Ob i motivation concepts & applications- perception & attitudes

Motivation Concepts & Applications
Perception & Individual Decision making
Attitudes & Job Satisfaction
Shivkumar Menon
09/17/14 PGC Business Management- XLRI

Motivation Concepts

Learning Objectives
1. Define Motivation and describe its 3 key elements
2. Early Theories of Motivation and its applicability today
3. Apply the predictions of Self Determination theory to intrinsic
and extrinsic rewards
4. Understand the implications of employee engagement for
management
5. Compare and contrast goal setting theory and management by
objectives (MBO)
6. Contrast reinforcement theory and goal setting theory
7. Demonstrate how organizational justice is a refinement of equity
theory
8. Apply the key tenets of expectancy theory to motivating
employees
9. Compare contemporary theories of motivation

Motivation & Key Éléments
“as the processes that account for an individual’s intensity, direction and
persistence of effort towards achieving a goal”
Intensity – How hard a person tries. This is the most
commonly observed factor when we talk about motivation.
But this may not alone result in effective job performance
outcomes.
Direction – Quality of the direction is equally important for
effective outcomes.
Persistence – this dimension measures how long a person can
maintain effort. Motivated individuals stay with a task long
enough to achieve their goal

early théories of motivation
4 theories of motivation formulated in the 1950’s are still the best known ones
even though its validity in today’s context is highly questionable.
Hierarchy of Needs Theory : Abraham Maslow
Physiological: Includes hunger, thirst, sex,
other bodily needs, shelter
Safety: Security, protection from physical and
emotional harm
Social: Affection, belongingness, acceptance
& friendship
Esteem: Internal factors such as self respect,
autonomy & achievement and external factors
like status, recognition & attention
Self Actualization: Drive to become what we
are capable of becoming including growth,
achieving our potential and self-fulfillment

Hierarchy of Needs Theory: Abraham Maslow
The Theory
Although no need is ever fully gratified, a substantially satisfied need no longer
motivates. Thus as each becomes substantially gratified, the next one becomes
dominant.
In order to motivate someone, you need to understand what level of the hierarchy
that person is currently on and focus on satisfying needs at or above that level
Maslow broke the five needs into higher and lower orders
Higher Order Needs
1. Self
Actualization
2. Esteem
3. Social
Lower Order Needs
1. Physiological
2. Safety
(Satisfied Internally
i.e. within the person)
(Satisfied externally
i.e. pay, union contracts
and tenure)
Limitation of Maslow’s Theory
The importance of higher and lower order is influenced considerably by culture and
hence differs upon country to counter and empirical evidence to support the theory
is missing

Theory X and Theory Y : Douglas Macgregor
Douglas Macgregor proposed two distinct views of human beings, basically one
negative Theory X and other positive Theory Y
(-) Theory X
Managers believe employees inherently dislike work and therefore need to be
directed or coerced into performing it.
(+) Theory Y
Managers assume employees can view work as being as natural like rest or play &
therefore the average person can learn to accept and to seek responsibility. A
similarity can be drawn to Maslow’s higher order social, esteem and self
actualization needs of people. Hence based on this assumption, Douglas proposed
ideas like participative decision making, responsibilities, challenges to bring
cohesion and better productivity in teams.
Limitation of Douglas Macgregor’s Theory
No empirical evidence again to support that this theory actually works in the
workplace

Two Factor Theory aka Motivation Hygiene Theory: Frederick Herzberg
Psychologist Frederick Herzberg came up with a two factor theory also called as
Motivation Hygiene Theory . The premise was that an individual’s relationship to
work is basic & that attitude towards work can determine success or failure.
What makes people feel exceptionally good or bad in a job?
Based on his study, Herzberg suggested that the opposite of satisfaction is no
satisfaction and opposite of dissatisfaction is no dissatisfaction
Removing dissatisfying factors did not
ensure Job Satisfaction.
“Factors which give satisfaction at the
workplace are distinctly different from
factors which give dissatisfaction”
Intrinsic factors related to job
satisfaction & extrinsic factors to
dissatisfaction.

Comparison of Satisfiers & Dissatisfiers (hygiene factors) at the workplace

Limitation of Herzberg’s
Theory
1. Methodology of compiling data was through self reports. When things go well,
people take credit and when it goes bad, blame it to the external environment
2. Reliability of methodology is questionable. Contamination of findings was
possible
3. No overall measure of satisfaction was utilized.
4. To make his theory work, we have to assume that satisfaction and productivity
are strongly related, which may be unrealistic often .

McClelland’s theory of Needs
Mc Clelland’s theory looks at 3 needs: Achievement, Power and Affiliation.
nAch
nPow
nAff
(nach) : the drive to excel, to achieve
in relationship to a set of standards
(nPow) : is the need to make others to
behave in a way they would not have
otherwise
(nAff) : is the desire for friendly and
close interpersonal relationships
Limitation of McClelland’s Theory
Process of evaluating is very time consuming and expensive and hence few
organizations are willing to invest in measuring this concept

