Perception

Influences on Decision Making: Individual Differences and Organizational Constraints

Individual Differences:

  • Personality – Specific facets of conscientiousness – particularly achievement-striving and dutifulness -may affect escalation of commitment.
  • Gender – Who makes better decisions, men or women? It depends on the situation. When the situation isn’t stressful, decision making by men and women is about equal in quality. In stressful situations, it appears that men become more egocentric and make more risky decisions, while women become more empathetic and their decision making improves.
  • Mental Ability – We know people with higher levels of mental ability can process information more quickly, solve problems more accurately, and learn faster, so you might expect them to be less susceptible to common decision errors. Once warned about decision making errors, more intelligent people learn to avoid them more quickly.
  • Cultural Differences – Indians do necessarily make the decisions the same way as Australians do. Therefore we need to recognize the differences of the cultural background.

Organizational Differences:

  • Performance Evaluation Systems – Managers are influenced by the criteria on which they are evaluated. If a decision maker believes the manufacturing plants under his responsibility are operating best when he hears nothing negative, the plant managers will spend a good part of their time ensuring that negative information does not reach him.
  • Reward Systems – The Organisation’s reward systems influence decision makers by suggesting which choices have better payoffs
  • Formal Regulations – All but the smallest organisations create rule and policies to program decisions and get individuals to act in an intended manner. In doing so, they limit decision choices.
  • System-Imposed Time Constraints – Almost all important decisions come with explicit deadlines
  • Historical Precedents – Decisions aren’t made in a vaccum; they have context. Individual decisions are points in a stream of choices; those made in the past are like ghosts that haunt and constraint current choices. It’s common knowledge that the largest determinant of the size of any given year’s budget is last year’s budget. Choices made today are largely a result of choices made over the years

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Organizational Behavior by Icfai Business School is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted.