Basic Elements of Planning and Decision Making

Planning and the planning process Planning: setting an organization’s goals and deciding how best to achieve them. It’s a generic activity

The Environmental Context
The organization’s mission • Purpose • Premises • Value • Directions Strategic goals Strategic plans

Tactical goals

Tactical plans

Operational goals

Operational plans

Organizational Goals Purpose of Goals Provide guidance and a unified direction for people in the organization. Have a strong effect on the quality of planning. Serve as a source of motivation for employees of the organization. Provide an effective mechanism for evaluation and control of the organization. Kinds of Goals Goals by level: Mission: a statement of an organization’s fundamental purpose. Strategic goal: goals set by and for top management of the organization that address broad, general issues. Tactical goal: goals set by and for middle managers; their focus is on how to operationalize actions to strategic goals. Operational goals: goals set by and for lower-level managers to address issues associated with tactical goals. By area By time frame: Long term Intermediate term Short term – (action plan & reaction plan) May be explicit or open-ended


Varies by level Responsibilities for setting goals Optimizing: balancing and reconciling possible conflicts among goals Organizational Plans Kinds of organizational plans Strategic plan: A general plan outlining resource allocation, priorities, and action steps to achieve strategic goals. The plans are set by and for top management. Tactical Plans: A plan aimed at achieving the tactical goals and is developed to implement parts of a strategic plan. Operational Plans: Plans that have a short-term focus. These plans are set by and for lower-level managers to carry out tactical plans Responsibilities for Planning Planning staff Planning task force Board of directors CEO Executive committee Line management Contingency planning Contingency is the determination of alternative courses of action to be taken if an intended plan is unexpectedly disrupted or rendered inappropriate. These plans help managers to cope with uncertainty and change.

Ongoing planning

Action point 1
Develop plan, considering contingency events

Action point 2

Implement plan and formally identify contingency events

Action point 3

Specify indicators for the contingency events and develop contingency plans for each possible event

Successfully complete plan or contingency plan

Action point 4

Monitor contingency event indicators and implement contingency plan if necessary


Tactical planning Developing and Executing Tactical Plans Developing tactical plans
• Recognize and overarching strategic and tactical • Specify relevant resource time • Recognize and identify resource

Executing tactical plans
• Evaluate each course of in light of its • Obtain and information and • Monitor horizontal and communication and of • Monitor ongoing activities goal

Operational Planning

Single-use plan Program Project Standing plan Policy Standard operating proc edure Rules and regulations

Developed to carry out a course of action not likely to be repeated in the future Single-use plan for a large set of activities Single-use plan of less scope and complexity than a program Developed for activities that recur regularly over a period of time Standing plan specifying the organiz ation’s general response to a designated problem or situation Mc Donald Standing plan outlining steps to be followed in particular circumstances Standing plans describing exactly how specific activities are to be carried out

Barriers to Goal Setting & Planning Inappropriate goals Improper reward system Dynamic and complex environment Reluctance to set goals Resistance to change constraints 3

Overcoming the barriers Understand the purpose of goals and plans Communication and participation Consistency, revision and updating Effective reward systems

Management by Objective (MBO) The process to collaborative goal setting by a manager and subordinate; the extent to which goals are accomplished is a major factor in evaluating and rewarding the subordinate’s performance. The nature and purpose of MBO: The purpose of MBO is to give subordinates a voice in the goal setting and planning process and to clarify for them exactly what they are expected to accomplish in a given time span. MBO is concerned with goal setting and planning for individual managers and their units or work groups. The MBO process Starting the MBO program -it must start at the top of the organization -employee must also be educated about what MBO is, what they think it will do. -manager must implement it in a way that is consistent with overall organizational goals Collaborative goal setting and planning Manager tell their subordinates what org. and unit goals and plans top management has established Manager meeting with their subordinates on a one-to-one basis to arrive at a set of goals and plans the goals are refined to be as verifiable as possible and to specify a time frame for their accomplishment Role of counselors Workable and attainable Spell out the resources Periodic review Evaluation Effectiveness of MBO system Benefits of MBO Increased motivation of employees Enhanced communication More objective performance appraisal Helps in finding managerial talents Ensures effective control Problems associated with MBO Improper implementation Lack of top management support Lack of commitment at lower level Too much emphasis on quantitative goals



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