CH-1 What Is Organizational Behavior?

Demonstrate the Importance of Interpersonal Skills in the Workplace

Interpersonal skills are important because…
 "Good places to work’ have better financial performance.
 Better interpersonal skills result in lower turnover of quality employees and higher
quality applications for recruitment.
 There is a strong association between the quality of workplace relationships and job
satisfaction, stress, and turnover.
 It fosters social responsibility awareness.
Describe the Manager’s Functions, Roles, And Skills
 Manager: Someone who gets things done through other people in
organizations.
 Organization: A consciously coordinated social unit composed of two
or more people that functions on a relatively continuous basis to
achieve a common goal or set of goals.
 Planning, organizing, leading, and controlling.
 Mintzberg concluded that managers perform ten different, highly
interrelated roles or sets of behaviors attributable to their jobs.
 Management Skills
 Technical Skills – the ability to apply specialized knowledge or
expertise. All jobs require some specialized expertise, and many people
develop their technical skills on the job.
 Human Skills – the ability to work with, understand, and motivate
other people, both individually and in groups.
 Conceptual Skills – the mental ability to analyze and diagnose
complex situations.
Effective Versus Successful Managerial Activities
 Luthans and his associates found that all managers engage in four managerial
activities:
1. Traditional management
2. Communication
3. Human resource management
4. Networking
  Organizational behavior (OB) is a field of study that investigates the impact that
individuals, groups, and structure have on behavior within organizations for the
purpose of applying such knowledge toward improving an organization’s
effectiveness.
OB includes the core topics:
 Motivation
 Leader behavior and power
 Interpersonal communication
 Group structure and processes
 Attitude development and perception
 Change processes
 Conflict and negotiation
 Work design
Complementing Intuition with Systematic Study
 Systematic Study of Behavior
 Behavior generally is predictable if we know how the person perceived the
situation and what is important to him or her.
 Evidence-Based Management (EBM)
 Complements systematic study.
 Argues for managers to make decisions based on evidence.
 Intuition
 Systematic study and EBM add to intuition, or those “gut feelings” about “why
I do what I do” and “what makes others tick.”
 If we make all decisions with intuition or gut instinct, we’re likely working
with incomplete information.
Big Data
 Background:
The use of Big Data for managerial practices is a relatively new area, but one that holds
convincing promise.
 Current Usage:
The reasons for data analytics include predicting any event, detecting how much risk is
incurred at any time, and preventing catastrophes
  New Trends:
The use of Big Data for understanding, helping, and managing people is relatively new but
holds promise.
 Limitations:
Use evidence as much as possible to inform your intuition and experience.
Identify the Major Behavioral Science Disciplines That Contribute to OB
Organizational behavior is an applied behavioral science that is built upon contributions from
a number of behavioral disciplines:
 Psychology
 Social psychology
 Sociology
 Anthropology
 Psychology
seeks to measure, explain, and sometimes change the behavior of humans and other animals.
 Social psychology
blends the concepts of psychology and sociology.
 Sociology
studies people in relation to their social environment or culture.
 Anthropology
is the study of societies to learn about human beings and their activities.
Demonstrate Why Few Absolutes Apply to OB
 There are few, if any, simple and universal principles that explain organizational
behavior.
 Contingency variables
situational factors are variables that moderate the relationship between the independent and
dependent variables.
 Responding to economic pressure
 In tough economic times, effective management is an asset.
 In good times, understanding how to reward, satisfy, and retain employees is at
a premium.
 In bad times, issues like stress, decision making, and coping come to the
forefront.
 Responding to globalization
 Increased foreign assignments.
 Working with people from different cultures.
 Overseeing movement of jobs to countries with low-cost labor.
 Adapting to differing cultural and regulatory norms.
 Managing workforce diversity
 Workforce diversity – organizations are becoming more heterogeneous in
terms of gender, age, race, ethnicity, sexual orientation, and inclusion of other
diverse groups.
 Improving customer service
 Service employees have substantial interaction with customers.
 Employee attitudes and behavior are associated with customer satisfaction.
 Need a customer-responsive culture.
 Improving people skills
 People skills are essential to managerial effectiveness.
 OB provides the concepts and theories that allow managers to predict
employee behavior in given situations.
 Working in networked organizations
 Networked organizations are becoming more pronounced.
 A manager’s job is fundamentally different in networked organizations.
 Challenges of motivating and leading “online” require different techniques.
