DECISION MAKING IN ORGANIZATIONAL

Decision making is an important process for organizational effectiveness. Decision making is almost
universally defined as choosing between alternatives. It is closely related to all the traditional
management functions. In the manufacturing area, effective decisions are aimed at achieving zero
defects in recent years this focus has also been applied to the service sector in order to create zero
defections. Decision making is an organizational process because it transcends the individual and has an
effect on organizational goals. First the overall nature of the decision making is explored.

Then the models of behavioral decision making are described. Next, the traditional and modern
participative techniques are presented as behaviorally oriented decision techniques. Creativity in
decision making can apply to individuals or groups. Since individual decision making has largely given
way to group decision making in today, organizations, an under standings of group dynamics become
relevant. In fast a no of social decision schemes have emerged. Decisions can be classified as either
programmed or non-programmed. Programmed decisions are repetitive or routine and can be solved
through clear-cut mechanical procedures, such as applying the rules to find the best solution. Up to 90
percent of management decisions are programmed. Non-programmed decisions are exceptional or non-
recurring, and they are often made under crisis conditions which involve so much ambiguity that specific
procedures or programs are not available. Therefore, managers who must make non-programmed
decisions rely on judgment and creativity. 1

This is where OB enters the pictures: to improve how we make decisions in organizations, we
must understand the decision-making errors people commit. Next we describe this errors, beginning
with a brief overview of the rational decision making model.

The Rational Model

We often think the best decision maker is rational and makes consistent, value maximizing choices
within specified constraints.2 This decision follow a six-step rational decision making model. 3 The six-step
is a:

1. Define the problem.

2. Identify the decisions criteria.
3. Allocate weight to the criteria.
4. Develop the alternatives.
5. Evaluate the alternatives.
6. Select the best alternative.

1
http://www.blurtit.com/q573135.html
2
See H.A.Simon, “Rationality in Psychology and Economics,” Journal of Business, October 1986, pp.206-224; and E.Shafir and
A.LeBacuf,”Rationality,” in S.T. Fiske, D.I. Schacter, and C.Zahn-Waxler, Eds., Annual Review of Psuchology, Vol.53 (Palo Alto, Ca:
Annual Reviews, 2002) pp.491-517.
3
See E.F.Harrison, The Managerial Decision Making Model, 3 rd ed., (New York: Houghton Mifflin), 1999, pp. 75-102.
The rational decision making model relies a number of assumptions, including that the decision maker
has complete information, is able to identify all the relevant options in an unbiased manner, and choose
the option with the highest utility.4 As you might imaginr, 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 then an optimal one. Choises 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 then by by a prescriptive model.” What more, people are remarkably
unaware of making suboptimal decisions.

Bounded Rationality

The limited information-processing capability of human being makes in impossible to assimilate and
understand all the information necessary to optimize. 5 So, most of people respond to a complex
problem by reducing it to a level at which their can readily understand it. Also many problem likely don’t
have an optimal solution because there are too complicated to be beroken down into the parameters of
the rational decision-making model. So people satisfied; that is, they seek solutions that are satisfactory
and sufficient.

When you consider which college to attend, did you look every viable alternative? Did you
carefully identify all the criteria that were important in your decision? Did you evaluate each alternative
against the criteria in order to find the optimal college? The answer are probably “No”. well, don’t feel
bad. Few people made their college choice this way. Instead of optimizing, you are probably satisfied.

Because human mind cannot formulate and solves complex problems with full rationality, we
operate within the confines of bounded rationality. We construct simplified models that extracts the
essential features from problems without capturing all their complexity. 6 We can then behave rationality
within the limits of simple model.

Intuition

Perhaps the least rational way of making decisions is to rely on intuition. Intuitive decision making is an
unconscious process created from distilled experience. 7 Its defining qualities are that it occurs outside
conscious thought; it relies on holistic associations, or link between disparate pieces of information; it’s
fast; and its affectively changed, meaning is usually engages the emotions.

