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Corporate Learning Course Seminar 3.5 Planning and Decision Making. Objectives. 1. Define planning in an organizational setting 2. Describe the steps in the planning process 3. Explain the importance of strategic planning to an organization - PowerPoint PPT Presentation
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Corporate Learning Course Seminar 3.5
Planning and Decision Making
Objectives
1. Define planning in an organizational setting2. Describe the steps in the planning process3. Explain the importance of strategic planning to an organization4. Identify the two components in the process of decision making5. Describe the context factors associated with decision making6. Explain the decision support process
Decision making is crucial to effective managing…
Planning Process
1. State organizational objectives
2. List alternatives for reaching objectives
3. Develop assumptions about each alternative
4. Choose the best alternative
5. Develop plans to pursue the chosen alternative
6. Put the plans into action
Types of Planning
Strategic Planning
Long-range planning that focuses on the entire organization
Involves managers at the highest levels
3-5 years for long-range planning
Strategies must be consistent with the purpose and mission of the organization
Types of Planning (cont.)
Tactical Planning
Short-term planning
One year or less
Mid-level managers
More detailed than strategic planning
Types of Planning (cont.)
Contingency Planning
What an organization does when something unexpected happens or when something needs changing
May cause manager to go back to the original plan or look for other alternatives
“What if” way of thinking
Two Components of Decision Making
Judgment – a process of evaluating alternatives
Choice – a process of selecting a specific alternative to implement
Characteristics of Human Information Processors
Selective perception – select relevant information and ignore irrelevant information
Framing – how a decision is oriented and organized
Escalation of commitment to a failing course of action – failure to ignore sunk costs (investments that are already gone and cannot be recovered)
Risk propensity – the orientation of the decision maker to either seek risk or avoid it
Hindsight bias – inability of a decision maker to remember correctly the circumstances that existed prior to implementing a choice once action has been taken
Over-confidence, complacency – give yourself credit for being more capable than you are / becoming more comfortable with a situation than is warranted by the level of risk
Context Factors for Decision Making
Degree of Certainty
|------------------|-----------------|--------------------|----------------------| Certainty Risk Uncertainty Ambiguity
Urgency – how quickly do you have to decide
Importance – how much impact will the decision have
Life-span of Problem/Opportunity – how likely is the issue to go away on its own
Creating a Decision Support Process
1. Recognize need for a choice
2. Diagnose causal relationships
3. Identify criteria for evaluation of alternatives and establish weights for criteria
4. Identify all relevant alternatives
5. Assess each alternative against the criteria – the judgment process
6. Determine “score” for each alternative
7. Choose alternative with “best” score
Steps in Decision Making
1. Identify the problem.
2. List alternatives.
3. Select the best alternative.
4. Implement the chosen alternative.
5. Evaluate.
Models of Individual Decision Making
Classical – aka Rational, Economic
Administrative – aka Behavorial
Intuitive – aka Seat of the Pants Selection
Political
Social
Summary
1. Planning determines how an organization can get to where it wants to go.
2. Steps in the planning process include: Stating organizational objectives, Listing alternatives for reaching objectives, Developing assumptions about each alternative, Choosing the best alternative, Developing plans to pursue the chosen alternative and putting the plans into action.
3. An organization needs strategic planning to develop strategies for achieving the objectives consistent with the purpose and mission of the organization over a long-range period.
Summary (cont.)
4. Two components in the process of decision making are judgment and choice.
5. The context factors associated with decision making are:
Selective perception – Select the relevant information and ignore the irrelevant information
Framing – how a decision is oriented and organized
Escalation of commitment to a failing course of action – failure to ignore sunk costs (investments that are already gone and cannot be recovered)
Risk propensity – orientation of the decision maker to either seek risk or avoid it
Hindsight bias – the inability of a decision maker to remember correctly the circumstances that existed prior to implementing a choice
Over-confidence, complacency – give yourself credit for being more capable than you actually are, being more comfortable with a situation than is warranted by the level of risk
Summary (cont.)
6. The decision support process includes:
Recognize need for a choice
Diagnose causal relationships
Identify criteria for evaluation of alternatives and establish weights for criteria
Identify all relevant alternatives
Assess each alternative against the criteria – the judgment process
Determine “score” for each alternative
Choose alternative with “best” score
Exercise – Winter Survival
1. Divide class into 2-3 groups of 5-7 people
2. Present situation
3. Rank items according to importance to your survival
4. Background information
5. Score results with key