 Using social media at work
 Policies on accessing social media at work.
 When, where, and for what purpose.
 Impact of social media on employee well-being.
 Enhancing employee well-being at work
 The creation of the global workforce means work no longer sleeps.
 Communication technology has provided a vehicle for working at any time or
any place.
 Employees are working longer hours per week.
 The lifestyles of families have changed —creating conflict.
  Balancing work and life demands now surpasses job security as an employee
priority.
 Creating a positive work environment
 Positive organizational scholarship is concerned with how organizations
develop human strength, foster vitality and resilience, and unlock potential.
 This field of study focuses on employees’ strengths versus their limitations, as
employees share situations in which they performed at their personal best.
 Improving ethical behavior
 Ethical dilemmas and ethical choices are situations in which an individual is
required to define right and wrong conduct.
 Good ethical behavior is not so easily defined.
 Organizations distribute codes of ethics to guide employees through ethical
dilemmas.
 Managers need to create an ethically healthy climate.
Three Levels of Analysis in This Book’s OB Model
 Inputs
 Variables like personality, group structure, and organizational culture that lead
to processes.
 Group structure, roles, and team responsibilities are typically assigned
immediately before or after a group is formed.
 Organizational structure and culture change over time.
 Processes
 If inputs are like the nouns in organizational behavior, processes are like verbs.
 Defined as actions that individuals, groups, and organizations engage in as a
result of inputs, and that lead to certain outcomes.
 Outcomes
 Key variables that you want to explain or predict, and that are affected by some
other variables.
 Attitudes and stress
 Employee attitudes are the evaluations employees make, ranging from
positive to negative, about objects, people, or events.
 Stress is an unpleasant psychological process that occurs in response to
environmental pressures.
 Outcome Variables
 Task performance
 The combination of effectiveness and efficiency at doing your core job tasks is
a reflection of your level of task performance.
 Organizational citizenship behavior
 The discretionary behavior that is not part of an employee’s formal job
requirements, and that contributes to the psychological and social environment
of the workplace, is called organizational citizenship behavior.
 Withdrawal behavior
 Withdrawal behavior is the set of actions that employees take to separate
themselves from the organization.
 Group cohesion
 Group cohesion is the extent to which members of a group support and
validate one another at work.
 Group functioning
 Group functioning refers to the quantity and quality of a group’s work output.
 Productivity
 An organization is productive if it achieves its goals by transforming inputs
into outputs at the lowest cost. This requires both effectiveness and efficiency.
 Survival
 The final outcome is organizational survival, which is simply evidence that
the organization is able to exist and grow over the long term.
Implications for Managers
 Resist the inclination to rely on generalizations; some provide valid insights into
human behavior, but many are erroneous.
 Use metrics and situational variables rather than “hunches” to explain cause-and-effect
relationships.
 Work on your interpersonal skills to increase your leadership potential.
 Improve your technical skills and conceptual skills through training and staying
current with OB trends like “big data”.
 OB can improve your employees’ work quality and productivity by showing you how
to empower your employees, design and implement change programs, improve
customer service, and help your employees balance work-life conflicts.
CH-2 Diversity in Organizations
Workplace Discrimination and Organizational Effectiveness
 Discrimination is to note a difference between things.
 Unfair discrimination assumes stereotypes about groups.
 Refusal to recognize individual differences is harmful to organizations and
employees.
 Biographical characteristics are personal characteristics that are objective and easily
obtained from personnel records.
 Variations in these can be the basis for discrimination
 Age
 The U.S. workforce is aging.
 Does job performance decline with increasing age?
 Studies show that turnover and absenteeism rates are lower among older
workers, and age is not associated with lower productivity.
 Sex
 There are no consistent male-female differences in problem-solving ability,
analytical skills, competitive drive, motivation, sociability, or learning drive.
 But women earn less than men for the same positions and have fewer
professional opportunities.
 Race and Ethnicity
 Employees tend to favor colleagues of their own race in performance
evaluations, promotion decisions, and pay raises.
 African Americans and Hispanics perceive higher levels of discrimination in
the workplace.
 African Americans generally fare worse than Whites in employment decisions.
 Disabilities
 The U.S. Equal Employment Opportunity Commission classifies a person as
disabled who has any physical or mental impairment that substantially limits
one or more major life activities.
 Workers with disabilities receive higher performance evaluations, but may
have lower performance expectations.
