Principles of Management: Planning and Decision-Making (CH5)

Planning

Choosing a goal and developing a strategy to achieve that goal.

Benefits of Planning

Intensifies efforts, leads to persistence, provides direction, encourages the development of task strategies, and works for both companies and individuals.

Pitfalls of Planning

Impede change, prevent or slow needed adaptation, create a false sense of certainty, and lead to detachment of planners.

S.M.A.R.T. goals

Goals that are specific, measurable, attainable, realistic, and timely.

Goal commitment

The determination to achieve a goal.

Action plan

A plan that lists the specific steps, people, resources, and time period needed to attain a goal.

Proximal goals

Short-term goals or subgoals.

Distal goals

Long-term or primary goals.

Options-based planning

Maintaining planning flexibility by making small, simultaneous investments in many alternative plans.

Slack resources

A cushion of extra resources that can be used with options-based planning to adapt to unanticipated changes, problems, or opportunities.

Urgent Important Matrix

A tool used to provide direction in planning.

Techniques for Effective Planning

Setting goals participatively, making the goal public, and obtaining top management's support.

Methods for tracking progress

Setting proximal goals and distal goals, and gathering and providing performance feedback.

Steve Jobs Quote

You can't connect the dots looking forward, you can only connect them looking backward. So you have to trust that the dots will somehow connect in your future.

Ray Kroc Quote

Nothing in the world can take the place of persistence.

Polling Activity

Which of the following pitfalls to planning do you believe managers need to work most diligently to avoid?

Top management

Responsible for developing long-term strategic plans.

Strategic plans

Overall company plans that clarify how the company will serve customers and position itself against competitors over the next two to five years.

Purpose statement

A statement of a company's purpose or reason for existing.

Strategic objective

A more specific goal that unifies company-wide efforts, stretches and challenges the organization, possesses a finish line and a time frame.

Middle management

Develops and carries out tactical plans to accomplish strategic objectives.

Tactical plans

Plans created and implemented by middle managers that direct behavior, efforts, and attention over the next six months to two years.

Management by objectives

A four-step process in which managers and employees discuss possible goals, collectively select goals, develop tactical plans, and meet regularly to review progress toward goal accomplishment.

Lower-level managers

Develop and carry out operational plans.

Operational plans

Day-to-day plans, developed and implemented by lower-level managers, for producing or delivering the organization's products and services over a 30-day to six-month period.

Single-use plans

Plans that cover unique, one-time-only events.

Standing plans

Plans used repeatedly to handle frequently recurring events.

Policies

Standing plans that indicate the general course of action that should be taken in response to a particular event or situation.

Procedures

Standing plans that indicate the specific steps that should be taken in response to a particular event.

Rules and regulations

Standing plans that describe how a particular action should be performed or what must happen or not happen in response to a particular event.

Budgeting

Quantitative planning through which managers decide how to allocate available money to best accomplish company goals.

Decision-making

The process of choosing a solution from available alternatives.

Rational decision-making

A systematic process of defining problems, evaluating alternatives, and choosing optimal solutions.

Define the problem

A gap between a desired state and an existing state.

Decision criteria

The standards used to guide judgments and decisions.

Absolute comparisons

A process in which each decision criterion is compared to a standard or ranked on its own merits.

Relative comparisons

A process in which each decision criterion is compared directly with every other criterion.

Absolute Weighting of Decision Criteria

A scale where 5=critically important, 4=important, 3=somewhat important, 2=not very important, 1=completely unimportant.

Predicted reliability

Rated as 5 in the Absolute Weighting of Decision Criteria.

Owner satisfaction

Rated as 2 in the Absolute Weighting of Decision Criteria.

Predicted depreciation

Rated as 1 in the Absolute Weighting of Decision Criteria.

Avoiding accidents

Rated as 4 in the Absolute Weighting of Decision Criteria.

Fuel economy

Rated as 5 in the Absolute Weighting of Decision Criteria.

Crash protection

Rated as 4 in the Absolute Weighting of Decision Criteria.

Acceleration

Rated as 1 in the Absolute Weighting of Decision Criteria.

Ride

Rated as 3 in the Absolute Weighting of Decision Criteria.

Front seat comfort

5

Daily commute (L)

+1, -1, -1, -1, 0

School system quality (SSQ)

-1, -1, -1, -1, -1

In-ground pool (IP)

+1, +1, 0, 0, +1

Sun room (SR)

+1, +1, 0, 0, 0

Quiet street (QS)

+1, +1, 0, 0, 0

Newly built house (NBH)

0, +1, -1, 0, 0

Total weight

+2, +5, -3, -2, -2, 0

Step 4: Generate alternative courses of action

A step in Rational Decision-Making

Step 5: Evaluate each alternative against each criterion systematically

A step in Rational Decision-Making

Step 6: Compute the optimal decision

Involves multiplying the rating for each criterion by the weight for that criterion and then summing the generated scores

Bounded rationality

Limits to Rational Decision-Making due to real-world constraints faced by managers

Maximize

Choosing the best alternative

Satisficing

Choosing a 'good-enough' alternative

Advantages of Group Decision-Making

Groups perform better than individuals in defining the problem and in generating alternative solutions

Pitfalls of Group Decision-Making

Groupthink, takes considerable time, individuals can dominate group discussions, equality bias

Groupthink

A barrier to good decision-making caused by pressure within the group for members to agree with each other

Conditions for Groupthink

The group is insulated from others with different perspectives, the group leader expresses a strong preference for a particular decision, no established procedure for systematically defining problems and exploring alternatives, group members have similar backgrounds and experiences

C-type conflict

Disagreement that focuses on problem- and issue-related differences of opinion.

A-type conflict

Disagreement that focuses on individuals or personal issues, resulting in hostility, anger, resentment, distrust, cynicism, and apathy.

Devil's advocacy

A decision-making method in which an individual or a subgroup is assigned the role of critic.

Dialectical inquiry

A decision-making method in which decision makers state the assumptions of a proposed solution (a thesis) and generate a solution that is the opposite (antithesis) of that solution.

Nominal group technique

A decision-making method that begins and ends by having group members quietly write down and evaluate ideas to be shared with the group.

Delphi technique

A decision-making method in which members of a panel of experts respond to questions and to each other until reaching agreement on an issue.

Brainstorming

A decision-making method in which group members build on each others' ideas to generate as many alternative solutions as possible.

Electronic brainstorming

A decision-making method in which group members use computers to build on each others' ideas and generate as many alternative solutions as possible.

Production blocking

A disadvantage of face-to-face brainstorming in which a group member must wait to share an idea because another member is presenting an idea.

Evaluation apprehension

Fear of what others will think of your ideas.

Advantages of electronic brainstorming

Helps overcome production blocking and evaluation apprehension, protects participant anonymity, and is generally more productive than traditional brainstorming.

Disadvantages of electronic brainstorming

Expense of computers, network, and software; challenge of writing rather than speaking ideas.

Conflict management approaches

Methods to find solutions to managing conflict, such as dialectical inquiry, nominal group technique, Delphi technique, and electronic brainstorming.

Steps for creating an effective plan

Outline the necessary actions to develop a successful plan.

Use of plans at management levels

Discussion on how companies can implement plans at all management levels, from top to bottom.

Limits to rational decision-making

Identify the steps to avoid limitations in rational decision-making.

Group decision-making techniques

Explain how group decisions and techniques can enhance decision-making.