining factor of the size of any given year’s budget is last year’s budget. What about Ethics in Decision Making? Introduction Ethical considerations should be an important criterion in organizational decision making. Three Ethical Decision Criteria Utilitarianism—decisions are made solely on the basis of their outcomes or consequences. Focus on rights—calls on individuals to make decisions consistent with fundamental liberties and privileges as set forth in documents such as the Bill of Rights. This criterion protects whistleblowers when they reveal an organization’s unethical practices to the press or government agencies, using their right to free speech. A third criterion is to impose and enforce rules fairly and impartially to ensure or an equitable distribution of benefits and costs. Union members typically favor this view. Each criterion has advantages and liabilities. A focus on utilitarianism promotes efficiency and productivity, but it can sideline the rights of some individuals, particularly those with minority representation. 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. A focus on justice protects the interests of the underrepresented and less powerful, but it can encourage a sense of entitlement that reduces risk taking, innovation, and productivity. Increasingly, researchers are turning to behavioral ethics– an area of study that analyzes how people actually behave when confronted with ethical dilemmas. Their research tells us that while ethical standards exist collectively (society and organizations) and individually (personal ethics), individuals do not always follow ethical standards promulgated by their organizations, and we sometimes violate our own standards. How might we increase ethical decision making in organizations? First, sociologist James Q. Wilson promulgated the broken windows theory—the idea that decayed and disorderly urban environments may facilitate criminal behavior because they signal antisocial norms. Second, managers should encourage conversations about moral issues; they may serve as a reminder and increase ethical decision making. Finally, we should be aware of our own moral “blind spots”—the tendency to see ourselves as more moral than we are, and others as less moral than they are. Behavioral ethics research stresses the importance of culture to ethical decision making. There are few global ethical standards, as contrasts between Asia and the West illustrate. What is ethical in one culture may be unethical in another. Without sensitivity to cultural differences in defining ethical conduct, organizations may encourage unethical conduct without even knowing it. Lying Lying is one of the top unethical activities we may indulge in daily, and it undermines all efforts toward sound decision making. Lying is deadly to decision making, whether we sense the lies or not. Managers—and organizations—simply cannot make good decisions when facts are misrepresented and people give false motives for their behaviors. Lying isa big ethical problem as well. Creativity, Creative Decision Making, and Innovation in Organizations Introduction Definition: Creativity is the ability to produce novel and useful ideas. These are ideas that are different from what has been done before, but that are also appropriate to the problem. The three-stage model of creativity shown in Exhibit 6-5 suggests that creativity involves causes (creative potential and creative environment), creative behavior, and creative outcomes (innovation). Creative Behavior 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 behavior is designed to solve. Problem formulation: the stage of creative behavior in which we identify a problem or opportunity that requires a solution as yet unknown. Information gathering: given a problem, the solution is rarely directly at hand. We need time to learn more and to process that learning. Information gathering: the stage of creative behavior when possible solutions to a problem incubate in an individual’s mind. Idea generation: once we have collected the relevant information, it is time to translate that knowledge into ideas. Idea generation: the process of creative behavior in which we develop possible solutions to a problem from relevant information and knowledge. Idea evaluation: finally, it’s time to choose from the ideas we have generated. Idea evaluation: the process of creative behavior in which we evaluate potential solutions to identify the best one. Causes of Creative Behavior Creative potential Is there such a thing as a creative personality? Indeed. Most people have some of the characteristics shared by exceptionally creative people. The more of these characteristics we have, the higher our creative potential. The potential for creativity is enhanced when individuals have abilities, knowledge, proficiencies, and similar expertise to their field of endeavor. Creative environment What environmental factors affect whether creative potential translates into creative behaviors? First, and perhaps most important, is motivation. If you aren’t motivated to be creative, it is unlikely you will be. It is also valuable to work in an environment that rewards and recognizes creative work. A recent nation-level study suggests that countries scoring high on Hofstede’s culture dimension of individuality are more creative. Good leadership matters to creativity too. Studies show that diverse teams can be more creative, but only under certain conditions. Creative outcomes (Innovation) We can define creative outcomes as ideas or solutions judged to be novel and useful by relevant stakeholders. 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. Softs skills help translate ideas into results. Summary and Implications for Managers 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. 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. We find individuals looking for solutions that satisfice rather than optimize, injecting biases and prejudices into the decision process, and relying on intuition. Managers should encourage creativity in employees and teams to create a route to innovative decision making. Specific implications for managers are below: 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. 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. Adjust your decision making approach to the national culture you’re operating in and to the criteria your organization values. If you’re in a country that doesn’t value rationality, you don’t feel compelled to follow the rational decision making model or to try to make your decisions appear rational. Adjust your decision approach to ensure compatibility with the organizational culture. Combine rational analysis with intuition. These are not conflicting approaches to decision making. By using both, you can actually improve your decision making effectiveness. 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 What Is Perception? Perception is a process by which individuals organize and interpret their sensory impressions in order to give meaning to their environment. Why is this important to the study of OB? Because people’s behavior is based on their perception of what reality is, not on reality itself. Factors That Influence Perception (Exhibit 6-1) Factors that shape and can distort perception: Perceiver Target Situation Perceiver: When an individual looks at a target and attempts to interpret what he or she sees, that interpretation is heavily influenced by personal characteristics of the individual perceiver. The more relevant personal characteristics affecting perception of the perceiver are attitudes, motives, interests, past experiences, and expectations. Target: Characteristics of the target can also affect what is being perceived. This would include attractiveness, gregariousness, and our tendency to group similar things together. For example, members of a group with clearly distinguishable features or color are often perceived as alike in other, unrelated characteristics as well. Context: The context in which we see objects or events also influences our attention. This could include time, heat, light, or other situational factors. Person Perception: Making Judgments about Others Attribution Theory (Exhibit 6-2) Our perceptions of people differ from our perceptions of inanimate objects. Our perception and judgment of a person’s actions are influenced by these assumptions. 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: Distinctiveness Consensus Consistency Clarification of the differences between internal and external causation: Internally caused behaviors are those that are believed to be under the personal control of the individual. Externally caused behavior is what we imagine the situation forced the individual to do. Three determining factors Distinctiveness refers to whether an individual displays different behaviors in different situations. What we want to know is whether the observed behavior is unusual. If it is, the observer is likely to give the behavior an external attribution. If this action is not unusual, it will probably be judged as internal. 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 give an external attribution to the employee’s tardiness, whereas if other employees who took the same route made it to work on time, your conclusion as to causation would be internal. 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. Fundamental attribution error 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. Self-serving bias There is also a tendency for individuals to attribute their own successes to internal factors, such as ability or effort, while putting the blame for failure on external factors, such as luck. This is called the “self-serving bias” and suggests that recipients will distort feedback provided to employees. Cultural differences The evidence on cultural differences in perception is mixed, but most suggest there are differences across cultures in the attributions people make. One study found Asian managers less likely to use the self-serving bias. On the other hand, Asian managers are more likely to blame institutions or whole organizations. This tendency to make group-based attributions also explains why individuals from Asian cultures are more likely to make group-based stereotypes. Differences in attribution tendencies don’t mean the basic concepts of attribution and blame completely differ across cultures, though. Self-serving biases may be less common in East Asian cultures, but evidence suggests they still operate across cultures. Studies indicate Chinese managers assess blame for mistakes using the same distinctiveness, consensus, and consistency cues Western managers use. They also become angry and punish those deemed responsible for failure, a reaction shown in many studies of Western managers. Common Shortcuts in Judging Others Introduction 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. Selective perception Any characteristic that makes a person, object, or event stand out will increase the probability that it will be perceived. Since we can’t observe everything going on about us, we engage in selective perception. Halo effect The halo effect occurs when we draw a general impression on the basis of a single characteristic. Contrast effects We do not evaluate a person in isolation. Our reaction to one person is influenced by other persons we have recently encountered. Contrast effect can distort perception. For example, an interview situation in which one sees a pool of job applicants can distort perception. Distortions in any given candidate’s evaluation can occur as a result of his or her place in the interview schedule. Stereotyping Stereotyping—judging someone on the basis of our perception of the group to which he or she belongs. 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. 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. We have to monitor ourselves to make sure we’re not unfairly applying a stereotype in our evaluations and decisions. Specific Applications of Shortcuts in Organizations Employment interview Evidence indicates that interviewers make perceptual judgments that are often inaccurate. Interviewers generally draw early impressions that become very quickly entrenched. Studies indicate that most interviewers’ decisions change very little after the first four or five minutes of the interview. Recent research indicates that our individual intuition about a job candidate is not reliable in predicting job performance, but that collecting input from multiple independent evaluations can be predictive. Performance expectations Evidence demonstrates that people will attempt to validate their perceptions of reality, even when those perceptions are faulty. Self-fulfilling prophecy, or the Pygmalion effect, characterizes the fact that people’s expectations determine their behavior. Expectations become reality. Performance evaluation An employee’s performance appraisal is very much dependent on the perceptual process. Although the appraisal can be objective, many jobs are evaluated in subjective terms. Subjective measures are problematic because of selective perception, contrast effects, and so on. The Link Between Perception and Individual Decision Making Individuals in organizations make decisions; they make choices from among two or more options. Decision making occurs as a reaction to a problem. There is a discrepancy between some current state of affairs and some desired state, requiring consideration of alternative courses of action. One person’s problem is another’s satisfactory state of affairs. Every decision requires interpretation and evaluation of information. The perceptions of the decision maker will address these two issues: Data are typically received from multiple sources. Which data are relevant to the decision and which are not? Decision Making in Organizations The Rational Model, Bounded Rationality, and Intuition Introduction In OB, there are generally accepted constructs of decision making each of us employs to make determinations: rational decision making, bounded rationality, and intuition. There are times when one strategy may lead to a better outcome than another in a given situation. Rational decision making We often think the best decision maker is rational and makes consistent, value-maximizing choices within specified constraints. These decisions follow a six-step rational decision making model listed in Exhibit 6-3. Step 1: Define the problem. Step 2: Identify the decision criteria. Step 3: Allocate weights to the criteria. Step 4: Develop the alternatives. Step 5: Evaluate the alternatives. Step 6: Select the best alternative. The rational decision-making model assumes that the decision maker has complete information, is able to identify all the relevant options in an unbiased manner, and chooses the option with the highest utility. Most decisions in the real world don’t follow the rational model. People are usually content to find an acceptable or reasonable solution to a problem rather than an optimal one. Choices tend to be limited to the neighborhood of the problem symptom and the current alternative. As one expert in decision making put it, “Most significant decisions are made by judgment, rather than by a defined prescriptive model.” People are remarkably unaware of making suboptimal decisions. Bounded Rationality When faced with a complex problem, most people respond by reducing the problem to a level at which it can be readily understood. This is because the limited information-processing capability of human beings makes it impossible to assimilate and understand all the information necessary to optimize. People satisfice—they seek solutions that are satisfactory and sufficient. Individuals operate within the confines of bounded rationality. They construct simplified models that extract the essential features. How does bounded rationality work? Once a problem is identified, the search for criteria and options begins. 