 Hidden Disabilities
 Sensory disabilities, chronic illness or pain, cognitive or learning
impairments, sleep disorders, and psychological challenges.
  U.S. organizations must accommodate employees with a very broad
range of impairments.
 Tenure
 Tenure is a good predictor of employee productivity.
 Tenure and job satisfaction are positively related.
 Religion
 U.S. law prohibits discrimination based on religion, but it is still an
issue, especially for Muslims.
 Sexual Orientation and Gender Identity
 Federal law does not protect employees against discrimination based on
sexual orientation, but this may soon change.
 Most Fortune 500 companies have policies covering sexual orientation
and about half now have policies on gender identity.
 Cultural Identity
 Need to accommodate and respect individual cultural identities.
 Ability is an individual’s current capacity to perform various tasks in a job.
 Two types
 Intellectual abilities
 Physical abilities
 Intellectual abilities are abilities needed to perform mental activities – thinking,
reasoning, and problem solving.
 Most societies place a high value on intelligence.
 General mental ability is an overall factor of intelligence as suggested by the
positive correlations among specific intellectual ability dimensions.
 Physical Abilities
 The capacity to do tasks demanding stamina, dexterity, strength, and similar
characteristics.
 Nine basic abilities related to strength, flexibility, and other factors are needed
to perform physical tasks.
 Diversity management is the process and programs by which managers make
everyone more aware of and sensitive to the needs and differences of others.
 Diversity is more successful when it is everyone’s business, not just for certain
groups of employees.
Describe How Organizations Manage Diversity Effectively
 Attracting, selecting, developing, and retaining diverse employees
 Target recruiting messages to specific demographic groups.
 Ensure that hiring is bias free.
 Create a positive diversity climate.
 Diversity in groups
 Most people in groups need a common way of looking at and accomplishing
major tasks, and they need to communicate well with each other.
 Emphasize higher-level similarities among people.
 Effective diversity programs
 Teach managers about the legal framework for equal employment opportunity
and encourage fair treatment of all people.
 Teach managers how a diverse workforce will be more effective at serving a
diverse customer base.
 Foster personal development practices that bring out the skills and abilities of
everyone.
Implications for Managers
 Understand your organization's anti-discrimination policies thoroughly and share them
with your employees.
 Assess and challenge your own stereotype beliefs to increase your objectivity.
 Look beyond readily observable biographical characteristics and consider the
individual’s capabilities before making management decisions.
 Fully evaluate what accommodations a person with disabilities will need and then
fine-tune a job to that person’s abilities.
 Seek to understand and respect the unique biographical characteristics of your
employees; a fair but individualistic approach yields the best performance.

CH-3 Attitudes and Job Satisfaction

 Attitudes are evaluative statements—either favorable or unfavorable—about objects,
people, or events.
 They reflect how we feel about something.
Summarize the Relationship Between Attitudes and Behavior
 The attitudes that people hold determine what they do.
  Festinger: cases of attitude following behavior illustrate the effects of cognitive
dissonance.
 Cognitive dissonance is any incompatibility an individual might perceive
between two or more attitudes or between behavior and attitudes.
 Research has generally concluded that people seek consistency among their attitudes
and between their attitudes and their behavior.
 Moderating Variables:
 Attitude’s importance
 Correspondence to behavior
 Accessibility
 Presence of social pressures
 Whether a person has direct
experience with the attitude
 The attitude-behavior relationship is likely to be much stronger if an attitude refers to
something with which we have direct personal experience.
Compare the Major Job Attitudes
 Job Satisfaction
 A positive feeling about the job resulting from an evaluation of its
characteristics.
 Job Involvement
 Degree of psychological identification with the job where perceived
performance is important to self-worth.
 Psychological Empowerment
 Belief in the degree of influence over one’s job, competence, job
meaningfulness, and autonomy.
 Organizational Commitment
 Identifying with a particular organization and its goals and wishing to maintain
membership in the organization.
 Employees who are committed will be less likely to engage in work
withdrawal even if they are dissatisfied, because they have a sense of
organizational loyalty.
 Perceived Organizational Support (POS)
 Degree to which employees believe the organization values their contribution
and cares about their well-being.
  Higher when rewards are fair, employees are involved in decision making, and
supervisors are seen as supportive.
 POS is important in countries where power distance is lower.
 Employee Engagement
 The degree of involvement with, satisfaction with, and enthusiasm for the job.