While intuition isn’t rational, it isn’t necessarily wrong. Not does it always operate in opposition
to rational analysis; rather, the two can compliment each other. But intuition is not superstitions, or the

4
J.G.March, A Primer on Decision Making (New York: The Free Press,1994), pp.2-7
5
E.A.Locke., “Toward a Theory of Task Motivation and Insentives,” Organizational Behaviour and Humans Performances, May
1968, pp.157-189.
6
P.C. Early, P.Wajnasrosky, and W.Prest, “Task Planning and Energy Expanded: Exploration of How Goals Influence
Performance,” Journal of Applied Psychology, February 1987,pp.107-114.
7
Locke and Latham, “Building a Practically Useful Theory of Goal Setting and task motivation.” Pp.705-717.
product some magical or paranormal sixth sense. As one recent review noted, “Intuition is highly
complex and highly developed form of reasoning that is based on years of experience and learning. 8

COMMON BIASES AND ERRORS IN DECISION MAKING

Decision makers engage in bounded rationality, but they also allow systematic biases and errors to creep
into their judgments. To minimize effort and avoid difficult trade-offs, people tend rely too heavily on
experience, impulses, gut feelings, and convenient tools of thumb. In many instances, these shortcuts
are helpful. However, they can leads to serve distortions of rationality. Following are the most common
biases in decision making.

Overconfidense Bias

It’s been said that “no problem in judgment and decision making is more prevalent and more potentially
catastrophic than overconfidence. 9 When we are given factual question and asked to judge the
probability that our answer are correct, we tend to be far too optimistic. When people say they’re 65 to
70 percent confident they’re right, they are actually correct only about 50 percent of the time. When
they say they’re 100 percent sure, they tend to be 70 to 85 percent correct. Here’s another interesting
example. In one random-sample rational poll, 90 percent of U.S. adult said they expected to go to
heaven. But in another random-sample nationally poll, only 86 percent thought Mother Teresa was in
heaven. Talk about an overconfidence bias!

Individuals whose intellectual and interpersonal abilities are weakest are most likely to
overestimate their performance and ability. So as managers and employees become more
knowledgeable about an issue, they become less likely to display overconfidence. There’s also negative
relationship between entrepreneurs optimism and the performance of their new ventures; the more
optimistic, the less successful. The tendency for some entrepreneurs to be too confident about their
ideas might keep them from planning how to avoid problem that arise.

Anchoring Bias

The anchoring bias is a tendency to fix on initial information and fail to adequately adjust for subsequent
information. It occurs because our mind appears to give a disproportionate amount of emphasis to the
first information it receives.10 Anchors are widely used by people in professions in which persuasion skills
are important-such as advertising, management, politics, real estate, and law. Assumes two pilots-Jason
and Glenda- have been laid off their current jobs, and after an extensive search their best offers are
from Northwest Airlines (now merged with Delta). Each would earn the average annual pay of
Northwest’s narrow’s body jet pilots: $126,00. Jason was a pilot for Pinnacle, a regional airline where
the average annual salary is $82,000. Glenda was a pilot for FeDex, where where the average annual

8
P.D.Brown, “Some Hunches About Intuitions,” New York Times (November, 17 2007), p.B5.
9
S.Plous, The Psychology of Judgment and Decision Making (New York: Mc-Grow Hill, 1993), p.217.
10
J.S.Hammond, R.L.Keeney, and H.Raifla, Smart Choices (Buston: HBS Press,1999), p.191.
salary is $200,000. Which pilot more likely to accept, or be happiest with, Northwest offer? Obviously
Jason, because he is anchored by the lower salary. 11

Conformation Bias

The rational decision making process assumes that we objectively gather information. But we don’t. we
selectively gather it. The conformation bias represent specific case of selective perception we seek out
information that reaffirms our past choices, and we discount information that contradict them we also
tend to accept at face value information that confirms our preconceived views, while we are critical and
skeptical of information that challenges these views. Therefore, the information we gather is basically
biased toward supporting views we already hold. We even tend to seek out sources most likely to tell us
what we want to hear, and we give too much weight to supporting information and too little to
contradictory.

Availability Bias

More people fear flying than fear in a car. But if flying on a commercial airline really were as dangerous
as driving, the equivalent of two 747s filled to capacity would crash every week, killing all aboard. Yet
the media give much more attention to air accidents, so we tend to overstate the risk of flying and
understate of driving.

The availability bias is our tendency to base judgment on information readily available. Event
that evoke emotions, are particularly vivid, or are more recent tend to be more available in our memory,
leading us to overestimate the chances of unlikely event such as an airplane crash. The availability bias
can also explains why managers doing performance appraisal give more weight to recent employee
behaviors than to behaviors 6 or 9 month early or why credit-rating agency such as Moody’s or Standart
or Poor may issue overly positive ratings by relying on information presented by debt issues, who have
an intensive to offer data favorable to their case. 12

Escalation of Commitment

Another distortion that creeps into decisions in a tendency to escalate commitment. Escalation of
commitment refers to staying with a decisions even when there is clear eviden’s its wrong. Consider a
friend who has been dating someone for several years. Although he admits things aren’t going to well,
he says he is still going to merry her. His justification:”I have a lot invested in the relationship”.

Randomness Error

11
J. Bailey and D.Uy, “Precision of the Anchor Influences the amount of adjustment,” Psychological science 19, no.2, (2008),
pp.B1,B4.
12
G.Morgenson, “Debt Watchdogs: Tamed or Caught Napping?” New York Times (Disember 7, 2009), pp.1, 32.
Human beings have difficulty dealing with chance. Most of us like to believe we have some control over
our world and our destiny. Our tendency to believe we can predict the outcomes of random events is
the randomness errors.

Risk Aversion

Mathematically, we should find a 50-50 flip of the coin of $100 to be worth as much as a sure promise of
$50. After all, the expected value of the gamble over a number of trials is $50. After all, the expected
value of the gamble over a number of trials is $50. However, most people don’t consider these options
equally valuable. Rather, nearly everyone but committed gambles would rather have a sure things than
a risky prospect. For many people, a 50-50 flip of a coin even for $200 might not be worth as much as a
sure promise of $50. Even thought the gamble in mathematically worth twice as much as the sure thing!
This tendency to prefer a sure thing over a risky outcome is risk aversion.

Hindsight Bias

The hindsight bias is a tendency to believe falsely, after the outcome is known, that we’d have
accurately predicted it. When we have accurate feedback on the outcome, we seem pretty good at
concluding it was obvious.

INFLUENCES ON DECISION MAKING: INDIVIDUAL DIFFERENCES AND ORGANIZATIONAL CONSTRAINTS

We turn here to factors that influence how people make decision and the degree to which they are
susceptible to errors and biases. We discuss individual differences and organizational constraints.

Individual Differences

Decision making in practice is characterized by bound rationality, common biases and errors, and the
use of intuition. In addition, individual differences create deviation from the rational model. In this
section, we look at two such differences: personality and gender.

Personality

Researchers have investigated the relationship of Jung's theory of individuals' preferences and their
approach to problem solving and decision making (e.g., Lawrence, 1982, 1984; McCaulley, 1987; Myers
& McCaulley, 1985). The following is a summary of their findings.

When solving problems, individuals preferring introversion will want to take time to think and
clarify their ideas before they begin talking, while those preferring extraversion will want to talk through
their ideas in order to clarify them. In addition, Is will more likely be concerned with their own
understanding of important concepts and ideas, while Es will continually seek feedback from the
environment about the viability of their ideas.

Sensing individuals will be more likely to pay attention to facts, details, and reality. They will also
tend to select standard solutions that have worked in the past. Persons with intuition preferences, on
the other hand, will more likely attend to the meaningfulness of the facts, the relationships among the
facts, and the possibilities of future events that can be imagined from these facts. They will exhibit a
tendency to develop new, original solutions rather than to use what has worked previously.

Individuals with a thinking preference will tend to use logic and analysis during problem solving.
They are also likely to value objectivity and to be impersonal in drawing conclusions. They will want
solutions to make sense in terms of the facts, models, and/or principles under consideration. By
contrast, individuals with a feeling preference are more likely to consider values and feelings in the
problem-solving process. They will tend to be subjective in their decision making and to consider how
their decisions could affect other people.

The final dimension to be considered describes an individual's preference for either judging
(using T or F) or perceiving (using S or N). Js are more likely to prefer structure and organization and will
want the problem-solving process to demonstrate closure. Ps are more likely to prefer flexibility and
adaptability. They will be more concerned that the problem-solving process considers a variety of
techniques and provides for unforeseen change.

As a demonstration of how personality type can affect problem solving, McCaulley (1987)
describes the problem-solving characteristics of two of the 16 MBTI types, ISTJ and ENFP.