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. Once this limited set of options is identified, the decision maker will begin reviewing it. The decision maker will begin with options that differ only in a relatively small degree from the choice currently in effect. The first option that meets the “good enough” criterion ends the search. Satisficing is not always a bad idea— a simple process may frequently be more sensible than the traditional rational decision-making model. To use the rational model in the real world, you need to gather a great deal of information 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. Sometimes a fast-and-frugal process of solving problems might be your best option. Intuition Perhaps the least rational way of making decisions is intuitive decision making, an unconscious process created from distilled experience. It occurs outside 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. While intuition isn’t rational, it isn’t necessarily wrong. Nor does it always contradict rational analysis; rather, the two can complement each other. The key is to neither abandon nor rely solely on intuition, but to supplement it with evidence and good judgment. Common Biases and Errors in Decision Making Introduction (Exhibit 6-4 shows how to reduce biases and errors) Decision makers allow systematic biases and errors to creep into their judgments. People tend to rely on experience, impulses, gut feelings, and rules of thumb. These can lead to distortions. Overconfidence Bias Individuals whose intellectual and interpersonal abilities are weakest are most likely to overestimate their performance and ability. The tendency to be too confident about their ideas might keep some from planning how to avoid problems that arise. Investor overconfidence operates in a variety of ways. People think they know more than they do, and it costs them. Investors, especially novices, overestimate not just their own skill in processing information, but also the quality of the information they’re working with. Anchoring Bias Anchoring bias involves fixating on initial information as a starting point and failing to adequately adjust for subsequent information. Anchors are widely used by people in advertising, management, politics, real estate, and lawyers – where persuasion skills are important. Any time a negotiation takes place, so does anchoring. Confirmation Bias Confirmation bias is a type of selective perception: we seek out information that reaffirms past choices, and discount information that contradicts past judgments. Availability Bias Availability bias is the tendency for people to base judgments on information that is readily available. Escalation of Commitment Escalation of commitment occurs when we stay with a decision even when there is clear evidence that it’s wrong. When is escalation most likely to occur? Evidence indicates it occurs when individuals view themselves as responsible for the outcome. Randomness Error Decision making becomes impaired when we try to create meaning out of random events. Our tendency to believe we can predict the outcome of random events is the randomness error. Risk Aversion The tendency to prefer a sure thing instead of a risky outcome is risk aversion. Risk aversion has important implications. Risk-averse employees will stick with the established way of doing their jobs, rather than taking a chance on innovative methods. Ambitious people with power that can be taken away (most managers) appear to be especially risk averse, perhaps because they don’t want to lose on a gamble everything they’ve worked so hard to achieve. Because people are less likely to escalate commitment where there is a great deal of uncertainty, the implications of risk aversion aren’t all bad. People will more likely engage in risk-seeking behavior for negative outcomes, and risk-averse behavior for positive outcomes, when under stress. Hindsight Bias Tendency to believe falsely that one has accurately predicted the outcome of an event, after that outcome is actually known. The hindsight bias reduces our ability to learn from the past. Influences on Decision Making: Individual Differences and Organizational Constraints Individual Differences Research suggests that personality does influence our decisions. Specific facets of conscientiousness—rather than the broad trait itself—may affect escalation of commitment. Achievement-striving Achievement-striving people were more likely to escalate their commitment, whereas dutiful people were less likely. Achievement-oriented people hate to fail, so they escalate their commitment, hoping to forestall failure. Achievement-striving individuals appear more susceptible to the hindsight bias, perhaps because they have a greater need to justify their actions. People with high self-esteem are strongly motivated to maintain it, so they use the self-serving bias to preserve it. They blame others for their failures while taking credit for successes. Gender Rumination refers to reflecting at length. In decision making, it means over-thinking about problems. Evidence indicates that women analyze decisions more than men. Women, in general, are more likely than men to engage in rumination. Rumination tendency appears to be moderated by age. Differences are largest during young adulthood and smallest after age 65. Mental ability 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. Cultural differences The rational model makes no acknowledgment of cultural differences, nor does the bulk of OB research literature on decision making. We need to recognize that the cultural background of a decision maker can significantly influence the selection of problems, the depth of analysis, the importance placed on logic and rationality, and whether organizational decisions should be made autocratically by an individual manager or collectively in groups. Cultures differ in their time orientation, the importance of rationality, their belief in the ability of people to solve problems, and their preference for collective decision making. Differences in time orientation help us understand why managers in Egypt make decisions at a much slower and more deliberate pace than their U.S. counterparts. While rationality is valued in North America, that’s not true elsewhere in the world. A North American manager might make an important decision intuitively but know it’s important to appear to proceed in a rational fashion because rationality is highly valued in the West. In countries such as Iran, where rationality is not as paramount as other factors, efforts to appear rational are not necessary. Some cultures emphasize solving problems, while others focus on accepting situations as they are. The United States falls in the first category. Thailand and Indonesia are examples of the second. Because problem-solving managers believe they can and should change situations to their benefit, U.S. managers might identify a problem long before their Thai or Indonesian counterparts would choose to recognize it. Decision making by Japanese managers is much more group-oriented than in the United States. The Japanese value conformity and cooperation. Before Japanese CEOs make an important decision, they collect a large amount of information, which they use in consensus-forming group decisions. Nudging Commercials are 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) initiatives to change people’s expectations for organizations. People differ in their susceptibility to suggestion, but it is probably fair to say we are all receptive to nudging to some degree. Organizational Constraints Introduction The organization itself constrains decision makers creating deviations from the rational model. Performance evaluation Managers are strongly influenced in their decision making by the criteria by which they are evaluated. Reward systems The organization’s reward system influences decision makers by suggesting to them what choices are preferable in terms of personal payoff. Formal regulations Organizations create rules, policies, procedures, and other formalized regulations to standardize the behavior of their members. System-imposed time constraints Organizations impose deadlines on decisions. Such conditions often make it difficult, if not impossible, for managers to gather all the information before making a final choice. Historical precedents Decisions have a context. Individual decisions are more accurately characterized as points in a stream of decisions. Decisions made in the past are ghosts that continually haunt current choices. It is common knowledge that the largest determining factor of the size of any given year’s budget is last year’s budget. What about Ethics in Decision Making? Introduction Ethical considerations should be an important criterion in organizational decision making. Three Ethical Decision Criteria Utilitarianism—decisions are made solely on the basis of their outcomes or consequences. The goal of utilitarianism is to provide the greatest good for the greatest number. This view tends to dominate business decision making. Promotes efficiency, productivity, and high profits. Focus on rights—calls on individuals to make decisions consistent with fundamental liberties and privileges as set forth in documents such as the Bill of Rights. An emphasis on in decision making means respecting and protecting the basic rights of individuals, such as the right to privacy, free speech, and due process. Focus on justice—requires individuals to impose and enforce rules fairly and impartially. This criterion protects when they reveal an organization’s unethical practices to the press or government agencies, using their right to free speech. A third criterion is to impose and enforce rules fairly and impartially to ensure or an equitable distribution of benefits and costs. Public concern about individual rights and social justice suggests managers should develop ethical standards based on non-utilitarian criteria. This presents a challenge because satisfying individual rights and social justice creates far more ambiguities than utilitarian effects on efficiency and profits. However, while raising prices, selling products with questionable effects on consumer health, closing down inefficient plants, laying off large numbers of employees, and moving production overseas to cut costs can be justified in utilitarian terms, that may no longer be the single measure by which good decisions are judged. Increasingly, researchers are turning to behavioral ethics—an area of study that analyzes how people actually behave when confronted with ethical dilemmas. Their research tells us that while ethical standards exist collectively (society and organizations) and individually (personal ethics), individuals do not always follow ethical standards promulgated by their organizations, and we sometimes violate our own standards. How might we increase ethical decision making in organizations? First, sociologist James Q. Wilson promulgated the broken windows theory—the idea that decayed and disorderly urban environments may facilitate criminal behavior because they signal antisocial norms. Second, managers should encourage conversations about moral issues; they may serve as a reminder and increase ethical decision making. Finally, we should be aware of our own moral “blind spots”—the tendency to see ourselves as more moral than we are, and others as less moral than they are. Behavioral ethics research stresses the importance of culture to ethical decision making. There are few global ethical standards, as contrasts between Asia and the West illustrate. What is ethical in one culture may be unethical in another. Without sensitivity to cultural differences in defining ethical conduct, organizations may encourage unethical conduct without even knowing it. Lying Lying is one of the top unethical activities we may indulge in daily, and it undermines all efforts toward sound decision making. Lying is deadly to decision making, whether we sense the lies or not. Managers—and organizations—simply cannot make good decisions when facts are misrepresented and people give false motives for their behaviors. Lying isa big ethical problem as well. Creativity, Creative Decision Making, and Innovation in Organizations Introduction Definition: Creativity is the ability to produce novel and useful