“Planning and Decision Making”

Presented By: Sardar Sikander Tajamul Farooq Saffi DARChapter No.07

Decision Making and the Planning Process Organizational Goal Organizational Planning Tactical Planning Operational Planning Managing Goal-Setting and Planning Processes

Decision Making and Planning process

Contents:

Decision making is the cornerstone of planning. Decision making is the catalyst that drives the

planning process. Deciding on the best plan for achieving particular

goals also reflects a decision to adopt one course of action as opposed to others.

Understanding the environment is essentially the first step in planning.

Managers must establish the organization’s mission.

Directly following the mission are strategic

Decision Making and Planning process

The Organization’s Mission

∙Purpose ∙Premises ∙Values ∙Directions

Strategic goals

Tactical goals

Operational plans

Operational goals

Tactical plans

Strategic plans

The Environmental Context

Decision Making and the Planning Process

“Goals are critical to organizational effectiveness, and they serve a number of

purposes”

Goals can help everyone understand where the organization is going and why getting there is important.

Effective goal setting promotes good planning,and good planning facilities future goal setting.

Goals can serve as a source of motivation foremployees of the organization.

Purpose of Goals

Organizational Goal

A goal set by and for top management of the organization.

A goal set by and for middle managers of the organization.

A goal set by and for lower level managers of the organization.

Kinds of Goals

1. Strategic Goal:

2. Tactical Goal:

3. Operational Goal:

Organizational Planning

An organizational plan is basically a “to do” list for and organization. It lists out

the plan of work, programs & tasks.

Each specific plan is designed for achieving each specific goal.

Plans are also distributed according to the time frame in which they are implemented or act upon.

Different plans are also prepared by management in order to tackle any unexpected event.

A general plan outlining decisions of resource allocation,priorities,and action steps necessary to reach strategic goals.

A plan aimed at achieving tactical goals and developed to implement parts of a strategic plan.

Focuses on carring out tactical plans to achieve operational goals.

Kinds of Organizational Planning

1. Strategic Plan:

2. Tactical Plan:

3. Operational Plan:

A plan that covers many years even decades;

common long range plans are for five years or more.

A plan that generally covers from one to five years.

Time Frames for Planning

1. Long range plan:

2. Immediate plan:

A plan that generally covers a span of one year or less.

A plan used to operationalize any other kind of plan.

A plan developed to react to an unforeseen circumstances.

3. Short range plan:

4. Action plan:

5. Reaction plan:

Time Frames for Planning (cont’d)

Contigency Planning: The determination of alternative courses of

action to be taken if an intended plan is unexpectedly disrupted or rendered inappropriate.

Crisis Management: The set of procedures the organization uses in

the event of a disaster or other unexpected calamity.

Ongoing planning process

Develop plan,Considering Contigency events

Implement planAnd formally Identify contigency Events

Specify indicators For the contigencyEvents and develop Contigency plans For each possibleEvent

SuccessfullyComplete Plan or Contigency plan

Action point 1 Action point 2 Action point 3 Action point 4

Contigency Planning and Crisis Management

The manager needs to recognize that tactical planning must address a number of tactical goals derived from a broader strategic goal.

Tactics must specify resources & time frames. It requires the use of human resources.

Tactical Planning

Executing Tactical Plans

Developing Tactical Plans

• Successful implementation depends upon astute use of resources, effective decision making.

• Steps to ensure that right things are done at right time in right way.

• Ongoing monitoring must be carried out to evaluate achievement of desired results from plan.

Developing Tactical Plans Executing Tactical Plans Recognize and understand Evaluate each course of action overarching strategic plans in light of its goal

and tactical goals Obtain and distribute

Specifying relevant resource information and resources and time issues Monitor horizontal and

vertical Recognize and identify human communication and integration

resource commitments of activities. Monitor ongoing activities

for goal achievements

Developing & Executing Tactical Plans

Tactical plans are used to accomplish specific parts of strategic plan. Several tactical plans are used to implement each strategic plan. Effective tactical planning involves both development & execution.

Plan Description

Single use plan Developed to carry out a course of action not likely to be repeated in future. Program Single use plan for a large set of activities. Project Single use plan of less scope and complexity than a program.

