Organizational Behavior

Personality: A person who is generally optimistic may see more positive outcomes in a risky decision, while a pessimistic person might focus on the potential for failure.

Risk Tolerance: Individuals have varying levels of comfort with risk. A manager with a high-risk tolerance might be more willing to invest in an unproven technology, whereas a risk-averse manager would prefer a more conservative option.

Cognitive Biases: People are prone to cognitive biases that affect their decisions. For instance, confirmation bias is the tendency to seek out and interpret information that confirms one's pre-existing beliefs, ignoring contradictory evidence.

Organizational Constraints

The organization itself imposes constraints on decision makers, often leading to decisions that are not purely rational.

Performance Evaluation Systems: Managers are often influenced by the criteria on which they are evaluated. If a performance review heavily rewards risk-aversion, managers will likely make conservative decisions to avoid mistakes.

Reward Systems: The way an organization rewards its employees shapes their choices. If a reward system prioritizes speed over quality, employees will make decisions to meet deadlines, even if it means cutting corners.

Formal Regulations and Rules: Policies, procedures, and rules can limit the range of choices available to a decision maker. While this can streamline processes, it can also stifle innovation and prevent a manager from making the best decision for a specific situation.

Historical Precedents: Decisions are not made in a vacuum. Past choices and traditions can act as powerful precedents, making it difficult to pursue a new course of action, even if it's more effective.

Sample Answer

Our perception is a complex process influenced by a mix of internal and external factors. Internal factors, or those related to the perceiver, include our personality, motivations, past experiences, and emotional state. For example, a person who is feeling hungry is more likely to notice a fast-food restaurant billboard. External factors, or those related to the object being perceived, include its size, intensity, novelty, and repetition. A loud noise or a brightly colored object is more likely to catch our attention than a soft sound or a muted one.

Link Between Perception and Decision Making

Perception and decision making are fundamentally linked because our decisions are based not on objective reality, but on our perceived reality. We don't make decisions based on what's actually happening, but on how we interpret and understand what's happening.

Every step of the decision-making process—from identifying that a problem exists to evaluating alternative solutions and making a final choice—is shaped by perception. For example, two managers facing the same situation might define the problem differently because of their past experiences and biases. The information they choose to focus on and the weight they give it are also a function of their perception, leading them to different conclusions.

Influence of Individual Differences and Organizational Constraints

Individual differences and organizational constraints introduce biases that can significantly impact decision making.

Individual Differences

Individual differences, such as personality, cognitive style, and values, can lead to systematic variations in how people make decisions.