Class 6 Notes - Chapter Five Perception Decision Making and...

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Unformatted text preview: Chapter Five Perception, Decision Making, and Creativity Thomson South-Western Wagner & Hollenbeck 5e 1 Presentation Overview This presentation examines the following topics: Perceptual Processes Attention Organization Recall Reducing Perceptual Problems Decision-Making Processes The Rational Decision-Making Model The Administrative Decision-Making Model Reducing Decision-Making Errors Creativity in Decision Making The Creative Process Creative People Creativity-Inducing Situations 2 Introduction Perception is the process by which individuals select, organize, store, and retrieve information. Decision making is the process whereby this perceived information is used to evaluate and choose among possible courses of action. Decision makers must be able to envision the future and use their vision to generate innovative and creative options. 3 Process of Perception 1. Attention: In the attention stage, most of the available information is filtered so that some enters the system but other information does not. 2. In the organization stage human receivers further simplify and organize incoming sensory data e.g. Schemas, Scripts, Prototypes 1. Recall: After information is organized, it must be stored in memory for later retrieval; information can be lost in this process: Availability Hindsight 4 Person Perception: Attribution Theory Kelley's Attribution Theory: Consistency Consensus Distinctiveness Fundamental Attribution Error Self-Serving Bias 5 Shortcuts in Judging Others Selective Perception Halo Effect Contrast Effects Projection Stereotyping 6 Reducing Perceptual Problems There are many ways that a human observer can fail to portray the environment accurately There are many steps which can be taken to avoid these problems: Increasing the frequency of observations Taking care in how and when observations are made Obtaining observations from different people and different perspectives Seeking out information that is inconsistent with or contradicts current beliefs 7 Decision Making Theory At the end of the process of perception, the decision has been framed and the decision maker has collected and discarded various pieces of information to arrive at the final set of information that will be used in making the final decision Two general models: Classical decision theory. Behavioral decision theory. 8 Types of Decisions Programmed vs. Nonprogrammed decisions Decision levels Strategic decision. Managerial (tactical) decision. Operating decision. 9 Rational (Classical) Model of Decision Making Decisions are based on rationality or a careful and calculated choice to maximize value given in assessment of alternatives and their consequences Describes how a decision should be made, rather than how managers actually make decisions. The rational decision-making model is sometimes referred to as the rational economic model, reflecting its ties to classic theories of economic behavior Ideally, observers use this information in a rational way to reach final decisions; however, this is not always the case 10 Rational (Classical) Model of Decision Making Consists of a structured four-step sequence Identifying the problem Generating alternative solutions Selecting a solution Implementing and evaluating the solution 11 Factors Limiting Rational DecisionMaking Models "The complexity of real-world decision situations often makes rationality impossible to achieve," Herbert A. Simon Rational models only work if there is general agreement on the definitions of problems, decisions, and decision-making goals. Difficulty in trying to generate an exhaustive list of alternatives and then selecting the best one 12 Decision Environments Certain environments. Exist when information is sufficient to predict the results of each alternative in advance of implementation. Certainty is the ideal problem solving and decision making environment. Risk environments. Exist when decision makers lack complete certainty regarding the outcomes of various courses of action, but they can assign probabilities of occurrence. Probabilities can be assigned through objective statistical procedures or personal intuition. 13 Decision Environments cont... Uncertain environments. Exist when managers have so little information that they cannot even assign probabilities to various alternatives and possible outcomes. Uncertainty forces decision makers to rely on individual and group creativity to succeed in problem solving. Also characterized by rapidly changing: External conditions. Information technology requirements Personnel influencing problem and choice definitions. 14 The Administrative Model of Decision Making The rational decision-making model may outline what managers should do, but this model provides a better picture of what managers actually do. Decision making is often not rational. Instead people make decisions in ways that are "boundedly rational". Decision making is characterized by: limited information processing. satisficing rather than optimizing. use of judgmental heuristics. 15 Satisficing Decisions Satisficing decision Satisfactory rather than optimal decision Lack capability to collect and process all of the information relevant for a particular decision. Will never know if all possible alternatives have been identified. Lack of time and other necessary resources for completing all of the decision activities. Thus, a tendency to choose the first satisfactory alternative discovered. 16 Judgmental Heuristics and Biases Heuristics are simplifying strategies or "rules of thumb" used to make decisions. Makes it easier to to deal with uncertainty and limited information. Can lead to systematic errors that affect the quality and/or ethics of decisions. Availability Heuristic Representative Bias Anchoring and Adjustment Heuristic Base Rate Bias Loss-Aversion or Framing Bias Confirmation Bias Winner's Curse 17 Escalation of Commitment Dynamic Influences: Escalation of commitment: people invest more heavily in an apparently losing course of action so as to justify their earlier decisions Usually the investments once this process gets started are disproportionate to any gain that could conceivably be realized and the level of irrationality becomes particularly pronounced when the project nears completion 18 Escalation of Commitment A decision maker initially makes a decision that results in some kind of loss or negative outcome. Rather than change the course of action contained in the initial decision, the decision maker commits more time, money, or effort to the course of action. Further losses are experienced because of this escalation of commitment to a failing course of action. 19 Reasons for Escalation of Commitment Decision makers often do not want to admit to themselves or to other people that they have made a mistake. Decision makers erroneously believe that an additional commitment of resources is justified, given how much has been spent already, and may help to recoup some of the losses. Decision makers tend to take more risks when they frame or view decisions in negative terms rather than in positive terms. 