PSYCH 322

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COURSE OVERVIEW:
Welcome! dear learners to Psych
322, you are about to venture
into the next part of the world of
the workers and organizations.
The average worker spends most
of his/her lifetime engaged in
working than in any other
activity. Thus, this course is
devoted to help you understand
and evaluate the interaction
between people and their jobs.
As future HR practitioners or I/O
psychologists, your main goal is
INDUSTRIAL AND in making organisations more
productive while ensuring
ORGANIZATIONAL
physically and psychologically
PSYCHOLOGY productive and healthy lives for
workers.

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 MODULE 2 INDIVIDUAL DIFFERENCES IN ORGANIZATIONS
This module tackles the different factors surrounding individual differences In organizations,
particularly attitudes, emotions, moods, personality, values, perception, and individual
decision-making.

1) From what you have learned in Social Psychology, what defines attitudes?
2) Assuming you will be an HR practitioner in the future, list some of your most significant
attitudes that you believe will be relevant to your practice.

At this point in your academic life, how committed are you to your
academic institution? Rate your commitment to the school from 1-5, with 1 being the lowest
and 5 being the highest. Provide a short explanation about your rating.

Unit 1: ATTITUDES AND JOB SATISFACTION

ATTITUDES
Emotions influence workplace behavior, and one of the keys to understanding the
relationship between emotions and behavior is through understanding the nature of
attitudes. Positive attitudes more often result to increased efforts toward productivity, while
negative attitudes often lead to poor work habits.
Attitudes may be characterized as:
1. evaluative statements or judgments people have concerning objects, people,
or events (also known as the attitude object);
2. cluster of beliefs, assessed feelings, and behavioral intentions toward a person,
object, or event
3. persistent mental state of readiness to feel and behave in a favorable or
unfavorable way toward a specific person, object, or idea

Key characteristics of attitudes may be derived from the given definitions:

➢ attitudes are relatively stable unless an individual encounters significant reasons to
change them;
➢ attitudes are directed toward specific objects, persons, or ideas; and
➢ an attitude toward an object or person relates to an individual’s behavior toward that
object or person

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 Components of Attitudes

AFFECTIVE
COMPONENT

ATTITUDES

BEHAVIORAL COGNITIVE
COMPONENT COMPONENT

Cognitive component - The opinion or belief segment of an attitude.

This includes the established perceptions or what you believe to be true about
something or someone. For example, you believe that challenging tasks increases your
motivation to do better on the job. These perceptions or beliefs are acquired through
learning and experience, and people could either have a positive or negative feeling
about each belief. For instance, you feel good about having increased motivation.

Affective component - The emotional or feeling segment of an attitude.

Feelings represent one’s conscious positive or negative evaluations of someone or
something. The emotion or feeling element of attitude is represented by your like or dislike
of something or someone, as well as the degree to which you hold these feelings. Some
people love, like, dislike, or even hate their jobs.
Most of the time your beliefs about something or someone affect your feelings, but
the reverse sometimes occurs. For example, you feel good about doing challenging
tasks because you believe that this motivates you more. However, your boss kept on
giving you impossible deadlines to meet which elicited your negative feelings toward
your boss, and this led you to develop negative feelings about accomplishing
challenging tasks.

Behavioral component - An intention to behave in a certain way toward someone or

something.
Behavioral intentions represent your motivation to engage in a particular behavior
regarding the attitude object. Feelings motivate intentions and motivation to do
something. For example, your negative feelings toward your boss and eventually, your
job motivated you to consider either looking for another job or complaining to the
management. Which action you choose is dependent on your past experiences,
personality, values and norms.

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 In organizations, attitudes are important for their behavioral component. For example,
employees in a certain company believe that the top management deliberately ignores
their complaints and just gives random incentives for them to continue to do their jobs
despite being overworked. Management should look into how this attitude was formed and
how it affects job performance. Ultimately, it is also the task of management to figure out
how to address or modify these kinds of attitudes.

Attitude Formation

Learning
We form attitudes through our experience of reward and punishment. When an
employee’s interaction with a boss is pleasant, hence rewarding, that employee may
develop positive attitudes toward the boss. When an employee’s interaction with a boss is
unpleasant, hence punishing, that employee may develop negative attitudes toward the
boss.

Self-perception
People may form attitudes based on their observation of their own behaviors. People
analyze their own behavior in the same fashion as they would analyze someone else’s
behavior in order to make inferences about them.
➢ Self-perception effect
Self-perception suggests that people infer their emotions by observing their bodies
and their behaviors. In other words, people’s emotions and other feelings come from
such actions as facial expressions, postures, level of arousal and behaviors. In this way,
feelings are consequences of behavior rather than the other way around. People feel
sad because they frown and feel happy because they smile—this is the self-
perception effect.
This also shows how our behavior changes our attitude. For instance, an
employee may be asked to join his coworkers for lunch in the company cafeteria, to
which he feels neutral about. While in t he cafeteria, he observed himself and realized
that he was actually enjoying the experience. This led to him developing a positive
attitude toward eating lunch at the cafeteria.

Need for Consistency

People seek consistency among their attitudes, and between their attitudes and their
behavior. If we have a specific attitude toward an object or person, we tend to form other
consistent attitudes toward related objects or persons.
For example, you are a newly hired HR staff and you were tasked to work with another
employee who is a marketing graduate in coming up with new recruitment strategies. While
you like to apply your background in psychology, your partner disapproves and likes to apply
marketing principles as he believes that they are more important in attracting applicants.
Since his attitude toward the applicability of psychology principles in HR practice is different
from yours, you may form a negative attitude toward your partner in order to have a
consistent set of attitudes.

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 ATTITUDES AND BEHAVIOR
Common knowledge on the relationship between attitudes and behavior is that it is
the attitudes that influence behaviors. Early researches found that there is a causal link
between attitudes and behavior, that is – attitudes determine how people behave. While
other researchers agreed that attitudes predict future behavior, Leon Festinger argued that
attitudes follow behavior.

Cognitive Dissonance
Cognitive dissonance refers to any incompatibility between two or more attitudes or
between behavior and attitudes. It involves an emotional experience caused by a
perception that our beliefs, feelings, and behavior are incongruent with one another. As
people seek consistency, any form of inconsistency makes one feel uncomfortable, and
individuals will therefore attempt to reduce it. This inconsistency generates emotions (such
as feeling hypocritical) that motivate the person to create more consistency by changing
one or more of the elements that have become inconsistent with each other.

To illustrate cognitive dissonance, imagine that you approved a procurement of a

new but expensive equipment to be used in your company’s production. After sealing the
deal, you immediately felt guilty about the expensive purchase despite knowing that it
would improve production. You felt guilty because one of the organization’s principles is to
achieve organizational at the smallest cost possible, and you have always been by the book.
You think that what you did violates one of the organization’s principles but you still went for
it because you know it would be beneficial in the long run.

➢ Dissonance-reducing Strategies
o developing more favorable attitudes toward specific features a conflicting
decision made
(ex: forming a more positive opinion like, sometimes it is good to veer away from
rigid observance of principles especially if it is beneficial in the long run)

o develop a rationalization for the discrepancy

(ex: If I did not make such decision, we might not be able to reach our target
production in the near future. Besides, being in my position really requires making
tough decisions from time to time.)

o emphasizing how your other decisions have been made in the past
(ex: Yes, I chose to procure expensive equipment in this instance, but I have
been faithful with our organization’s principle when it comes to spending since
the beginning.)