Contemporary Theories of Motivation
Self Determination Theory: Edward L. Deci & Richard M. Ryan
“It proposes that people prefer to feel they have control over their actions, so
anything that makes a previously enjoyed task feel more like an obligation, than a
freely chosen activity will undermine motivation”
Self Determination Theory focuses on cognitive evaluation theory which
hypothesizes that extrinsic rewards will reduce intrinsic interest in a task.
When people are paid for work, it feels less like something they want to do and
more like something they have to do.
Extrinsic rewards work act like motivators for employees when they perceive them
as a reward for doing a good job but when they still enjoy it and are in control of
the task.
A couple of examples are as outlined
If a sales representative really enjoys selling, a commission indicates she’s been doing a good
job and increases her sense of competence by providing feedback that could improve intrinsic
motivation.
But on the flip side, if a programmer values writing code because she likes to solve problems,
a reward for an externally imposed standard she does not accept, such as daily target on the
number of programs she has to code, she may find the entire activity coercive and her
intrinsic 09/17/14 motivation would suffer.
PGC Business Management- XLRI

Goal Setting Theory: Edwin Locke
Research on goal setting theory reveals impressive effect of goal specificity, challenge
and feedback on performance. Specific goals produce a higher level of output than the
generalized goal “do your best”. It’s a cognitive approach, proposing that an
individual’s purposes direct his actions.
People are motivated by difficult goals. Why?
1. Challenging goals gets our attention and thus tends to help us focus
2. Difficult goals energize us because we have to work harder to attain them
3. When goals are difficult, people in persist in trying to attain them.
4. Difficult goals leads us to strategies that help us to perform our job or task more
effectively.
Factors influencing goals
Feedback – Feedback on progress of goals
helps to identify discrepancies or
slippages early helping to take corrective
action at the right time
Goal Commitment - the theory believes
he or she can achieve the goal and wants
to achieve it.
Task Characteristics – Goals themselves
affect performance when the set tasks
are simple
National Culture – Goal setting and
achievement statistics will be different
in individualistic and collectivist cultures 09/17/14 PGC Business Management- XLRI

Management by Objectives: Peter Drucker
A systematic way to utilize goal setting is with management by objectives which
emphasizes participatively set goals that are tangible, verifiable and measurable.
Four ingredients are common to Goal Setting theory and MBO, goal specificity,
participation in goal setting, time period and performance feedback.
The only area of disagreement between both theories is participation. In Goal
setting theory participative as well as assigned goals are considered to be effective.

Self Efficacy Theory: Albert Bandura
Self Efficacy theory aka Social cognitive theory or social learning theory refers to an
individual’s belief that he or she is capable of performing a task. The higher your self
efficacy the more confidence you in your ability to succeed.
How will managers use Self Efficacy theory to achieve goals and how will they help
their employees to achieve high levels of self efficacy?
•Individuals who already possess a high self efficacy will try harder to master the
challenge, whereas individuals with low self efficacy will give up on the task
altogether. Surprisingly individuals with higher self efficacy get egged on even with
negative feedback
•Managers will bring goal setting and self efficacy theory together to help employees
to achieve higher self efficacy. Both the theories complement each other.
•Employees whose manager sets difficult goals will have a higher self efficacy and
set higher goals for their own performance. Setting difficult goals shows their
confidence on your abilities. People with low self efficacy will feel they are getting
picked up on and reduce 09/17/14 their efPfGoCr Btuss infeussr Mthanearge.ment- XLRI

Self Efficacy Theory: Albert Bandura
Albert Bandura proposes 4 approaches to increase self efficacy
Enactive Mastery – gaining relevant experience with the task or job. IF an
individual has successfully done the job earlier, he/she is more confident to do
the job successfully again
Vicarious Modeling – becomes more confident when you see someone else who
is an equal to you, succeeding in the task. Someone equal to you is more
important than seeing a Hulk break boulders and expecting yourself to do the
same task effectively
Verbal Persuasion – commonly used by trainers in their training programs,
convincing you about possessing the skills to become successful. The best way
to use verbal persuasion is through the Pygmalion or Galatea effect. It’s a form
of self fulfilling prophecy in which believing something can make it true.
Arousal – leads to an energized state, so the person gets “psyched up” and
performs better.

Reinforcement Theory: B F Skinner
Reinforcement theory states that behavior is a function of consequence. It ignores
the inner state of the individual & concentrates solely on the what happens when he
or she takes action.
Operant conditioning or the Law of Effect is the most relevant component of the
Reinforcement theory. It says, people learn to get something they want or to avoid
something they don’t want.
Hence reinforcement strengthens a behavior and increases the likelihood it will be
repeated.
Individuals can learn by being told or by observing what happens to other people as
well as through direct experiences. This view that we can learn through both
observation and direct experience is called the Social Learning Theory
Four processes determine social learning theory’s influence on an individual
Attentional Processes – people learn when the
model is attractive and they recognize and pay
attention to its critical features.
Retention Processes – influence of the model
depends on the retention of the models’
action & capability in the individual’s mind
Motor Reproduction Processes – after a person
has seen a new behavior by observing the
model, watching must be converted to doing
Reinforcement Processes – individuals are
motivated to exhibit the modeled behavior if
positive incentives or rewards are provided.

Equity Theory / Organizational Justice: John Stacy Adams
Employees perceive what they get from a job situation (salary, perks, recognition) in
relationship to what they put into it and then they compare their outcome: input ratio
with that of relevant others and respond to the inequities in a positive or a negative
manner depending on the type of inequities observed by them
Referents to the Equity Theory
Self – Inside : employee’s experiences in a different position inside the same organization
Self – Outside : employee’s experiences in a situation or position outside the organization
Other – Inside : another individual or group of individuals inside the organization
Other – Outside: another individual or group of individuals outside the organization
Employees might compare themselves with multiple referents inside the
organization or outside but their behavior at work gets influenced by the equity
theory after a comparison of outcome: input ratio.