ideas. These are ideas that are different from what has been done before, but that are also appropriate to the problem. The three-stage model of creativity shown in Exhibit 6-5 suggests that creativity involves causes (creative potential and creative environment), creative behavior, and creative outcomes (innovation). Creative Behavior 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 behavior is designed to solve. Problem formulation: the stage of creative behavior in which we identify a problem or opportunity that requires a solution as yet unknown. Information gathering: given a problem, the solution is rarely directly at hand. We need time to learn more and to process that learning. Information gathering: the stage of creative behavior when possible solutions to a problem incubate in an individual’s mind. Idea generation: once we have collected the relevant information, it is time to translate that knowledge into ideas. Idea generation: the process of creative behavior in which we develop possible solutions to a problem from relevant information and knowledge. Idea evaluation: finally, it’s time to choose from the ideas we have generated. Idea evaluation: the process of creative behavior in which we evaluate potential solutions to identify the best one. Causes of Creative Behavior Creative potential Is there such a thing as a creative personality? Indeed. Most people have some of the characteristics shared by exceptionally creative people. The more of these characteristics we have, the higher our creative potential. Intelligence and Creativity Intelligence is related to creativity. Smart people are more creative because they are better at solving complex problems. Personality and Creativity: The Big Five personality traits of openness to experience (see Chapter 5) correlates with creativity, probably because open individuals are less conformist in action and more divergent in thinking. Expertise and Creativity are the foundation for all creative work, and, than, is the single most important predictors of creative potential. Ethics and Creativity Although creativity is linked to many desirable individual characteristics, it is not correlated with ethicality. Creative environment What environmental factors affect whether creative potential translates into creative behaviors? First, and perhaps most important, is motivation. If you aren’t motivated to be creative, it is unlikely you will be. It is also valuable to work in an environment that rewards and recognizes creative work. A recent nation-level study suggests that countries scoring high on Hofstede’s culture dimension of individuality are more creative. Good leadership matters to creativity too. Studies show that diverse teams can be more creative, but only under certain conditions. Creative outcomes (Innovation) We can define creative outcomes as ideas or solutions judged to be novel and useful by relevant stakeholders. 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. Soft skills help translate ideas into results. Summary and Implications for Managers 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. 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. We find individuals looking for solutions that satisfice rather than optimize, injecting biases and prejudices into the decision process, and relying on intuition. Managers should encourage creativity in employees and teams to create a route to innovative decision making. Specific implications for managers are below: 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. 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. Adjust your decision-making approach to the national culture you’re operating in and to the criteria your organization values. If you’re in a country that doesn’t value rationality, you don’t feel compelled to follow the rational decision-making model or to try to make your decisions appear rational. Adjust your decision approach to ensure compatibility with the organizational culture. Combine rational analysis with intuition. These are not conflicting approaches to decision making. By using both, you can actually improve your decision making effectiveness. 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. Career Objectives So what if I’m a few minutes late for work? I’m often late to work; something ways comes up at the last minute. But my boss is such a jerk about it! He’s threatening to install a time clock. This is so insulting—I’m in management, I’m a professional, I’m on salary, and I do the work! Please tell me how to talk some sense into him.—Renée Dear Renée, This issue seems to be very frustrating to you, and we’d like to help you eliminate that dissatisfaction. Let’s start by analyzing why you and your boss think differently about the issue. You and he certainly perceive the situation differently—he sees your lateness as a violation, and you see it as a natural occurrence. In many other jobs, precise timing may not be expected, valued, or needed. Perhaps your boss is trying to highlight the value he places on punctuality. Or maybe he sees your lateness as unethical behavior that cheats your organization of your valuable work time. According to Ann Tenbrunsel, Director of the Institute for Ethical Business Worldwide, the way we look at our decisions changes our perception of our behaviors. You view your tardiness as something that just happens, not part of a decision-making process. What if you looked at your tardiness as a daily ethical decision? Your organization has a start time to which you agreed as a condition of your employment, so coming in late is a deviation from the standard. There are actions you can take throughout your early morning that control your arrival time. So, by this model, your behavior is unethical. Your situation is not uncommon; we all have moral blind spots, or situations with ethical ramifications we don’t see. Also, as we said earlier, other organizations may not care about your arrival time, so it’s not always an ethical situation. But in situations where ethics are at play, research indicates punishment doesn’t work. Reframing the decisions so we see the ethical implications does work. Try these steps to gain insight: • Look at the motives for your decisions during your morning routine. Can you see where you make choices? Consider your past actions. When you think back about your early morning decisions, do you find yourself self-justifying your delays? Justification signals that our decisions might be suspect. • Look at the facts. How do the reasons for your past delays reflect attitudes you have unconsciously acted on? If you can see the ethical aspect of your daily lateness, you can work to meet the expectation. Think briefly about the ethics of your morning choices when you first wake up, and you’ll be much more likely to be on time. Sources: C. Moore and A. E. Tenbrunsel, “’Just Think About It’? Cognitive Complexity and Moral Choice,” Organizational Behavior and Human Decision Processes 123, no. 2 (2014): 138–49; A. Tenbrunsel, Ethical Systems, www.ethicalsystems.org/content/anntenbrunsel, accessed May 7, 2015; Review and podcast of Blind Spots: Why We Fail to Do What’s Right and What to Do about It, May 4, 2015, http://press.princeton.edu/titles/9390.html, accessed May 7, 2015. Myth or Science? “All Stereotypes Are Negative” This statement is false. Positive stereotypes exist as much as negative ones. A study of Princeton University students shows, for example, that even today we believe Germans are better workers, Italians and African Americans are more loyal, Jews and Chinese are more intelligent, and Japanese and English are more courteous. What is surprising is that positive stereotypes are not always positive. We may be more likely to "choke (fail to perform) when we identify with positive stereotypes because they induce pressure to perform at the stereotypical level. For example, men are commonly believed to have higher math abilities than women. One study shows that when this stereotype is activated before men take a math test, their performance on the test actually goes down. Another study found that the belief that white men are better at science and math than women or minorities caused white men to leave science, technology, engineering, and math majors. Finally, a study used basketball to illustrate the complexity of stereotypes. Researchers provided evidence to one group of undergraduates that whites were better free-throw shooters than blacks. Another group was provided evidence that blacks were better free-throw shooters than whites. A third group was given no stereotypic information. The undergraduates in all three groups then shot free throws while observers watched. The people who performed the worst were those in the negative stereotype condition (black undergraduates who were told whites were better and white undergraduates who were told blacks were better). However, the positive stereotype group (black undergraduates who were told blacks were better and white undergraduates who were told whites were better) also did not perform well. The best performance was turned in by those in the group without stereotypic information. “Choking” is not the only negative thing about positive stereotypes. Research revealed that when women or Asian Americans heard positive stereotypes about themselves (“women are nurturing"; “Asians are good at math”), they felt depersonalized and reacted negatively to the individual expressing the positive stereotype. Another study showed that positive stereotypes about African Americans actually solidified negative stereotypes because any stereotype tends to reinforce group-based differences, whether positive or negative. Stereotypes are understandable. To function, we need shortcuts. This shortcut, however, runs both ways. Because stereotypes are socially learned, we need to be vigilant about not accepting or propagating them among our coworkers and peers. Sources: A. C. Kay, M. V. Day, M. P. Zanna, and A. D. Nussbaum, “The Insidious (and Ironic) Effects of Positive Stereotypes,” Journal of Experimental Social Psychology 49 (2013), pp. 287–-291; J. O. Sly and S. Cheryan, “When Compliments Fail to Flatter: American Individualism and Responses to Positive Stereotypes,” Journal of Personality and Social Psychology 104 (2013), pp. 87-–102; M. J. Tagler, “Choking Under the Pressure of a Positive Stereotype: Gender Identification and Self-Consciousness Moderate Men's Math Test Performance,” The Journal of Social Psychology 152 (2012), pp. 401–-416; M. A. Beasley and M. J. Fischer, “Why They Leave: The Impact of Stereotype Threat on the Attrition of Women and Minorities from Science, Math and Engineering Majors,” Social Psychology of Education 15 (2012), pp. 427–-448; and A. Krendl, I. Gainsburg, and N. Ambady, “The Effects of Stereotypes and Observer Pressure on Athletic Performance,” Journal of Sport & Exercise Psychology 34 (2012), pp. 3–-15. Class Exercise Divide the class into groups of three to five students each. Ask the students to reflect on situations in which they felt they were victims of a negative stereotype. Then, ask students to consider whether they have ever benefited from a positive stereotype. Finally, ask students to think about whether they have unfairly viewed others based on a negative stereotype, or whether they have expected something because of a positive stereotype of another individual. Ask students to present their findings to the class and discuss the implications of stereotyping, both negative and positive. Teaching Notes This exercise is applicable to face-to-face classes or synchronous online classes such as Black Board 9.1, Breeze, WIMBA, and Second Life Virtual Classrooms. See http://www.baclass.panam.edu/imob/SecondLife for more information. An Ethical Choice Choosing to Lie Mark Twain wrote, “The wise thing is for us diligently to train ourselves to lie thoughtfully.” Not everyone agrees that lying is wrong. But we probably agree that people do lie, including each of us, to varying degrees. And most of us probably agree that if we lied less, organizations and society would be better off. So how might that be done? Research conducted by behavioral scientists suggests some steps to recovery. Stop lying to ourselves. We lie to ourselves about how much we lie. Specifically, many studies reveal that we deem ourselves much less likely to lie than we judge others to be. At a collective level, this is impossible—everyone can’t be below above average in their propensity to lie. So Step 1 is to admit the truth: We underestimate the degree to which we lie, we overestimate our morality compared to others, and we tend to engage in what Bazerman and Tenbrunsel call “moral hypocrisy”—we think we’re more moral than we are. Trust, but verify. A recent study showed that lying is learned at a very young age. When a toy was placed out of view, an experimenter told young children not to look at the toy, and went out of sight. More than 80 percent of the children looked at the toy. When asked whether they had looked, 25 percent of 2½ year-olds lied, compared to 90 percent of four-year-olds. Why do we learn to lie? Because we often get away with it. Negotiation research shows that we are more likely to lie in the future when our lies have succeeded or gone undetected in the past. Managers need to identify areas where lying is costly and find ways to shine a light on it when it occurs. Reward honesty. “The most difficult thing is to recognize that sometimes we too are blinded by our own incentives,” writes Dan Ariely, “because we don’t see how our conflicts of interest work on us.” So if we want more honesty, we have to provide greater incentives for the truth, and more disincentives for lying and cheating. Sources: Based on D. Ariely, The Honest Truth About Dishonesty: How We Lie to Everyone—and Especially Ourselves. (New York: Harper, (2012); K. Canavan, “Even Nice People Cheat Sometimes,” The Wall Street Journal (August 8, 2012), p. 4B; M. H. Bazerman and Ann E. Tenbrunsel, Blind Spots: Why We Fail to Do What's Right and What to Do about It (2012) Princeton, NJ: Princeton University Press, 2012; A. D. Evans and K. Lee, “Emergence of Lying in Very Young Children,” Developmental Psychology (2013); and L. Zhou Y. Sung, and D. Zhang, “Deception Performance in Online Group Negotiation and Decision Making: The Effects of Deception Experience and Deception Skill,” Group Decision and Negotiation 22 (2013), pp. 153–-172. Class Exercise Divide the class into three groups. Ask each group to list situations in which they feel lying is acceptable. Then, ask students whether they would lie to protect a friend, to save their job, or to move ahead in their job. As a group, students should compare their responses to the three questions and evaluate why they differ. Finally, ask students to think about what could prevent them from lying in each of the situations. Would the same solution apply in all cases? Teaching Notes This exercise is applicable to face-to-face classes or synchronous online classes such as Black Board 9.1, Breeze, WIMBA, and Second Life Virtual Classrooms. See http://www.baclass.panam.edu/imob/SecondLife for more information. Personal Inventory Assessments How Creative Are You? Everyone is innovative, to some degree. Take this PIA to find out if you are wildly or mildly creative. Point/Counterpoint Stereotypes are Dying Point In the Myth or Science? feature in this chapter, we discussed the harmful effects of stereotypes, even positive ones. Fortunately, stereotypes are dying a slow but inexorable death. Whether they are about women, racial or ethnic minorities, or gays, each passing year brings evidence that stereotypes are losing their hold—thanks to the progress of society, but also thanks to younger individuals replacing older ones in the workforce. Younger people are less likely to endorse stereotypes across the board. In the 1930s, when asked whether African Americans were “superstitious,” 84 percent agreed; 75 percent endorsed a stereotype that African Americans were “lazy.” Thankfully, those stereotypes are nearly gone. Results vary by study, but today between 0 and 10 percent of individuals agree with those stereotypes. These results show that racism still exists, but they also show it is waning. Even when people endorse stereotypes, their consensus has weakened dramatically over time. For example, if forced to choose 10 adjectives to describe a group of people, at one time people converged on a few (often incorrect) traits. Today, their lists will vary dramatically by person. There is another factor at play here: the media. Media reports are not a good source of scientific information, yet to listen to them, you’d think stereotypes were as alive as ever. Fortunately, that’s not the case, but when stereotypes fade, it’s not newsworthy. Someday soon, stereotypic thinking will be as retrograde as outright acts of racism or sexism. We should count ourselves lucky to live in societies and work in organizations where such thinking and behavior are viewed quite negatively. Counterpoint Unfortunately, stereotypes are alive and well. We may have just become better at hiding them. People conceal negative stereotypes in favor of emphasizing positive ones, especially when communicating publicly (to a casual acquaintance) rather than privately (to a close friend). When someone communicates a negative stereotype, listeners think less of the communicator, even when they agree. Research shows that people do not communicate their negative stereotypes to others because they know that expressing stereotypes may make them look bad. We cannot assume that unspoken stereotypes are benign. A prejudice expressed is no less a prejudice. Negative stereotypes don't magically reverse themselves over time. Thankfully, positive stereotypes help to balance out the equation a little bit, and negative stereotypes can change when they are openly refuted. For example, nearly half (48.9 percent) of individuals describe Italians as “passionate, and that has remained stable over time, whereas only 1.5 percent now describe them as “cowardly, which has declined greatly over time. The decline of a few negative stereotypes may seem like progress , but it’s less than it seems. All stereotypes are undesirable; positive stereotypes beget negative ones, and the negative ones haven’t gone away; they’ve just been driven underground. We can only really hope to eliminate stereotypes by addressing them openly. When such prejudices are concealed, they are harder to change. Time and the entrance of younger individuals into society and organizations have not eliminated or necessarily even reduced stereotypes. Ironically, even the assertion that younger workers are less likely to hold stereotypes than older ones relies on a stereotype (that older people are more likely to be prejudiced)! Sources: J. L. Skorinko and S. A. Sinclair, “Perspective Taking Can Increase Stereotyping: The Role of Apparent Stereotype Confirmation,” Journal of Experimental Social Psychology 49 (2013), pp. 10–-18; and H. B. Bergsieker, L. M. Leslie, V. S. Constantine, and S. T. Fiske, “Stereotyping by Omission: Eliminate the Negative, Accentuate the Positive,” Journal of Personality and Social Psychology 102 (2012), pp. 1214–-1238. Class Exercise Divide the class into pairs of groups of three each. Assign one group out of each pair to take the Point position and the other group in the pair to take the Counterpoint position. The groups should prepare for a class debate on each position. Have each pair present its reason for supporting the position. Take a vote among the remainder of the class for the winning side. Teaching Notes This exercise is applicable to face-to-face classes or synchronous online classes such as Black Board 9.1, Breeze, WIMBA, and Second Life Virtual Classrooms. See http://www.baclass.panam.edu/imob/SecondLife for more information. CHAPTER6 Perception and individual Decision making LEARNING OBJECTIVES After studying this chapter, your students should be able to: Explain the factors that influence perception. Describe attribution theory. Explain the link between perception and decision making. Contrast the rational model of decision making with bounded rationality and intuition. Explain how individual differences and organizational constraints affect decision making. Contrast the three ethical decision criteria. Describe the three-stage model of creativity. INSTRUCTOR RESOURCES Instructors may wish to use the following resources when presenting this chapter. Text Exercises Career Objectives: So What If I’m A Few Minutes Late to Work? Myth or Science?: “All Stereotypes Are Negative” An Ethical Choice: Choosing to Lie Personal Inventory Assessments: How Creative Are You? Point/Counterpoint: Stereotypes Are Dying Questions for Review Experiential Exercise: Good Liars and Bad Liars Ethical Dilemma: Cheating Is a Decision Text Cases Case Incident 1:Too Much of a Good Thing Case Incident 2: The Youngest Billionaire Instructor’s Choice This section presents an exercise that is NOT found in the student's textbook. Instructor's Choice reinforces the text's emphasis through various activities. Some Instructor's Choice activities are centered on debates, group exercises, Internet research, and student experiences. Some can be used in class in their entirety, while others require some additional work on the student's part. The course instructor may choose to use these at anytime throughout the class—some may be more effective as icebreakers, while some may be used to pull together various concepts covered in the chapter. Web Exercises At the end of each chapter of this Instructor’s Manual, you will find suggested exercises and ideas for researching OB topics on the Internet. The exercises “Exploring OB Topics on the Web” are set up so that you can simply photocopy the pages, distribute them to your class, and make assignments accordingly. You may want to assign the exercises as an out-of-class activity or as lab activities with your class. Summary and Implications for Managers 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. 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. We find individuals looking for solutions that satisfice rather than optimize, injecting biases and prejudices into the decision process, and relying on intuition. Managers should encourage creativity in employees and teams to create a route to innovative decision making. Specific implications for managers are below: 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. 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. Adjust your decision-making approach to the national culture you’re operating in and to the criteria your organization values. If you’re in a country that doesn’t value rationality, don’t feel compelled to follow the rational decision-making model or to try to make your decisions appear rational. Adjust your decision approach to ensure compatibility with the organizational culture. Combine rational analysis with intuition. These are not conflicting approaches to decision making. By using both, you can actually improve your decision making effectiveness. 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. This chapter begins with an introduction to Palmer Luckey, inventor of the Oculus Rift virtual reality headset. The case illustrates how important—and perhaps rare—an individual’s creativity can be to an industry. As we will see later in the chapter, the creativity of individuals can lead to breakthroughs in innovation. To better understand what influences us and our organizations, we start at the roots of our thought processes: our perceptions and the way they affect our decision making. BRIEF CHAPTER OUTLINE What Is Perception? Perception is a process by which individuals organize and interpret their sensory impressions in order to give meaning to their environment. Why is this important to the study of OB? Because people’s behavior is based on their perception of what reality is, not on reality itself. Factors That Influence Perception (Exhibit 6-1) Factors that shape and can distort perception: Perceiver Target Situation When an individual looks at a target and attempts to interpret what he or she sees, that interpretation is heavily influenced by personal characteristics of the individual perceiver. Characteristics of the target also affect what we perceive. Context matters too. Person Perception: Making Judgments about Others Attribution Theory (Exhibit 6-2) 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: Distinctiveness Consensus Consistency Clarification of the differences between internal and external causation: Internally caused behaviors are those that are believed to be under the personal control of the individual. Externally caused behavior is what we imagine the situation forced the individual to do. Three determining factors: Distinctiveness refers to whether an individual displays different behaviors in different situations. Consensus occurs if everyone who is faced with a similar situation responds in the same way. Consistency in a person’s actions. Fundamental attribution error 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. Self-serving bias There is also a tendency for individuals to attribute their own successes to internal factors, such as ability or effort, while putting the blame for failure on external factors, such as luck. Cultural differences The evidence on cultural differences in perception is mixed, but most suggest there are differences across cultures in the attributions people make. Common Shortcuts in Judging Others The shortcuts for judging others often allow us to make accurate perceptions rapidly and provide valid data for making predictions. However, they can and do sometimes result in significant distortions. Selective perception Any characteristic that makes a person, object, or event stand out will increase the probability that it will be perceived. Since we can’t observe everything going on about us, we engage in selective perception. Halo effect The halo effect occurs when we draw a general impression on the basis of a single characteristic. Contrast effects We do not evaluate a person in isolation. Our reaction to one person is influenced by other persons we have recently encountered. Contrast effect can distort perception. For example, an interview situation in which one sees a pool of job applicants can distort perception. Stereotyping Stereotyping—judging someone on the basis of our perception of the group to which he or she belongs. 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. Specific Applications of Shortcuts in Organizations Employment interview Evidence indicates that interviewers make perceptual judgments that are often inaccurate. Interviewers generally draw early impressions that become very quickly entrenched. Studies indicate that most interviewers’ decisions change very little after the first four or five minutes of the interview. Performance Expectations Evidence demonstrates that people will attempt to validate their perceptions of reality, even when those perceptions are faulty. Self-fulfilling prophecy, or the Pygmalion effect, characterizes the fact that people’s expectations determine their behavior. Expectations become reality. Performance Evaluation An employee’s performance appraisal is very much dependent on the perceptual process. Although the appraisal can be objective, many jobs are evaluated in subjective terms. Subjective measures are problematic because of selective perception, contrast effects, halo effects, and so on. The Link Between Perception and Individual Decision Making Individuals in organizations make decisions; they make choices from among two or more options. A discrepancy between the current state of affairs and some desired state. Every decision requires interpretation and evaluation of information. The perceptions of the decision maker will address these two issues. Decision Making in Organizations The Rational Model, Bounded Rationality, and Intuition Introduction In OB, there are generally accepted constructs of decision making that each of us employs to make determinations: rational decision making, bounded rationality, and intuition. There are times when one strategy may lead to a better outcome than another in a given situation. Rational decision making We often think the best decision maker is rational and makes consistent, value-maximizing choices within specified constraints. These decisions follow a six-step rational decision making model listed in Exhibit 6-3 Step 1: Define the problem. Step 2: Identify the decision criteria. Step 3: Allocate weights to the criteria. Step 4: Develop the alternatives. Step 5: Evaluate the alternatives. Step 6: Select the best alternative. The rational decision-making model assumes that the decision maker has complete information, is able to identify all the relevant options in an unbiased manner, and chooses the option with the highest utility. Most decisions in the real world don’t follow the rational model. Bounded Rationality When faced with a complex problem, most people respond by reducing the problem to a level at which it can be readily understood. People satisfice—they seek solutions that are satisfactory and sufficient. Individuals operate within the confines of bounded rationality. They construct simplified models that extract the essential features. How does bounded rationality work? Once a problem is identified, the search for criteria and options begins. 