Planning and Decision Making Flashcards
The benefits and pitfalls of planning.
Planning is choosing a goal and developing a method for achieving it. Planning is one of the best ways to
improve organizational and individual performance. It encourages people to work harder (intensified
effort), to work hard for extended periods (persistence), to engage in behaviors directly related to goal
accomplishment (directed behavior), and to think of better ways to do their jobs (task strategies).
However, planning also has three potential pitfalls. Companies that are overly committed to their plans
may be slow to adapt to environmental changes. Planning is based on assumptions about the future, and
when those assumptions are wrong, plans can fail. Finally, planning can fail when planners are detached
from the implementation of plans
How to make a plan that works.
There are five steps to making a plan that works: (1) Set S.M.A.R.T. goals—goals that are Specific,
Measurable, Attainable, Realistic, and Timely. (2) Develop commitment to the goals. Managers can
increase workers’ goal commitment by encouraging worker participation in goal setting, making goals
public, and getting top management to show support for workers’ goals. (3) Develop action plans for goal
accomplishment. (4) Track progress toward goal achievement by setting both proximal and distal goals
and by providing workers with regular performance feedback. (5) Maintain flexibility by keeping options
open.
How companies can use plans at all management levels, from top to bottom.
Proper planning requires that the goals at the bottom and middle of the organization support the objectives
at the top of the organization. Top management develops strategic plans, which start with the creation of
an organizational vision and mission. Middle managers use techniques like management by objectives to
develop tactical plans that direct behavior, efforts, and priorities. Finally, lower-level managers develop
operational plans that guide daily activities in producing or delivering an organization’s products and
services. There are three kinds of operational plans: single-use plans, standing plans (policies, procedures,
and rules and regulations), and budgets.
The steps and limits to rational decision-making.
Rational decision-making is a six-step process in which managers define problems, evaluate alternatives,
and compute optimal solutions. The first step is identifying and defining the problem. Problems are gaps
between desired and existing states. Managers won’t begin the decision-making process unless they are aware of the gap, motivated to reduce it, and possess the necessary resources to fix it. Step 2 is defining the decision criteria used to judge alternatives. In Step 3, an absolute or relative comparison process is used to rate the importance of the decision criteria. Step 4 involves generating many alternative courses of action (i.e., solutions). Potential solutions are assessed in Step 5 by systematically gathering information
and evaluating each alternative against each criterion. In Step 6, criterion ratings and weights are used to
compute the optimal value for each alternative course of action. Rational managers then choose the
alternative with the highest optimal value. The rational decision-making model describes how decisions
should be made in an ideal world without limits. However, bounded rationality recognizes that in the real
world, managers’ limited resources, incomplete and imperfect information, and limited decision-making
capabilities restrict their decision-making processes.
How group decisions and group decision-making techniques can improve decision making
When groups view problems from multiple perspectives, use more information, have a diversity of
knowledge and experience, and become committed to solutions they help choose, they can produce
better solutions than individual decision makers. However, group decisions can suffer from these
disadvantages: groupthink, slowness, discussions dominated by just a few individuals, and unfelt
responsibility for decisions. Group decisions work best when group members encourage c-type conflict.
However, group decisions don’t work as well when groups become mired in a-type conflict. The devil’s
advocacy and dialectical inquiry approaches improve group decisions because they bring structured ctype
conflict into the decision-making process.
By contrast, the nominal group technique and the Delphi technique both improve decisionmaking
by reducing a-type conflict. The stepladder technique improves group decision making by
adding group member’s independent contributionsto the discussion one by one. Finally, because it
overcomes the problems of production blocking and evaluation apprehension, electronic brainstorming
is more effective than face-to-face brainstorming.