Equity Theory / Organizational Justice: John Stacy Adams
Choices employees can make when tthheeyy ppeerrcceeiivvee iinneeqquuiittyy
1. Change inputs (slack off)
2. Change outcomes (increase output)
3. Distort/change perceptions of self
4. Distort/change perceptions of others
5. Choose a different referent person
6. Leave the field (quit the job)
1. Change inputs (slack off)
2. Change outcomes (increase output)
3. Distort/change perceptions of self
4. Distort/change perceptions of others
5. Choose a different referent person
6. Leave the field (quit the job)
Focus of Equity Theory/Organizational Justice
Distributive Justice: Employees’ perceived fairness of the amount rewards among
individuals and who received them.
Procedural Justice: the perceived fairness of the process used to determine the
distribution of rewards.
Interactional Justice: individual’s perception of the degree to which he/she is
treated with dignity, concern and respect.

Expectancy Theory: Victor Vroom
“ the strength of our tendency to act a certain manner depends on the strength of our
expectation of a given outcome and its attractiveness”
In practical terms, employees will be motivated to exert a high level of effort when
they believe it will lead to a good performance appraisal; that a good performance
appraisal will lead to organizational rewards such as bonuses, salary increases or
promotions and that the rewards will satisfy the employee’s personal goals

Integrating contemporary theories of motivation
Goals effort loop reminds us that goals direct behavior.
Expectancy theory predicts employees will exert a high level of effort if they
perceive a strong relationship between effort & performance, performance &
rewards, rewards & satisfaction of personal goals.
Each of these relationships is in turn influenced by other factors. For effort to lead
to good performance, the individual must have the ability to perform and perceive
the performance appraisal process to be fair and objective.
Performance Reward relationship will be strong if the individual perceives that
performance (rather than seniority, nepotism or other criterion) is rewarded.
If cognitive evaluation theory was fully valid in the workplace, we would predict
here that basing rewards on performance should decrease the individual’s intrinsic
motivation.
The final link in the expectancy theory is the rewards-goal relationship. Motivation is
high if the rewards for the high performance satisfied the dominant needs consistent
with individual goals

Motivation: Concepts to Application

Learning Objectives
1. Describe the Job Characteristics Model & evaluate the way it
motivates by changing the work environment
2. Compare and contrast the main ways jobs can be redesigned
3. Identify three alternative work arrangements and show they
might motivate employees
4. Give examples of employee involvement measures and show how
they can motivate employees
5. Demonstrate how the different types of variable pay programs
can increase employee motivations
6. Show how flexible benefits turn benefits into motivators
7. Identify the motivational benefits of intrinsic rewards

Motivating by Job Design: The Job Characteristics Model
Research on motivation focuses on approaches that link motivational concepts to
changes in the way work is structured. Research in Job design suggests the way the
elements of a job can increase or decrease effort. But first the JCM and then Job
redesign.
5 Core Job Dimensions
Skill Variety: is the degree to which a job requires a variety of different
activities so the worker can use a number of different skills & talent. Viz. A garage
owner-operator scores high on skill variety and a body shop worker scores low
Task Identity: is the degree to which a job requires completion of a whole &
identifiable piece of work. A cabinet maker scores high on Task Identity and a job
scoring low on this dimension is a man operating a lathe machine solely to make
table legs
Task Significance: is the degree to which a job affects the lives or work of
other people. A nurse scores high on this dimension and a sweeper in the same
hospital 09/17/ 1w4 ould score low PGC Business Management- XLRI

5 Core Job Dimensions (Contd…)
Autonomy: is the degree to which a job provides the worker freedom,
independence and discretion in scheduling work and determining the procedures in
carrying it out. A sales person will score high on this dimension and a software
programmer cracking codes will score low
Feedback: is the degree to which carrying out work activities, generates
direct and clear information about your own performance. A job with high feedback
is assembling ipads and testing them to see whether they operate properly and a
factory worker who assembles ipads receives low feedback
MPS = Skill Variety + Task Identity + Significance * Autonomy * Feedback
3
To be high on MPS, jobs must be high on at least one of the 3 factors that lead to
experienced meaningfulness and high on both autonomy & feedback. If jobs score high
on MP, 09/17/it 14 predicts motivation, performance PGC Business Management- & satisfaction XLRI
will improve and absence &
turnover will reduce

When employees suffer from monotony and routine work two approaches which can
reduce absenteeism or employee turnover is Job Rotation & Job Enrichment
Job Rotation is the periodic shifting of an employee from one task to another task which
has similar skill requirements at the same organizational level.
Strengths: eliminates monotony, increases motivation and helps employee to understand how
their work contributes to the organization.
Weakness: can hamper productivity and efficiency with frequent job rotations in teams, team
members may take time to adjust to new employees and supervisors will have to spend more
time in monitoring and hand holding the new employee. Training costs also increases
exponentially.
Job Enrichment expands the job by increasing the degree of control to the worker by
adding planning, executing, evaluation of the work and adding feedbacks on his performance
in different forms.
Strengths: helps the employee understand the impact and significance of their roles in the
organization, feedback can be internal or external which also allows them to value their work
better, expansion of the role helps them to learn more new skills and breaks monotony
Weakness: works best when it compensates for poor feedback and rewards systems. 09/17/14 PGC Business Management- XLRI

