MGMT349- CH5
Chapter 5: Planning and Decision Making
Benefits and Pitfalls of Planning
Benefits:
Involves intensified effort.
Leads to persistence in achieving goals.
Provides direction to efforts and resources.
Encourages the development of task strategies that are effective.
Works for both companies and individuals in various contexts.
Pitfalls:
Impedes change and prevents necessary adaptation to new conditions.
Creates a false sense of certainty among planners and stakeholders.
Leads to detachment of planners from the reality of ongoing situations, resulting in ineffective plans.
How to Make a Plan That Works
S.M.A.R.T. Goals
Goal Commitment:
Definition: The determination to achieve a specified goal.
Techniques to enhance commitment include:
Setting goals participatively to involve team members.
Making the goal public, fostering accountability.
Obtaining top management’s support for higher significance of the goal.
Action Plans
Definition: Lists specific steps, people involved, resources required, and the timeframe needed to achieve a given goal.
Tracking Progress
Setting Goals:
Proximal Goals: Short-term milestones that provide motivation and allow for adjustments.
Distal Goals: Long-term objectives that serve as overall guides.
Maintaining Flexibility
Options-Based Planning: Ensuring multiple pathways to adjust plans as situations evolve.
Slack Resources: Keeping excess resources available to facilitate adjustments when needed.
Effective Planning Example: KTM
Background: By 2016, KTM had secured over 270 World titles, affirming its status as the most successful motorsport brand.
Key strategies for adaptability in planning include:
Adjusting and training for varying race conditions.
Adapting track setup for individual needs.
Modifying equipment and parts as dictated by performance requirements.
Scoping the track for advantageous areas for riders.
Insights from Pit Beirer (KTM Motorsports Director):
Emphasizes the importance of collaboration among all involved—riders, factory staff, and support teams for success.
Acknowledges the emotional aspects of racing and teamwork in achieving goals.
Structural Strategies at KTM
Vision: Create high-performance motor vehicles that are premium and made from high-quality components.
Top Management Responsibilities:
Development of long-term strategic plans that define the company’s purpose and objectives.
Purpose Statement: A declaration of a company’s reason for existing.
Strategic Objective: Specific goals that unify efforts, challenge the organization, and have a set timeline.
KTM Strategy: Establish premium-quality performance vehicles while simultaneously enhancing customer connections to those vehicles.
Middle Management Responsibilities
Typically focuses on developing and executing tactical plans to meet strategic objectives for a timeline of six months to two years.
Management by Objectives (MBO):
Involves a cyclical process where managers and employees collaboratively:
Discuss and select goals.
Develop tactical plans to achieve them.
Meet regularly to review progress.
Lower-Level Management Responsibilities
Focus on developing and executing operational plans that guide day-to-day operations, typically covering a period of thirty days to six months.
Types of Operational Plans:
Single-Use Plans: Designed for unique, one-time events, such as adapting mid-race strategies.
Example: Ryan Dungey’s improvised gear-shifting strategy during a race due to equipment failure.
Standing Plans: Established for handling recurring events including policies and procedures.
Budgeting: Managers allocate available funds to align with strategic goals.
Decision Making
Definition
Decision Making: The process of selecting a solution from multiple alternative options available.
Rational Decision Making Process
Definition: A systematic approach to defining problems, evaluating alternatives, and selecting optimal solutions.
Steps Involved:
Defining the problem: Recognizing and understanding the issue at hand.
Identifying decision criteria: Guidelines used to inform decisions.
Weighing the criteria: Understanding the importance of each criterion.
Absolute Comparisons: Comparing each criterion against a specific standard.
Relative Comparisons: Assessing criteria against one another.
Generating alternative solutions: Considering various potential courses of action.
Evaluating each alternative: Assessing options against the identified criteria systematically.
Computing the optimal decision: Achieving the best outcome through ratings and weighted scores for each criterion.
Limits to Rational Decision Making
Real-world Impediments: Managers face limitations due to constrained resources, cognitive overload, lack of expertise, etc.
Satisficing: A strategy of selecting a good-enough option instead of an optimal one due to these constraints.
Advantages and Pitfalls of Group Decision Making
Advantages
Groups tend to outperform individuals in decision-making for:
Defining problems effectively.
Generating a broader range of alternative solutions.
Pitfalls
Groupthink: This phenomenon can hinder sound decision-making, leading to conformity over critical analysis.
Decisions take considerable time when made collectively.
Individual dominance in group discussions may lead to off-task discussions, leading to potential resolution issues.
Types of Conflicts
C-type Conflict (Cognitive Conflict): Involves problem-related differences of opinion, fosters open discussion, and seeks reconciliations for the best solutions.
A-type Conflict (Affective Conflict): Centers around personal issues, resulting in negative emotional responses such as hostility and distrust.
Methods of Creating C-Type Conflict
Techniques
Devil’s Advocacy: Assigning an individual or subgroup the role of critic in the decision-making process.
Dialectical Inquiry: Decision makers present an assumption of a solution (thesis) and then develop an opposing solution (antithesis).
Group Decision-Making Tools
Nominal Group Technique: Members write down and evaluate ideas independently, improving focus on issues and reducing affective conflict.
Delphi Technique: A panel of experts responds to each other's inputs until consensus is reached.
Electronic Brainstorming: Utilizes technology for group sessions, allowing members to build on ideas while minimizing interruptions due to performance anxiety or blocking.