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. Once this limited set of options is identified, the decision maker will begin reviewing it until we identify one that is “good enough” – that meets an acceptable level of performance. Thus ends our search. Therefore, the solution represents a satisficing choice—the first acceptable one we encounter—rather than an optimal one. To use the rational model in the real world, you need to gather a great deal of information about all the options, compute applicable weights, and then calculate values across a huge number of criteria. Intuition Perhaps the least rational way of making decisions is intuitive decision making, an unconscious process created from distilled experience. It occurs outside conscious thought; it relies on holistic associations, or links between disparate pieces of information; is fast; and is affectively charged, meaning it usually engages the emotions. While intuition isn’t rational, it isn’t necessarily wrong. Nor does it always contradict rational analysis; rather, the two can complement each other. The key is to neither abandon nor rely solely on intuition, but to supplement it with evidence and good judgment. Common Biases and Errors in Decision Making Introduction (Exhibit 6-4) Decision makers allow systematic biases and errors to creep into their judgments. People tend to rely on experience, impulses, gut feelings, and rules of thumb. These can lead to distortions. Overconfidence Bias Individuals whose intellectual and interpersonal abilities are weakest are most likely to overestimate their performance and ability. The tendency to be too confident about their ideas might keep some from planning how to avoid problems that arise. Investor overconfidence operates in a variety of ways. People think they know more than they do, and it costs them. Investors, especially novices, overestimate not just their own skill in processing information, but also the quality of the information they’re working with. Anchoring Bias Anchoring bias involves fixating on initial information as a starting point and failing to adequately adjust for subsequent information. Anchors are widely used by people in advertising, management, politics, real estate, and lawyers – where persuasion skills are important. Any time a negotiation takes place, so does anchoring. Confirmation Bias Confirmation bias is a type of selective perception: we seek out information that reaffirms past choices, and discount information that contradicts past judgments. Availability Bias Availability bias is the tendency for people to base judgments on information that is readily available. Escalation of Commitment Escalation of commitment occurs when we stay with a decision even when there is clear evidence that it’s wrong. When is escalation most likely to occur? Evidence indicates it occurs when individuals view themselves as responsible for the outcome. Randomness Error Decision making becomes impaired when we try to create meaning out of random events. Our tendency to believe we can predict the outcome of random events is the randomness error. Risk Aversion The tendency to prefer a sure thing instead of a risky outcome is risk aversion. Risk aversion has important implications. Risk-averse employees will stick with the established way of doing their jobs, rather than taking a chance on innovative methods. Ambitious people with power that can be taken away (most managers) appear to be especially risk averse, perhaps because they don’t want to lose on a gamble everything they’ve worked so hard to achieve. People will more likely engage in risk-seeking behavior for negative outcomes, and risk-averse behavior for positive outcomes, when under stress. Hindsight Bias Hindsight bias is the tendency to believe, falsely, that one has accurately predicted the outcome of an event, after that outcome is actually known. The hindsight bias reduces our ability to learn from the past. Influences on Decision Making: Individual Differences and Organizational Constraints Individual Differences Personality influences our decisions. Specific facets of conscientiousness—rather than the broad trait itself—may affect escalation of commitment. Achievement-striving Dutifulness People with high self-esteem are strongly motivated to maintain it, so they use the self-serving bias to preserve it. Gender Rumination refers to reflecting at length. In decision making, it means over-thinking about problems. Evidence indicates that women analyze decisions more than men. Mental ability 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. Cultural differences The rational model makes no acknowledgment of cultural differences, nor does the bulk of OB research literature on decision making. We need to recognize that the cultural background of a decision maker can significantly influence the selection of problems, the depth of analysis, the importance placed on logic and rationality, and whether organizational decisions should be made autocratically by an individual manager or collectively in groups. Cultures differ in their time orientation, the importance of rationality, their belief in the ability of people to solve problems, and their preference for collective decision making. While rationality is valued in North America, that’s not true elsewhere in the world. Some cultures emphasize solving problems, while others focus on accepting situations as they are. Because problem-solving managers believe they can and should change situations to their benefit, U.S. managers might identify a problem long before their Thai or Indonesian counterparts would choose to recognize it. Decision making by Japanese managers is much more group-oriented than in the United States. Nudging Commercials are 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) initiatives to change people’s expectations for organizations. People differ in their susceptibility to suggestion, but it is probably fair to say we are all receptive to nudging to some degree. Organizational Constraints Introduction The organization itself constrains decision makers, creating deviations from the rational model. Performance evaluation systems Managers are strongly influenced in their decision making by the criteria by which they are evaluated. Reward systems The organization’s reward system influences decision makers by suggesting to them what choices are preferable in terms of personal payoff. Formal regulations Organizations create rules, policies, procedures, and other formalized regulations to standardize the behavior of their members. System-imposed time constraints Organizations impose deadlines on decisions. Such conditions often make it difficult, if not impossible, for managers to gather all the information before making a final choice. Historical precedents Decisions have a context. Individual decisions are more accurately characterized as points in a stream of decisions. Decisions made in the past are ghosts that continually haunt current choices. It is common knowledge that the largest determining factor of the size of any given year’s budget is last year’s budget. What about Ethics in Decision Making? Introduction Ethical considerations should be an important criterion in organizational decision making. Three Ethical Decision Criteria Utilitarianism—decisions are made solely on the basis of their outcomes or consequences. Focus on rights—calls on individuals to make decisions consistent with fundamental liberties and privileges as set forth in documents such as the Bill of Rights. This criterion protects whistleblowers when they reveal an organization’s unethical practices to the press or government agencies, using their right to free speech. A third criterion is to impose and enforce rules fairly and impartially to ensure or an equitable distribution of benefits and costs. Union members typically favor this view. Each criterion has advantages and liabilities. A focus on utilitarianism promotes efficiency and productivity, but it can sideline the rights of some individuals, particularly those with minority representation. 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. A focus on justice protects the interests of the underrepresented and less powerful, but it can encourage a sense of entitlement that reduces risk taking, innovation, and productivity. Increasingly, researchers are turning to behavioral ethics– an area of study that analyzes how people actually behave when confronted with ethical dilemmas. Their research tells us that while ethical standards exist collectively (society and organizations) and individually (personal ethics), individuals do not always follow ethical standards promulgated by their organizations, and we sometimes violate our own standards. How might we increase ethical decision making in organizations? First, sociologist James Q. Wilson promulgated the broken windows theory—the idea that decayed and disorderly urban environments may facilitate criminal behavior because they signal antisocial norms. Second, managers should encourage conversations about moral issues; they may serve as a reminder and increase ethical decision making. Finally, we should be aware of our own moral “blind spots”—the tendency to see ourselves as more moral than we are, and others as less moral than they are. Behavioral ethics research stresses the importance of culture to ethical decision making. There are few global ethical standards, as contrasts between Asia and the West illustrate. What is ethical in one culture may be unethical in another. Without sensitivity to cultural differences in defining ethical conduct, organizations may encourage unethical conduct without even knowing it. Lying Lying is one of the top unethical activities we may indulge in daily, and it undermines all efforts toward sound decision making. Lying is deadly to decision making, whether we sense the lies or not. Managers—and organizations—simply cannot make good decisions when facts are misrepresented and people give false motives for their behaviors. Lying isa big ethical problem as well. Creativity, Creative Decision Making, and Innovation in Organizations Introduction Definition: Creativity is the ability to produce novel and useful ideas. These are ideas that are different from what has been done before, but that are also appropriate to the problem. The three-stage model of creativity shown in Exhibit 6-5 suggests that creativity involves causes (creative potential and creative environment), creative behavior, and creative outcomes (innovation). Creative Behavior 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 behavior is designed to solve. Problem formulation: the stage of creative behavior in which we identify a problem or opportunity that requires a solution as yet unknown. Information gathering: given a problem, the solution is rarely directly at hand. We need time to learn more and to process that learning. Information gathering: the stage of creative behavior when possible solutions to a problem incubate in an individual’s mind. Idea generation: once we have collected the relevant information, it is time to translate that knowledge into ideas. Idea generation: the process of creative behavior in which we develop possible solutions to a problem from relevant information and knowledge. Idea evaluation: finally, it’s time to choose from the ideas we have generated. Idea evaluation: the process of creative behavior in which we evaluate potential solutions to identify the best one. Causes of Creative Behavior Creative potential Is there such a thing as a creative personality? Indeed. Most people have some of the characteristics shared by exceptionally creative people. The more of these characteristics we have, the higher our creative potential. The potential for creativity is enhanced when individuals have abilities, knowledge, proficiencies, and similar expertise to their field of endeavor. Creative environment What environmental factors affect whether creative potential translates into creative behaviors? First, and perhaps most important, is motivation. If you aren’t motivated to be creative, it is unlikely you will be. It is also valuable to work in an environment that rewards and recognizes creative work. A recent nation-level study suggests that countries scoring high on Hofstede’s culture dimension of individuality are more creative. Good leadership matters to creativity too. Studies show that diverse teams can be more creative, but only under certain conditions. Creative outcomes (Innovation) We can define creative outcomes as ideas or solutions judged to be novel and useful by relevant stakeholders. 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. Softs skills help translate ideas into results. Summary and Implications for Managers 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. 