Management theories and Practices

Week 4

Step 1 The Planning Function

The head of operations of a pharmaceutical plant realized that the quantity of output was less than the input. He called meeting of production engineers, supervisors and workers to solve the problem and then brain storm on possible causes. All ideas were jotted down with list of possible causes. Small groups were formed to assess the suitability of causes. Based on recommendations of groups the decision were taken
How effective was the approach?

The Managerial Decision Making

Decision making is the essence of management All managers want to make good decisionswhy? Managers at all levels take decisions but of what kind?

How to make decision ? The steps

Managerial decisions and the management functions

Any examples you can think of?

Managerial decision making : The rationality How rational they can be ? Reasons ?

Bounded rationality
Suffice Escalation of commitment Why?

Is there a role of intuition in managerial decision making

Types of Decisions and Decision Making Conditions

1. Structured problems and programmed decisions What could be various situations?

What happens then? the decision making process.

Examples. Customer is always right. Rule Employee wages will remain competitive. Policy

2. Unstructured, Nonprogrammed Decisions What could be various situations?

What happens then? the decision making process.

Examples. New ban imposed which type?

Which level of managers take which type of decisions?

The situation and their impact on decision making: Certainty Risk Uncertainty psychological makeup

Sum up Linear and non-linear style of decision making

The biases and errors

Overconfidence Immediate gratification Anchoring effect Selective perception Confirmation Framing Availability Randomness Sunk costs Self serving Hindsight bias

Decision-Making Approach Rationality Bounded rationality Intuition Type of Problems and Decisions Well structured programmed Unstructured non programmed Decision-Making Process Decision-Making Conditions Certainty Risk Uncertainty

Decision-Making Errors and Biases

Decision Choosing best alternative -maximizing - satisficing Implementing Evaluating

Decision-Makers Style Linear thinking style Nonlinear thinking style

Decision making in todays world Cultural differences Know when its time to call it quits Use effective decision making process subjective and objective Build an organization that can spot the unexpected and quickly adapt to the changed env.

Think. How organizational culture influence the way managers make decisions ?

Consider this Your company is advertising for a new employee to work in your area of responsibility. The person in this position will be important because the work directly impacts the quality and quantity of your performance. One of your friends from college needs a and you think he is qualified for position. But you feel you could find a better qualified and more experienced candidate if you keep looking. What would you do? Which factors would influence your decisions? Could org develop any rules, procedures or policies to deal with such situation?

Recall managerial decision making and org objectives

And lets do some planning for the organization !!!

How important planning is? Consider a situation .

Boeing called its new 787 aircraft, the dreamliner, but the project turned out to be a nightmare for the managers. The new plane was the companys most popular product ever, mostly because of its innovations, especially in fuel efficiency. However, one month before its delivery date , the company announced delay in delivery date for about 15 months. The company admitted that the projects timeline was way too ambitious, even though every detail had been meticulously planned. What happens if Boeings customers get tired of waiting and cancel their orders? Could the managers have planned better?

What is planning ? Involves defining orgs goals, establishing strategies for achieving those goals and developing plans to integrate and coordinate work activities. Concerned with both ends and means

Formal planning - Time frame , org wide understanding of goals

Why do managers plan?

 Provides direction Reduces uncertainty Minimizes wastes and redundancy

Establishes goals and standards used in controlling

Planning and performance of org Is there a link ?

 Associated with positive financial results Planning and execution no matter how much planning is done External forces the culprit

Time frame - four/five years of planning before it impacts performance

Elements of planning

 Objectives Actions

Resources
Implementation
Lets take look at diagram

Goals and plans

What are goals , what are plans ?

One goal or many goals? Financial vs strategic goals Stated goals official statements of what an organization says its goals are Conflict between real goals (the actions) and stated goals can such situation happen e.g university

Types of Plans

 Described in terms of breadth Time frame

Specificity
Frequency of use
Lets take look at diagram

Type of Plans

Breadth

Time Frame

Specificity

Frequency of Use

Strategic

Long term

Directional

Single use

Operational

Short term

Specific

Standing

How to set goals ?

1. Traditional goal setting: Set by top managers communicated below , translated into responsibilities

Performance measures against those goals

Problem with translating strategic goals into departmental goals Theres another problem --- lets see in diagram

I want to sea a
significant improvement in this divisions profits. Top Managements Objective Division Managers Objective Dont worry about quality; just work fast.

We need to improve the companys performance

Increase profits regardless of the means.

Department Managers Objective

Individual Employees Objective

Management by objectives: How this happens?

Steps in goals setting

 Review orgs mission/ purpose Evaluate resources why?

Determine goals individually with input from others

Write down and communicate why Review results

Developing plans . Cater for - managerial level, uncertainty, time frame (not too short term nor too long term)

Criticism on planning : Planning create rigidity Plans cant be developed for dynamic env Formal plans cant replace intuition creativity Just planning isnt enough

What to do then.
Develop flexible plans its an ongoing process and serve as road map although destination may change Managers need to stay alert to env. Changes Involve employees to make it quicker (avoid flow from top), flexible and best ones to provide input

Class exercise: Mastering the plan priceless