➢ Factors in reducing dissonance

o importance of the elements creating dissonance

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 - the more important the specific attitudes are, the more motivated an
individual is to reduce the dissonance
o degree of influence we believe we have over the elements
- the greater sense of control over the elements of the dissonance an individual
has, the higher is the motivation to reduce it
o rewards of dissonance
- dissonance is less distressing if accompanied by something good; if the
dissonance is rewarding, the tension felt from the dissonance becomes reduced

JOB ATTITUDES

We know now that attitude is simply a positive or negative evaluation of something

or someone. In organizational behavior, the most relevant attitudes that employees hold in
relation to their work environments are: job satisfaction, job involvement, and organizational
commitment. With job satisfaction being considered as the most important job attitude, a
separate discussion is given in the latter part of this unit.

1) Job Satisfaction
• refers to a person’s evaluation of his or her job and work context
• considered to be the most important job attitude
• appraisal of the perceived job characteristics, work environment, and
emotional experiences at work.

Outcomes of Job Satisfaction:

➢ individuals with high job satisfaction holds positive feelings about work, while
individuals with low job satisfaction holds negative feelings about work
➢ better job performance
➢ strong organizational citizenship
➢ increased customer satisfaction and loyalty
➢ low turnover
➢ regular attendance
➢ maintains employee motivation
➢ higher life satisfaction

2) Job Involvement
• degree to which people identify psychologically with their jobs
• extent to which people consider their perceived performance levels important
to their self-worth
Outcomes of Job Involvement:
➢ strong identification with one’s job
➢ caring for one’s job
Related to this concept is psychological empowerment - employees’ beliefs
regarding the degree to which they influence their work environment, own competencies,
meaningfulness of their job, and their perceived autonomy. Research show that employees

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 are empowered through making employees see themselves as competent by involving
them in decision making and giving them more liberty in carrying out their jobs.

3) Organizational Commitment
• a broad attitude toward the organization as a whole
• extent to which an individual identifies with and values being associated with
the organization
• emotional attachment to an organization and belief in its values
• strong commitment is positive attitude towards the organization, while a weak
commitment is a less positive attitude towards the organization
However, as much as we associate emotional attachment with organizational
commitment, there are several possible reasons for an employee’s organizational
commitment.
o Affective commitment - Organizational commitment due to one’s strong
positive attitudes toward the organization. The “usual” organizational
commitment.
o Normative commitment - Organizational commitment due to feelings of
obligation. Being committed to an organization because one feels that he
should be.
o Continuance commitment - Organizational commitment due to lack of better
opportunities.

Outcomes of Organizational Commitment:

➢ low turnover
➢ regular attendance
➢ maintains employee motivation
➢ improves job performance
➢ strong organizational citizenship
➢ less likely to withdraw from work because of loyalty

Other Job Attitudes

Perceived Organizational Support
o the extent to which to which employees believe the organization values their
contributions and cares about their well-being
o employees are more likely to have a sense of POS when they observe fairness
in giving of rewards, are involved in decision making and see supervisors as
supportive
Employee Engagement
o an individual’s involvement with, satisfaction with, and enthusiasm for the work
he or she does
o conceptually similar with job involvement

Measuring Job Satisfaction

1) Single Global Rating

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 • involves simply asking individuals to respond to one question such as: All things
considered, how satisfied are you with your job?
• respondents circle a number between 1 and 5 on a scale from “highly
satisfied” to “highly dissatisfied.”

2) Summation of Job Facets

• more sophisticated than the single global rating
• includes identifying key elements in a job and asking for the employee’s
feelings about each
• involves summing up responses to a number of job factors such as nature of
the work, supervision, present pay, promotion opportunities, and relation with
co-workers

Other Approaches to Job Satisfaction Measurement

Job Descriptive Index (JDI) - by Smith, Kendall, and Hulin, 1969
o 72 items measuring five facets of job satisfaction which include: work, pay,
promotions, supervision, and coworkers
o Ratings of satisfaction in each facet are combined to come up with one
composite score of job satisfaction
Global Job Satisfaction – by Warr, Cook, and Wall, 1979
o 15 items distributed to two subscales: extrinsic (8 items) and intrinsic (7 items)
aspects of the job
Job Satisfaction Relative to Expectations – by Bacharach, Bamberger, and Conley
o measures the degree of agreement between the perceived quality of broad
aspects of a job and employee expectations
o most effective in determining how job stresses, role conflicts, or role ambiguities
can hinder an employee from meeting job expectations
Minnesota Satisfaction Questionnaire
o long-form: 100 questions based on 20 subscales which measure satisfaction
with:
▪ ability, utilization, achievement, activity, advancement, authority,
company policies and practices, compensation, co-workers, creativity,
independence, moral values, recognition, responsibility, security, social
service, social status, supervision human relations, supervision-technical
variety, and working conditions
Job Satisfaction Survey - by Spector
o 36 items based on nine job facets
o The job facets include pay, promotion, supervision, benefits, contingent
rewards operating procedures, co-workers, nature of work and
communication.
o was originally intended to measure job satisfaction in human service, nonprofit
and public organizations.
Job Satisfaction Index – by Schriescheim and Tsue
o six items that form an index measure of overall job satisfaction

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 oitems are concerned with work, supervision, co-workers, pay, promotion
opportunities, and the job in general
Job Diagnostic Survey – by Hackman and Oldham
o survey which measures both overall and specific facets of job satisfaction
o three dimensions of overall job satisfaction: general satisfaction, internal work
motivation, and growth satisfaction
o scores are combined into a single measure
o Facets: security, compensation, co-workers, and supervision

Measured Job Satisfaction Levels

➢ 49–69 percent of employees worldwide are generally satisfied with their jobs
➢ Job satisfaction levels may remain consistent over time, but tend to vary across
different cultures.
➢ Different approaches used in measuring job satisfaction may also account for
differences in job satisfaction levels as they measure different sets of job facets.
➢ To illustrate job satisfaction levels, refer to the figures below.

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 In the Philippines, a study conducted by Jobstreet Philippines in 2015 revealed that
Filipino employees become less satisfied with their jobs the longer they stay in the company
and the higher they move up the corporate ladder. Fresh graduates had the highest
satisfaction rating at 79% followed by junior executives at 70%, and lastly, supervisors at 66%.
In terms of duration of employment, those who were employed less than a year into their
jobs had the highest satisfaction rating at 75%, followed by those with a tenure of between
1-3 years at 72%, and between 3-5 years at 65%. Individuals who have been working for more
than five years in their jobs recorded the lowest satisfaction rating at 62%.

As the coronavirus disease 2019 (Covid-19) pandemic continues to push both the
public and private sectors to embrace digital transformation, public institutions as well as
companies are stepping up their game in innovative ways. These include investing in
efficient network systems, cybersecurity programs, remote devices and automated health
systems all of which aim to improve people experience.

