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

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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 Action point Action point Action point

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Develop plan, Implement plan and Specify indicators Successfully complete
considering formally identify for the contingency plan or contingency
contingency events contingency events events and develop plan
contingency plans for
each possible event

Monitor contingency event indicators and

implement contingency plan if necessary

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 Tactical planning
Developing and Executing Tactical Plans
Developing tactical plans
• Recognize and
overarching strategic
and tactical
• Specify relevant resource
time
• Recognize and identify
resource
Operational Planning
Plan
Single-use plan
Program
Project
Standing plan
Policy
Standard operating proc edure
Rules and regulations
Barriers to Goal Setting & Planning
† Inappropriate goals
† Improper reward system
† Dynamic and complex environment
† Reluctance to set goals
† Resistance to change
† constraints
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
Description
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
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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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