Abstract Contemporary managers are constantly faced with business-related decisions. However, the making of such decisions In the real world Is often unstructured. The term ‘rational decision making’ epitomizes the confusion and widely varying interpretations surrounding this phenomenon. A process-oriented approach may, therefore, seem different from traditional ways of arriving at a choice. Nevertheless, the benefits of adopting such an approach are significant, and its use seems certain to improve managerial decision making in organizations.

The purpose of this essay is o discuss how a managerial decision maker’s rationality may be impacted by perceptual processes. Several perceptual errors such as stereotyping, perceptual defense and halo effect will be examined. In addition, it is also suggested that unethical decisions may be linked to errors in perception. This essay concludes with the discussion on the notion of rationality and the part It plays in linking perceptual processes with decision making. Despite Its detractors, the notion of rationality should subsist as an exemplary model acting as a gulled for managers In making sound decisions.

Influence of rationality and perceptual processes on managerial decision making’ Managerial decision making and rationality are impacted and influenced by perceptual processes. This essay seeks to critically analyses and discuss perceptual processes as pivotal in any decision making endeavourer. Its importance are briefly discussed with particular emphasis placed on ways in which certain differences or biases in perception may have on individuals’ understanding of reality as well as how it impinges on the decision making process within a business environment where there are numerous variables.

Furthermore, this essay looks at what happens when there are perceptual errors In decision making within the business sphere. It also addresses the notion of rationality and Its conflicting attainability with Its application in a modern setting. Perceptual processes are fundamental in understanding the impact perception has on decision making. Managers make decisions every day, hour and minute based on the perceptions they interpret. As with management, the importance of understanding the influence of perceptual errors and improving perceptual accuracy are also addressed in the study of social psychology (Tagging, 1969).

Perception causes people to make wrong choices based on false information. In an organization, incorrect decisions result in a great deal of negative effects. Hence, it is important to delve deeper Into the area of perceptual processes so as to Identify and avoid the causes of such errors and biases In the decision making process. The characteristics of the decision maker lay the basic foundation in understanding characteristics of the perceiver will shape how he or she responds and select a course of action.

Research has shown that personal characteristics, and especially a arson’s self-concept, can affect perception of the social world and of others in it (Green & Skidded, 2001). For example, an individual with high self-esteem might be confident in making decisions and perceive himself as superior compared to one with a low self-esteem. Such characteristics are usually expressed when the perceiver forms impressions of others. Few decisions are made void of preconceived impression or Judgment. As such, this may be the spark that leads to distortion in the perceptual process which might in turn affect decision making.

When it comes to forming Judgments and interpreting information, the decision Akers may respond to irrelevant cues to arrive at a Judgment. Failure to avoid inaccuracies in forming impressions is influenced by a few important factors; the first of which is stereotyping. Stereotyping is a common process which most of us are guilty of committing at least a few times in our lives. The definition that ‘stereotyping’ is to ‘attribute to that person some characteristics which are seen to be shared by all or most of his or her fellow group members’ was coined by Brown (1995).

It can be a powerful tool which influences and impels how a manager makes decisions. An example of stereotyping is the glass ceiling phenomenon in the working world. It is an invisible barrier that prevents women from rising up to the upper echelons of the corporate ladder. In 2008, the COED found that the median earnings of female full- time workers were 17% lower than the earnings of their male counterparts. From this, we might infer that biases and prejudices exists which prevents women from rising to the top, hence the lower pay.

It also shows that Judgment might be clouded when decisions to promote women to higher positions are made regardless of their experience or qualification. Another type of perceptual distortion is perceptual defense. It affects decision making by creating Judgment about things which might not be true. Although it is normal for people to want to defend the way they perceive things, it is hard to change once established. Cash (1946) states that ‘perceptual defense occurs when a person’s value orientations act as a barrier to stimuli that are threatening.

When this happens, the perceiver might not be able to accept the new fact and rejects it by making inaccurate perceptions. A real life example would be the current situation within the Officer Corps of the Singapore Armed Forces. There is a line drawn between officers who are granted scholarships and those who do not have a basic degree. Those who are offered scholarships to study at prestigious universities overseas are termed as ‘scholars’ and those who do not have degrees are known as farmers’.