Read: [Link]
[Link]

CAUSES OF JOB SATISFACTION

Job Conditions - the intrinsic nature of the work itself, social interactions, and
supervision—are important predictors of job satisfaction. Liking what you do, in itself,
increases overall job satisfaction.
Personality – employees who believe in their inner worth and basic competence, also
known as ‘core self-evaluation’ or CSE, are more satisfied with their jobs than people
with negative CSEs
Pay – pay correlates with job satisfaction and happiness of people but only up to a
certain level. When individuals reach their standard of comfortable living, money is
not what all there is to job satisfaction. Money motivates people, but it does not
guarantee happiness among people.
Corporate Social Responsibility (CSR) – refers to an organization’s self-regulated
actions to benefit society or the environment beyond what is required by law (ex:
environmental sustainability initiatives, nonprofit work, charitable giving, and
philanthropy). Employees who work for organizations with strong CSR report higher job
satisfaction, especially the millennials as they seek employers focusing on the people,
the planet, and the revenue.

IMPACT OF JOB DISSATISFACTION

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 The E-V-L-N Model identifies four different ways that employees respond to
dissatisfaction:

1) Exit
o includes leaving the organization, transferring to another work department (or
unit) or trying to get away from the dissatisfying situation
o effects of this response to dissatisfaction is measured by researchers though
studying individual terminations and collective turnover, also known as the
total loss to the organization of employee knowledge, skills, abilities, and other
characteristics
o it is important to understand that specific shock events quickly energize
employees to think about leaving the organization and engaging themselves
in exit behavior.
2) Voice
o expressed through an active or constructive response/attempts to improve
conditions
o may be expressed through recommending ways to improve the conflict
situation, filling formal grievances or making a coalition in order to oppose a
decision
3) Loyalty
o expressed by passively but optimistically waiting for conditions to improve
o may also include employees speaking up for the organization in the face of
external criticism and trusting the organization and its management to “do the
right thing.”
o loyal associates can suffer in silence for days, months or even years without
clear problem resolution
4) Neglect
o expressed through allowing conditions to worsen
o includes reducing work effort, paying less attention to service quality, increases
in absenteeism and lateness, and an increased error rate

BEHAVIORAL RESPONSES TO JOB DISSATISFACTION

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 Behavioral responses to job dissatisfaction are also known as counterproductive work
behavior (CWB). This refers to Intentional employee behaviors that are contrary to the
interests of the organization. Common examples include:
o substance abuse
o stealing at work
o undue socializing
o gossiping
o absenteeism
o tardiness

Predictors of CWB:
- job dissatisfaction
- vocational misfit (being
- in the wrong line of work)
- lack of fit with the organization (working in the wrong kind of organizational culture)
- teams with high absenteeism
- abusive supervision from managers

Lowering CWB:
As workers who don’t like their jobs “get even” in various ways, addressing the specific
CWB with policies and punishments leaves the root cause untouched. Instead, employers
and/or managers should seek to address the root cause of the problem, the job
dissatisfaction.
- conduct a survey on employee attitudes, and identify areas for workplace
improvement
- to address lack of vocational fit, improve on the screening procedures to avoid
mismatch
- tailoring tasks to a person’s abilities and values
- with regard to work teams, create strong teams, and integrate supervisors with
- them
- provide formalized team policies and introduce team-based incentives

Additional Notes
In terms of absenteeism, Organizations that provide liberal sick leave benefits are
encouraging all their employees to take days off. Even those who are highly satisfied might
be encouraged to take advantage of such leaves because after all, who would not want
to enjoy some days off especially when they come with no penalties?
In terms of turnover, employees’ job embeddedness, which refer to the extent to
which an employee’s connections to the job and community result to an increased
commitment to the organization—can be closely linked to their job satisfaction. This means
that when job embeddedness is high, probability for turnover is low, especially in collectivistic
cultures where organizational membership is valued. Employees with high job
embeddedness are less likely consider looking for another job and are more satisfied.
However, even when an employee is satisfied, this does not guarantee that he/she
will not consider quitting because it sometimes depends on the available alternative job

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 prospects, and especially when opportunities are plentiful. Lastly, when employees have
high “human capital” (high education, high ability), their job dissatisfaction is more likely to
translate into turnover because they have or perceive, many available alternatives.
This module explains the dynamics of the personality of the worker that is reflected
through the behavior of the person within the organization. It also explains the major
theories and research findings pertinent to personal factors such as emotions and global
beliefs that explain the nature of diversity in organizations.

Take the first quiz (Quiz #1 Prelims) that was sent to

you along with the Assignment Guides. If there are
none, ask your course facilitator for more
information.

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 UNIT 2 Emotions and Moods
The study of emotions has been a relatively small part of the field of organizational
behavior. The scientific management movement focused on the rational workplace,
believing that rationality and emotion were mutually exclusive. Also, there was a belief that
emotions had only negative impacts on performance.

Affect
Affect is a generic term that includes both moods and emotions. While emotions
can be defined as intense feelings that are directed at someone or something, moods are
less intense and often lack a contextual stimulus. Emotions are more likely to be caused
while a specific event, while moods may be more cognitive, causing individuals to think or
brood for longer periods. In addition, emotions and moods mutually influence each other.

• Positive affectivity

the tendency to be perceptually positive

• Negative affectivity

tend to experience negative moods in a wide range of settings and under many
different conditions

Emotions

Intense feelings that are directed at someone or something

Moods

Less intense and frequently lack a contextual stimulus

The Basic Emotions

There are a dozen of emotions out there, including anger, contempt, enthusiasm,
envy, fear, frustration, disappointment, embarrassment, disgust, happiness, hate, hope,
jealousy, joy, love, pride, surprise, and sadness. Numerous researchers have tried to limit
them to a fundamental set.
Other scholars argue that it makes no sense to think in terms of “basic” emotions,
because even emotions we rarely experience, such as shock, can have a powerful effect
on us. It’s unlikely psychologists or philosophers will ever completely agree on a set of basic
emotions, or even on whether there is such a thing. Still, many researchers agree on six
universal emotions—anger, fear, sadness, happiness, disgust, and surprise. We sometimes
mistake happiness for a surprise, but rarely do we confuse happiness and disgust.

Psychologists have tried to identify basic emotions by studying how we express

them. Of our myriad ways of expressing emotions, facial expressions have proved one of
the most difficult to interpret.

One problem is that some emotions are too complex to be easily represented on
our faces. Second, people may not interpret emotions from vocalizations (such as sighs or

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 screams) the same way across cultures. One study found that while vocalizations
conveyed meaning in all cultures, the specific emotions people perceived varied. For
example, Himba participants (from northwestern Namibia) did not agree with Western
participants that crying meant sadness or a growl meant anger. Lastly, cultures have norms
that govern emotional expression, so the way we experience emotion isn’t always the
same as the way we show it.

Self-conscious Emotions Vs Social Emotions

• Self-conscious emotions

help individuals stay aware of and regulate their relationships with others

• Social emotions

individuals’ feelings based on information external to themselves which includes pity, envy,
and jealousy

Emotion versus Mood

Although emotions and moods are influenced by different events and situations,
each of us may be prone to displaying some relatively stable tendencies. Some people
seem almost always positive and upbeat about things. For these optimists, we might say
the glass is nearly always half full.

EMOTION MOOD

• identified with a source, cause • hard to identify the source, cause

• tend to be brief, episodic • can be long lasting
• many forms and types • either “positive” or “negative”
• action-oriented; link with behavior • more cerebral; less action-oriented
• can turn into a mood • can influence emotions

Interesting to know!

• In one study, team members were found to share good and bad moods within two
hours of being together; bad moods, interestingly, traveled person to-person faster
than good moods. Other research found that when mood contagion is positive,
followers report being more attracted to their leaders and rate the leaders more
highly. Mood contagion can also have inflationary and deflationary effects on the
moods of co-workers and teammates, as well as family and friends.