In problem solving, ISTJ will want a clear idea of the problem (I) and attack it by looking for the
facts (S) and by relying on a logical, impersonal (T), step-by-step approach in reaching conclusions. In
contrast, ENFP will throw out all sorts of possibilities (N), seeking feedback from the environment to
clarify the problem (E). Brainstorming (NP) will be enjoyed. The human aspects of the problem (F) are
likely to be emphasized over impersonal, technical issues (T). To the ISTJ, the ENFP approach is likely to
seem irrational or scattered. To the ENFP, the ISTJ approach is likely to seem slow and unimaginative.
(pp. 43-44).13

Gender

This collection of gender differences in decision making come from many sources. It's important to
remember that we're talking here about humans. This means that the gender differences in decision
making are true in general, and may not be true in specific cases.

It is well known that men and women have different shopping strategies, different ways of
communicating and place emphasis on different things in relationships. Let's have a closer look at some
of these.

Shopping!!

The 'shopping gender gap' has been well documented in retail anthropology. One specific aspect of this
is the factor of time. Men tend to make their purchasing decisions based on immediate needs and how
well the product or service will satisfy needs now and into the immediate future. Long-term
considerations seem to play little part for men.

13
http://chiron.valdosta.edu/whuitt/papers/prbsmbti.html
 For women, however, this trend is almost reversed. Frequently the long-term considerations,
and whether the purchase can be used again and again over time, may even be a stronger factor in the
woman's purchasing decision than instant satisfaction.

Obviously if you're selling to men, emphasise the immediate gratification. For women it's more
useful to ensure that they understand the benefits over the long-term. Or even to make sure that they
buy sufficient quantity to last them a long time. It's also useful to keep in mind how this affects brand
loyalty for both sexes.

Emotion vs facts

When it comes to actually making the decision, women generally make purchase decisions on a more
emotive level, whereas men go more with the facts and data. Women prefer a narrative, a story with
the faces and the interaction and the relationships that are occurring. The female brain seems to be
more multitracked and networked compared to the male brain which is a lot more compartmentalised.

Opinions to decisions and back

Here is an interesting idea in gender differences in decision making. Women use other peoples opinions
to help make their own decision. Men use other people's decisions to help them form their own opinion.

How does this work? If men know that other people have made the purchase decision and it
works for them, then they will be happy to go ahead themselves.

While women would like to know that it worked for others, they prefer to know the reasons
behind somebody else's purchase. Because other people's reasons and motivations may not be the
same as their own. So they may not get the same result.

These gender differences in decision making also effect brand loyalty differently for men and
women. Men avoid products that fail for others regardless of the reason. Depending on the reason for
failure, a woman may still go ahead and make the purchase.

These gender differences in decision making with regard to purchasing are important when you
consider that women purchase, or influence the purchase of, up to 80% of all consumer goods!

The decision to ask for help

Another area where there are significant gender differences in decision making is in the area of asking
others for help. Women make this decision much more quickly than men do.

For example, a study was done on employees whose PCs at work became infected with spy ware. 64% of
women called the IT department for help. Only 30 per cent of men did so.

And consider when a man and a woman are driving some place and get lost. It's amazing how often any
argument becomes about whether they should ask for directions or not!
The standing joke is that the man would have to kill the person who gives him directions simply for
knowing that he (the man) was lost!

Men women decision making in business

With the increasing number of women in decision making positions in business nowadays it's useful to
know how they differ to men in leadership and communication styles. There are even gender differences
in decision making with regard to ethical issues.

Remember that women are much more interested in relationships than tasks. They build relationships
to get the task done. Men prefer to build relationships as they're doing the task.

Women often like to discuss options out loud before reaching a decision. Men seem to prefer
quiet contemplation. Of course, these are generalisations. But if each is unaware of the other, it may
cause difficulties. Most people have their own experiences of this!

In terms of communication, women not only like to discuss things, but non verbal
communication may include lots of eye to eye contact, head nodding to indicate agreement, and
standing face to face. For some men, some of these things can be threatening.

Men talking together will very often be side to side at an angle, a position that's more
comfortable for them. Women may interpret this as being secretive or uninterested.

Men approach moral issues looking at individual rights and considering what is just and fair.
Women approach them with caring and compassion and constantly consider relationship. It is obviously
difficult to say which is more ethical, but a combination of both tends to give more creative solutions
and is generating more useful results over the long-term in organisations.