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. We find individuals looking for solutions that satisfice rather than optimize, injecting biases and prejudices into the decision process, and relying on intuition. Managers should encourage creativity in employees and teams to create a route to innovative decision making. Specific implications for managers are below: 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. 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. Adjust your decision making approach to the national culture you’re operating in and to the criteria your organization values. If you’re in a country that doesn’t value rationality, you don’t feel compelled to follow the rational decision making model or to try to make your decisions appear rational. Adjust your decision approach to ensure compatibility with the organizational culture. Combine rational analysis with intuition. These are not conflicting approaches to decision making. By using both, you can actually improve your decision making effectiveness. 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 What Is Perception? Perception is a process by which individuals organize and interpret their sensory impressions in order to give meaning to their environment. Why is this important to the study of OB? Because people’s behavior is based on their perception of what reality is, not on reality itself. Factors That Influence Perception (Exhibit 6-1) Factors that shape and can distort perception: Perceiver Target Situation Perceiver: When an individual looks at a target and attempts to interpret what he or she sees, that interpretation is heavily influenced by personal characteristics of the individual perceiver. The more relevant personal characteristics affecting perception of the perceiver are attitudes, motives, interests, past experiences, and expectations. Target: Characteristics of the target can also affect what is being perceived. This would include attractiveness, gregariousness, and our tendency to group similar things together. For example, members of a group with clearly distinguishable features or color are often perceived as alike in other, unrelated characteristics as well. Context: The context in which we see objects or events also influences our attention. This could include time, heat, light, or other situational factors. Person Perception: Making Judgments about Others Attribution Theory (Exhibit 6-2) Our perceptions of people differ from our perceptions of inanimate objects. Our perception and judgment of a person’s actions are influenced by these assumptions. 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: Distinctiveness Consensus Consistency Clarification of the differences between internal and external causation: Internally caused behaviors are those that are believed to be under the personal control of the individual. Externally caused behavior is what we imagine the situation forced the individual to do. Three determining factors Distinctiveness refers to whether an individual displays different behaviors in different situations. What we want to know is whether the observed behavior is unusual. If it is, the observer is likely to give the behavior an external attribution. If this action is not unusual, it will probably be judged as internal. 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 give an external attribution to the employee’s tardiness, whereas if other employees who took the same route made it to work on time, your conclusion as to causation would be internal. 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. Fundamental attribution error 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. Self-serving bias There is also a tendency for individuals to attribute their own successes to internal factors, such as ability or effort, while putting the blame for failure on external factors, such as luck. This is called the “self-serving bias” and suggests that recipients will distort feedback provided to employees. Cultural differences The evidence on cultural differences in perception is mixed, but most suggest there are differences across cultures in the attributions people make. One study found Asian managers less likely to use the self-serving bias. On the other hand, Asian managers are more likely to blame institutions or whole organizations. This tendency to make group-based attributions also explains why individuals from Asian cultures are more likely to make group-based stereotypes. Differences in attribution tendencies don’t mean the basic concepts of attribution and blame completely differ across cultures, though. Self-serving biases may be less common in East Asian cultures, but evidence suggests they still operate across cultures. Studies indicate Chinese managers assess blame for mistakes using the same distinctiveness, consensus, and consistency cues Western managers use. They also become angry and punish those deemed responsible for failure, a reaction shown in many studies of Western managers. Common Shortcuts in Judging Others Introduction 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. Selective perception Any characteristic that makes a person, object, or event stand out will increase the probability that it will be perceived. Since we can’t observe everything going on about us, we engage in selective perception. Halo effect The halo effect occurs when we draw a general impression on the basis of a single characteristic. Contrast effects We do not evaluate a person in isolation. Our reaction to one person is influenced by other persons we have recently encountered. Contrast effect can distort perception. For example, an interview situation in which one sees a pool of job applicants can distort perception. Distortions in any given candidate’s evaluation can occur as a result of his or her place in the interview schedule. Stereotyping Stereotyping—judging someone on the basis of our perception of the group to which he or she belongs. 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. 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. We have to monitor ourselves to make sure we’re not unfairly applying a stereotype in our evaluations and decisions. Specific Applications of Shortcuts in Organizations Employment interview Evidence indicates that interviewers make perceptual judgments that are often inaccurate. Interviewers generally draw early impressions that become very quickly entrenched. Studies indicate that most interviewers’ decisions change very little after the first four or five minutes of the interview. Recent research indicates that our individual intuition about a job candidate is not reliable in predicting job performance, but that collecting input from multiple independent evaluations can be predictive. Performance expectations Evidence demonstrates that people will attempt to validate their perceptions of reality, even when those perceptions are faulty. Self-fulfilling prophecy, or the Pygmalion effect, characterizes the fact that people’s expectations determine their behavior. Expectations become reality. Performance evaluation An employee’s performance appraisal is very much dependent on the perceptual process. Although the appraisal can be objective, many jobs are evaluated in subjective terms. Subjective measures are problematic because of selective perception, contrast effects, and so on. The Link Between Perception and Individual Decision Making Individuals in organizations make decisions; they make choices from among two or more options. Decision making occurs as a reaction to a problem. There is a discrepancy between some current state of affairs and some desired state, requiring consideration of alternative courses of action. One person’s problem is another’s satisfactory state of affairs. Every decision requires interpretation and evaluation of information. The perceptions of the decision maker will address these two issues: Data are typically received from multiple sources. Which data are relevant to the decision and which are not? Decision Making in Organizations The Rational Model, Bounded Rationality, and Intuition Introduction In OB, there are generally accepted constructs of decision making each of us employs to make determinations: rational decision making, bounded rationality, and intuition. There are times when one strategy may lead to a better outcome than another in a given situation. Rational decision making We often think the best decision maker is rational and makes consistent, value-maximizing choices within specified constraints. These decisions follow a six-step rational decision making model listed in Exhibit 6-3. Step 1: Define the problem. Step 2: Identify the decision criteria. Step 3: Allocate weights to the criteria. Step 4: Develop the alternatives. Step 5: Evaluate the alternatives. Step 6: Select the best alternative. The rational decision-making model assumes that the decision maker has complete information, is able to identify all the relevant options in an unbiased manner, and chooses the option with the highest utility. Most decisions in the real world don’t follow the rational model. People are usually content to find an acceptable or reasonable solution to a problem rather than an optimal one. Choices tend to be limited to the neighborhood of the problem symptom and the current alternative. As one expert in decision making put it, “Most significant decisions are made by judgment, rather than by a defined prescriptive model.” People are remarkably unaware of making suboptimal decisions. Bounded Rationality When faced with a complex problem, most people respond by reducing the problem to a level at which it can be readily understood. This is because the limited information-processing capability of human beings makes it impossible to assimilate and understand all the information necessary to optimize. People satisfice—they seek solutions that are satisfactory and sufficient. Individuals operate within the confines of bounded rationality. They construct simplified models that extract the essential features. How does bounded rationality work? Once a problem is identified, the search for criteria and options begins. 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. Once this limited set of options is identified, the decision maker will begin reviewing it. The decision maker will begin with options that differ only in a relatively small degree from the choice currently in effect. The first option that meets the “good enough” criterion ends the search. Satisficing is not always a bad idea— a simple process may frequently be more sensible than the traditional rational decision-making model. To use the rational model in the real world, you need to gather a great deal of information 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. Sometimes a fast-and-frugal process of solving problems might be your best option. Intuition Perhaps the least rational way of making decisions is intuitive decision making, an unconscious process created from distilled experience. It occurs outside 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. While intuition isn’t rational, it isn’t necessarily wrong. Nor does it always contradict rational analysis; rather, the two can complement each other. The key is to neither abandon nor rely solely on intuition, but to supplement it with evidence and good judgment. Common Biases and Errors in Decision Making Introduction (Exhibit 6-4 shows how to reduce biases and errors) Decision makers allow systematic biases and errors to creep into their judgments. People tend to rely on experience, impulses, gut feelings, and rules of thumb. These can lead to distortions. Overconfidence Bias Individuals whose intellectual and interpersonal abilities are weakest are most likely to overestimate their performance and ability. The tendency to be too confident about their ideas might keep some from planning how to avoid problems that arise. Investor overconfidence operates in a variety of ways. People think they know more than they do, and it costs them. Investors, especially novices, overestimate not just their own skill in processing information, but also the quality of the information they’re working with. Anchoring Bias Anchoring bias involves fixating on initial information as a starting point and failing to adequately adjust for subsequent information. Anchors are widely used by people in advertising, management, politics, real estate, and lawyers – where persuasion skills are important. Any time a negotiation takes place, so does anchoring. Confirmation Bias Confirmation bias is a type of selective perception: we seek out information that reaffirms past choices, and discount information that contradicts past judgments. Availability Bias Availability bias is the tendency for people to base judgments on information that is readily available. Escalation of Commitment Escalation of commitment occurs when we stay with a decision even when there is clear evidence that it’s wrong. When is escalation most likely to occur? Evidence indicates it occurs when individuals view themselves as responsible for the outcome. Randomness Error Decision making becomes impaired when we try to create meaning out of random events. Our tendency to believe we can predict the outcome of random events is the randomness error. Risk Aversion The tendency to prefer a sure thing instead of a risky outcome is risk aversion. Risk aversion has important implications. Risk-averse employees will stick with the established way of doing their jobs, rather than taking a chance on innovative methods. Ambitious people with power that can be taken away (most managers) appear to be especially risk averse, perhaps because they don’t want to lose on a gamble everything they’ve worked so hard to achieve. Because people are less likely to escalate commitment where there is a great deal of uncertainty, the implications of risk aversion aren’t all bad. People will more likely engage in risk-seeking behavior for negative outcomes, and risk-averse behavior for positive outcomes, when under stress. Hindsight Bias Tendency to believe falsely that one has accurately predicted the outcome of an event, after that outcome is actually known. The hindsight bias reduces our