• Emotion and mood contagion is the spillover of one’s emotions and mood onto
others.

ORGANIZATIONAL AND CULTURAL EXEMPLARS OF EMOTIONS AND MOODS

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 Emotional labor

• A situation where a person displays organizationally desired emotions during

interpersonal transactions at work. Emotional labor is a key component of effective
job performance. We expect flight attendants to be cheerful, funeral directors to be
sad, and doctors to be emotionally neutral. At the least, your managers expect you
to be courteous, not hostile, in your interactions with coworkers.

Controlling Emotional Displays

The way we experience emotion is not always the same as the way we show it. To
analyze emotional labor, we divide emotions into felt or displayed emotions. Felt emotions
are our actual emotions. In contrast, displayed emotions are those the organization
requires workers to show and considers appropriate in a given job. They’re not innate;
they’re learned, and they may or may not coincide with felt emotions.

Deep acting (related to emotional dissonance)

• Trying to modify your true inner feelings based on display rules. Deep acting is less
psychologically costly than surface acting because we are trying to experience the
emotion, so we experience less emotional exhaustion. In the workplace, deep
acting can have a positive impact. For example, one study in the
Netherlands and Germany found that individuals in service jobs earned significantly
more direct pay (tips) after they received training in deep acting. Deep acting has
a positive relationship with job satisfaction and job performance. Employees who
can depersonalize or standardize their work interactions that require emotional
labor may be able to successfully carry on their acting while thinking of other tasks,
thus bypassing the emotional impact.

Surface acting (related to emotional dissonance)

• Hiding your inner feelings and forgoing emotional expressions as a response to

display rules. Surface acting is literally “putting on a face” of appropriate response
to a given situation, like smiling at a customer when you don’t feel like it. Surface
acting daily can also lead to emotional exhaustion at home, work-family conflict,
and insomnia.43 In the workplace, daily surface acting leads to exhaustion, fewer
OCBs,44 increased stress, and decreased job satisfaction. Perhaps due to the costs
of creatively expressing what we don’t feel, individuals who vary their surface-acting
responses may have lower job satisfaction and higher levels of work withdrawal than
those who consistently give the same responses.
Employees who engage in surface displays should be given a chance to
relax and recharge. For example, a study that looked at how cheerleading
instructors spent their breaks from teaching found those who used the time to rest
and relax were more effective after their breaks than those who did chores during
their breaks.

Emotional dissonance

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 • Inconsistencies between emotions we feel and emotions we project. When
employees have to project one emotion while feeling another, this disparity is called
emotional dissonance. Bottled-up feelings of frustration, anger, and resentment can
lead to emotional exhaustion. Long-term emotional dissonance is a predictor for job
burnout, declines in job performance, and lower job satisfaction.
• It is important to counteract the effects of emotional labor and emotional
dissonance. Research in the Netherlands and Belgium indicates that while surface
acting was stressful to employees, mindfulness—objectively and deliberately
evaluating our emotional situation at the moment—was negatively correlated with
emotional exhaustion and positively affected job satisfaction.52 When people
become non-judgmentally aware of the emotions they are experiencing, they are
better able to look at situations more clearly. Mindfulness has been shown to
increase the ability to shape our behavioral responses to emotions.

Note:

1 It is a form of self-regulation to display organizationally desired emotions in one’s job.

Good examples come from service settings such as airline check-in personnel or
flight attendants. They are supposed to appear approachable, receptive, and
friendly while taking care of the things you require as a customer.

2 Emotional labor isn’t always easy; it can be hard to be consistently “on,” projecting
the desired emotions associated with one’s work. If you’re having a bad mood day
or just experienced an emotional run-in with a neighbor, for example, being
“happy” and “helpful” with a demanding customer might seem a little much to ask.

DISPLAY RULES

informal standards that govern the degree to which it is appropriate for people from
different cultures to display their emotions similarly.

• We should be sensitive to the way emotions are displayed in other cultures; often
they may not mean what they do at home.

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 Affective Events Theory

Affective events theory (AET) proposes that employees react emotionally to things
that happen to them at work, and this reaction influences their job performance and
satisfaction. Say you just found out your company is downsizing. You might experience a
variety of negative emotions, causing you to worry that you’ll lose your job. Because it is
out of your hands, you may feel insecure and fearful, and spend much of your time
worrying rather than working. Needless to say, your job satisfaction will also be down.

Work events trigger positive or negative emotional reactions, to which employees’

personalities and moods predispose them to respond with greater or lesser intensity. People
who score low on emotional stability are more likely to react strongly to negative events,
and emotional response to a given event can depend on mood. Finally, emotions
influence several performance and satisfaction variables, such as organizational
commitment, level of effort, intention to quit, and workplace deviance.

In sum, AET offers two important messages. First, emotions provide valuable insights
into how workplace events influence employee performance and satisfaction. Second,
employees and managers shouldn’t ignore emotions or the events that cause them, even
when they appear minor because they accumulate. The AET framework highlights the
emotionality of the workplace and its real outcomes. Emotional intelligence is another
framework that may help us understand the impact of emotions on job performance, so
we look at that next.

Emotional Intelligence

Emotional intelligence (EI) is a person’s ability to:

(1) perceive emotions in him or herself and others;

(2) understand the meaning of these emotions; and
(3) regulate his or her own emotions accordingly,

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 People who know their own emotions and are good at reading emotional cues—for
instance, knowing why they’re angry and how to express themselves without violating
norms—are most likely to have high EI.

Several studies suggest EI plays an important role in job performance. One study
that used functional magnetic resonance imaging (fMRI) technology found that executive
MBA students who performed best on a strategic decision-making task were more likely to
incorporate emotion centers of the brain into their choice processes. One simulation study
showed that students who were good at identifying and distinguishing among their feelings
were able to make more profitable investment decisions. Although organizational behavior
(OB) is progressing in its understanding of EI, and several studies suggest it plays an
important role in job performance, many questions remain unanswered. One relates to
proving what EI may predict.

For example, while evidence indicates that EI correlates with job

performance, the correlation isn’t high and is explained to a large degree by traits
such as emotional stability. A second question is about the reliability of EI testing. For
example, part of the reason EI has only a modest correlation with job effectiveness is
that it is hard to measure—mostly it is measured with self-report inventories, which of
course are often far from objective!

All questions aside, Emotional Intelligence (EI) is wildly popular among consulting firms and
in the popular press, and it has accumulated some support in the research literature. Love
it or hate it, one thing is for sure—EI is here to stay. So might be our next topic—emotion
regulation—an independent concept from emotional labor and emotional intelligence,
although they are related.

Emotion Regulation Influences and Outcomes

• Not everyone is equally good at regulating emotions.

