7 PROBLEM ANALYSIS AND DECISION MAKING Supervision Today! 7th Edition Planning, organizing, staffing, controlling, and decision making PROBLEM ANALYSIS AND DECISION MAKING 7 Supervision Today! 7th Edition Stephen Robbins David DeCenzo Robert Wolter

Chapter Outcomes List the 7 steps in the decision-making process. Describe expected value analysis. Explain the four types of decision styles. Identify and explain the common decision-making errors. Describe the two types of decision problems and the two types of decisions that are used to solve them. Compare and contrast group decision-making and individual decision-making. List and describe three techniques for improving group decision-making. Explain three different ethical viewpoints. Supervision Today!, 7/e Robbins, DeCenzo, Wolter © 2013 Pearson Education Uppers Saddle River, NJ 07458, All Rights Reserved

The decision-making process. EXHIBIT 7–1 The decision-making process. Supervision Today!, 7/e Robbins, DeCenzo, Wolter © 2013 Pearson Education Uppers Saddle River, NJ 07458, All Rights Reserved

EXHIBIT 7–3 Payoff table for ski jacket decision. Supervision Today!, 7/e Robbins, DeCenzo, Wolter © 2013 Pearson Education Uppers Saddle River, NJ 07458, All Rights Reserved

EXHIBIT 7–4 Decision tree and expected values for renting a large or small retail space. Supervision Today!, 7/e Robbins, DeCenzo, Wolter © 2013 Pearson Education Uppers Saddle River, NJ 07458, All Rights Reserved

Conditions of decision-making Certainty Risk Uncertainty Supervision Today!, 7/e Robbins, DeCenzo, Wolter © 2013 Pearson Education Uppers Saddle River, NJ 07458, All Rights Reserved

Decision tools Expected value analysis Decision tree Marginal analysis Permits decision makes to place monetary value on likely consequences Decision tree Assigns probabilities to possible outcomes and calculates payoffs for decisions Marginal analysis Deals with additional cost in decisions rather than average cost Supervision Today!, 7/e Robbins, DeCenzo, Wolter © 2013 Pearson Education Uppers Saddle River, NJ 07458, All Rights Reserved

EXHIBIT 7–5 Decision-style model. Supervision Today!, 7/e Robbins, DeCenzo, Wolter © 2013 Pearson Education Uppers Saddle River, NJ 07458, All Rights Reserved

Common errors in decision-making Availability heuristic Judgment based on readily available information Representative heuristic Matching the likelihood of an occurrence with something familiar Escalation of commitment Increasing commitment to a decision despite negative information Supervision Today!, 7/e Robbins, DeCenzo, Wolter © 2013 Pearson Education Uppers Saddle River, NJ 07458, All Rights Reserved

Advantages of group decisions Provides more complete information Generates more alternatives Increases solution acceptance Increases legitimacy Supervision Today!, 7/e Robbins, DeCenzo, Wolter © 2013 Pearson Education Uppers Saddle River, NJ 07458, All Rights Reserved

Disadvantages of group decision-making Time-consuming Minority domination Pressure to conform Ambiguous responsibility Supervision Today!, 7/e Robbins, DeCenzo, Wolter © 2013 Pearson Education Uppers Saddle River, NJ 07458, All Rights Reserved

Improving group decision-making Brainstorming Nominal group technique Electronic meetings Supervision Today!, 7/e Robbins, DeCenzo, Wolter © 2013 Pearson Education Uppers Saddle River, NJ 07458, All Rights Reserved

Common rationalizations of unethical behavior “It’s not really illegal or immoral.” “It’s in my (or the organization’s) best interest.” “No one will find out.” “Because it helps the organization, the organization will condone it and protect me.” Supervision Today!, 7/e Robbins, DeCenzo, Wolter © 2013 Pearson Education Uppers Saddle River, NJ 07458, All Rights Reserved

Three views on ethics Utilitarian view Rights view Justice view Decisions made solely on basis of their outcomes Rights view Decisions are consistent with liberties set forth in Bill of Rights Justice view Impose and enforce rules fairly and impartially to achieve equitable distribution of benefits and costs Supervision Today!, 7/e Robbins, DeCenzo, Wolter © 2013 Pearson Education Uppers Saddle River, NJ 07458, All Rights Reserved

EXHIBIT 7–7 Three views on ethics. Supervision Today!, 7/e Robbins, DeCenzo, Wolter © 2013 Pearson Education Uppers Saddle River, NJ 07458, All Rights Reserved