The Importance of Decision-Making in Organizations


Decision-making is a crucial component of any company’s success. The thesis of the paper is that perceptions, attribution theory, and bias have a considerable impact on human behaviors in organizations.

The sub-topics that will be discussed in the paper include decision-making, attribution theory, personal experience of inaccurate judgment, and creative decision-making. Each of these subtopics will help to analyze the main topic with the help of citations and analyses.


Decision-making is the key issue in any organization. A correctly arranged process of making decisions allows minimizing mistakes and reaching the best outcomes.

The first step in the productive decision-making is acknowledging the existence of a problem (Youssef-Morgan & Noon, 2017). Due to the discretionary character of the problem identification, a significant place in this process belongs to perceptions.

Bounded Rationality

The theory of bounded rationality was suggested by the American psychologist and economist, Herbert A. Simon (Youssef-Morgan & Noon, 2017). According to this theory, people’s limited mental abilities in combination with external characteristics that cannot be controlled do not allow making perfectly rational resolutions.

One of the potential effects of this theory is that a person may fail to establish all the possible alternatives or analyze the accurate probabilities. As a result, decision-makers “satisfice” their resolutions instead of maximizing them (Youssef-Morgan & Noon, 2017, ch. 8.3). Satisficing presupposes accepting the necessary level of acceptability for the solution and thinking about alternative outcomes.

Cognitive Biases

Individuals are prone to acquiring and processing the data in an erroneous way (Youssef-Morgan & Noon, 2017). Cognitive bias can misinterpret data processing.

The most common biases that may occur in the decision-making process are anchoring, availability, confirmation, escalation of commitment, hindsight, and overconfidence biases (Youssef-Morgan & Noon, 2017). The potential effect of such behavior is that wrong decisions may be made.

Conjunction Fallacy

Conjunction fallacy is another kind of the cognitive bias that presupposes the evaluation of the probability of conjunction by averaging rules (Tentori, Crupi, & Russo, 2013). This bias is quite common (Youssef-Morgan & Noon, 2017).

The potential effect of conjunction fallacy is making illogical assumptions. As a result, wrong decisions can be made.

Attribution Theory

Some of the most common perceptions individuals make are related to others. The attribution theory offers a framework for explaining how people make their judgments.

The theory was developed by Harold Kelly (Youssef-Morgan & Noon, 2017). With the help of this approach, it is easier to understand how people explain the actions made by others and themselves, as well as the results of these actions.

Effects of Perception

Perception has a great impact on people’s choices of attributing behaviors. The evaluation is closely associated with such factors as primacy and recency effects, selective perceptions, contrast effect, and stereotyping (Youssef-Morgan & Noon, 2017).

The primacy effect is the inclination to trust the data collected from one’s earliest experiences (Youssef-Morgan & Noon, 2017). The recency effect involves relying on the new experiences. Selective perceptions are similar to these effects. However, they are not focused on time. Rather, they refer to an individual’s ability to make quick conclusions about the surroundings (Youssef-Morgan & Noon, 2017).

Contrast effect implies that people’s reactions to others are impacted by previous relations (Youssef-Morgan & Noon, 2017). Stereotyping helps to categorize different individuals. However, it can be offensive and harmful.

Consistency, Consensus, Distinctiveness

Consistency, consensus, and distinctiveness have a significant impact on how people attribute behaviors. The greater the consistency, the more probable it is for the observer to ascribe the conduct to internal factors (Youssef-Morgan & Noon, 2017). On the contrary, the lesser the consistency, the greater the likelihood of attributing the behavior to external characteristics (Youssef-Morgan & Noon, 2017).

Consensus alters an individual’s behavior due to the similarity of actions of the majority of people (Youssef-Morgan & Noon, 2017). If most employees act the same in a particular situation, the consensus is high, and the causes of behavior are external. When consensus is low, the reasons for the employee’s conduct are internal.

As well as consistency and consensus, distinctiveness affects the behavior (Youssef-Morgan & Noon, 2017). For instance, if a person fails at one aspect of work but succeeds in other duties, the conduct will likely be attributed to external factors. However, if one is equally bad at everything, the causes of the behavior are internal.

Fundamental Attribution Error

Individuals frequently make mistakes when trying to understand why others choose particular types of behavior. Such a tendency is called fundamental attribution error.

With the help of fundamental attribution error, it is possible to explain why some people attribute internal factors instead of external ones when analyzing someone’s conduct (Youssef-Morgan & Noon, 2017). The opposite tendency is called self-serving bias, and it involves blaming external factors in one’s failures.

Personal Experience: Inaccurate Judgment

When I was at high school, I missed several days of school because of being ill. However, my teacher of literature was very prejudiced, and he decided that I had been missing classes because I was afraid to pass a test. As a result, he gave me a more difficult task than my peers had had, and I failed it.

This experience supports the thesis about bias affecting people’s behaviors. My teacher’s fundamental attribution error led to the misinterpretation of the situation.


There was no consistency in my actions. I did not use to miss classes frequently.

The teacher should have attributed my behavior to external factors. However, he did not do so.


Probably the reason why the teacher behaved in such a way was concerned with consensus. It is common for students to miss classes when they want to avoid a difficult task, so the teacher assumed that I did the same.

However, despite the high consensus, the teacher should have analyzed the situation better. His perception was negatively impacted by this factor.


The situation was not characteristic of my behavior. Thus, the teacher should have understood that external, and not internal, factors led to my missing the classes.

The teacher’s inability to apply distinctiveness affected my perception of self and others. I felt disappointed and devastated.

Creative Decision Making

One of the innovative approaches to making decisions is creative decision-making. According to Furley and Memmert (2015), such an approach helps to increase performance to a considerable extent.

Problems can be solved more productively if creative decision-making is involved. According to the three-component model of creativity introduced by Teresa Amabile, creativity comprises the outcomes of an individual’s expertise, motivation, and creative-thinking skills (Youssef-Morgan & Noon, 2017).


The paper analyzed the importance of decision-making in organizations. The analysis of key elements of the decision-making process allows concluding that managers should pay attention to this element when arranging their work.

The paper’s thesis concerning the effect of perceptions, biases, and the attribution theory on people’s behaviors was proved and exemplified with citations from the textbook and other academic sources.


Furley, P., & Memmert, D. (2015). Creativity and working memory capacity in sports: Working memory capacity is not a limiting factor in creative decision making amongst skilled performers. Frontiers in Psychology, 6, 1-7.

Tentori, K., Crupi, V., & Russo, S. (2013). On the determinants of the conjunction fallacy: Probability versus inductive confirmation. Journal of Experimental Psychology: General, 142(1), 235-255.

Youssef-Morgan, C., & Noon, A. (2017). Industrial/organizational psychology (2nd ed.). Web.

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