Flextime: employees must work a specific number of hours per week but are free to vary
their hours of work within certain limits. Each day consists of a common core time usually 6
hours with a flexibility band surrounding it.
The core may be 10 am to 4 pm with the office opening at 7 am and closing at 10pm giving
employees the flexibility to work the balance 2 hours either at the start of the day or end of
the day.
Benefits: Reduced absenteeism, less employee turnover, higher productivity,
organizational citizenship behavior, employee engagement or involvement in the
organization
Job sharing: allows two or more individuals to split a traditional 40 or 60 hour week job.
One might perform the job from 8 am to noon and the other from noon to 8 pm.
Benefits : 2 heads but pay for one, reduced absenteeism, less employee turnover,
higher productivity, opportunity to hire skilled workers in women with young children or
retirees etc.
Drawbacks : getting the right combination or pair to work together on a project

Telecommuting: work from home
Benefits : access to skilled workers, reduced absenteeism, less employee turnover,
higher productivity, opportunity to hire skilled workers in women with young children or
retirees etc.
Drawbacks : for the employee, “out of sight could become out of mind” and they may get
skipped from promotions, informal workplace interaction with co—workers plays a vital role
in boosting morale of employees, hence employees who have a high need for social
interaction will find such alterations at the work place stifling

Employee Involvement
Employee involvement is a participative process that uses employees’ input to
increase their commitment to the organization’s success. Increasing autonomy and
control over their work lives will keep the employees motivated, feel important in
their roles and hence keep them committed to the organization
Examples of Employee Involvement Programs
Participative Management
Subordinates share a significant degree of decision making with immediate
superiors. Participative management works only when the ability of the employees
is commensurate to the task or it may alternatively lead to low productivity
Representative Participation
Its goal is to redistribute power within an organization putting labor on a more
equal footing with the interests of the management and stockholders by having a
representation in the board for workers. But in reality, board representatives
though elected employees are generally figure heads and do not have the power to
influence the management and there is also a wide gap between the elected
employees and the employees of the organization itself for the benefits to trickle
down to all the employees 09/17/14 PGC Business Management- XLRI

Using Rewards to Motivate Employees
What to pay?
Process of initially setting pay levels entails balancing internal equity (the worth
of the job to the organization (job evaluation) ) to external equity (the external
competitiveness of an organization’s pay relative to pay in the industry)
Employee cost is the highest operating cost for any business and taking a decision
to pay above the market median or below is a strategic decision which has
widespread implications on employee turnover, productivity, company’s
profitability and positioning in the market
How to pay
A number of organizations are moving from paying based on credentials, tenure of
service to productivity and contribution instead of entitlement. Variable pay
programs are getting introduced in different forms to motivate employees to
perform well in business.

Piece Rate Pay
As a means of compensating production workers with a fixed sum for each unit of
production completed. This plan provides no base salary and pays the employees only for
what he or she produces.
They are not feasible for many jobs as all jobs cannot be linked to successful outcomes. Viz.
Surgeon
Merit Based Pay
Pays for an individual performance based on performance appraisal ratings. If designed
correctly, merit based plans let individuals perceive a strong relationship between
performance and rewards
Recent Hewitt studies suggest companies give 10% to the top performers, 3.6% to average
performers and 1.5% to low performers. Limitations are that this plan is annually based and
hence are as valid as the performance ratings itself.
Bonuses
Bonus is a significant component of total compensation for many jobs. Limitations of bonus
as a variable pay is that over a period of time, workers consider this as entitlement and a
critical part of salaries and if not declared in a bad year, can lead to sudden spikes in
employee turnnover 09/17/14 PGC Business Management- XLRI

Skill Based Pay
Aka competency based or knowledge based pay is an alternative to job based pay that bases
pay levels on the number of skills possessed by the individual has or how many jobs they can
do.
Profit Sharing Plans
Distributes compensation based on some established formula designed around a company’s
profitability. Compensation can be in the form of direct cash outlays or employee stock
options
Gainsharing
Gain sharing is different from profit sharing in tying rewards to productivity gains rather
than profits, so employees can receive incentive awards even when the organization isn’t
profitable. As benefits accrue to groups of workers good performers pressurize low
performers to improve their performance

Employee Stock Ownership Plans (ESOP)
A company established benefit plan in which employees acquire stock at below market
prices. Often given to senior leaders in the organization , in some organizations, ESOPS’ are
offered at all levels.
ESOP plans for top management can reduce unethical behavior when the stock prices are
linked to individual profitability, top management has ample incentive to desist from
inflating balance sheets or fabricating key performance indicators for personal gains
Variable pay programs increase motivation and productivity. Research supports that profit
sharing plans have higher levels of profitability than those without them

Flexible Benefits: Developing a benefit package
A standardized benefit package would be unlikely to meet all the needs of the different
demographic set of groups employed in organizations today.
One size does not fit all. The employee mix in today’s context is more of singles, two
income families with no children and families with children. Flexible benefits package
allows all groups to choose and opt for the best benefits they can leverage from the
organization.
3 types of flexible benefit plans in vogue today.
Modular plans – employees can choose between different modules based on their
requirements
Core Plus Plans - consists of a core of essential benefits and a menu like selection of
others from which employees can select. Employees are given “benefit credits” which allow
the purchase of additional benefits that uniquely meet his or her needs
Flexible spending plans – allows employees to set aside pretax money up to the amount
offered in the plan to pay for particular benefits, such as healthcare and dental premiums
etc.