 Engaged employees are passionate about their work and company.
 Are these job attitudes really all that distinct?
 No, these attitudes are highly related; and while there is some distinction, there
is also a lot of overlap that may cause confusion.
 Job Satisfaction
 A positive feeling about a job resulting from an evaluation of its
characteristics.
 Two approaches for measuring job satisfaction are popular
 The single global rating.
 The summation of job facets.
 How satisfied are people in their jobs?
 Over the last 30 years, employees in the U.S. and most developed countries
have generally been satisfied with their jobs.
 With the recent economic downturn, more workers are less satisfied.
 Satisfaction levels differ depending on the facet involved.
 There are cultural differences in job satisfaction.
Summarize the Main Causes of Job Satisfaction
 What causes job satisfaction?
 Job conditions
 The intrinsic nature of the work itself, social interactions, and
supervision are important predictors of job satisfaction.
 Personality
 People who have positive core self-evaluations, who believe in their
inner worth and basic competence, are more satisfied with their jobs
than those with negative core self-evaluations.
 Corporate Social Responsibility (CSR)
 Corporate social responsibility (CSR):
self-regulated actions to benefit society or the environment beyond what is required by law.
  Includes environmental sustainability initiatives, nonprofit work, and
charitable giving.
 Increasingly affects employee job satisfaction.
 CSR is particularly important for Millennials.
 But, not everyone finds value in CSR.
Outcomes of Job Satisfaction
 Job Performance
 Happy workers are more likely to be productive workers.
 OCB (Organizational Citizenship Behavior)
 People who are more satisfied with their jobs are more likely to engage
in OCB.
 Customer Satisfaction
 Satisfied employees increase customer satisfaction and loyalty.
 Life Satisfaction
 Research shows that job satisfaction is positively correlated with life
satisfaction.
Four Employee Responses to Dissatisfaction
 Counterproductive Work Behavior (CWB)
 Counterproductive work behavior: actions that actively damage the
organization, including stealing, behaving aggressively toward coworkers, or
being late or absent.
 Absenteeism: the more satisfied you are, the less likely you are to miss work.
 Turnover: a pattern of lowered job satisfaction is the best predictor of intent to
leave.
 Managers Often “Don’t Get It”
Implications for Managers
 Of the major job attitudes – job satisfaction, job involvement,
organizational commitment, perceived organizational support (POS),
and employee engagement – remember that an employee’s job
satisfaction level is the best single predictor of behavior.
 Pay attention to your employees’ job satisfaction levels as determinants of their
performance, turnover, absenteeism, and withdrawal behaviors.
 Measure employee job attitudes objectively and at regular intervals in order to
determine how employees are reacting to their work.
  To raise employee satisfaction, evaluate the fit between the employee’s work interests
and the intrinsic parts of his/her job to create work that is challenging and interesting
to the individual.
 Consider the fact that high pay alone is unlikely to create a satisfying work
environment.

CH-5 Personality and Values

 Defining Personality
 Personality is a dynamic concept describing the growth and development of a
person’s whole psychological system.
 The sum total of ways in which an individual reacts to and interacts with
others.
 Measuring Personality
 Managers need to know how to measure personality.
 Personality tests are useful in hiring decisions and help managers
forecast who is best for a job.
 The most common means of measuring personality is through self-report
surveys.
 Personality Determinants
 Is personality the result of heredity or environment?
 Heredity refers to those factors that were determined at conception.
 The heredity approach argues that the ultimate explanation of an
individual’s personality is the molecular structure of the genes, located
in the chromosomes.
 Early research tried to identify and label enduring personality characteristics.
 Shy, aggressive, submissive, lazy, ambitious, loyal, and timid.
 These are personality traits.
 The most widely used personality framework is the Myers-Briggs Type Indicator
(MBTI).
 Individuals are classified as:
 Extroverted or Introverted (E or I)
 Sensing or Intuitive (S or N)
 Thinking or Feeling (T or F)
 Perceiving or Judging (P or J)
  INTJs are visionaries.
 ESTJs are organizers.
 ENTPs are conceptualizers.
 The Big Five Model
 Extraversion
 Agreeableness
 Conscientiousness
 Emotional stability
 Openness to experience
Big Five Model
 Extraversion
Extroverts tend to be gregarious, assertive, and sociable.
Introverts tend to be reserved, timid, and quiet.