And now we move onto a tricky subject, financial decision making in relationships...14

Organizational Constraints

The organization itself constrains decision makers and thus can create deviations from the rational
model. Managers, for instance, shape their decisions to reflect the organizational performance
evaluation and reward system, to comply with the organizational formal regulations, and to meet
organizationally imposed time constraints. Previous organizational decisions also act as precedents to
constrain current decision.

Performance Evaluation

Managers are strongly influenced in their decision making by the criteria on which they are evaluated. If
a division manager believes that the manufacturing plants under his responsibility are operating best
when he hears nothing negative, we shouldn’t be surprised to find his plant managers spending a
good part of their time ensuring that negative information doesn’t reach the division boss. Similarly,
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http://www.decision-making-confidence.com/gender-differences-in-decision-making.html
if a college dean believes that an instructor should never fail more than 10% of her students—to fail
more reflects on the instructor’s ability to teach—we should expect that instructor who want to
receive favorable evaluations will decide not to fail too many students.

Reward systems

The organization’s reward system influences decision makers by suggesting to them what choices are
preferable in terms of personal payoff. For example, if the organization rewards risk aversion, manager
are likely to make conservative decisions. From the 1930s through the mid-1980s, General Motors
consistently gave out promotions and bonuses to managers who kept a low profile, avoided
controversy, and were good team players. The result was that GM managers became very adept at
dodging tough issues and passing controversial decisions on to committees.

Formal Regulations

All but the smallest of organizations create rules, policies, procedures, and other formalized regulations
in order to standardize the behavior of their members. By programming decisions, organizations are
able to get individuals to achieve high levels of performance without paying for the years of experience
that would be necessary in the absence of regulations. And of course, in so doing, they limit the decision
makers choices.

System “Imposed Time constraints

Organizations impose deadlines on decisions. For instance, department budgets need to be completed
by next Friday. Or the report on new- product development has to be ready for the executive committee
to review by the first of the month. A host of decisions must be made quickly in order to stay ahead of
the competition and keep customers satisfied. And almost all important decisions come with explicit
deadlines. These conditions create time pressure on decision makers and often make it difficult, if not
impossible, to gather all the information they might like to have making a final choice.

Historical Precedents

Decisions aren’t made in a vacuum. They have a context. In fact, individual decisions are more accurately
characterized as points in a stream of decisions.

Government budget decisions also offer an illustration of our point. It’s common knowledge that the
largest determining factor of the size of any given year’s budget is last year’s budget. Choices
made today, therefore, are largely a result of choices made over the years.

The inference is that these organizational constraints inhibit fresh ideas and decisions in view of the past
actions. It is possible that the new ideas could have outperformed the old methodology but the
managers are not willing to take a high risk due to fear of failure which may antagonize the top
management. That is how the organization acts as a constraint.

WHAT ABOUT ETHICS IN DECISION MAKING?

Ethical consideration should be an important criterion in all organizational decision making. In this
section, we present three ways to frame decisions ethically.

Three Ethical Decision Criteria15

An individual can use three different criteria in making ethical choices. The first is the utilitarian
criterion, in which 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. The view tends to dominate
business decision making. It is consistent with goals like efficiency, productivity, and high profits. By
maximizing profits, for instance, a business executive can argue he is securing the greatest good for the
greatest number he hands out dismissal notices to 15 % of his employees.

Another ethical criterion is to focus on rights. This 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
rights in decision making means respecting and protecting the basic rights of individuals, such as the
right to privacy, to free speech, and to due process.

A third criterion is to focus on justice. This requires individuals to impose and enforce rules fairly and
impartially so that there is an equitable distribution of benefits and costs. Union members typically favor
this view. It justifies paying people the same wage for a given job, regardless of performance
differences, and using seniority as the primary determination in making layoff decisions.

Each of these criteria has advantages and liabilities. A focus on utilitarianism promotes efficiency and
productivity, but it can result in ignoring the rights of some individuals, particularly those with minority
representation in the organization. The use of rights as a criterion protects individuals from injury and is
consistent with freedom and privacy, but it can create an overly legalistic work 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.

