Dr. hab. Jerzy Supernat Institute of Administrative Sciences University of Wrocław Planning and Decision Making

Dr. hab. Jerzy SupernatInstitute of Administrative Sciences

University of Wrocław

Planningand Decision Making

Planning and Decision Making

dr hab. Jerzy Supernat

Planning and decision making

constitute the first managerial function

that organizations must address.



All planning and decision making

occurs within an environmental context.

Thus understanding the environment is

essentially

the first step in planning and decision making.



Decision making is the cornerstone of planning. It is the catalyst that drives the planning process:

• organization’s goals follow from decisions made by various managers

• the best plan for achieving particular goals reflects a decision to adopt one course of action as opposed to others

Decision making underlies every aspect of setting goals and formulating plans.



Purposes of goals

• goals provide guidance and a unified direction for people in the organization

• (effective) goal setting promotes good planning, and good planning facilities future goal setting

• (specific and moderately difficult) goals can serve as a source of motivation to employees of the organization (es-pecially if attaining the goal is likely to result in rewards)

• goals provide a mechanism for control and evaluation



Kinds of goals. Organization’s goals vary by:

• level (an organization’s mission, strategic goals, tactical goals, operational goals)

• area (goals for operations, marketing, finance, quality, productivity and so forth)

• time frame (long-term goals, intermediate-term goals, short-term goals; nb. some goals have an explicit time frame and others have an open-ended time horizon)



John A. Pearce II, Fred David:

An organization mission is a statement of its fundamen-tal, unique purpose that sets a business apart from other firms of its type and identifies the scope of the business’s operations in product and market terms.

Jelfa SA mission statement:

The mission of Jelfa SA is to enhance the quality of life and prolong the life span of society by manufacturing phar-maceuticals that come up to the highest world standards.



Managing Multiple Goals

Organizations set many different kinds of goals and sometimes ex-perience conflicts or contradictions among goals. To address such pro-blems, managers must understand the concept of optimizing. Optimizing involves balancing and reconciling possible conflicts between goals. Managers must look for inconsis-tencies and decide whether to pursue one goal to the ex-clusion of another or to find a midrange target between the extremes.



Kinds of organizational plans

Given the clear link between organizational goals and plans it is obvious that organizations establish many dif-ferent kinds of plans. At a general level, these include:

strategic plans

tactical plans

operational plans



Strategic Plans

Strategic plans are the plans developed to achieve stra-tegic goals. They are long-range plans and address ques-tions of

• scope / domain• resource allocation / deployment• competitive advantage• synergy



Tactical Plans

Tactical plans aim at achieving tactical goals. They are intermediate plans developed to implement specific parts of a strategic plan. Thus tactical plans are concerned more with actually getting things done than with deciding what to do.



Operational Plans

Operational plans are short-range plans and focus on car-rying out tactical plans to achieve operational goals. Two basic forms of operational plans are:

Single-use plans (developed for nonrecurring situations)

programs projects

Standing plans

policies standard operating procedures rules and regulations



Murphy’s Law

To err is human, to forgive is not company policy.



Contingency Planning

Contingency planning is important for most organizations and necessary for those operating in particularly complex or dynamic environments. The essence of contingency planning is the determination of alternative courses of action to be taken if an intended plan of action is un-expectedly disrupted or rendered inappropriate.

Contingency: an event which may or may not occur; that which is possible or pro-bable; a fortuitous event; a chance.

Contingency plans should be periodically updated and revised.

Peter F. Drucker(1909-2005)

http://www.washingtonpost.com/wp-dyn/content/article/2005/11/11/AR2005111101938_pf.html



Peter F. Drucker on decision making

• Making good decisions is a crucial skill at every level.

• Decision making is the specific executive task.

• Most discussions of decision making assume that only senior executives make decisions or that only senior executives' decisions matter. This is a dangerous mistake.

• Whenever you see a successful business, someone once made a courageous decision.

• Plans are only good intentions unless they immediately degenerate into hard work.



Whatever a manager does he does through making decisions.

Those decisions may be made as a matter of routine. In-deed, he may not even realize that he is making them. Or they may affect the future existence of the enterprise and require years of systematic analysis. But management is always a decision-making process.



Progressive stages of decision-making process

defining the problem

analyzing the problem

developing alternative solutions

deciding upon the best solution

converting the decision into effective action



Stage 1: Defining the problem • finding the real problem and defining it

• determining the objectives for the solution and the ru-les that limit the solution



Quod tibi fieri non vis, alteri ne feceris (Do not do unto others what you do not want done to yourself).

The Gospel according to Matthew 7, 12:

„Do for others what you want them to do for you”.

George Bernard Shaw (1856-1950):

Do not do unto others as you would expect they should do unto you. Their tastes may not be the same.



Peter M. Senge (born 1947) distinguishes:

• fundamental solutions

• symptomatic solutions



Stage 2: Analyzing the problem

• classifying the problem

• finding the facts



Aaron Bernard Wildavsky (1930-1993): Orga-nizations exist to suppress data. Some data are screened in but most are screened out. The very structure of organizations – the units, the levels, the hierarchy – is designed to reduce the data to manageable and manipula-table proportions. (…) at each level there is not

only compression of data but absorption of uncertainty. It is not the things in themselves but data – reduction sum-maries that are passed up until, at the end, executives are left with mere chains of inferences. Whichever way they go, error is endemic: If they seek original sources, they are easily overwhelmed; if they rely on what they get, they are easily misled.



Stage 3: Developing alternative solutions

What the alternatives are will vary with the problem. But one solution should always be considered: taking no ac-tion at all.

Some problems are so complex that you have to be high-ly intelligent and well-informed just to be undecided about them.

Laurence J. Peter



Alex F. Osborne (1888-1966) – the man who invented brainstorming:

It is easier to tone down a wild idea than to think up a new one.



Stage 4: Deciding upon the best solution

There are four criteria for picking the best from among the possible solutions:

• risk• economy of effort• timing• limitation of resources



Stage 5: Converting the decision into effective ac-tion

(…) it is of the essence of manager’s decision that other people must apply it to make it effective. A manager’s de-cision is always a decision concerning what other people should do. (…) It requires that any decision become „our decision” to the people who have to convert it into action. This in turn means that they have participate responsibly in making it.



Decision making and problem solving

Decision making

sensu stricto

Stage 1

Stage 4

Stage 2

Stage 3

Stage 5

Decision making sensu largo

Decision making sensu largissimo

Problem solving sensu stricto

Problem solving sensu largo

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Dr. hab. Jerzy Supernat Institute of Administrative Sciences University of Wrocław Planning and Decision Making