MGMT Planning and Decision Making Chapter 5 Planning

MGMT Planning and Decision Making Chapter 5

Planning Ø Choosing a goal Ø Developing a method or strategy to achieve that goal Ø Double-edged sword 2

Benefits and Pitfalls of Planning ØBenefits Ø Employee efforts intensified Ø Leads to persistence Ø Provides direction Ø Encourages the development of task strategies Ø Works for companies and individuals Ø Pitfalls Ø Impedes change Ø Prevents or slows needed adaptation Ø Creates a false sense of certainty – based on “assumptions” of what the future holds Ø Detachment of planners 3

How to Make a Plan That Works

Setting Goals Effective Planning S. M. A. R. T. Goals Ø Specific Ø Measurable Ø Attainable Ø Realistic Ø Timely 5

Effective Planning Developing Commitment to Goals Ø Goal commitment is the determination to achieve a goal Ø Techniques Ø Set goals collectively Ø Make the goal public Ø Obtain top management’s support 6

Effective Planning Develop Effective Action Plans An action plan lists… Ø Specific steps (how) Ø People (who) Ø Resources (what) Ø Time period (when) …for accomplishing a goal 7

Tracking Progress Effective Planning Ø Set proximal goals (short-term) and distal goals (long-term) Ø Gather and provide performance feedback Ø Needs to be regular and frequent to allow for adjustments 8

Effects of Goal Setting, Training, and Feedback on Safe Behavior in a Bread Factory

Maintaining Flexibility Effective Planning Ø Options-based planning Ø keep options open by making, small simultaneous investments in many alternative plans. Ø Slack resources Ø a cushion of resources, like extra time or money, that can be used to address and adapt to unanticipated changes. 10

Planning from Top to Bottom Ø Top management (long-term, conceptual) Ø Responsible for developing long term strategic plans Ø Strategic plans make clear how to serve customers and position against competitors for next 2 – 5 years Ø Purpose statement: Declaration of a company’s purpose or reason for existing (mission or vision) Ø Brief, clear, inspirational, consistent, and enduring Ø Strategic objective: Specific goal derived from the purpose statement Ø Unifies company-wide efforts Ø Stretches and challenges the organization Ø Possesses a finish line and a time frame 11

Planning from Top to Bottom Ø Middle management Ø Responsible for developing and carrying out tactical plans to accomplish strategic objective Ø Tactical plans: Specify how the company will use resources, budgets, and people to accomplish specific goals Ø Time frame – 6 months to 2 years Ø Management by objectives: 4 step process used my managers and employees Ø Discuss goals Ø Collectively select goals Ø Jointly develop tactical plans Ø Meet regularly to review progress toward goal accomplishment 12

Planning from Top to Bottom Ø First-level managers Ø Responsible for developing and carrying out operational plans – day-to-day plans Ø Time Frame – 30 days to 6 months Ø Operational plans Ø Single-use plans: Cover unique, one-time-only events Ø Standing plans: Used repeatedly to handle frequently recurring events Ø Policies – what to do if “x” happens Ø Procedures – more specific than polices Ø Rules & Regulations – even more specific than procedures Ø Budgeting: Managers decide how to allocate available money to best accomplish company goals 13

Steps to Rational Decision Making 1. Define the problem Ø Problem: Gap between a desired state and an existing state Ø Managers must: Ø Be aware of a problem Ø Be motivated to solve the problem Ø Have the knowledge, skills, abilities, and resources to fix the problem 2. Identify decision criteria Ø Decision criteria: Standards used to guide judgments and decisions 14

Steps to Rational Decision Making 3. Weigh the criteria Ø Absolute comparisons: Each decision criterion is compared to a standard or ranked on its own merits Ø Relative comparisons: Each decision criterion is compared directly with every other criterion 15

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 Ø Involves systematically evaluating each alternative against each criterion 6. Compute the optimal decision Ø Performed by multiplying the rating for each criterion by the weight for that criterion, and then summing the generated scores 18

Criteria Ratings Used to Determine the Best Location for a New Office

Limits to Rational Decision Making Ø Managers have to operate in a perfect world with no real-world constraints Ø Limited resources as well as attention, memory, and expertise problems make it difficult for managers to maximize decisions Ø Satisficing: Choosing a good-enough alternative 20

Advantage and Pitfalls of Group Decision Making Ø Advantages ØPitfalls Ø In the decision-making process groups perform better than individuals in: Ø Defining the problem Ø Generating alternative solutions Ø Groupthink: Barrier to good decision making Ø Intense pressure to agree with each other Ø Takes considerable time Ø Meeting complaints Ø Individuals can dominate group discussions Ø Equality Bias – individuals treat all group members as equally competent 21

Avoiding Pitfalls Using Groups to Improve Decision Making Ø Structured conflict - Right kind of conflict can lead to better group decision making Ø C-type (cognitive) conflict Ø Focuses on problem- and issue-related differences of opinion Ø Willingness to examine, compare, reconcile differences to produce the best possible solution Ø A-type (affective) conflict Ø Focuses on individuals or personal issues Ø Emotional reaction that can occur when disagreements become personal Ø Hostility, anger, resentment, distrust, cynicism, apathy 22

Creating C-Type Conflict Ø Devil’s advocacy Ø Dialectical Inquiry – propose solution (thesis), then generate an opposite proposal (antithesis) Ø Nominal Group Technique – Begins and ends by having group members write down and evaluate ideas Ø Shared with the group Ø Improves group decision making by decreasing a-type conflict Ø Delphi Technique Ø Don’t have to meet face-to-face Ø Members of a panel of experts respond to questions and to each other until reaching agreement on an issue Ø Brainstorming/Electronic brainstorming – all anonymous Ø Group members use computers to build on each others’ ideas Ø Generate as many alternative solutions as possible 23

Summary Ø Planning brings about increase in individual and organizational performance Ø 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 Ø Decision making the process of choosing a solution from available alternatives 24

Key Terms Ø Ø Ø Planning S. M. A. R. T. goals Goal commitment Action plan Proximal goals Distal goals Options-based planning Slack resources Strategic plans Purpose statement Strategic objective Tactical plans Ø Ø Ø Management by objectives Operational plans Single-use plans Standing plans Policies Procedures Rules and regulations Budgeting Decision making Rational decision making Problem Decision criteria 25

Key terms Ø Absolute comparisons Ø Dialectical inquiry Ø Relative comparisons Ø Nominal group technique Ø Maximize Ø Delphi technique Ø Satisficing Ø Brainstorming Ø Groupthink Ø Electronic brainstorming Ø C-type conflict Ø Production blocking Ø A-type conflict Ø Evaluation apprehension Ø Devil’s advocacy 26