 Agreeableness
High agreeableness; cooperative, warm, and trusting.
Low agreeableness; cold, disagreeable, and antagonistic.
 Conscientiousness
Highly conscientious; responsible, organized, dependable, persistent. Low
conscientious; easily distracted, disorganized, and unreliable.
 Emotional stability
Positive emotional stability tend to be calm, self-confident, and secure.
Negative emotional stability tend to be nervous, anxious, depressed, and insecure.
 Openness to experience
Extremely open people are creative, curious, and artistically sensitive.
Other end of the openness category are conventional and find comfort in the familiar.
Strengths and Weakness of the MBTI and Big Five Model
 The Dark Triad
Machiavellianism: the degree to which an individual is pragmatic, maintains emotional
distance, and believes that ends can justify means.
Narcissism: the tendency to be arrogant, have a grandiose sense of self-importance, require
excessive admiration, and have a sense of entitlement.
Psychopathy: the tendency for a lack of concern for others and a lack of guilt or remorse
when their actions cause harm.
 An emerging framework to study dark side traits:
 First, antisocial people are indifferent and callous toward others.
 Second, borderline people have low self-esteem and high uncertainty.
 Third, schizotypal individuals are eccentric and disorganized.
 Fourth, obsessive compulsive people are perfectionists and can be stubborn, yet
they attend to details, carry a strong work ethic, and may be motivated by
achievement.
 Fifth, avoidant individuals feel inadequate and hate criticism.
CSE, Self-Monitoring, and Proactive Personality
 Other Personality Traits Relevant to OB
 Core Self-Evaluation: bottom line conclusions individuals have about their
capabilities, competence, and worth as a person.
 Self-Monitoring: measures an individual’s ability to adjust his or her behavior
to external, situational factors.
 Proactive Personality: people who identify opportunities, show initiative,
take action, and persevere until meaningful change occurs.
The Situation, Personality, and Behavior
 Situation strength theory: indicates that the way personality translates into behavior
depends on the strength of the situation.
 The degree to which norms, cues, or standards dictate appropriate behavior.
 Clarity
 Consistency
 Constraints
 Consequences
 Values: basic convictions about what is right, good, or desirable.
 Value system: ranks values in terms of intensity.
 The Importance and Organization of Values
 Values:
 Lay the foundation for understanding of attitudes and motivation.
 Influence attitudes and behaviors.
 Terminal vs. Instrumental Values
  Terminal values: desirable end-states of existence.
 Instrumental values: preferred modes of behavior or means of achieving
terminal values.
 Person-Organization Fit
 People high on extraversion fit well with aggressive and team-oriented
cultures.
 People high on agreeableness match up better with a supportive organizational
climate than one focused on aggressiveness.
 People high on openness to experience fit better in organizations that
emphasize innovation rather than standardization.
 Other Dimensions of Fit
 Although person-job fit and person-organization fit are considered the
most salient dimensions for workplace outcomes, other avenues of fit
are worth examining.
 Person-group fit
 Person-supervisor fit
 Hofstede’s Framework
 Power distance
 Individualism versus collectivism
 Masculinity versus femininity
 Uncertainty avoidance
 Long-term versus short-term orientation
Hofstede’s Research Findings
 Asian countries were more collectivistic than individualistic.
 United States ranked highest on individualism.
 Germany and Hong Kong rated high on masculinity.
 Russia and The Netherlands were low on masculinity.
 China and Hong Kong had a long-term orientation.
 France and the United States had short-term orientation.
Hofstede’s Five Value Dimensions and GLOBE
 The GLOBE Framework for Assessing Culture
 The Global Leadership and Organizational Behavior Effectiveness (GLOBE)
research program updated Hofstede’s research.
  Data from 825 organizations and 62 countries.
 Used variables similar to Hofstede’s.
 Added some news ones.
Implications for Managers
 Consider screening job candidates for high conscientiousness—as well
as the other Big Five traits—depending on the criteria your
organization finds most important. Other aspects, such as core self-
evaluation or narcissism, may be relevant in certain situations.
 Although the MBTI has faults, you can use it for training and
development; to help employees better understand each other, open up
communication in work groups, and possibly reduce conflicts.
 Evaluate jobs, work groups, and your organization to determine the
optimal personality fit.
 Take into account employees' situational factors when evaluating their
observable personality traits, and lower the situation strength, to better
ascertain personality characteristics.