• Individuals who are higher in the personality trait of neuroticism have more trouble
doing so and often find their moods are beyond their ability to control.
• Individuals who have lower levels of self-esteem are also less likely to try to improve
their sad moods, perhaps because they are less likely than others to feel they
deserve to be in a good mood.
• The workplace environment affects an individual’s tendency to employ emotion
regulation. In general, diversity in workgroups increases the likelihood that you will
regulate your emotions.
• Racial diversity also affects: if diversity is low, the minority may engage in emotion
regulation, perhaps to “fit in” with the majority race as much as possible; if diversity is
high and many different races are represented, the majority race will employ
emotion regulation, perhaps to integrate themselves with the whole group.66 These
findings suggest a beneficial outcome of diversity—it may cause us to regulate our
emotions more consciously and effectively.
• While regulating your emotions might seem beneficial, research suggests there is a

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 the downside to trying to change the way you feel. Changing your emotions takes
effort, and as we noted when discussing emotional labor, this effort can be
exhausting. Sometimes attempts to change an emotion make the emotion stronger;
for example, trying to talk yourself out of being afraid can make you focus more on
what scares you, which makes you more afraid. From another perspective, research
suggests that avoiding negative emotional experiences is less likely to lead to
positive moods than does seeking out positive emotional experiences.68 For
example, you’re more likely to experience a positive mood if you have a pleasant
conversation with a friend than if you avoid an unpleasant conversation with a
hostile coworker.

Emotion Regulation Techniques

Emotion regulation has important ethical implications. On one end of the

continuum, some people might argue that controlling your emotions is unethical because
it requires a degree of acting. On the other end, people might argue that all emotions
should be controlled so you can take a dispassionate perspective. Both arguments—and
all arguments in between—have ethical pros and cons you will have to decide for yourself.
Consider the reasons for emotion regulation and outcomes. Are you regulating your
emotions so you don’t react inappropriately, or are you regulating your emotions so no one
knows what you are thinking?

Finally, consider this: you may be able to “fake it ’til you make it.” Acting like you are
in a good mood might put you in a good mood. In one study, a group of participants was
asked to hold only a conversation with a barista serving them at Starbucks, while another
group was asked to act happy. The happy actors reported later that they were in much
better moods.

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 UNIT 3 Personality and Values
What Is Personality?

It is the sum of ways in which an individual reacts to and interacts with others. We
most often describe personality in terms of the measurable traits a person exhibits. Early
work on personality tried to identify and label enduring characteristics that describe an
individual’s behavior including shyness, aggressive, submissive, lazy, ambitious, loyal, and
timidness. When someone exhibits these characteristics in a large number of situations and
they are relatively enduring over time, we call them personality traits. The more consistent
the characteristic over time and the more frequently it occurs in diverse situations, the
more important the trait is in describing the individual.

Personality Frameworks:

Throughout history, people have sought to understand what makes individuals

behave in myriad ways. Many of our behaviors stem from our personalities, so
understanding the components of personality helps us predict behavior.

Myer-Briggs Type Indicator

It is the most widely used personality assessment instrument in the world. It is a 100-question
personality test that asks people how they usually feel or act in situations. Respondents are
classified as extraverted or introverted (E or I), sensing or intuitive (S or N), thinking or feeling
(T or F), and judging or perceiving (J or P):

■ Extraverted (E) vs. Introverted (I):

✓ outgoing, sociable vs assertive/ quiet and shy

■ Sensing (S) vs. Intuitive (N):

✓ practical, routine order, focus on details vs relying on unconscious process,

“big picture”

■ Thinking (T) vs. Feeling (F):

✓ use reason and logic vs personal values and emotions

■ Judging (J) vs. Perceiving (P):

✓ wants control and prefer order vs structure/ flexible and spontaneous

■ INTJs: visionaries with original minds and great drive; skeptical, critical, independent,
determined, and often stubborn.

■ ENFJs: natural teachers and leaders; relational, motivational, intuitive, ethical, and
kind.

■ ESTJs: organizers, realistic, logical, analytical, and decisive, perfect for business or
mechanics.

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 ■ ENTPs: innovative, individualistic, versatile, attracted to entrepreneurial ideas,
resourceful, but may neglect routine assignments

Big Five Personality Factors

This theory proposes that five basic dimensions underlie all others and encompass most of
the significant variation in human personality. Test scores of these traits do a very good job
of predicting how people behave in a variety of real-life situations and remain relatively
stable for an individual over time, with some daily variations. These are the Big Five factors:

How Do the Big Five Traits Predict Behavior at Work?

Example:

Conscientiousness at work

Conscientiousness is key. As researchers recently stated, “Personal attributes related

to conscientiousness and agreeableness are important for success across many jobs,
spanning across low to high levels of job complexity, training, and experience.”18
Employees who score higher in conscientiousness develop higher levels of job knowledge,

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 probably because highly conscientious people learn more (conscientiousness may be
related to GPA),19 and these levels correspond with higher levels of job performance.
Conscientious people are also more able to maintain their job performance when faced
with abusive supervision, according to a study in India.

Like any trait, conscientiousness has its pitfalls. A highly conscientious individual can
prioritize work over family, resulting in more conflict between their work and family roles
(termed work-family conflict).21 They may also become too focused on their work to help
others in the organization,22 and they don’t adapt well to changing contexts. Furthermore,
conscientious people may have trouble learning complex skills early in a training process
because their focus is on performing well rather than on learning. Finally, they are often less
creative, especially artistically. Despite pitfalls, conscientiousness is the best overall
predictor of job performance. However, the other Big Five traits are also related to aspects
of performance and have other implications for work and life.

The Dark Triad

A constellation of negative personality traits consisting of :

■ Machiavellianism: the degree to which an individual is pragmatic, maintains

emotional distance, and believes that ends can justify the means.

■ Narcissism: tendency to be arrogant, grandiose sense of self-importance, require

excessive admiration, entitlement.

■ Psychopathy: the tendency for lack of concern for others and lack of guilt or
remorse

Other RELEVANT Personality attributes

Core Self-Evaluation (CSE)

CSEs are bottom-line conclusions individuals have about their capabilities, competence,
and worth as a person.

■ People with positive CSE see themselves as effective and in control of their
environment.
■ People with negative CSE tend to dislike themselves and question their capabilities
and view themselves as powerless over the environment.

Self-monitoring

➢ An individual’s ability to adjust to his or her behavior to external situational factors.

High self-monitors:

✓ highly sensitive to external cues;

✓ can behave differently in varying
✓ situations; more conforming

Low self-monitors:

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 ✓ display true dispositions and
✓ there is high behavioral consistency between who they are and what they
do.

Proactive Personality

Identifying opportunities, show initiative, take action and persevere until meaningful
changes occur.

■ A higher level of job performance

■ Receptive to changes in job demands

■ Important to work team (exchange information with others –build trust relationships)

Personality and situations

A. Situations Strength Theory

A theory indicating that the way personality translates into behavior depends on the
strength of the situation.

Components:

1. Clarity - or the degree to which cues about work duties and responsibilities are
available and clear—jobs high in clarity produce strong situations because
individuals can readily determine what to do.
2. Consistency - the extent to which cues regarding work duties and responsibilities are
compatible with one another—jobs with high consistency represent strong situations
because all the cues point toward the same desired behavior.
3. Constraints - the extent to which individuals’ freedom to decide or act is limited by
forces outside their control—jobs with many constraints represent strong situations
because an individual has limited discretion.
4. Consequences - the degree to which decisions or actions have important
implications for the organization or its members, clients, supplies, and so on—jobs
with important consequences represent strong situations because the environment
is probably heavily structured to guard against mistakes.

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 B. Trait Activation Theory (TAT)

➢ This theory predicts that some situations, events, or interventions “activate” a trait
more than others.