Standing plan Developed for activities that recur regularly over a period of time

Policy Standing plan specifying the organization’s general

response to a designated problem or situation Standard operating Standing plan outlining steps to be followed in

procedure particular circumstances Rules and regulations Standing plans describing exactly how specific

activities are to be carried out.

Operational PlansTypes of Operational Plans

Organizations develop various operational plans to help achieve operational goals.In general there are two types of single use plan & three types of standing plan.

Managing Goal-Setting and Planning Processes

Barriers to Goal Setting and Planning Major Barriers Inappropriate goals

Improper Reward System Dynamic and Complex Environment Reluctance to Establish Goals Constraints

Overcoming the Barriers Understanding the purposes of goals and planning Communication and Participation Consistency,Revision and Updating Effective Reward System

Goals may also be inappropriate if they are unattainable. Goals may also be inappropriate if they place too much

emphasis on either quantitative or qualitative measures of success.

An improper reward setting acts as a barrier to goal setting and planning.

The nature of an organization’s environment is also a barrier to effective goal setting and planning.

Rapid change,technological innovation and intense competition can all increase the difficulty of an organization’s accurately assessing future opportunities and threats.

Barriers to Goal Setting and Planning

1. Inappropriate Goals:

3. Dynamic and Complex Environment:

2. Improper Reward System:

Managers reluctance to establish goals for themselves and their units of responsibility.

Another barrier to goal setting and planning is resistance to change.

Planning essentially involves changing something about the organization.

Constraints that limit what an organization can do are another major obstacle.

Common constraints include a lack of resources, government restrictions and strong competition.

Barriers to Goal Setting and Planning (cont’d)

4.Reluctance to Establish Goals:

5.Resistance to Change:

6.Constraints:

Managers should also recognize that there are limits to the effectiveness of setting goals and making plans.

Everyone involved in the planning process should know what the over-riding organizational strategy is,what the various functional strategies are, and how they are all to be integrated and coordinated.

People responsible for achieving goals and implementing plans must have a voice in developing them from the outset.

Overcoming the Barriers

2.Communication and Participation:

1.Understand the Purpose of Goals and Planning:

Goals should be consistent both horizontally and vertically. Horizontal consistency means that goals should be

consistent across the organization from one department to the next.

Vertical consistency means that goals should be consistent up and down the organization- strategic, tactical and operational goals must agree with one another.

In general, people should be rewarded both for establishing effective goals and plans and for successfully achieving them.

3.Consistency,Revision and Updating:

4.Effective Reward Systems:

Overcoming the Barriers

Management by Objectives(MBO)

“ A formal goal- setting process involving collaboration between managers and

subordinates; the extent to which goals are accomplished is a major factor in evaluating and rewarding subordinates performance.”

The purpose of formal goal setting is generally to give subordinates a voice in the goal-setting and planning processes and to clarify for them exactly what they are expected to accomplish in a given time span.

If a formal goal-setting program is to be successful, it must start at the top of the organization.

The collaboration involves a series of distinct steps.

The Nature and Purpose of Formal Goal Setting:

The Formal Goal setting Process:

Starting Establishment Collaborative Periodic Evalua-

The formal of organiza goal setting review tion

Goal tional goals and setting and plans planning Program

Resources

Counselling

Verifiable goals and

Clear plans

Meeting

The Formal Goal Setting Process

Communicating

organi - zational

goals and plans

Formal goal setting is an effective technique for integrating goal setting & planning. This figure portrays the general steps that most organizations use when they adopt formal goal setting. Of course most organizations adapt this general process to fit their own unique needs & circumstances.

A primary benefit of goal setting is improved employee motivation.

Goal setting focuses attention on appropriate goals and plans, helps identify superior managerial talent for future promotion, and provides a systematic management philosophy that can have a positive effect on the overall organization.

The major problem that can derail a goal-setting program is lack of top management support.

Another problem with goal setting is that firms overemphasize quantitative goals and plans and burden their system with too much paperwork and record keeping.

The Effectiveness of Formal Goal Setting

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