ability to learn from the past. Influences on Decision Making: Individual Differences and Organizational Constraints Individual Differences Research suggests that personality does influence our decisions. Specific facets of conscientiousness—rather than the broad trait itself—may affect escalation of commitment. Achievement-striving Achievement-striving people were more likely to escalate their commitment, whereas dutiful people were less likely. Achievement-oriented people hate to fail, so they escalate their commitment, hoping to forestall failure. Achievement-striving individuals appear more susceptible to the hindsight bias, perhaps because they have a greater need to justify their actions. People with high self-esteem are strongly motivated to maintain it, so they use the self-serving bias to preserve it. They blame others for their failures while taking credit for successes. Gender Rumination refers to reflecting at length. In decision making, it means over-thinking about problems. Evidence indicates that women analyze decisions more than men. Women, in general, are more likely than men to engage in rumination. Rumination tendency appears to be moderated by age. Differences are largest during young adulthood and smallest after age 65. Mental ability 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. Cultural differences The rational model makes no acknowledgment of cultural differences, nor does the bulk of OB research literature on decision making. We need to recognize that the cultural background of a decision maker can significantly influence the selection of problems, the depth of analysis, the importance placed on logic and rationality, and whether organizational decisions should be made autocratically by an individual manager or collectively in groups. Cultures differ in their time orientation, the importance of rationality, their belief in the ability of people to solve problems, and their preference for collective decision making. Differences in time orientation help us understand why managers in Egypt make decisions at a much slower and more deliberate pace than their U.S. counterparts. While rationality is valued in North America, that’s not true elsewhere in the world. A North American manager might make an important decision intuitively but know it’s important to appear to proceed in a rational fashion because rationality is highly valued in the West. In countries such as Iran, where rationality is not as paramount as other factors, efforts to appear rational are not necessary. Some cultures emphasize solving problems, while others focus on accepting situations as they are. The United States falls in the first category. Thailand and Indonesia are examples of the second. Because problem-solving managers believe they can and should change situations to their benefit, U.S. managers might identify a problem long before their Thai or Indonesian counterparts would choose to recognize it. Decision making by Japanese managers is much more group-oriented than in the United States. The Japanese value conformity and cooperation. Before Japanese CEOs make an important decision, they collect a large amount of information, which they use in consensus-forming group decisions. Nudging Commercials are 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) initiatives to change people’s expectations for organizations. People differ in their susceptibility to suggestion, but it is probably fair to say we are all receptive to nudging to some degree. Organizational Constraints Introduction The organization itself constrains decision makers creating deviations from the rational model. Performance evaluation Managers are strongly influenced in their decision making by the criteria by which they are evaluated. Reward systems The organization’s reward system influences decision makers by suggesting to them what choices are preferable in terms of personal payoff. Formal regulations Organizations create rules, policies, procedures, and other formalized regulations to standardize the behavior of their members. System-imposed time constraints Organizations impose deadlines on decisions. Such conditions often make it difficult, if not impossible, for managers to gather all the information before making a final choice. Historical precedents Decisions have a context. Individual decisions are more accurately characterized as points in a stream of decisions. Decisions made in the past are ghosts that continually haunt current choices. It is common knowledge that the largest determining factor of the size of any given year’s budget is last year’s budget. What about Ethics in Decision Making? Introduction Ethical considerations should be an important criterion in organizational decision making. Three Ethical Decision Criteria Utilitarianism—decisions are made solely on the basis of their outcomes or consequences. The goal of utilitarianism is to provide the greatest good for the greatest number. This view tends to dominate business decision making. Promotes efficiency, productivity, and high profits. Focus on rights—calls on individuals to make decisions consistent with fundamental liberties and privileges as set forth in documents such as the Bill of Rights. An emphasis on in decision making means respecting and protecting the basic rights of individuals, such as the right to privacy, free speech, and due process. Focus on justice—requires individuals to impose and enforce rules fairly and impartially. This criterion protects when they reveal an organization’s unethical practices to the press or government agencies, using their right to free speech. A third criterion is to impose and enforce rules fairly and impartially to ensure or an equitable distribution of benefits and costs. Public concern about individual rights and social justice suggests managers should develop ethical standards based on non-utilitarian criteria. This presents a challenge because satisfying individual rights and social justice creates far more ambiguities than utilitarian effects on efficiency and profits. However, while raising prices, selling products with questionable effects on consumer health, closing down inefficient plants, laying off large numbers of employees, and moving production overseas to cut costs can be justified in utilitarian terms, that may no longer be the single measure by which good decisions are judged. Increasingly, researchers are turning to behavioral ethics—an area of study that analyzes how people actually behave when confronted with ethical dilemmas. Their research tells us that while ethical standards exist collectively (society and organizations) and individually (personal ethics), individuals do not always follow ethical standards promulgated by their organizations, and we sometimes violate our own standards. How might we increase ethical decision making in organizations? First, sociologist James Q. Wilson promulgated the broken windows theory—the idea that decayed and disorderly urban environments may facilitate criminal behavior because they signal antisocial norms. Second, managers should encourage conversations about moral issues; they may serve as a reminder and increase ethical decision making. Finally, we should be aware of our own moral “blind spots”—the tendency to see ourselves as more moral than we are, and others as less moral than they are. Behavioral ethics research stresses the importance of culture to ethical decision making. There are few global ethical standards, as contrasts between Asia and the West illustrate. What is ethical in one culture may be unethical in another. Without sensitivity to cultural differences in defining ethical conduct, organizations may encourage unethical conduct without even knowing it. Lying Lying is one of the top unethical activities we may indulge in daily, and it undermines all efforts toward sound decision making. Lying is deadly to decision making, whether we sense the lies or not. Managers—and organizations—simply cannot make good decisions when facts are misrepresented and people give false motives for their behaviors. Lying isa big ethical problem as well. Creativity, Creative Decision Making, and Innovation in Organizations Introduction Definition: Creativity is the ability to produce novel and useful ideas. These are ideas that are different from what has been done before, but that are also appropriate to the problem. The three-stage model of creativity shown in Exhibit 6-5 suggests that creativity involves causes (creative potential and creative environment), creative behavior, and creative outcomes (innovation). Creative Behavior 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 behavior is designed to solve. Problem formulation: the stage of creative behavior in which we identify a problem or opportunity that requires a solution as yet unknown. Information gathering: given a problem, the solution is rarely directly at hand. We need time to learn more and to process that learning. Information gathering: the stage of creative behavior when possible solutions to a problem incubate in an individual’s mind. Idea generation: once we have collected the relevant information, it is time to translate that knowledge into ideas. Idea generation: the process of creative behavior in which we develop possible solutions to a problem from relevant information and knowledge. Idea evaluation: finally, it’s time to choose from the ideas we have generated. Idea evaluation: the process of creative behavior in which we evaluate potential solutions to identify the best one. Causes of Creative Behavior Creative potential Is there such a thing as a creative personality? Indeed. Most people have some of the characteristics shared by exceptionally creative people. The more of these characteristics we have, the higher our creative potential. Intelligence and Creativity Intelligence is related to creativity. Smart people are more creative because they are better at solving complex problems. Personality and Creativity: The Big Five personality traits of openness to experience (see Chapter 5) correlates with creativity, probably because open individuals are less conformist in action and more divergent in thinking. Expertise and Creativity are the foundation for all creative work, and, than, is the single most important predictors of creative potential. Ethics and Creativity Although creativity is linked to many desirable individual characteristics, it is not correlated with ethicality. Creative environment What environmental factors affect whether creative potential translates into creative behaviors? First, and perhaps most important, is motivation. If you aren’t motivated to be creative, it is unlikely you will be. It is also valuable to work in an environment that rewards and recognizes creative work. A recent nation-level study suggests that countries scoring high on Hofstede’s culture dimension of individuality are more creative. Good leadership matters to creativity too. Studies show that diverse teams can be more creative, but only under certain conditions. Creative outcomes (Innovation) We can define creative outcomes as ideas or solutions judged to be novel and useful by relevant stakeholders. 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. Soft skills help translate ideas into results. Summary and Implications for Managers 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. 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. We find individuals looking for solutions that satisfice rather than optimize, injecting biases and prejudices into the decision process, and relying on intuition. Managers should encourage creativity in employees and teams to create a route to innovative decision making. Specific implications for managers are below: 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. 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. Adjust your decision-making approach to the national culture you’re operating in and to the criteria your organization values. If you’re in a country that doesn’t value rationality, you don’t feel compelled to follow the rational decision-making model or to try to make your decisions appear rational. Adjust your decision approach to ensure compatibility with the organizational culture. Combine rational analysis with intuition. These are not conflicting approaches to decision making. By using both, you can actually improve your decision making effectiveness. 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. Career Objectives So what if I’m a few minutes late for work? I’m often late to work; something ways comes up at the last minute. But my boss is such a jerk about it! He’s threatening to install a time clock. This is so insulting—I’m in management, I’m a professional, I’m on salary, and I do the work! Please tell me how to talk some sense into him.