Job Trait

Detail Orientation Conscientiousness (+)

Requirement

Social Skills Requirement Extraversion (+) Agreeableness (+)

Competitive Work Extraversion (+) Agreeableness (+)

Innovation Requirement Openness (+)

Dealing with Angry People Extraversion (+) Agreeableness (+)

Neuroticism (-)

Time Pressure (Deadlines) Conscientiousness (+)

Neuroticism (-)

VALUES

■ Values: basic convictions that a specific mode of conduct or end-state of existence

is personally or socially preferable to an opposite or converse mode of conduct or
end-state existence.

■ Value-system: hierarchy based on the ranking of an individual’s values in terms of

their intensity.

Terminal vs Instrumental Values

■ Terminal values: desirable end-states of existence; the goals a person would like to
achieve during his or her lifetime.

■ Instrumental values: preferable modes of behavior or means of achieving one’s

terminal values.

Generational Values

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 Researchers have integrated several analyses of work values into groups that
attempt to capture the shared views of different cohorts or generations in the U.S.
workforce. You will surely be familiar with the labels—for example, baby boomers, Gen-
Xers, millennials—some of which are used internationally. It is important to remember that
while categories are helpful, they represent trends not the beliefs of individuals. Though it is
fascinating to think about generational values, remember these classifications lack solid
research support. Early research was plagued by methodological problems that made it
difficult to assess whether differences exist. Reviews suggest many of the generalizations
are either overblown or incorrect.80 True differences across generations often do not
support popular conceptions of how generations differ.

For example, the value placed on leisure has increased over generations from the
baby boomers to the millennials and work centrality has declined, but the research did not
find that millennials had more altruistic work values than their predecessors. Generational
classifications may help us understand our own and other generations better, but we must
also appreciate their limits.

Linking personality and values to the workplace

1. Personality Job Fit Theory - A theory that identifies six personality types and proposes that
the fit between personality type and occupational environment determines satisfaction
and turnover.

2. Personality Job Fit Theory: Holland’s Typology

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 The effort to match job requirements with personality characteristics is described by John
Holland’s personality–job fit theory, one of the more proven theories in use internationally.
The Vocational Preference Inventory questionnaire contains 160 occupational titles.
Respondents indicate which they like or dislike, and their answers form personality profiles.
Holland presented six personality types and proposed that satisfaction and the propensity
to leave a position depend on how well individuals match their personalities to a job.

There are cultural implications for person–job fit that speak to workers’ expectations that
jobs will be tailored to them. In individualistic countries where workers expect to be heard
and respected by management, increasing person–job fit by tailoring the job to the person
increases the individual’s job satisfaction. However, in collectivistic countries, person–job fit
is a weaker predictor of job satisfaction because people do not expect to have jobs
tailored to them, so they value person–job fit efforts less. Therefore, managers in
collectivistic cultures should not violate cultural norms by designing jobs for individuals;
rather they should seek people who will likely thrive in jobs that have already been
structured.

3. Person-Organization Fit Theory

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 A theory that people are attracted and selected by organizations that match their values,
and leave when there is no compatibility.

Examples:

■ Extraverts = team-oriented cultures

■ Open people = emphasize innovation

4. Other Dimensions of Fit

■ Person-group fit – important in team settings where dynamics of team interaction

significantly affect work outcomes.

■ Person-Supervisor fit – poor fit in this dimension can lead to lower job satisfaction
and reduced performance.

Cultural values

1. Hofstede’s Framework

One of the most widely referenced approaches for analyzing variations among cultures
was done by Geert Hofstede.89 Hofstede surveyed more than 116,000 IBM employees in 40
countries about their work-related values and found managers and employees varied on
five value dimensions of national culture:

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 2. GLOBE Framework

Founded in 1993, the Global Leadership and Organizational Behavior Effectiveness

(GLOBE) research program is an ongoing cross-cultural investigation of leadership and
national culture. Using data from 825 organizations in 62 countries, the GLOBE team
identified 9 dimensions on which national cultures differ.

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 Implications in the workplace:

■ Consider screening job candidates for conscientiousness and other Big Five traits
depending on the criteria of one’s organization.

■ Evaluate job, workgroups, and organization to determine the optimal personality-fit.

■ Take into account situational factors when evaluating observable personality traits,
and lower situation strength to better ascertain personality characteristics.

■ The more you consider people’s cultural differences, the better you will be able to
determine their work behavior and create a positive organizational climate that
performs well.

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 UNIT 4: PERCEPTIONS AND INDIVIDUAL DECISION MAKING

What is PERCEPTION?
Perception refers to the process by which we organize and interpret sensory
impressions to give meaning to their environment. It involves receiving information about and
making sense of the world around us. As people have different interpretations and
impressions of what is happening in the environment, this makes perceptions subjective. In
the workplace context, some employees may perceive their work environment as satisfying
while others may interpret it otherwise.
Understanding perception is important in studying human behavior in organizations
because people behave based on what they perceive as reality, and not really on the
objective reality. The world as an individual sees it is the world in which he/she reacts. In the
workplace, the employee's behavior is based on his/her subjective perception of the work
environment. What makes it difficult to manage employees is that when they perceive the
world inaccurately, it will be difficult for them to learn from experience.

FACTORS INFLUENCING PERCEPTION

1. Perceiver
• when an individual looks at a target and
attempts to interpret what he or she sees,
that interpretation is heavily influenced by
the perceiver’s personal characteristics
such as attitudes, personality, motives,
interests, past experiences, and
expectations
• we see what we want to see, and hear
what we want to hear not because it’s the
reality but because it is what conforms to
our thinking

For example, a manager who has had an excellent relationship with a subordinate
over many years may disregard evidence of lying or poor performance because it
does not fit his preexisting conceptions of the person.
• some erroneous perceptions may be countered by objective evaluations, but
some others are more persistent
2. Target
• characteristics of the target being observed can affect what is perceived
• as targets are not looked at in isolation, the relationship of a target to its
background also influences perception
• the individual’s perceptions of another person are affected by that person’s
most obvious characteristics (those that stand out).
For instance, the perceiver is likely to notice things that are intense, bright,
noisy, or in motion. In organizations, extremely good and bad performers may
be noticed more than average associates.

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 People have the tendency to group close things and similar things
o
together.
People who share certain surface characteristics may be perceived as being
similar even in other aspects of their identity. For example, those who have
criminal records may be prejudged negatively regardless of whether they
were wrongfully accused or not.
o Sometimes, though, we are drawn to those that turn out to be different
from what we expect.
An older boss may be adored when he acts more like his younger associates
more than the same boss acting according to what is expected of old people
who are grumpy, traditional and conservative.
3. Context
• some situational factors like the time of perceiving others, work settings, social
settings can influence our attention and the perception process
For instance, we are less likely to notice a person dressed up for a Saturday
night partying as compared when we see the same person all dressed up for
a casual meeting on a Monday morning

PERSON PERCEPTION: Making Judgments about Others

Think about the time where you first met a friend of yours. The way you saw him/her
then is most likely formed by your first impressions and some minor cues. For people, this is
how we form person perceptions, or the perceptions people form about each other.
However, as perceptions are very much subjective and are held by people regardless of its
accuracy, people have several tendencies that interferes with correct person perception.
Attribution Theory – attempts to explain the ways we judge people differently, depending
on the meaning we attribute to a behavior
o involves determining whether an individual’s behavior is internally or externally caused
o people tend to assign different meanings to similar things because they have different
ways of causal attribution
➢ Internal and External Causation
According to the attribution theory, we attempt to determine whether the behaviors
we observed from others are internally or externally caused. How do we differentiate
between the two?
o Internal causation
Behaviors that are perceived by an individual to be internally caused are those
behaviors which the observer thinks are under the personal control of the
individual.
Example: If an employee is late to work, you might attribute his tardiness to
partying all night and oversleeping.
o External causation
Behaviors that are perceived by an individual to be externally caused are
those behaviors which the observer thinks are caused by some uncontrollable
factor external to the individual.
Example: If an employee is late to work, you might attribute his tardiness to being
stuck in heavy traffic.