Intrinsic Rewards: Employee Recognition Programs
Rewards can fulfill the extrinsic and intrinsic needs of employees and
organizations are realizing that fulfilling the intrinsic needs by recognizing
employees in the workplace increases motivation, citizen ship behavior and
reduces turnover.

Perception & Individual Decision making

38 Learning Objectives
Define Perception & factors that
influence it
Attribution Theory
Common Shortcuts adopted by
Individuals to make Judgments
Link between Perception &
Individual Decision making
Rational Model of Decision Making
Common Decision Biases & Errors
Individual Differences &
Organizational Constraints affecting
decision making
Ethics in Decision making
Define Creativity & its 3 component
model

39 Perceptions & Factors influencing it
“a process by which individuals organize and interpret their sensory
impressions in order to give meaning to their environment”
Importance of Perception Importance of Perception iinn tthhee ssttuuddyy ooff OOBB
People’s behavior is based on their perception of what reality is, not on
reality itself
The world as it is perceived, is the world that is behaviorally important

40 Factors influencing Perception

41 Attribution Theory
Attribution Theory suggests that when we observe an individual’s behavior, we
attempt to determine whether it was internally or externally caused.
That determination also depends on 3 factors
a.distinctiveness
b.consensus
c.consistency
Internally caused behaviors
Those we believe to be
under the personal control
of the individual
Externally caused behaviors
What we imagine the
situation forced the
individual to do
For example if one of your employees is late for work, you
might attribute that to his partying into the wee hours and
oversleeping. This is an internal attribution
But if you attribute his lateness to an automobile accident that
tied up traffic, its an external attribution

42 Attribution Theory
Distinctiveness
refers to whether an individual displays different behaviors in
different situations. Viz. Is the employee who is late today, a
regular in blowing off commitments? If the behavior is unusual,
it could be an external attribution, but if it’s a frequent
feature, it comes as an internal attribution
Consensus If everyone who faces a similar situation responds in the same
manner the behavior shows consensus
Consistency
An observer looks for consistency in a person’s actions. Does the
person respond in the same way over time? Coming in 10
minutes late for work, is not perceived in the same way for an
employee who has never been late, than an employee who is
late 2 to 3 times in a week. The more consistent the behavior,
the more we are inclined to attribute this to internal causes

43 Fundamental Attribution Error
An important finding from attribution theory research is that errors or biases distort
attribution. We underestimate the influence of external factors and overestimate
the influence of internal or personal factors while judging the behavior of other
people
The fundamental attribution error explains why a sales manager is prone to
attribute the performance of his/her sales agents to laziness rather than to an
innovative product line introduced by a competitor.
People tend to attribute their own successes to internal factors such
as ability or effort, but blame failure on external factors such as a
bad luck or unproductive workers
People tend to attribute ambiguous information as relatively
flattering and accept positive feedback while rejecting negative
feedback. This is self serving bias

44 Frequently used shortcuts while judging others
Selective Perception
People selectively interpret what they see on the basis of their interests,
background, experience, and attitudes
Analogy
Dearborn and Simon asked 23 executives (6 in sales, 5 in production, 4 in
accounting and 8 in miscellaneous functions) to read a comprehensive case
describing the organization and activities of a steel company. Each manager was
asked to write down the most important problem in the case.
83% of the sales executives rated sales important, whereas only
29% of the others did so. Participants perceived as important the
aspects of a situation specifically related to their own unit’s
activities and goals.
A group’s perception of organizational activities is selectively
altered to align with the vested interests the group represents.

Halo Effect
Drawing a general impression about an individual on the basis of a single
characteristic such as intelligence, sociability or appearance
For example, If you are a critic of President Obama, try listing 10 things you
admire about him and if you are an admirer, try listing 10 things you dislike
about him. No matter which group describes you, odds are you wont’ find this
exercise easy!
That’s the halo effect! Our general views contaminate our specific ones
Contrast Effect
Contrast effect can distort perceptions. We don’t evaluate a person in isolation.
Our reactions are influenced by other person we have recently encountered.
For example, in a series of job interviews, interviewers can get
distorted in their views about a candidate based on where the
candidate is placed in the interview schedule.
A candidate is likely to receive a favorable evaluation if
preceded by mediocre applicants and a less favorable one if
preceded by a strong applicant

Stereotyping
When we judge a person on the basis of our perception of the group to which he
or she belongs we are using the shortcut called stereotyping.
For example, Women are generally considered as bad drivers. A sweeping
generalization made in this context is that, their judging capabilities are poor
and they get anxious very fast. But there may not be a shred of truth when
applied to a specific person or situation.
But stereotyping helps us to make decisions faster in our day to day life.