20 How can the decision-making process be managed? Reasons for decision making failure. Managers too often copy others' choices and try to sell them to subordinates. Managers tend to emphasize problems and solutions rather than successful implementation. Managers use participation too infrequently. 21 How can the decision-making process be managed? Knowing when to quit -- eliminating escalating commitments Escalating commitment reflects the continuation and renewed efforts on a previously chosen course of action even when feedback suggests that it is failing. Eliminating escalating commitment requires self-discipline to admit mistakes and change direction. 22 Reducing Decision-Making Errors It is possible to identify many different means of reducing errors in decision making: Providing decision makers with aids that will force them to ask all the right questions, get all the right information, and then process the information in all the right ways Computerized expert systems Chunking pieces of information Loosely coupling: weakening the effect that one subgroup has on another Develop separate project development and project evaluation teams 23 Decision Making Theory The garbage can model. solutions, participants, and choice situations as mixed together in the "garbage can" of the organization. Based on belief that decision making is a sloppy and haphazard process Decisions result from an interaction between four independent streams of events problems solutions participants choice opportunities A model of decision making that views problems, 24 More on Garbage Can Model Deals with the pattern or flow of multiple decisions within organizations. Explains the pattern of decision making in organizations that experience extremely high uncertainty. Organized Anarchy: Problematic preferences: Goals, problems, alternatives, and solutions are ill defined. Unclear, poorly understood technology (or cause-andeffect relationships) Turnover Decisions are the outcome of independent streams of 25 events within the organization. More on Garbage Can Model (cont'd) Problems, solutions, participants, and choices all flow through the organization. In one sense, the organization is a large garbage can in which these streams are being stirred. When a problem, solution, and participant happen to connect at one point, a decision may be made and the problem may be solved; but if the solution does not fit the problem, the problem may not be solved. Consequences Solution may be proposed even when problems do not exist. Choices are made without solving problems. Problems may persist without being solved. 26 A few problems are solved. Decision Making Theory: Intuitive Model Intuition has been conceptually defined as: A personality trait An unconscious process, as opposed to analysis, which is assumed to occur separately on the conscious level A set of actions that the decision maker chooses to employ A function of experience from having made many similar decisions 27 Individual Differences in Decision Making Cognitive Attributes (Judgmental) Intelligence Learning Remembering Thinking Decision Making Personality Attributes (Style) High Risk Dogmatic Impatient Competitive Tolerance for Ambiguity (avoiders, solvers, seekers) 28 Decision Theory Conclusions Most decision making in organizations goes beyond step-by step rational choice. Most decision making in organizations falls somewhere between the highly rational and the highly chaotic. Decisions must be made under risk and uncertainty. Decisions must be made to solve nonroutine problems. Decisions must must be made under time pressures and information limitations. Decisions should be ethical. 29 How do culture and ethics influence decision making? Cultural factors and decision making. Culture is "the way in which a group of people solves problems." North American culture stresses decisiveness, speed, and the individual selection of alternatives. Other cultures place less emphasis on individual choice than on developing implementations that work. The most important impact of culture on decision making concerns which issues are elevated to the status of problems solvable with the firm. 30 How do culture and ethics influence decision making? Ethical issues and decision making. Ethical dilemma. A situation in which a person must decide whether or not to do something that, although personally or organizationally beneficial, may be considered unethical and perhaps illegal. Ethical dilemmas are often associated with: Risk and uncertainty. Nonroutine problem situations. 31 How do culture and ethics influence decision making? Ethical decision-making checklist. Is my action legal? Is it right? Is it beneficial? How would I feel if my family found out about this? How would I feel if my decision were printed in the local newspaper? 32 How do culture and ethics influence Suggestions for integrating ethical decision making into the firm. Develop a code of ethics and follow it. Establish procedures for reporting violations. Involve employees in identifying ethical decision making? issues. Monitor ethical performance. Reward ethical behavior. Publicize ethical efforts. 33 Creativity in Decision Making One elusive quality essential to all decision making is creativity Creative decisions consist of choices that are new or unusual but effective Neither the rational nor the administrative decision making models deals with the issues of producing creative decisions 34 The Creative Process Most innovative episodes can be broken down into four distinct stages: 1. Preparation: Creative solutions rarely come out of the blue and requires assembling materials 2. Incubation: Period in which it seems decision makers cease to expend effort on the problem 3. Insight: The solution to the problem typically manifests itself in a flash of inspiration or insight 4. Verification: The solution is tested more rigorously to determine its usefulness for solving the problem 35 Creative People A modest relationship appears to exist between creativity, general cognitive ability, and the specific capacities of reasoning and deduction Personal characteristics such as interests, attitudes, and motivations are more important than intelligence in distinguishing creative people from the general population Creative people generally set high goals for themselves The creative person is unusually persistent and has a high level of energy Age seems to be related to creativity 36 Creativity-Inducing Situations Providing specific and difficult goals and firm deadlines actually seems to stimulate creative achievement Some firms set goals for creativity Certain characteristics of organizational culture may be related to creativity Recognizing and rewarding creativity Encouragement of risk taking Supportive leadership Encouragement of collaborative efforts Exposing people to varying types of experiences 37 ...
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This note was uploaded on 03/18/2008 for the course MGT 325 taught by Professor Roth during the Fall '07 term at Michigan State University.

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