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 ➢ Distinctiveness, Consensus, and Consistency
Determining whether another’s behavior is internally or externally caused depends
on three factors namely, distinctiveness, consensus, and consistency.
o Distinctiveness
This refers to whether an individual display different behaviors in different
situations. We want to know if the behavior being displayed is unusual. Going back
to our example, is it usual for the employee to be late?
▪ Unusual behavior = external attribution
▪ Usual behavior = internal attribution
o Consensus
If everyone who faces a similar situation responds in the same way, we can say
the behavior shows consensus.
▪ High consensus (all employees late who take the same route were also late)
= external attribution
▪ Low consensus (other employees who took the same route got to work on
time) = internal attribution
o Consistency
This involves looking at whether the individual responds in the same manner
over time. If the individual does, the behavior is said to be consistent.
▪ High consistency (the employee is late three times a week) = internal
attribution
▪ Low consistency (the employee is rarely late) = external attribution

➢ Errors and Biases

o Fundamental attribution error
This refers to the tendency to underestimate the influence of external factors
and overestimate the influence of internal factors when making judgments about
the behavior of others.
Example: A manager attributes the poor performance of the sales agents due to
laziness, rather than to the innovative product introduced by a competitor.

o Self-serving Bias
This refers to the tendency for individuals to attribute their successes to
internal factors and blamed for failures on external factors.
Example: A manager believes that the high sales for the third quarter of 2020 were
due to the team effort exerted by her team of sales agents, but when their sales
took a plunge towards the end of the year, she blamed it on luck not being on
their side.

Common Shortcuts in Judging Others

For us to make quick but accurate predictions, as well as to provide valid data for
making predictions, we sometimes resort to shortcuts in judging other people. However, this
may result in certain perceptual distortions.

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 Selective Perception – refers to the tendency to selectively interpret what one sees based
on one’s interests, background, experience, and attitudes.
➢ Any characteristic that makes a person, an object, or an event stand out (based on
our interest, attitudes, background, and experiences) will increase the likelihood that we
will perceive it. It is difficult for us to take in every single detail or information about our
environment so we tend to pay attention to the things that are more relevant to us and
drown out the others.
➢ Simply put, we see what we want to see. But we sometimes draw overreaching
conclusions based on ambiguous situations because of selective perception.
Example: We tend to notice cars that look like ours, or why bosses reprimand some
people and not others who are doing the same thing.

Halo Effect – refers to the tendency to draw a general impression about an individual on
the basis of a single characteristic.
➢ Involves drawing out general impressions about an individual on the basis of a single
characteristic (ex: intelligence, sociability, appearance)
Example: An individual who is intelligent may also make someone infer that he will
demonstrate high job performance.

Contrast Effects – refers to the evaluation of a person’s characteristics that is affected

by comparisons with other people recently encountered who rank higher or lower on
the same characteristics.
Example: In performance appraisal, an employee’s performance was compared to the
performance of the previous employee and not on the set criteria for performance.

Stereotyping – involves judging someone on the basis of one’s perception of the group
to which that person belongs
➢ Example: Giving more programming jobs to men than women because women are
not seen as “fit” for programming.

PERCEPTION AND INDIVIDUAL DECISION MAKING

Decisions are choices from among two or more alternatives, and decision making is
the process by which an individual deliberates on which option to choose. The decision
making process is ideally an objective process but the way people choose and the quality
of the choices they make are heavily influenced by perceptions. In the context of
organizations, individual decision making is important in all levels.
Decision making happens when there is a problem, a discrepancy existing between
the current state of affairs and some desired state which requires us to consider alternative
courses of action. For instance, if your car breaks down on your way to work, you need to
choose whether to fix your car yourself or find different transportation alternatives in order for
you to show up for work.
However, a thing about problems is that there are circumstances that one person
might consider to be a problem and requires a solution, while another sees it as a satisfying
state of affairs, basically meaning that there is no problem and that there is nothing to solve.
In a way, we are saying that the acknowledgment of problems and the need to decide
whether a decision needs to be made, especially among people in an organization, is a
matter of perception.

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 In making decisions:
o we use our perceptions to identify which data are relevant to the problem at hand
o we use our perceptual processes in developing alternatives and assessing their
strengths and weaknesses
o we also have to consider how our perceptions of the situation influence our decisions

DECISION MAKING IN ORGANIZATIONS

Rational Decision Making

The rational decision-making
model describes a series of steps that
decision makers should consider if
their goal is to maximize the quality of
their outcomes. This model describes
how individuals should behave in
order to maximize some outcome.
The basic assumption for the rational
decision making model is that the
decision maker has
complete information, is able to
identify all relevant options in an
unbiased
manner, and chooses the option with the highest utility, hence the term rational. There are
six steps followed in this model as shown in the figure.

Bounded Rationality
The bounded rationality model of decision making recognizes the limitations of our
decision-making processes. According to this model, individuals knowingly limit their
options to a manageable set and choose the best alternative without conducting an
exhaustive search for alternatives. Because the human mind cannot formulate and solve
complex problems with full rationality, we operate within the confines of bounded
rationality. According to this model, many problems don’t have an optimal solution
because they are too complicated to fit the rational decision-making model so people
tend to satisfice - accepting the first alternative that meets your minimum criteria or that
are satisfactory.

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 The decision making process using bounded rationality starts with identifying the
problems. Then, begin to search for criteria and alternatives. Afterwards, the alternatives
will be reviewed, focusing on choices that differ little from the current state until we
identify one that is “good enough”—that meets an acceptable level of performance.
Rather than choosing the best choice and maximizing the potential outcome, the
decision maker saves time and effort by accepting the first alternative that is satisfying
and sufficient. Therefore, the solution represents a satisficing choice—the first acceptable
one we encounter—rather than an optimal one.

Intuition/Intuitive Decision Making

Intuitive decision making involves an unconscious process created from distilled
experience. It is considered to be the least rational, occurring outside of conscious thought,
relying on holistic associations, is fast and affectively charged. While intuitive decision making
is the least rational, it does not necessarily mean it is wrong as it can complement rational
analysis. The use of one’s intuition combined with objective data may prove to be useful.
From an expert’s perspective, one’s intuition or hunches derived from previous experiences
may be used to speculate or hypothesize on problems, but those hunches should still be
tested with objective data and rational analysis.

