Planning & Decision Making Engr. Rexmelle F. Decapia Jr. RME-Instructor Mechanical Engineering Department Technological University of the Philippines-Taguig

Decision Making and the Planning Process Decision making is the cornerstone of planning. Is the catalyst that drives the planning process. Can best be thought of as a generic activity.

Management in Organizations Planning and Decision Making Organizing Inputs from the Environment Human Resources Financial Resources Physical Resources Information Resources Goals Attained Efficiently Effectively Leading Controlling

The Environmental Context AT The Organization’s mission Purpose Premises Values Directions Strategic Goals Strategic Plans Tactical Goals Tactical Plans Operational Goals Operational Plans

ORGANIZATIONAL GOALS Purposes of Goals They provide guidance and a unified direction for people in the organization. Goal setting practices strongly affect other aspects of planning. Goals can serve as a source of motivation to employees of the organization. Goals provide an effective mechanism for evaluation and control

Kinds of Goals Level of Goals Mission is a statement of its fundamental, unique purpose that sets a business apart from other firms of its type and identify the scope of the business’s operations in the product and market terms. outlines the organization’s purpose, premises, values, and directions. b. Strategic Goals are goals set by and for top management of the organization. it focus on general issue. c. Tactical Goals are set by and for middle managers. it focus on how to operationalize actions necessary to achieve

Kinds of Goals Level of Goals 1. Level (cont…) c. Operational Goals are set by and for lower level managers. its concern is with short-term issues associated with the tactical goals. 2. Area goals also varies depends on the area within the organizations or firms such as operations, marketing, finance, quality, productivity, etc.

Kinds of Goals Level of Goals 3. Time Frame Long- term Goals - usually applicable for strategic goals. - often means ten years or longer. b. Intermediate-term Goals - around five years or so. c. Short-term Goals - around one year.

Responsibilities for Setting Goals Who sets goals? The mission and strategic goals are generally determined by the board of directors and top managers. Top and middle managers then work together to establish tactical goals. Middle and lower-level managers are jointly responsible for operational goals.

Organizational Planning Kinds of Organizational Plans Strategic Plans - are the plans developed to achieve strategic goals. - is a general plan outlining decisions of resource allocation, priorities, and action steps necessary to reach strategic goals. - these plans are set by the board of directors and top management, generally have an extended time horizon, and address questions of scope, resource deployment, competitive advantage and synergy.

Organizational Planning Kinds of Organizational Plans 2. Tactical Plans - aimed at achieving tactical goals. - is developed to implement specific parts of a strategic plan. - typically involve upper and middle management and, compared with strategic plans, have a somewhat shorter time horizon, and more specific and concrete focus. - are concerned more with actually getting things done than with deciding what to do.

Organizational Planning Kinds of Organizational Plans 3. Operational Plans - focuses on carrying out tactical plans to achieve operational goals. - developed by middle and lower managers, operational plans have short-term focus and relatively narrow in scope. - each one deals with fairly small set of activities.

Time Frames for Planning Long- Range Plans - covers many years, perhaps even decades, common long-range plans are for five years or more. 2. Intermediate Plans - is somewhat less tentative and subject to change than is long-range plan. - usually cover periods from one to five years and are especially important for middle and first-line managers. 3. Short-Range Plans - has a time frame of one year or less. -greatly affect the manager’s day-to-day activities.

Responsibilities for Planning Planning Staff - they can reduce the workload of individual managers. -help coordinate the planning activities of individual managers, bring to a particular problem many different tools and techniques, - take a broader view than individual managers, and go beyond pet projects and particular departments.

Responsibilities for Planning 2. Planning Task Force - often comprises line managers with special interest in the relevant area of planning. - is often created when the organization wants to address a special circumstances. - include representatives from each of the major units within the company, the corporate planning staff, and the management team that would run the operation.

Responsibilities for Planning 3. Board of Directors - establishes the corporate mission and strategy. - traditionally played a major role in planning. 4. Chief Executive Officer - is usually the president or the chair of the board of directors. - the single most important individual in any organization’s planning process and is responsible for implementing the strategy.

Responsibilities for Planning 5. Executive Committee - is usually composed of the top executives in the organization working together as a group. - Committee members usually meet regularly to provide input to the CEO on the proposals that affect their own units and to review the various strategic plans that develop from this input. - Members are frequently assigned to various staff committees, subcommittees, and task forces to concentrate on specific projects or problems that might confront the entire organization at some time in the future.

Responsibilities for Planning 6. Line Management - line managers are those persons with formal authority and responsibility for the management of the organization. - they are valuable of inside information for other managers as plans are formulated and implemented. - they are at he lower and middle levels of the organization usually must execute the plans developed by top management. - identifies, analyzes, and recommends program alternatives, develops budgets and submits them for approval, and finally sets the plans in motion.

Contingency Planning Contingency Planning - determination of alternative courses of action to be taken if an intended plan of action is unexpectedly disrupted or rendered inappropriate. Ongoing Planning Process 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. Action point 4: Successfully complete plan or contingency plan.

Tactical Planning Tactical Plans - are developed to implement specific parts of a strategic plans. - strategy focuses on resources, environment, and mission, whereas tactics focus primarily on people and action.

Developing Tactical Plans Tactical Planning Developing Tactical Plans Developing tactical plans Recognize and understand overarching strategic plans and tactical goals. Specify relevant resource and time issues. Recognize and identify human resource commitments. Executing tactical plans Evaluate each course of action in light of its goal. Obtain and distribute information and resources. Monitor horizontal and vertical communication and integration of activities. Monitor ongoing activities for goal achievement.

Operational Planning Operational plans - are derived from tactical plans and are aimed at achieving operational goals. Types of Operational Plans Single-use plan - developed to carry out a course of action not likely to be repeated in the future. Program – a single-use plan for a large set of activities and it has no limit. Project – is a single-use plan of less scope and complexity than a program and it has a strict limitation on time.

Operational Planning Types of Operational Plans Standing plan - developed for activities that recur regularly over a period of time Policy – a standing plan specifying the organization’s general response to a designated problem or situation Standard Operating Procedure – a standing plan outlining steps to be followed in particular circumstances. Rules and regulations- a standing plans describing exactly how specific activities are to be carried out. Project Estimate Times Costs

Barriers to Goal Setting and Planning Major Barriers Inappropriate goals Improper reward system Dynamic and complex environment Reluctance to establish goals Resistance to change Constraints Overcoming the Barriers Understanding the purposes of goals and planning Communication and participation Consistency, revision, and updating Effective reward systems

Management by Objectives to Implement Plans -A widely used method for managing the goal-setting and planning process concurrently to ensure that both are done effectively. The Nature and Purpose of MBO - The purpose of MBO is to give subordinates a voice in the goal-setting and planning processes 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.

Management by Objectives to Implement Plans The MBO Process Starting the MBO Program Establishment of organizational goals and plans Collaborative goal setting and planning Communicating organizational goals and plans Periodic Review Evaluation Meeting Variable goals and clear plans Counseling Resources

Management by Objectives to Implement Plans The Effectiveness of MBO 1. Improved employee motivation 2. Communication is enhanced through the process of discussion and collaboration. 3. Focus attention on appropriate goals and plans 4. Helps identify superior managerial talent for future promotion. 5. Provides a systematic management philosophy that can have a positive effect on the overall organization. 6. Facilitates control