—Renée Dear Renée, This issue seems to be very frustrating to you, and we’d like to help you eliminate that dissatisfaction. Let’s start by analyzing why you and your boss think differently about the issue. You and he certainly perceive the situation differently—he sees your lateness as a violation, and you see it as a natural occurrence. In many other jobs, precise timing may not be expected, valued, or needed. Perhaps your boss is trying to highlight the value he places on punctuality. Or maybe he sees your lateness as unethical behavior that cheats your organization of your valuable work time. According to Ann Tenbrunsel, Director of the Institute for Ethical Business Worldwide, the way we look at our decisions changes our perception of our behaviors. You view your tardiness as something that just happens, not part of a decision-making process. What if you looked at your tardiness as a daily ethical decision? Your organization has a start time to which you agreed as a condition of your employment, so coming in late is a deviation from the standard. There are actions you can take throughout your early morning that control your arrival time. So, by this model, your behavior is unethical. Your situation is not uncommon; we all have moral blind spots, or situations with ethical ramifications we don’t see. Also, as we said earlier, other organizations may not care about your arrival time, so it’s not always an ethical situation. But in situations where ethics are at play, research indicates punishment doesn’t work. Reframing the decisions so we see the ethical implications does work. Try these steps to gain insight: • Look at the motives for your decisions during your morning routine. Can you see where you make choices? Consider your past actions. When you think back about your early morning decisions, do you find yourself self-justifying your delays? Justification signals that our decisions might be suspect. • Look at the facts. How do the reasons for your past delays reflect attitudes you have unconsciously acted on? If you can see the ethical aspect of your daily lateness, you can work to meet the expectation. Think briefly about the ethics of your morning choices when you first wake up, and you’ll be much more likely to be on time. Sources: C. Moore and A. E. Tenbrunsel, “’Just Think About It’? Cognitive Complexity and Moral Choice,” Organizational Behavior and Human Decision Processes 123, no. 2 (2014): 138–49; A. Tenbrunsel, Ethical Systems, www.ethicalsystems.org/content/anntenbrunsel, accessed May 7, 2015; Review and podcast of Blind Spots: Why We Fail to Do What’s Right and What to Do about It, May 4, 2015, http://press.princeton.edu/titles/9390.html, accessed May 7, 2015. Myth or Science? “All Stereotypes Are Negative” This statement is false. Positive stereotypes exist as much as negative ones. A study of Princeton University students shows, for example, that even today we believe Germans are better workers, Italians and African Americans are more loyal, Jews and Chinese are more intelligent, and Japanese and English are more courteous. What is surprising is that positive stereotypes are not always positive. We may be more likely to "choke (fail to perform) when we identify with positive stereotypes because they induce pressure to perform at the stereotypical level. For example, men are commonly believed to have higher math abilities than women. One study shows that when this stereotype is activated before men take a math test, their performance on the test actually goes down. Another study found that the belief that white men are better at science and math than women or minorities caused white men to leave science, technology, engineering, and math majors. Finally, a study used basketball to illustrate the complexity of stereotypes. Researchers provided evidence to one group of undergraduates that whites were better free-throw shooters than blacks. Another group was provided evidence that blacks were better free-throw shooters than whites. A third group was given no stereotypic information. The undergraduates in all three groups then shot free throws while observers watched. The people who performed the worst were those in the negative stereotype condition (black undergraduates who were told whites were better and white undergraduates who were told blacks were better). However, the positive stereotype group (black undergraduates who were told blacks were better and white undergraduates who were told whites were better) also did not perform well. The best performance was turned in by those in the group without stereotypic information. “Choking” is not the only negative thing about positive stereotypes. Research revealed that when women or Asian Americans heard positive stereotypes about themselves (“women are nurturing"; “Asians are good at math”), they felt depersonalized and reacted negatively to the individual expressing the positive stereotype. Another study showed that positive stereotypes about African Americans actually solidified negative stereotypes because any stereotype tends to reinforce group-based differences, whether positive or negative. Stereotypes are understandable. To function, we need shortcuts. This shortcut, however, runs both ways. Because stereotypes are socially learned, we need to be vigilant about not accepting or propagating them among our coworkers and peers. Sources: A. C. Kay, M. V. Day, M. P. Zanna, and A. D. Nussbaum, “The Insidious (and Ironic) Effects of Positive Stereotypes,” Journal of Experimental Social Psychology 49 (2013), pp. 287–-291; J. O. Sly and S. Cheryan, “When Compliments Fail to Flatter: American Individualism and Responses to Positive Stereotypes,” Journal of Personality and Social Psychology 104 (2013), pp. 87-–102; M. J. Tagler, “Choking Under the Pressure of a Positive Stereotype: Gender Identification and Self-Consciousness Moderate Men's Math Test Performance,” The Journal of Social Psychology 152 (2012), pp. 401–-416; M. A. Beasley and M. J. Fischer, “Why They Leave: The Impact of Stereotype Threat on the Attrition of Women and Minorities from Science, Math and Engineering Majors,” Social Psychology of Education 15 (2012), pp. 427–-448; and A. Krendl, I. Gainsburg, and N. Ambady, “The Effects of Stereotypes and Observer Pressure on Athletic Performance,” Journal of Sport & Exercise Psychology 34 (2012), pp. 3–-15. Class Exercise Divide the class into groups of three to five students each. Ask the students to reflect on situations in which they felt they were victims of a negative stereotype. Then, ask students to consider whether they have ever benefited from a positive stereotype. Finally, ask students to think about whether they have unfairly viewed others based on a negative stereotype, or whether they have expected something because of a positive stereotype of another individual. Ask students to present their findings to the class and discuss the implications of stereotyping, both negative and positive. Teaching Notes This exercise is applicable to face-to-face classes or synchronous online classes such as Black Board 9.1, Breeze, WIMBA, and Second Life Virtual Classrooms. See http://www.baclass.panam.edu/imob/SecondLife for more information. An Ethical Choice Choosing to Lie Mark Twain wrote, “The wise thing is for us diligently to train ourselves to lie thoughtfully.” Not everyone agrees that lying is wrong. But we probably agree that people do lie, including each of us, to varying degrees. And most of us probably agree that if we lied less, organizations and society would be better off. So how might that be done? Research conducted by behavioral scientists suggests some steps to recovery. Stop lying to ourselves. We lie to ourselves about how much we lie. Specifically, many studies reveal that we deem ourselves much less likely to lie than we judge others to be. At a collective level, this is impossible—everyone can’t be below above average in their propensity to lie. So Step 1 is to admit the truth: We underestimate the degree to which we lie, we overestimate our morality compared to others, and we tend to engage in what Bazerman and Tenbrunsel call “moral hypocrisy”—we think we’re more moral than we are. Trust, but verify. A recent study showed that lying is learned at a very young age. When a toy was placed out of view, an experimenter told young children not to look at the toy, and went out of sight. More than 80 percent of the children looked at the toy. When asked whether they had looked, 25 percent of 2½ year-olds lied, compared to 90 percent of four-year-olds. Why do we learn to lie? Because we often get away with it. Negotiation research shows that we are more likely to lie in the future when our lies have succeeded or gone undetected in the past. Managers need to identify areas where lying is costly and find ways to shine a light on it when it occurs. Reward honesty. “The most difficult thing is to recognize that sometimes we too are blinded by our own incentives,” writes Dan Ariely, “because we don’t see how our conflicts of interest work on us.” So if we want more honesty, we have to provide greater incentives for the truth, and more disincentives for lying and cheating. Sources: Based on D. Ariely, The Honest Truth About Dishonesty: How We Lie to Everyone—and Especially Ourselves. (New York: Harper, (2012); K. Canavan, “Even Nice People Cheat Sometimes,” The Wall Street Journal (August 8, 2012), p. 4B; M. H. Bazerman and Ann E. Tenbrunsel, Blind Spots: Why We Fail to Do What's Right and What to Do about It (2012) Princeton, NJ: Princeton University Press, 2012; A. D. Evans and K. Lee, “Emergence of Lying in Very Young Children,” Developmental Psychology (2013); and L. Zhou Y. Sung, and D. Zhang, “Deception Performance in Online Group Negotiation and Decision Making: The Effects of Deception Experience and Deception Skill,” Group Decision and Negotiation 22 (2013), pp. 153–-172. Class Exercise Divide the class into three groups. Ask each group to list situations in which they feel lying is acceptable. Then, ask students whether they would lie to protect a friend, to save their job, or to move ahead in their job. As a group, students should compare their responses to the three questions and evaluate why they differ. Finally, ask students to think about what could prevent them from lying in each of the situations. Would the same solution apply in all cases? Teaching Notes This exercise is applicable to face-to-face classes or synchronous online classes such as Black Board 9.1, Breeze, WIMBA, and Second Life Virtual Classrooms. See http://www.baclass.panam.edu/imob/SecondLife for more information. Personal Inventory Assessments How Creative Are You? Everyone is innovative, to some degree. Take this PIA to find out if you are wildly or mildly creative. Point/Counterpoint Stereotypes are Dying Point In the Myth or Science? feature in this chapter, we discussed the harmful effects of stereotypes, even positive ones. Fortunately, stereotypes are dying a slow but inexorable death. Whether they are about women, racial or ethnic minorities, or gays, each passing year brings evidence that stereotypes are losing their hold—thanks to the progress of society, but also thanks to younger individuals replacing older ones in the workforce. Younger people are less likely to endorse stereotypes across the board. In the 1930s, when asked whether African Americans were “superstitious,” 84 percent agreed; 75 percent endorsed a stereotype that African Americans were “lazy.” Thankfully, those stereotypes are nearly gone. Results vary by study, but today between 0 and 10 percent of individuals agree with those stereotypes. These results show that racism still exists, but they also show it is waning. Even when people endorse stereotypes, their consensus has weakened dramatically over time. For example, if forced to choose 10 adjectives to describe a group of people, at one time people converged on a few (often incorrect) traits. Today, their lists will vary dramatically by person. There is another factor at play here: the media. Media reports are not a good source of scientific information, yet to listen to them, you’d think stereotypes were as alive as ever. Fortunately, that’s not the case, but when stereotypes fade, it’s not newsworthy. Someday soon, stereotypic thinking will be as retrograde as outright acts of racism or sexism. We should count ourselves lucky to live in societies and work in organizations where such thinking and behavior are viewed quite negatively. Counterpoint Unfortunately, stereotypes are alive and well. We may have just become better at hiding them. People conceal negative stereotypes in favor of emphasizing positive ones, especially when communicating publicly (to a casual acquaintance) rather than privately (to a close friend). When someone communicates a negative stereotype, listeners think less of the communicator, even when they agree. Research shows that people do not communicate their negative stereotypes to others because they know that expressing stereotypes may make them look bad. We cannot assume that unspoken stereotypes are benign. A prejudice expressed is no less a prejudice. Negative stereotypes don't magically reverse themselves over time. Thankfully, positive stereotypes help to balance out the equation a little bit, and negative stereotypes can change when they are openly refuted. For example, nearly half (48.9 percent) of individuals describe Italians as “passionate, and that has remained stable over time, whereas only 1.5 percent now describe them as “cowardly, which has declined greatly over time. The decline of a few negative stereotypes may seem like progress , but it’s less than it seems. All stereotypes are undesirable; positive stereotypes beget negative ones, and the negative ones haven’t gone away; they’ve just been driven underground. We can only really hope to eliminate stereotypes by addressing them openly. When such prejudices are concealed, they are harder to change. Time and the entrance of younger individuals into society and organizations have not eliminated or necessarily even reduced stereotypes. Ironically, even the assertion that younger workers are less likely to hold stereotypes than older ones relies on a stereotype (that older people are more likely to be prejudiced)! Sources: J. L. Skorinko and S. A. Sinclair, “Perspective Taking Can Increase Stereotyping: The Role of Apparent Stereotype Confirmation,” Journal of Experimental Social Psychology 49 (2013), pp. 10–-18; and H. B. Bergsieker, L. M. Leslie, V. S. Constantine, and S. T. Fiske, “Stereotyping by Omission: Eliminate the Negative, Accentuate the Positive,” Journal of Personality and Social Psychology 102 (2012), pp. 1214–-1238. Class Exercise Divide the class into pairs of groups of three each. Assign one group out of each pair to take the Point position and the other group in the pair to take the Counterpoint position. The groups should prepare for a class debate on each position. Have each pair present its reason for supporting the position. Take a vote among the remainder of the class for the winning side. Teaching Notes This exercise is applicable to face-to-face classes or synchronous online classes such as Black Board 9.1, Breeze, WIMBA, and Second Life Virtual Classrooms. See http://www.baclass.panam.edu/imob/SecondLife for more information. Instructor Manual for Organizational Behavior Timothy A. Judge Stephen P. Robbins 9781292146300, 9780133507645, 9780136124016