47 Specific Applications of shortcuts in Organizations
People in organizations are always judging each other. Managers must appraise
their employee performances. Co-workers size up each other or a new person who
has joined the group. Our judgments have important consequences for the
organization
Employment Interview Interviewers form impressions within the first few
seconds of meeting a candidate and form opinions within the next 4 to 5 minutes.
Very often they may be inaccurate ones or stereotypes based on their past
experience, situations, temperament or behavior of the candidate in the initial
introductions. Most interviewers change their decisions about candidates very little
after forming their initial opinion.
Performance Expectations Self fulfilling prophecy or the
pygmalion effect describe how an individuals’ behavior is determined
by other people’s expectations.
If a manager expects big things from his/her people, they are not
likely to let down and if they expect nothing spectacular from a team
member, they don’t feel let down.
Expectations become reality, because expectations are also
formed based on the perception of the perceiver about the
target, which may not be objective or actual reality but a
distorted view of the perceiver

48 Specific Applications of shortcuts in Organizations
Performance Evaluation an employee’s future is closely tied to the appraisal-promotion,
pay raises and continuation of employment are among the most obvious
outcomes.
Although appraisals can be objective but in many roles in an organization,
many jobs are evaluated on subjective terms. Even sales roles, which are
conventionally evaluated objectively, often have subjective elements in the
appraisal process, which may have positive or negative outcomes based on
the perception of the manager or leaders.
Subjective evaluations often fall prey to errors and biases
like selective perception, halo effect, contrast effect and so
on.
Ironically sometimes performance ratings say as much about
the evaluator as they do about the employee

The link between Perception & 49
Individual Decision making
Decision making in organizations have moved from the conventional. Hence we
find non managerial personnel also taking decisions at the workplace. But
individual decision making & the quality of choices he/she takes, is also heavily
influenced by their perception.
Decision making happens often as a reaction to a problem. A problem is defined
as a discrepancy between current state of affairs to some desired state.
Problems do not come labeled as “Problems”. Hence for example, a sales
manager In a division of a business can see a 2% drop in business in comparison
to last year as alarming and the same may not hold true for another sales
manager in a different business. Both may have different reasons for feeling so,
but at the same time, their individual perceptions will actually influence their
decisions in their roles.
These are called Perceptual distortions which often surface and
can bias analysis and conclusions.

Rational Model of Decision making 50
Assumptions made by the Rational Decision Making Model
1. Decision maker has complete information
2. Ability to identify all relevant options in an
unbiased manner
3. Chooses an option with the highest utility
Unlike the assumptions in the model, people are usually content to find an
acceptable and reasonable solution to a problem rather than an optimal
one
6 step process 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

Bounded Rationality & Intuition 51
Bounded Rationality
Human mind cannot formulate and solve complex problems with full rationality and
hence operates with the limited confines of bounded rationality.
We construct simplified models that extract essential features from problems with
out capturing all their complexity.
There is nothing wrong in taking decisions on the basis of bounded rationality. Very
often the cost, time spent and extracting all relevant information for a rational
decision making model to work may still give the same results than if operated on
bounded rationality or the ends may not justify the means.
Intuition
Intuitive decision making , an unconscious process created from distilled
experience.
Intuition isn’t rational, but not may not be entirely wrong too.
Intuition is a highly developed form of reasoning that is based on
years of experience and learning.

52 Common biases & errors in decision making
Overconfidence Bias
believing too much in our ability to take correct decisions. Holding a very
optimistic view of our decisions.
Anchoring Bias
tendency to fixate on initial information & fail to adequately adjust for
subsequent information. Our mind gives a disproportionate amount of emphasis
to the first information it receives.
Confirmation Bias
confirmation bias represents a case of selective perception; we seek out
information that reaffirms our past choices, and we discount information that
contradicts them.
Availability Bias
tendency to base judgments based on readily available
information. Events that evoke emotions or that are vivid in our
minds leading us to overestimate or underestimate. Viz.
appraisals where the manager recollects current behavior of
employee more than an objective assessment of the whole year

53 Common biases & errors in decision making
Escalation of commitment
staying with a decision even when there is clear evidence its wrong. Individuals
escalate commitment to a failing course of action when they view themselves
are responsible for the failure aka throwing good money over bad
Randomness Error
tendency to believe we can predict the outcome of random events is the
randomness error. Decision making suffers when we try to create meaning in
random events
Risk Aversion
tendency to prefer a sure thing over a risky outcome is risk aversion.
Hindsight bias
tendency to believe falsely, after the outcome is known, that
we’d have accurately predicted it.

54 Influences on Decision making: Individual Differences
Decision making in practice is characterized by bounded rationality, biases, errors and
intuition. Individual differences also create deviations in the rational model.
Personality
Personality has a strong influence in decision making. Conscientiousness and Self
Esteem are two personality traits which are taken as an example.
Two specific facets of the same personality trait viz. Conscientiousness can influence
different & contrasting decisions in the same situation.
Achievement striving people were more likely to escalate their commitment, as they
hate to fail and hope to forestall failure by escalating commitment ; they also seem
to more susceptible to hindsight bias , because they have a greater need to justify
their actions
Dutifulness in people makes them more inclined to see what is best
for the organization which is a direct contrast to achievement striving
people

55 Influences on Decision making: Individual Differences
Gender
Rumination offers insights on gender differences in decision making. Rumination is
reflecting at length. Women tend to reflect a lot analyzing past, present and future.
Overanalyzing problems makes it harder to solve. One reason seems to be that women
tend to base their self esteem and well being on what others thinks about them
Mental Ability
People with higher mental ability also get influenced by common errors and biases
but have the ability to comprehend faster and desist from repeating the same errors
Cultural Differences
Cultural differences influences personality which has its effects in decision making.
In an individualistic society like the US, emphasis on solving a problem and
administering solutions is much higher than in Asian economies, where accepting is
more the norm because of their beliefs in the Yin and Yan concept

