Individuals in organizations make decisions meaning they make choices from among two or more alternatives. Top managers, for instance determine their organization’s goal, what products or services to offer, how best to finance operations, or where to locate a new manufacturing plant. Middle and lower level managers determine production schedules select new employees and decide how pay raises are to be allocated. Of course, making decisions is not the sole province of manager. Non-managers employees also make decisions that affect their jobs and the organizations for which they work. The more obvious of these decision might include whether or not to come to work on any given day, how much effort to put forth once at work and whether or not to comply with request made by the boss. In addition, an increasing number of organizations in recent years have been empowering their non-managerial employees with job related decision making authority that historically was reserved for managers alone. Individual decision making, therefore, is an important part of organizational behavior. But how individuals in organizations make decisions and the quality of their final choices are largely influenced by their perceptions.
Decision making occurs as a reaction to a problem. That is, there is a discrepancy between some current state of affairs and some desired state, requiring the consideration of alternative courses of action. So, if your car breaks down and you rely on it to get to work you have problem that requires a decision on your part. Unfortunately most problems do not come neatly packaged with a label ‘problem’ clearly displayed on them. One person’s problem is another person’s satisfactory state of affairs. One manager may view her division’s two percent decline in quarterly sales to be a serious problem requiring immediate action on her part. In contrast, her counter part in another division of the same company, who also had a two percent sales decrease, may consider that percentage quite acceptable. So the awareness that a problem exists and that a decision needs to be made is a perceptual issue.
Moreover, every decision requires the interpretation and evaluation of information. Data are typically received from multiple successes they need to be screened, processed and interpreted. Which data, for instance are relevant to the decision and which are not? The perceptions of the decision maker will answer that question. Alternatives will be developed, and the strengths and weaknesses of each will need to be evaluated. Gain, because alternatives don’t come with “red flags” identifying them as such or with strengths and weaknesses clearly marked. The individual decision maker’s perceptual process will have large bearing on the final outcome. Finally throughout the entire decision process perceptual distortions often surface that have the potential to bias analysis and conclusions.
Performance Evaluations: Although the impact of performance evaluations on behavior will be discussed fully, it should be pointed out here that an employee’s performance appraisal is very much dependent on the perceptual futures. An employee’s future is closely tied to the appraisal – promotions, pay raises, and continuation of employment are among the most obvious outcomes. The performance appraisal represents an assessment of an employee’s work. Although the appraisal can be objective for example, a salesperson is appraised on how many dollars of sales she generates in her territory, many jobs are evaluated in subjective terms. Subjective measures are easier to improvement, they provide managers with greater discretion and many jobs do not readily tend themselves to objective measures. Subjective measures are, by definition, judgmental. The evaluation forms a general impression of an employee’s work. To the degree that managers use subjective measures in appraising employees, what the evaluation will significantly influence the outcome of the appraisal.