1. Chapter 5
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2. Learning Objectives Discuss the benefits and pitfalls of planning
Describe how to make a plan that works
Discuss how companies can use plans at all management levels, from top to bottom
Explain the steps and limits to rational decision making
Explain how group decisions and group decision-making techniques can improve decision making

3. Developing a method or strategy to achieve that goal
Planning
LO 1
Choosing a goal
Developing a method or strategy to achieve that goal
Has advantages and disadvantages

4. Benefits and Pitfalls of Planning
LO 1
Benefits
Involves intensified effort
Leads to persistence
Provides direction
Encourages the development of task strategies
Works for companies and individuals
Pitfalls
Impedes change and prevents needed adaptation
Creates a false sense of certainty
Leads to detachment of planners

5. 5.1 How to Make a Plan That Works
LO 2
How to Make a Plan That Works

6. Goal commitment: Determination to achieve a goal
Effective Planning
LO 2
S.M.A.R.T. goals: Specific, measurable, attainable, realistic, and timely goals
Goal commitment: Determination to achieve a goal
Techniques
Setting goals participatively
Making the goal public
Obtaining top management’s support

7. Effective Planning (continued 1)
LO 2
Action plan: Lists the specific steps, people, resources, and time period needed to attain a goal
Tracking progress
Setting proximal goals and distal goals
Proximal goals: Short-term goals or subgoals
Distal goals: Long-term or primary goals
Gathering and providing performance feedback

8. Effective Planning (continued 2)
LO 2
Maintaining flexibility
Options-based planning: Keeping options open by making small, simultaneous investments in many alternative plans
Slack resources: Cushion of extra resources that can be used to adapt to unanticipated changes, problems, or opportunities

9. 5.3 Planning from Top to Bottom
LO 3
5.3 Planning from Top to Bottom

10. Planning from Top to Bottom
LO 3
Top management - Responsible for developing long-term strategic plans
Purpose statement: Declaration of a company’s purpose or reason for existing
Strategic objective: Specific goal that:
Unifies company-wide efforts
Stretches and challenges the organization
Possesses a finish line and a time frame

11. Planning from Top to Bottom (continued 1)
LO 3
Middle management - Responsible for developing and carrying out tactical plans to accomplish strategic objectives
Tactical plans: Direct behavior, efforts, and attention over the next six months to two years
Management by objectives: Managers and employees:
Discuss and select goals
Develop tactical plans
Meet regularly to review progress

12. Planning from Top to Bottom (continued 2)
LO 3
Lower-level managers - Responsible for developing and carrying out operational plans
Operational plans: Day-to-day plans for producing or delivering the organization’s products and services over a thirty-day to six-month period

13. Kinds of Operational Plans
LO 3
Single-use plans: Plans that cover unique, one-time-only events
Standing plans: Plans used repeatedly to handle frequently recurring events
Policies, procedures, and rules and regulations
Budgeting: Managers decide how to allocate available money to best accomplish company goals

14. Decision Making and Rational Decision Making
LO 4
Decision making: Process of choosing a solution from available alternatives
Rational decision making: Systematic process of defining problems, evaluating alternatives, and choosing optimal solutions

15. Steps in Rational Decision Making
LO 4
Defining the problem
Managers must:
Be aware of a problem
Be motivated to solve the problem
Have the knowledge, skills, abilities, and resources to fix the problem
Identifying decision criteria
Decision criteria: Standards used to guide judgments and decisions

16. Steps in Rational Decision Making (continued 1)
LO 4
Weighing the criteria
Absolute comparisons: Each decision criterion is compared to a standard or ranked on its own merits
Relative comparisons: Each decision criterion is compared directly with every other criterion
Generating alternative courses of action

17. Steps to Rational Decision Making (continued 2)
LO 4
Evaluating each alternative against each criterion systematically
Computing the optimal decision
Performed by multiplying the rating for each criterion by the weight for that criterion and then summing the generated scores

18. Limits to Rational Decision Making
LO 4
Managers have to operate in a perfect world with no real-world constraints
Limited resources as well as attention, memory, and expertise problems make it difficult for managers to maximize decisions
Satisficing: Choosing a good-enough alternative

19. Advantages and Pitfalls of Group Decision Making
LO 5
Advantages
In the decision-making process, groups perform better than individuals in:
Defining the problem
Generating alternative solutions
Pitfalls
Groupthink: Barrier to good decision making
Takes considerable time
Individuals can dominate group discussions

20. Types of Conflicts C-type conflict (cognitive conflict)
Focuses on problem- and issue-related differences of opinion
Involves a willingness to examine, compare, and reconcile the differences to produce the best possible solution
C-type conflict (cognitive conflict)
Focuses on individuals or personal issues
Results in hostility, anger, resentment, distrust, cynicism, and apathy
A-type conflict (affective conflict)

21. Methods of Creating C-Type Conflict
LO 5
Devil’s advocacy
Assigning an individual or a subgroup the role of critic
Dialectical inquiry: Decision makers:
State the assumptions of a proposed solution (thesis)
Generate a solution that is the opposite (antithesis) of that solution

22. Nominal Group Technique and Delphi Technique
LO 5
Nominal group technique
Begins and ends by having group members write down and evaluate ideas
Improves group decision making by decreasing a-type conflict
Delphi technique
Members of a panel of experts respond to questions and to each other until reaching agreement on an issue

23. Electronic Brainstorming
LO 5
Group members use computers to build on each others’ ideas and generate as many alternative solutions as possible
Disadvantages associated with face-to-face brainstorming are solved
Production blocking: 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

24. Key Terms Planning S.M.A.R.T. goals Goal commitment Action plan
Proximal goals
Distal goals
Options-based planning
Slack resources
Strategic plans
Purpose statement
Strategic objective
Tactical plans
Management by objectives
Operational plans
Single-use plans
Standing plans
Policies
Procedures

25. Key Terms (continued 1) Rules and regulations Budgeting
Decision making
Rational decision making
Problem
Decision criteria
Absolute comparisons
Relative comparisons
Maximize
Satisficing
Groupthink
C-type conflict (cognitive conflict)
A-type conflict (affective conflict)
Devil’s advocacy
Dialectical inquiry

26. Key Terms (continued 2) Nominal group technique Delphi technique
Brainstorming
Electronic brainstorming
Production blocking
Evaluation apprehension

27. Summary
Planning brings about increases in individual and organizational performance
Planning works best when the goals and action plans at the bottom and middle of the organization support the goals and action plans at the top of the organization
Rational decision making is a systematic process of defining problems, evaluating alternatives, and choosing optimal solutions
Group decision making can lead to better decisions