Influences on Decision making: Organizational 56
Constraints
Performance Evaluation
Managers are strongly influenced by the criteria on which they are evaluated and will
go to any lengths to ensure those criterias are met irrespective of its impact on
people and organizational efficiency.
Reward Systems
Reward systems in organizations influences decision making by suggesting which
choices will have better personal pay offs. If the organization believes in risk
aversion, managers make conservative choices and on the flip side, if it believes in
“pay for performance”, managers make riskier choices to achieve success.
Formal Regulations
Rules and regulations in organizations can at times become a constraint in
taking decisions. Example Macdonalds the restaurant has more than 72 rules
and regulations which needs to be monitored by restaurant managers on a
daily basis.

Influences on Decision making: Organizational 57
Constraints
System Imposed Time Constraints
All important decisions come with explicit deadlines, which may eventually impact
or put pressure on completeness of information to take optimal decisions. A new
product development team may have to submit their findings to the executive
committee review board which may evaluate it for further funding.
Historical Precedents
Decisions are not made in vacuum and generally have context to it. Hence we find
budgets for the next year are generally based on last year’s budgets.

58
Ethical considerations form an important criterion in organizational decision making.
Three ethical decision criterias are outlined below.
Utilitarianism
focuses purely on making decisions for business outcomes, for the greater good.
Its consistent with goals such as productivity, efficiency and high profits
Advantages Limitations
promotes efficiency & productivity &
focuses on profit generation for
shareholders and investors
sidelines rights of individuals for the
greater good.
Rights
emphasis on rights in decision making means respecting and protecting the basic
rights of individuals, such as right to privacy, speech and due process.
Whistleblowers are an example of protection of right to speech
protects individuals from
injury & is consistent with
freedom and privacy
brings a legalistic environment
hindering productivity and
efficiency

59
Justice
impose and enforce rules fairly and impartially to ensure justice or an equitable
distribution of benefits & costs. Union members typically favor this view. Justifies
paying fair wages to all employees and base pay on seniority instead of
performance criterions.
focus on justice ensure the minority
representation is adequate
encourages sense of entitlement that
reduces risk taking, innovation and
productivity. Viz. Indian economy

Creativity & the 3 component model of Creativity 60
Rational decision making will often improve decisions, but a rational decision
maker also needs creativity, the ability to produce novel and useful ideas.
Three-Component Model of Creativity
What can individuals and organizations do to stimulate employee
creativity?
The three component model proposes
that individual creativity requires
expertise, creative thinking skills and
task motivation and each feeds on the
other in order to develop creative
ideas which eventually aid in rational
decision making

Attitudes & Job Satisfaction
Attitude isn’t everything, but its’ close…

Learning Objectives
a) What is Attitude and contrast its 3 components
b) Relationship between Attitudes and behavior
c) Compare and contrast the major Job Attitudes
d) Define Job Satisfaction and how we can measure it.
e) Summarize the main causes of Job Satisfaction
f) Identify 4 employee responses to dissatisfaction
09/17/14

Attitude & its main components
Attitudes
Evaluative
statements or
judgments
concerning
objects, people,
or events.
They reflect
how we feel
about
something.
Cognitive component
The opinion or belief segment
of an attitude.
Belief: “My pay is low”
Affective Component
The emotional or feeling segment
of an attitude.
Emotion: “I’m angry over how little
I’m paid”
Behavioral Component
An intention to behave in a certain
way toward someone or something.
Intention: “I’m going to look for
another job that pays better” 09/17/14

Relationship between Attitudes and Behavior
09/17/14

Measuring A-B Relationship
Does Behavior follow Attitude or is it the other way round?
Leon Festinger, a researcher argued that Attitude follows behavior. As an example, a friend of
yours has consistently argued that the quality of Indian Jeans is poor as compared to imports from
the US, but his sister unaware of his views, buys him a nice pair of jeans from Flying Machine.
Notice how he suddenly says that Indian denims are really world class.
Theory of Cognitive Dissonance
any incompatibility an individual might perceive between two or more attitudes or between behavior
and attitudes.
Individuals seek to reduce this gap, or “dissonance”. They either alter the attitudes or the behavior,
or they develop a rationalization for the discrepancy.
Desire to reduce dissonance depends on the following moderating factors:
09/17/14

Moderating Variables
Research indicates that there is a strong relationship between attitudes and behavior
and the moderating variables are:
Importance of Attitude
Important attitudes reflect our fundamental values, self interest or identification
with individuals or groups we value.
Correspondence to Behavior
Specific attitudes tend to predict specific behaviors, whereas general attitudes tend
to best predict general behaviors. viz. Asking someone about her intention to stay
with an organization for the next 6 months is likely to better predict turnover for that
person than asking her how satisfied she is with her job overall.
On the other hand, overall job satisfaction would better predict a general behavior,
such as whether the individual was engaged in her work or motivated to contribute to
her organizations
09/17/14