Decisions makers, particularly in for-profit organizations, tend to feel safe and comfortable when they
use utilitarianism. A lot of questionable actions can be justified when framed as being in the best
interests of “the organization� and stockholders. But many critics of business decision makers
argue that this perspective needs to change. Increased concern in society in society about individual
rights and social justice suggests the need for managers to develop ethical standards based on non
utilitarian criteria. This presents a solid challenge to today’s managers because making decisions
using criteria such as individual rights and social justice involves far more ambiguities than using
utilitarian criteria such as effects on efficiency and profits.

Improving Creativity in Decision Making

Although following the steps of the rational decision making model will often improve decisions, the
rational decisions maker also needs creativity, that is, the ability to produce novel and useful ideas.
These are ideas that are problem or opportunity presented. Why is creativity important to decision
making? It allows the decision maker to more fully appraise and understand the problem, including

15
http://www.citeman.com/292-three-ethical-decision-criteria/
seeing problems others can’t see. However, creativity’s most obvious value is in helping the decision
maker identify all viable alternatives or to identify alternatives that aren’t readily apparent.

Creative Potential: Most people have creative potential that they use when confronted with a decision
making problem. But to unleash that potential, they have to get out of the psychological ruts many of us
get into and learn how to think about a problem in divergent ways.

People differ in their inherent creativity and exceptional creativity is scarce. Albert Einstein. Emily
Dickinson, Pablo Picasso, and Wolfgang Mozart were individuals of exceptional creativity. What about
the typical individual? People who score high on Openness to Experience, for example, are more likely
to be creative. Intelligent people also are more likely to be creative. Other traits that have been found to
be associated with creative people: independence, self-confidence, risk taking, an internal locus of
control, tolerance for ambiguity, and perseverance in the face of frustration.

A study of the lifetime creativity of 461 men and women found that fewer than 1 percent were
exceptionally creative, but 10 percent were highly creative and about 60 percent were some what
creative. This suggests that most of us have creative potential; we just need to learn to unleash it.

Three Component Model of Creativity: Given that most people have the capacity to be at least
somewhat creative, what can individuals and organizations do to stimulate employee creativity? The
best answer to this question lies in the three component model of creativity .Based on an extensive
body of research this model proposes that individual creativity essentially requires expertise, creative
thinking skills, and intrinsic task motivation. Studies confirm that the higher the level of each of these
three components, the higher the creativity.

Expertise is the foundation for all creative work. Many of Eminem’s lyrics for example, were based on his
childhood experiences. The film writer producer, and director Quentin Tarantino spent his youth
working in a video rental store, were he built up an encyclopedic knowledge of movies. The potential for
creativity is enhanced when individuals have abilities, knowledge proficiencies, and similar expertise in
their field of endeavor. For example, you wouldn’t expect someone with a minimal knowledge of
programming to be very creative.

The second component is creative thinking skills. This encompasses personality characteristics
associated with creativity, the ability to use analogies, as well as the talent to see the familiar in a
different light.

Research suggests that we are more creative when we’re in good moods, so if we need to be creative
we should do things that make us happy. Perhaps that is listening to music we enjoy, eating foods we
like, watching funny movies or socializing with others. There is also evidence that suggests being around
others who are creative can actually make us more inspired, especially if we’re creatively stuck.

The effective use of analogies allows decision makers to apply an idea from one context to another. One
of the most famous examples in which analogy resulted in a creative breakthrough was Alexander
Graham Bell’s observation that it might be possible to take concepts of how that ear operates and apply
them to his “talking box”. He noticed that the bones in the ear are operated by a delicate, thin
membrane. He wondered why then thicker and stronger piece of membrane shouldn’t be able to move
a piece of steel. Out of that analogy, the telephone was conceived.
GLOBAL IMPLICATIONS

In considering potential global differences in this chapter’s concepts, let’s consider the three areas that
have attracted the most research: (1) attributions, (2) decision making, and (3) ethics.

Attribution

The evidence on cultural differences in perception is mixed, but most suggest there are differences
across cultures in the attributions people make. We noted earlier the tendency for Asians (Japanese) to
be less susceptible to the fundamental attribution error. Another study found Korean managers less
likely to use the self-serving bias-they tend to accept responsibility for group failure “ because I was not
a capable leader” instead of attributing failure to group members. On the other hands, Asian managers
are more likely to lay blame on institution or whole organization, whereas Western observers are more
likely to believe individual managers should be the focus of blame or praise. That probably explain why
U.S. newspaper prominently reports the names of individuals executive when firm do poorly, whereas
Asian media provide more coverage of how the firm as a whole has failed. This tendency to make group-
based attribution also explains why individuals from Asian cultures are more likely to make group based
stereotypes. Attribution theory was develop largely based on experiment with U.S. and Western
European workers. But this studies suggest caution in making attribution theory predictions in non-
Western societies. Especially in country with strong collectivist traditions.

Decision Making

The rational decisional makes no acknowledgment of cultural differences, not does the bulk of OB
research literature on decision making. The 2007 review of cross-cultural OB research covered 25 areas,
but cultural influence on decision making was not among them. Another 2007 review identified 15
topics, but the result was the same; no research on culture and decision making. 16

But the Indonesia, for instance, don’t necessary make decisions the same way Australian do.
Therefore, we need recognize that the cultural background of a decision maker can have a significant
influence on the selection of problem the depth of analysis, the importance placed on logic and
nationality, and whether organizational decision should be made autocratically by an individual manager
or collectively in group.17

Ethics

There are no global ethical standard, as contrasts between Asia and the west illustrate. Because bribery
is commonplace in country such as China, a Canadian working in China might face dilemma: Should I pay
a bribe to secure business if is it accepted part of that country culture? The manager of large U.S.

16
G.Park, D.Lubinski, and G.P.Benbow, “Contrasting Intellectual Patterns Predict Creativity in the Arts and Sciences,” Psychology
Science 18, n0.11 (2007), pp.948-952.
17
N.J.Adler, International Dimensions of Organizational Behavior, 4th ed. (Cincinnati, OH: South-Western Publishing, 2002)
pp.182-189.
company operating in China caught an employee stealing. Following company policy, she fired him and
turn him over to the local authorities. Later, she was horrified to learn the employee had been
summarily executed.18

SUMMARY AND IMPLICATION FOR MANAGER

Perception

Individual base their behavior not on the way their external environment actually is but rather on what
they see or believe it to be. Whether manager successfully plans and organizes the work of employees
and actually helps them to structure their work more efficiently and effectively is far less important than
how employees perceive the manager’s effort. Similarly, employees judge issues such as fair pay,
performance appraisals, and working condition very individual way; we can’t be assured they will
interpret conditions about their jobs in favorable light. To influence productivity, we need to assess how
workers perceive their jobs.

Individual Decision Making

Individual think and reason before they act. This is why and understanding of how people make
decisions can be helpful for explaining and predicting their behavior.

In some decision situations, people follow the rational decision making model. But few decisions
are simple or unambiguous enough for the rarional model’s assumptions to apply. So we find individuals
looking for solutions that satisfied rather than optimize, injecting biases and prejudices into the decision
process, and relying on intuition.

What can managers do to improve their decision making? We offer four suggestion:

i. Analyze the situation

Adjust your decision making approach to the national culture you’re operating in and to the
criteria your organization evaluates and rewards. If you’re in a country that doesn’t rationality,
don’t feel compelled to follow the rational decision making model or to try to make your
decisions appear rational. Similarly, organizations differ in terms of the importance they place
on risk, the use of groups, and the like. Adjust your decision approach to ensure it’s compatible
with organization’s culture.

ii. Be aware of biases

Then try to minimize their impact.

iii. Combine rational analysis with intuition

18
P.Digh, “Shades of Gray in the Global Marketplace,” HRMagazine, April 1997, p.91.
 These are not conflicting approaches to decision making. By using both, you can actually
improve your decision making effectiveness. As you gain managerial experience, you should feel
increasingly confident in imposing your intuitive processes on top of your rational analysis.

iv. Try to enhance your creativity

Actively look for novel solutions to problems, attempts to see problems in new ways, and use
analogies. Try to remove work and organizational barriers that might impede your creativity.

Reference:

1. S.P. Robbins, T.A. Judge, (2011), Organizational Behavior, 14 ed., New Jersey, U.S.A.

2. http://www.blurtit.com/q573135.html

3. http://chiron.valdosta.edu/whuitt/papers/prbsmbti.html
4. http://www.decision-making-confidence.com/gender-differences-in-decision-making.html
5. http://www.citeman.com/292-three-ethical-decision-criteria/