This distinction is accentuated as ‘scholars’ have accelerated careers promoting them faster to senior ranks in comparison with farmers’. As such, the SAFE has been criticized for “using a promotion system that is based more on education and scholarships than on proven competence”. As the majority of the military rent top brass are ‘scholars’, there might be perceptual defense when it comes to deciding who gets promoted. ‘Farmers’ might be perceived as less competent in promotion to senior ranks more difficult and fulfilling the existence of perceptual defense.

The halo effect is the third major distortion of the perceptual process. It is a form of bias which influences how one perceives an individual or object. It is used to describe a process in which a general impression that is favorable or unfavorable is used to evaluate specific traits (Harrison, 1999). The halo effect can be considered omnipresent in the workplace. One such area is during performance appraisals. When a subordinate is highly proficient in some areas, a laid-back manager might perceive him or her to be proficient in all areas and appraise highly as a result. Another area is Job tasks.

When a person does something well out of his specified Job scope, he or she might also be deemed as an expert in that particular task. An interesting feature’ of the halo effect is that it not only influences decisions within the organization but outside of it as well which in turn affects organizational performance. An example would be Apple Inc. Hereby the positive perception of its features or services extends to the entire corporation. The pod halo effect meant that customers who had a great experience with it would buy a Mac computer simply because it is made by Apple Inc. Thus boosting its sales figures. There is also a clear nexus between perceptual error and ethical decision making. When confronted with making ethical choices, managers might make decisions solely on the basis of their outcome or consequence. In this instance, the majority might stand to gain albeit the decision not being most objective. Decisions might also be dad based on the manager’s own sense of impartiality. The underlying problem is that not everyone will conform to this standard as they might feel the decision is flawed or biased.

T. M. Jones (1991) and Terrine (1986) affirms by stating that perceptual errors may affect an individual’s ethical Judgment by influencing later stages of individual planning and implementation of intentions when responding to ethical dilemmas. From this, it is evident that perceptual errors play a significant role when unethical workplace decisions are made. A classic example would be Enron Corporation’s bankruptcy in 2001. Former CEO Jeffrey Killings objective was profit at all costs.

His perception that profits should be the primary objective meant little regard for ethics and this led to the use of a reward system that only retains those who achieved profit targets (Sims, 2003). Such unrelenting push for profits ultimately led to the company’s downfall as there were charges of financial fraud and corruption within the organization. Perceptual errors are not only linked with decision making; it influences the ethical standards of a decision which may in turn translate into extensive consequences for an organization.

Prescriptive and normative models of decision making assume that managerial decision makers can process information and form Judgment on the basis of rationality. Rationality is defined as a self-conscious process of using explicit reasoned arguments to make and defend knowledge claims (Nonionic and Robert; 1993). Although widely used, there have been criticisms regarding the rational model choice rather than the whole process of decision making. Managers most often do not operate under conditions of perfect information. Landfill (1968) supports this by asserting that decision makers are not faced with concrete, clearly defined robbers.

Rather, they first have to identify and formulate the problems on which they make decisions. Simon (1957) emphasized that a completely rational decision making process demands too much of those making the decision. In a business context, we can consider the rise in the price of goods as an example. When there is an increase in price, it is easy for managers to blame it on inflation. Conversely, there are many causes to inflation such as high demand or low supply. The rational model is therefore hard to achieve as such causes are not clearly defined and are difficult or managers to determine.

The model of bounded rationality also seems to oppose this perfect rationality in decision making. Bounded rationality happens when decision makers simply avoid the effort to be rational and comprehensive at the same time. According to Simon (1979), the rational manager does not always have complete information, and that optimal decisions are not always required. In other words, as managers do not have the time or ability to process complete information about complex decisions, they must select some alternative that promises to meet the objective.

As such, it conflicts tit rationality as it would mean that rational decision making can now be made under risk, uncertainty and imperfect information. Despite such challenges, the notion of rationality does not dissipate once we have considered the perceptual processes of the decision maker. It must be noted that not all critics of the rational model have the aim of invalidating it. In fact, they largely contribute to the further modification and development of the model. It is extremely challenging to try and achieve rationality in every decision. Therefore, rationality should be archetypal of an ideal benchmark for sound decision making.

The value of the ‘rational’ model is that it prescribes procedures for decision making that will lead to the choice of the most efficient means of achieving goals and objectives. It should be used as a core concept to evaluate decision making. It is argued that the use of the term ‘rationality in managerial decision making is extremely useful as it creates a dialogue between philosophical and psychological perspectives of ethics and morality (Baseman, Max, Missies, David; 1998). From this, we can visualize the various theories and model through a simple illustration.