Moderating Variables
Accessibility
Attitudes that our memories can easily access are more likely to predict our behavior. So
attitudes which are frequently exhibited by a person shapes their behavior towards it.
Social Pressures
Discrepancies between attitudes & behavior happen often on account of social
pressures to behave in a certain manner hold merit. This could be the reason why
tobacco executives who are not smokers themselves and who tend to believe the
research linking smoking to cancer don’t actively discourage people from smoking
Direct Experience with the attitude
Attitude behavior relationship is likely to be much stronger if an attitude refers to
some thing with which we have direct personal experience.
Asking a college student with no work experience to respond to working for
an authoritarian supervisor is far less likely to predict actual behavior than asking
the same question to employees who have actually worked for such an individual.
09/17/14

Major Job Attitudes
Job Satisfaction
A collection of positive and/or negative feelings that an individual holds
toward his or her job resulting from an evaluation of its characteristics
Job Involvement
Identifying with the job, actively participating in it, and considering
performance important to self-worth
Perceived Organizational Support (POS)
Degree to which employees feel the organization cares about their
well-being
09/17/14

Major Job Attitudes
Employee Engagement
An individual’s involvement, satisfaction with, and enthusiasm for
the organization
Organizational Commitment
Identifying with a particular organization and its goals, and wishing to
maintain membership in the organization (Affective, Normative, and
Continuance Commitment)
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Affective Continuance
Commitment
Normative
Commitment
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yyoouurr jjoobb))
((FFeeaarr ooff LLoossss)) ((SSeennssee ooff
09/17/14 OObblliiggaattiioonn ttoo ssttaayy))

How do you define Job Satisfaction…
A positive / negative feeling about a job resulting from evaluation of its
characteristics is a very broad term. Jobs require interacting with co-workers
& bosses, following organizational rules and policies, meeting performance
standards, living with less than ideal working conditions.
Hence an employee’s assessment of his/her satisfaction at the workplace is
a complex summation of many discrete elements, which may either leave
them enthused, disenchanted or may condition them to remain static and not
think about satisfaction at all.
09/17/14

Measuring Job Satisfaction
Two approaches are popular globally.
Both approaches are not
wrong.
The Single Global Rating
scale is simplistic in
nature and saves time
The Summation of job
facets breaks the
numerous elements
involved in a job to point
out the specific elements
which are causing
dissatisfaction or high
s0a9/1t7i/s14faction if any

Causes of Job Satisfaction
• Pay only influences Job Satisfaction to a point
– After about INR 20 Lacs per annum, there is no relationship between
amount of pay and job satisfaction.
• Personality can influence job satisfaction
– Negative people are usually not satisfied with their jobs. People with
positive core self evaluations viz. who believe in their inner worth and
basic competence are more satisfied with their jobs than people with
negative core self-evaluations.
09/17/14

The Impact of Satisfied and Dissatisfied Employees
on the Workplace
09/17/14

what happens when employees like / dislike
their jobs?
Exit
Behavior directed toward leaving
the organization
Voice
Active and constructive
attempts to improve conditions
Neglect
Allowing conditions to worsen
Loyalty
Passively waiting for conditions
to improve
The framework’s 4 responses differ along 2 dimensions
Constructive / Destructive Active / Passive
Loyalty is a passive response but
optimistically waiting for conditions to
improve
Neglect response is also passive but
allows conditions to worsen including
absenteeism or lateness and basically
destructive to the business 09/17/14
Exit is a destructive response
Voice involves active and constructive
attempts to improve conditions

Outcomes of Job Satisfaction /
Dissatisfaction at the workplace
Job Satisfaction & Job Performance
Happy workers are more likely to productive workers. There is a strong positive co-relation
between Satisfaction and Performance.
Job Satisfaction & OCB
Job Satisfaction is moderately correlated with Organizational Citizenship behavior
(OCB). Satisfied employees talk positively about the organization and help others. But its
still moderately correlated because those who feel co-workers support them are more
likely to engage in OCB than those who have antagonistic relationships with co-workers
Job Satisfaction & Customer Satisfaction
Job Satisfaction is moderately correlated with Organizational Citizenship behavior
(OCB). Satisfied employees talk positively about the organization and help others. But its
still moderately correlated because those who feel co-workers support them are more
likely to engage in OCB than those who have antagonistic relationships with co-workers
09/17/14

Outcomes of Job Satisfaction /
Dissatisfaction at the workplace
Job Satisfaction & Absenteeism
Job Satisfaction has a consistent negative relationship but its moderate to weak.
Dissatisfied employees are more likely to miss work, but other factors also affect the
relationship
Job Satisfaction & Turnover
Relationship between Job Satisfaction & turnover is stronger than between satisfaction &
absenteeism. Job dissatisfaction is more likely to result into turnover when employment
opportunities are plentiful and the pull factor exists
Job Satisfaction & Workplace Deviance
Job Dissatisfaction and antagonistic relationships with co-workers predict a variety of
behaviors which organizations find undesirable like unionization, substance abuse,
stealing, pilfering and tardiness. Moreover when the work environment is not satisfactory,
employee withdrawal or counterproductive behavior occurs in the workplace
09/17/14

Strong empirical evidence suggests that job satisfaction is directly co-related
to the bottom line. A study conducted by a management consulting firm
separates large organizations into high morale ((< 70% employees satisfied),
medium and low morale
The stock prices of the companies in the high morale group grew by 19.4%
compared with 10% for the medium to low morale group
Even then managers in most organizations are totally unconcerned about job
satisfaction unless organization policies are framed in a manner where job
satisfaction becomes a key indicator for personal growth of managers
09/17/14

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