 The more you consider people’s different cultures, the better you will
be able to determine their work behavior and create a positive
organizational climate that performs well.

CH-6 Perception and Individual Decision Making

 Perception is a process by which individuals organize and interpret their sensory
impressions in order to give meaning to their environment.
 It is important to the study of OB because people’s behaviors are based on their
perception of what reality is, not on reality itself.
 Attribution theory suggests that when we observe an individual’s behavior, we
attempt to determine whether it was internally or externally caused.
 Determination depends on three factors:
 Distinctiveness
 Consensus
 Consistency
 Clarification of the differences between internal and external causation
 Internally caused – those that are believed to be under the personal control of
the individual.
 Externally caused – resulting from outside causes.
 Fundamental attribution error
  We have a tendency to underestimate the influence of external factors and
overestimate the influence of internal or personal factors.
 Self-serving bias
 Individuals attribute their own successes to internal factors.
 Common Shortcuts in Judging Others
 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 around 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.
 Stereotyping
 Judging someone on the basis of our perception of the group to which he or she
belongs.
 We have to monitor ourselves to make sure we’re not unfairly applying
a stereotype in our evaluations and decisions.
 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 upon the
perceptual process.
 Many jobs are evaluated in subjective terms.
 Subjective measures are problematic because of selective perception,
contrast effects, halo effects, and so on.
 Individuals make decisions – choosing from two or more alternatives.
 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.
Rational Model of Decision Making vs. Bounded Rationality and Intuition
 Assumptions of the Rational Model
 The decision maker…
 Has complete information.
 Is able to identify all the relevant options in an unbiased manner.
 Chooses the option with the highest utility.
 Most decisions in the real world don’t follow the rational model.
 Bounded Rationality
 Most people respond to a complex problem by reducing it 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.
 A limited list of the more conspicuous choices is identified.
 The decision maker then reviews the list, looking for a solution that is
“good enough.”
 Intuition
 Intuitive decision making 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.
 The key is neither to abandon nor rely solely on intuition, but to supplement it
with evidence and good judgment.
 Common Biases and Errors in Decision Making
 Overconfidence Bias: individuals whose intellectual and interpersonal
abilities are weakest are most likely to overestimate their performance and
ability.
 Anchoring Bias: fixating on initial information as a starting point and failing
to adequately adjust for subsequent information.
 Confirmation Bias: type of selective perception.
 Seek out information that reaffirms past choices, and discount information that
contradicts past judgments.
 Availability Bias: tendency for people to base judgments on information that is
readily available.
 Escalation of Commitment: staying with a decision even when there is clear
evidence that it’s wrong.
 Likely to occur when individuals view themselves as responsible for
the outcome.
 Randomness Error: our tendency to believe we can predict the outcome of random
events.
 Decision making becomes impaired when we try to create meaning out
of random events.
 Risk Aversion: the tendency to prefer a sure thing instead of a risky outcome. 
 Ambitious people with power that can be taken away appear to be
especially risk averse.
 People will more likely engage in risk-seeking behavior for negative
outcomes, and risk-averse behavior for positive outcomes, when under
stress. 
 Hindsight Bias: the tendency to believe falsely that one has accurately predicted the
outcome of an event, after that outcome is actually known.
 Individual Differences
Individual Differences, Organizational Constraints, and Decision Making
 Personality
 Conscientiousness
 High self-esteem
 Gender
 Rumination
 Mental Ability
 Cultural Differences
 Nudging
 Organizational Constraints
 Performance Evaluation Systems
 Reward Systems
 Formal Regulations
 System-Imposed Time Constraints
 Historical Precedents
Contrast the 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.
 Protects whistle-blowers.
 Impose and enforce rules fairly and impartially to ensure justice or an equitable
distribution of benefits and costs.
 Behavioral ethics: an area of study that analyzes how people actually behave when
confronted with ethical dilemmas.
 Individuals do not always follow ethical standards promulgated by their
organizations, and we sometimes violate our own standards.
 There are ways to increase ethical decision making in organizations.
 Consider cultural differences.
 Lying
 One of the top unethical activities we may indulge in
daily.
 It undermines all efforts toward sound decision making.
  Managers—and organizations—simply cannot make
good decisions when facts are misrepresented and
people give false motives for their behaviors.
 Lying is a big ethical problem as well.
Describe the Three-Stage Model of Creativity
 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.
Implications for Managers
 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.