Decision Making & Ethics

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Chapter 6

DECISIION MAKING & ETHICS


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What Is Perception, and Why Is It Important?

Peoples behavior is

based on their

perception of what

reali ty is, not on

real i ty itself .

The wor ld as it is

perceived is the worldthat is behaviorally

important.

Perception

A process by whichindividuals organize andinterpret their sensory

impressions in order togive meaning to theirenvironment.


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Factors That

Influence

Perception


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Person Perception: Making Judgments About

Others

Distinctiveness: shows different behaviors in different situations.

Consensus: response is the same as others to same situation.

Consistency: responds in the same way over time.

Attribution Theory

When individuals observebehavior, they attempt to

determine whether it isinternally or externallycaused.


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Attribution Theory


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Errors and Biases in Attributions (contd)

Self-Serving Bias

The tendency for individuals toattribute their own successesto internal factors while

putting the blame for failureson external factors.

Thought: When student

gets an A on an exam,they often say they

studied hard. But when

they dont do well, how

does the self serving

bias come into play?

Hint: Whose fault is it

usually when an exam is

tough?


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Frequently Used Shortcuts in Judging Others

Selective Perception

People selectively interpret what they see on thebasis of their interests, background, experience,and attitudes.


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Halo EffectDrawing a general impressionabout an individual on thebasis of a single characteristic

Contrast Effects

Evaluation of a persons characteristics that

are affected by comparisons with otherpeople recently encountered who rank higheror lower on the same characteristics


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Projection

Attributing ones owncharacteristics to other

people.

Stereotyping

Judging someone on thebasis of ones perception ofthe group to which thatperson belongs.


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Specific Applications in Organizations

Performance Evaluations Appraisals are often the subjective (judgmental)perceptions of appraisers of another employees jobperformance.

Employment Interview

Perceptual biases of raters affect the accuracy ofinterviewers judgments of applicants.

Performance Expectations

Self-fulfilling prophecy (Pygmalion effect): The lower orhigher performance of employees reflects preconceivedleader expectations about employee capabilities.

Ethnic Profiling

A form of stereotyping in which a group of individuals issingled outtypically on the basis of race or ethnicityforintensive inquiry, scrutinizing, or investigation.


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The Link Between Perceptions and Individual

Decision Making

Perceptionof the

decisionmaker

Outcomes

Problem

Aperceiveddiscrepancybetween the current state of

affairs and a desired state.

Decisions

Choices made from among

alternatives developed fromdata perceivedas relevant.


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Assumptions of the Rational Decision-Making

Model

Model Assumptions

Problem clarity

Known options Clear preferences

Constantpreferences

No time or costconstraints

Maximum payoff

Rational Decision-

Making Model

Describes how

individuals shouldbehave in order tomaximize someoutcome.


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Steps in the Rational Decision-Making Model

1. Define the problem.

2. Identify the decision criteria.

3. Allocate weights to the criteria.

4. Develop the alternatives.

5. Evaluate the alternatives.

6. Select the best alternative.


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The Three Components of Creativity

CreativityThe ability to producenovel and useful ideas.

Three-ComponentModel of Creativity

Proposition that individualcreativity requires expertise,

creative-thinking skills, andintrinsic task motivation.

Source: T.M. Amabile, Motivating Creativity in Organizations, California Management Review, Fall 1997, p. 43.


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How Are Decisions Actually Made in

Organizations?

Bounded Rationality

Individuals make decisions by constructingsimplified models that extract the essential

features from problems without capturingall their complexity.


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How Are Decisions Actually Made in

Organizations? (contd)

How/Why problems are Identified

Visibility over importance of problem

Attention-catching, high profile problems

Desire to solve problems

Self-interest (if problem concerns decision maker)

Alternative Development

Satisficing: seeking the first alternative that solvesproblem.

Engaging in incremental rather than unique problemsolving through successive limited comparison ofalternatives to the current alternative in effect.


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Common Biases and Errors

Availability Bias

Using information that is most readily at hand. Recent

Vivid

Representative Bias

Mixing apples with oranges Assessing the likelihood of an occurrence by trying to match

it with a preexisting category using only the facts thatsupport our decision.

Winners Curse Highest bidder pays too much

Likelihood of winners curse increases with the number ofpeople in auction.


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Common Biases and Errors

Escalation of Commitment

In spite of new negative information, commitmentactually increases!

Randomness Error

Creating meaning out of random events

Hindsight Bias

Looking back, once the outcome has occurred, andbelieving that you accurately predicted the outcome ofan event


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Intuition

Intuitive Decision Making

An unconscious process created out of distilledexperience.

Conditions Favoring Intuitive Decision Making

A high level of uncertainty exists

There is little precedent to draw on

Variables are less scientifically predictable

Facts are limited

Facts dont clearly point the way

Analytical data are of little use

Several plausible alternative solutions exist

Time is limited and pressing for the right decision


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Organizational Constraints on Decision Makers

Performance Evaluation

Evaluation criteria influence the choice of actions.

Reward Systems

Decision makers make action choices that are favoredby the organization.

Formal Regulations

Organizational rules and policies limit the alternativechoices of decision makers.

System-imposed Time Constraints

Organizations require decisions by specific deadlines.

Historical Precedents

Past decisions influence current decisions.


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Cultural Differences in Decision Making

Problems selected

Time orientation

Importance of logic and rationality

Belief in the ability of people to solve problems

Preference for collective decision making
http://www.photographersdirect.com/buyers/stockphoto.asp?imageid=2118648


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Ethics

Ethics are standards of right & wrong thatinfluence behavior.Right behavior is considered ethical, &wrong behavior is considered unethical.

It is major concern to both managers &employee.


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Honesty is FirstChapter in theBook of Wisdom

- Thomas Jefferson


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Ethical Models

Social Ethics:

Legal rules, customs

Professional Ethics:Values in workplace

Individual Ethics:

Family influence

Organizations

Code of Ethics


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Ethics

Eth ics, also kn own as mora l phi losop hy, is a branch of

philosophy that involves systematizing, defending, andrecommending concepts of right and wrong conduct. Theterm comes from the Greek word ethos, which means"character". Ethics is a complement to Aesthetics in thephilosophy field of Axiology. In philosophy, ethics studiesthe moral behavior in humans, and how one should act.

Ethics may be divided into four major areas of study: Meta-ethics, about the theoretical meaning and reference

of moral propositions and how their truth values (if any)may be determined;

Normative ethics, about the practical means of

determining a moral course of action; Appl ied ethics, about how moral outcomes can beachieved in specific situations;

Descr ip t ive ethics , also known as comparative ethics, isthe study of people's beliefs about morality


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Business ethics

Business ethics (also corporate ethics) is a form of applied ethicsor professional ethics that examines ethical principles and moral

or ethical problems that arise in a business environment. It

applies to all aspects of business conduct and is relevant to the

conduct of individuals and entire organizations.

Business ethics has both normative and descriptive dimensions.

As a corporate practice and a career specialization, the field is

primarily normative. Academics attempting to understand

business behavior employ descriptive methods.


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Ethics in Decision Making

Uti l i tar ianism: A system in which decisions are

made to provide the greatest good for the greatest

number.

Whist le blow ers :Individuals who report unethical

practices by their employer to the outsiders.

Just ice: Fair & Impartial.


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Ethics in Islam

Worship only God: Take not with Allah another object ofworship; or

thou (O man!) wilt sit in disgrace and destitution. (Quran17:22) Be kind, honourable and humble to one's parents: Thy Lord hathdecreed that ye worship none but Him, and that ye be kind to parents.Whether one or both of them attain old age in thy life, say not to thema word of contempt, nor repel them, but address them in terms ofhonour. (Quran17:23) And, out of kindness, lower to them the wing ofhumility, and say: "My Lord! bestow on them thy Mercy even as theycherished me in childhood." (Quran17:24)

Be neither miserly nor wasteful in one's expenditure: And render tothe kindred their due rights, as (also) to those in want, and to thewayfarer: But squander not (your wealth) in the manner of aspendthrift. (Quran17:26) Verily spendthrifts are brothers of the EvilOnes; and the Evil One is to his Lord (himself) ungrateful. (Quran17:27) And even if thou hast to turn away from them in pursuit of theMercy from thy Lord which thou dost expect, yet speak to them a

word of easy kindness. (Quran17:28) Do not engage in 'mercy killings' for fear of starvation: Kill not yourchildren for fear of want: We shall provide sustenance for them aswell as for you. Verily the killing of them is a great sin. (Quran17:31)
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Ethics in Islam

Do not commit adultery: Nor come nigh to adultery: for it is a shameful

(deed) and an evil, opening the road (to other evils). (Quran17:32) Do not kill unjustly: Nor take life which Allah has made sacred except

for just cause. And if anyone is slain wrongfully, we have given his heir

authority (to demand qisas or to forgive): but let him not exceed bounds in

the matter of taking life; for he is helped (by the Law). (Quran17:33)

Care for orphaned children: Come not nigh to the orphan's property

except to improve it, until he attains the age of full strength...(Quran17:34) Keep one's promises: ...fulfill (every) engagement [i.e. promise/covenant],

for (every) engagement will be enquired into (on the Day of Reckoning).

(Quran17:34)

Be honest and fair in one's interactions: Give full measure when ye

measure, and weigh with a balance that is straight: that is the most fitting

and the most advantageous in the final determination. (Quran17:35)

Do not be arrogant in one's claims or beliefs: And pursue not that of which

thou hast no knowledge; for every act of hearing, or of seeing or of

(feeling in) the heart will be enquired into (on the Day of Reckoning).

(Quran17:36) Nor walk on the earth with insolence: for thou canst not

rend the earth asunder, nor reach the mountains in height. (Quran17:37)
http://en.wikipedia.org/wiki/Quranhttp://www.usc.edu/org/cmje/religious-texts/quran/verses/017-qmt.phphttp://en.wikipedia.org/wiki/Quranhttp://www.usc.edu/org/cmje/religious-texts/quran/verses/017-qmt.phphttp://en.wikipedia.org/wiki/Quranhttp://www.usc.edu/org/cmje/religious-texts/quran/verses/017-qmt.phphttp://en.wikipedia.org/wiki/Quranhttp://www.usc.edu/org/cmje/religious-texts/quran/verses/017-qmt.phphttp://en.wikipedia.org/wiki/Quranhttp://www.usc.edu/org/cmje/religious-texts/quran/verses/017-qmt.phphttp://en.wikipedia.org/wiki/Quranhttp://www.usc.edu/org/cmje/religious-texts/quran/verses/017-qmt.phphttp://en.wikipedia.org/wiki/Quranhttp://www.usc.edu/org/cmje/religious-texts/quran/verses/017-qmt.phphttp://www.usc.edu/org/cmje/religious-texts/quran/verses/017-qmt.phphttp://en.wikipedia.org/wiki/Quranhttp://www.usc.edu/org/cmje/religious-texts/quran/verses/017-qmt.phphttp://en.wikipedia.org/wiki/Quranhttp://www.usc.edu/org/cmje/religious-texts/quran/verses/017-qmt.phphttp://en.wikipedia.org/wiki/Quranhttp://www.usc.edu/org/cmje/religious-texts/quran/verses/017-qmt.phphttp://en.wikipedia.org/wiki/Quranhttp://www.usc.edu/org/cmje/religious-texts/quran/verses/017-qmt.phphttp://en.wikipedia.org/wiki/Quranhttp://www.usc.edu/org/cmje/religious-texts/quran/verses/017-qmt.phphttp://en.wikipedia.org/wiki/Quranhttp://www.usc.edu/org/cmje/religious-texts/quran/verses/017-qmt.phphttp://en.wikipedia.org/wiki/Quran


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INTEGRITY

Integrity: from the Latin integritas, meaningwholeness, completeness, or purity.

To courageously hold to what one believes is rightand true, without compromise.

To stand undivided, immovable, consistent in bothheart and action, word and deed.

Involves the maintenance of virtue & pursuit of

moral excellence.


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INTEGRITY

Integrity is demonstrated by not only espousing yourvalues, but by living according to them. Integrity describes

both who you are and what you do.

People of integrity are conscientious, trustworthy,accountable, committed and consistent.

A key to maintaining integrity is counting the cost before

committing yourself.


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Decision-Making

8 Steps to Sound, Ethical Decision-Making 1. Gather as many relevant & material facts as

circumstances permit.

2. Identify the relevant ethical issues (consider alt.viewpoints)

3. Identify, weigh & prioritize all the affected parties (i.e.stakeholders)

4. Identify your existing commitments/obligations.

5. Identify various courses of action (dare to think

creatively) 6. Identify the possible/probable consequences of same

(both short & long-term)

7. Consider the practicality of same.

8. Consider the dictates and impacts upon yourcharacter & integrity.


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CASE STUDY : BRIBERY

A well know social charity wishes to set up an

office in Lahore city. Having employed an

architect to draw up plans, its officers have to

seek planning permission from planning

department.

The planning department indicates that in orderto obtain approval, it will be necessary to offer a

bribe to the relevant officials.

TO BRIBE OR NOT TO BRIBE.


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Faced with Moral Dilemma possible

Responses.

Response 1 : It is up to the individual. Response 2 : Everyone does it in Pakistan. You

cannot proceed without offering bribe.

Response 3 : Bribery is simply wrong. The end

does not justify the means. Response 4 : In a developing country where there

is a low literacy rate, humanitarian work should

always take precedence over principles.

Response 5 : The planning officers have no rightover charitys money. They are not entitled to it.


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RESPONSES

Response 1 : SUBJECTIVISM. (It is up to the individual)

Response 2 : CULTURAL RELATIVISM. (Everyone does it).

Response 3 : NON CONSEQUENTIALISM. (Bribery is simply wrong).

Response 4 : CONSEQUENTIALISM. (Human welfare is best served).

Response 5 : NATURAL LAW. (An ETHICS of rights).


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Ways to Improve Decision Making

1. Analyze the situation and adjust your decision

making style to fit the situation.

2. Be aware of biases and try to limit their impact.

3. Combine rational analysis with intuition to increase

decision-making effectiveness.

4. Dont assume that your specific decision style is

appropriate to every situation.

5. Enhance personal creativity by looking for novelsolutions or seeing problems in new ways, and using

analogies.


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Toward Reducing Bias and Errors

Focus on goals.

Clear goals make decision making easier and help toeliminate options inconsistent with your interests.

Look for information that disconfirms beliefs.

Overtly considering ways we could be wrong

challenges our tendencies to think were smarter thanwe actually are.

Dont try to create meaning out of random events.

Dont attempt to create meaning out of coincidence.

Increase your options.

The number and diversity of alternatives generatedincreases the chance of finding an outstanding one.


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QUESTIONS

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Decision Making & Ethics

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