Common Biases and Errors in Decision Making

Overconfidence Bias
➢ a tendency to be overconfident about our abilities and the abilities of others;
simply, people are overly optimistic about how right they are
➢ studies show that individuals with the weakest intelligence and interpersonal skills
are the most likely to exhibit overconfidence in their decision making
Anchoring Bias
➢ tendency to fixate on initial information and fail to adequately adjust for
subsequent information; in the context of decision making, the decision made is
anchored on the initial information collected
➢ in employment interviews, employers typically ask interviewees how much they
made in their previous jobs and subsequently anchor their salary offers based on
the interviewee’s response
Confirmation Bias
➢ tendency to seek out information that reaffirms our past choices, and we discount
information that contradicts them
➢ represents selective perception – people selectively gather information when
making decisions
➢ involves accepting things at face value and ignoring other information that
contradicts them
➢ for instance, when two people are arguing, the tendency is to look out for
evidence that supports one’s claim and ignore evidence that contradicts them
Availability Bias
➢ tendency to base judgments on readily available information
➢ readily available information and previous direct experience with similar
information, strongly impacts our decision making

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 ➢ observed in sensationalizing news
Escalation of Commitment
➢ staying with a previous decision even if there is clear evidence it is wrong or despite
negative or conflicting information; tendency to choose the information that
supports our decision
➢ more likely to occur when individuals perceive that they are responsible for the
outcome; an individual would rather continue to rationalize and defend his/her
decision rather than accept that he/she is wrong because of the fear of personal
failure
➢ wanting to prove one’s initial decision was correct by letting a bad decision go on
too long, hoping the direction will be corrected
Randomness Error
➢ tendency to believe we can predict the outcome of random events
➢ creating meaning from random events; turning imaginary patterns into superstitions
➢ for instance, wearing a lucky tie when presenting a proposal
Risk Aversion
➢ tendency to prefer a sure gain of a moderate amount over a riskier outcome, even
if the riskier outcome might have a higher expected payoff
➢ for example, employees may use more familiar ways of doing their jobs and avoid
taking a chance on new methods
➢ people seeking positive outcomes are more likely to avoid taking risks, while people
avoiding negative outcomes are more likely to take their chances
Hindsight Bias
➢ tendency to believe falsely, after the outcome is known, that we would have
accurately predicted it; “I was right. I knew it all along”
➢ thinking one completely knew about the event before it happened

Reducing Biases and Errors in Decision Making:

1. Focus on goals.
2. Look for information that disconfirms your beliefs.
3. Avoid creating meaning out of random events.
4. Increase your options.

INFLUENCES ON DECISION MAKING

Individual Differences
Personality
o Individuals with high achievement-striving
- more likely to escalate commitment due to fear of failure or in the hopes of
forestalling failure
- more prone to hindsight bias due to a strong need to justify their actions
o Individuals with high dutifulness
- less likely to escalate commitment as they are more inclined to do what they see
as best for the organization
Gender

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 o differences in decision making on the basis of gender depends on the situation
o men and women’s quality of decision making is relatively similar when situations are
not stressful
o in stressful situations, men tend to be more egocentric and make riskier decisions,
while women tend to be more empathetic and their decision making improves
General Mental Ability
o high levels of general mental ability
- process information more quickly, solve problems more accurately, and learn
faster, thus making them less susceptible to common decision errors
- however, they are as likely to commit anchoring, overconfidence, and escalation
of commitment which might probably be due to being less aware of the
possibility that one is being too confident or emotionally defensive
- when made aware of decision making errors, they quickly learn to avoid them
Cultural Differences
o cultures differ in time orientation, the value they place on rationality, their belief in the
ability of people to solve problems, and their preference for collective decision
making
o some examples include:
- managers in Egypt make decisions at a much slower and more deliberate pace
than their U.S. counterparts
- a North American manager might make a decision intuitively but knows the
importance to proceed with it in a rational fashion because rationality is highly
valued in the West. In countries such as Iran, where rationality is not paramount
to other factors, efforts to appear rational are not necessary
- US managers are more likely to focus on solving problems while those from
Thailand and Indonesia are more likely to accept situations as they are
- decision making in Japan is much more group-oriented than in the United States
Nudging
o involves changes the presentation of those choices in a way that makes people more
likely to pick the option that benefits them, as in how commercials are designed in a
way that would influence our perceptions of a product and our decision to acquire
that product
o though people differ in their susceptibility to nudging, they are all receptive to some
degree
o In organizations, nudging usually involves the strategic placement of facts and
resources that subtly suggest a better decision

Organizational Constraints

Performance Evaluation Systems

o managers are influenced by the criteria on which they are evaluated
o for instance, if an area manager of a fast-food chain believes that the branches
under her responsibility are performing well when she does not encounter any
negative information, the branch managers are more likely to ensure that the area
manager does not learn of any negative information should they arise

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 Reward Systems
o an organization’s reward systems influence decision-makers by suggesting which
choices have better personal payoffs
o for instance, if the organization rewards risk aversion, managers are more likely to
make conservative decisions
Formal Regulations
o organizations create rules and policies to program decisions and get individuals to
act in the intended manner, thus limiting decision choices
System-imposed Time Constraints
o almost all important decisions come with explicit deadlines
o when pressed with rigid deadlines, it is difficult/impossible to gather all information
before making a final choice
Historical Precedents
o individual’s choices are influenced by those made in the past; choices made today
are largely a result of choices made over the years
o for instance, in organizations, the present year’s budget largely takes into
consideration the budget allocation for the past years

ETHICS IN DECISION MAKING

Three Ethical Decision Criteria

1. Utilitarianism: Make decisions solely on the basis of their outcomes.
o decisions are made to provide the greatest good for the greatest number; basing
decisions on the best interests of the organization
2. Individual rights: Make decisions consistent with fundamental liberties and privileges.
o respecting and protecting the basic rights of individuals, such as the right to
privacy, free speech, and due process
o protects whistle-blowers, individuals who reveal an organization’s unethical
practices to the press or government agencies, using their right to free speech
3. Distributive justice: Impose and enforce rules fairly and impartially to ensure justice or an
equitable distribution of benefits and costs.

Choosing Between Criteria

Most often, decision making in for-profit organizations use utilitarianism. However, the
“best interests” of the organization and its stockholders can justify a lot of questionable
actions, such as large layoffs. Because of this, critics have proposed that organizations
develop ethical standards based on non-utilitarian criteria in order to protect individual rights
and uphold social justice. As much as the intention is good, this presents a further because
satisfying individual rights and social justice creates far more ambiguities on efficiency and
profits as compared to adapting a utilitarian approach in decision making. However, while
questionable decision may be justified in utilitarian terms, there may no longer be a single
measure by which good decisions are judged. This is where corporate social responsibility
comes in.
With CSR, there is now a public pressure on organizations to behave responsibly and
address issues of sustainability. At present, consumers increasingly choose to purchase goods

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 and services from organizations with effective CSR initiatives, high performers are attracted
to work for organizations with a good sense of CSR, and governments offer incentives to
organizations for sustainability efforts, among others.

Behavioral Ethics
Behavioral ethics is an area of study that analyze how people behave when
confronted with ethical dilemmas. Research show that while ethical standards exist
collectively and individually, this is not a guarantee that we always follow ethical standards
promoted by our organizations, and we sometimes violate our own standards.

Lying
Lying is one of the top unethical activities we may indulge in daily, and it undermines
all efforts toward sound decision making. One of the reasons people lie is because others
find it difficult to detect them. Whether detected or not, lying in organizations adversely
affects decision making, especially for managers, simply because they cannot make good
decisions when facts are misrepresented and people give false motives for their behaviors.

Recall an instance in your life where you committed an error or bias in decision-
making. Looking back, how do you think you could have avoided such?
________________________________________________________________________________________
________________________________________________________________________________________
_______________________________________________________________________________

Assignment #2. Refer to your assignment guide.

Quiz #2

Take your second quiz (Quiz #2_Prelims).

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 Answer the Prelim Examination
Exam coverage is Module 1 and 2.

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