MGMT

Planning and Decision

Making
Chapter 5
Planning
 Choosing a goal

 Developing a method or strategy to achieve

that goal

 Double-edged sword

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Benefits and Pitfalls of Planning
Benefits  Pitfalls
 Impedes change
 Employee efforts
intensified  Prevents or slows
 Leads to persistence needed adaptation
 Creates a false sense
 Provides direction
of certainty – based
 Encourages the on “assumptions” of
development of task what the future holds
strategies -
 Detachment of
 Works for companies planners
and individuals

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How to Make a Plan That Works
 Effective Planning
Setting Goals
S.M.A.R.T. Goals

 Specific
 Measurable
 Attainable
 Realistic
 Timely

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 Effective Planning
Developing Commitment to Goals
 Goal commitment is the determination to
achieve a goal

 Techniques
 Set goals collectively
 Make the goal public
 Obtain top management’s support

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 Effective Planning
Develop Effective Action Plans
An action plan lists…

 Specific steps (how)

 People (who)
 Resources (what)
 Time period (when)

…for accomplishing a goal

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 Effective Planning
Tracking Progress
 Set proximal goals (short-term) and distal goals
(long-term)

 Gather and provide performance feedback

 Needs to be regular and frequent to allow for adjustments

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Effects of Goal Setting, Training, and
Feedback on Safe Behavior in a Bread
Factory
 Effective Planning
Maintaining Flexibility
 Options-based planning
 keep options open by making, small simultaneous
investments in many alternative plans.

 Slack resources
 a cushion of resources, like extra time or money, that
can be used to address and adapt to unanticipated
changes.

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Planning from Top to Bottom
 Top management (long-term, conceptual)
 Responsible for developing long term strategic plans
 Strategic plans make clear how to serve customers
and position against competitors for next 2 – 5 years
 Purpose statement: Declaration of a company’s
purpose or reason for existing (mission or vision)
 Brief, clear, inspirational, consistent, and enduring
 Strategic objective: Specific goal derived from the
purpose statement
 Unifies company-wide efforts
 Stretches and challenges the organization
 Possesses a finish line and a time frame
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Planning from Top to Bottom
 Middle management
 Responsible for developing and carrying out tactical
plans to accomplish strategic objective
 Tactical plans: Specify how the company will use
resources, budgets, and people to accomplish specific
goals
 Time frame – 6 months to 2 years
 Management by objectives: 4 step process used my
managers and employees
 Discuss goals
 Collectively select goals
 Jointly develop tactical plans
 Meet regularly to review progress toward goal accomplishment
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Planning from Top to Bottom
 First-level managers
 Responsible for developing and carrying out
operational plans – day-to-day plans
 Time Frame – 30 days to 6 months
 Operational plans
 Single-use plans: Cover unique, one-time-only events
 Standing plans: Used repeatedly to handle frequently
recurring events
 Policies – what to do if “x” happens
 Procedures – more specific than polices
 Rules & Regulations – even more specific than procedures
 Budgeting: Managers decide how to allocate available money
to best accomplish company goals 13
Steps to Rational Decision Making
1. Define the problem
 Problem: Gap between a desired state and an existing
state
 Managers must:
 Be aware of a problem
 Be motivated to solve the problem
 Have the knowledge, skills, abilities, and resources to fix the problem

2. Identify decision criteria

 Decision criteria: Standards used to guide judgments
and decisions
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Steps to Rational Decision Making
3. Weigh the criteria
 Absolute comparisons: Each decision criterion is
compared to a standard or ranked on its own merits
 Relative comparisons: Each decision criterion is
compared directly with every other criterion

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Absolute Weighting of Decision
Criteria for a Car Purchase
Relative Comparison of Home
Characteristics
Steps to Rational Decision Making
4. Generate alternative courses of action

5. Evaluate each alternative

 Involves systematically evaluating each alternative
against each criterion

6. Compute the optimal decision

 Performed by multiplying the rating for each
criterion by the weight for that criterion, and then
summing the generated scores

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Criteria Ratings Used to Determine the Best Location for
a New Office
Limits to Rational Decision
Making
 Managers have to operate in a perfect world
with no real-world constraints

 Limited resources as well as attention, memory,

and expertise problems make it difficult for
managers to maximize decisions

 Satisficing: Choosing a good-enough

alternative

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Advantage and Pitfalls of Group
Decision Making
 Advantages Pitfalls
 In the decision-making  Groupthink: Barrier to good
process groups perform decision making
better than individuals  Intense pressure to agree with each
in: other

 Defining the problem

 Takes considerable time
 Generating alternative
 Meeting complaints
solutions

 Individuals can dominate group

discussions

 Equality Bias – individuals treat

all group members as equally
competent
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Avoiding Pitfalls Using Groups to
Improve Decision Making
 Structured conflict - Right kind of conflict can
lead to better group decision making
 C-type (cognitive) conflict
 Focuses on problem- and issue-related differences of
opinion
 Willingness to examine, compare, reconcile differences to
produce the best possible solution
 A-type (affective) conflict
 Focuses on individuals or personal issues
 Emotional reaction that can occur when disagreements
become personal
 Hostility, anger, resentment, distrust, cynicism, apathy

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Creating C-Type Conflict
 Devil’s advocacy
 Dialectical Inquiry – propose solution (thesis), then generate an
opposite proposal (antithesis)
 Nominal Group Technique – Begins and ends by having group
members write down and evaluate ideas
 Shared with the group
 Improves group decision making by decreasing a-type conflict
 Delphi Technique
 Don’t have to meet face-to-face
 Members of a panel of experts respond to questions and to each other
until reaching agreement on an issue
 Brainstorming/Electronic brainstorming – all anonymous
 Group members use computers to build on each others’ ideas
 Generate as many alternative solutions as possible
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Summary
 Planning brings about increase in individual
and organizational performance

 Planning works best when the goals and action

plans at the bottom and middle of the
organization support the goals and action plans
at the top of the organization

 Decision making the process of choosing a

solution from available alternatives
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Key Terms
 Planning  Management by objectives
 S.M.A.R.T. goals  Operational plans
 Goal commitment  Single-use plans
 Action plan  Standing plans
 Proximal goals  Policies
 Distal goals  Procedures
 Options-based planning  Rules and regulations
 Slack resources  Budgeting
 Strategic plans  Decision making
 Purpose statement  Rational decision making
 Strategic objective  Problem
 Tactical plans  Decision criteria
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Key terms
 Absolute comparisons  Dialectical inquiry
 Relative comparisons  Nominal group technique
 Maximize  Delphi technique
 Satisficing  Brainstorming
 Groupthink  Electronic brainstorming
 C-type conflict  Production blocking
 A-type conflict  Evaluation apprehension
 Devil’s advocacy

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