Managerial Planning and Decision Making

Planning is the process of determining where to go by doing what. Planning is  intertwined with effectiveness, which is defined as the achievement of  organizational goals. In fact, the planning process involves determining those goals and how to reach them.

By looking at the present through the collection of hourly, daily, monthly data, short-term planning shapes the near future of the organization. This planning addresses short-term concerns like the condition of machinery and equipment used in production.

Being the primary function of management, planning should be done by all managers. However, the nature of planning changes with the level of management (Table 4.1). High-level managers deal with long-term planning, whereas low-level managers plan for the short term. However, this does not necessarily mean that middle-level managers do not deal with long- or short- term planning, or low-level managers do not deal with medium-term planning. In fact, they do. In that respect, Table 4.1 shows the dominant planning that is held by a particular level of management.

Long-term planning is high-level managers’ responsibility whereas middle-level managers are mainly responsible for medium-term planning and lower level managers are mainly responsible for planning for the short term.

Managerial planning is the process whereby managers assess an organization’s goals and create a plan of action for meeting those goals. Goals are the desired outcomes or results that people intend to achieve. Organizational goals can also be called as overall objectives. As planning is of great importance to an organization, the whole process of planning should be carried out in a systematic manner (Figure 4.1)

Organizational goals should be measurable, results-oriented, realistic, challenging, and have a clear time frame.

Long-term objectives can be more ambiguous as they may involve qualitative terms in their statements. However, as time goes by, the long-term objectives should be revised periodically, so that they can become more tangible through being stated in more quantifiable and/or specific terms which have closer timelines.

Identifying resources involves answering these questions: which resources, how much, when, do we have them, where can we find them?

Coming to the answers of the second and third questions, one needs to make projections for how much of each resource should be made available through time for the fulfillment of each goal.

Managers should determine strategies for evaluating progress toward goal achievement within an established time period. One way to do this is through requesting monthly progress reports from responsible unit managers. If short- comings are found, then the next and last step in planning will be figuring out remedies for going back on track.

A strategic plan is a broadly defined plan that is aimed at creating a desired future for the organization. Strategic plans focus on the broad future and identify the long-term direction the organization will take as a whole. These plans ideally set forth the goals and objectives needed to accomplish the organization’s vision. 

Tactical plans are short-range plans that emphasize the current operations of various parts of the organization, such as production, marketing and human resources. Tactical plans translate strategic plans into specific goals for specific parts of the organization. They specify how the organization’s resources can be used to put strategies into action. Tactical plans in business often take the form of functional plans that indicate how different operations within the organization will contribute to the overall strategy. 

An operational plan presents information to direct people in their day-to-day tasks that will support and enable the tactical plan. Operational plans translate tactical plans into specific goals and actions for small units of the organization and focus on the near term (12 months or less).

Standing plans are ongoing plans that provide guidance for activities performed repeatedly, like policies and procedures.Standing plans are developed to ensure the smooth running of operations. They bring consistency and uniformity to employees’ efforts.

A budget is a plan that commits resources to projects or activities for a specific time period. In some organizations managers may spend a fair amount of time bargaining with higher levels to get adequate budgets to support the needs of their work units or teams.

A proposed budget is rarely approved without a cutback. Therefore, many managers propose a budget by adding the expected amount of cut and/or attempt to give better rationalizations for each or critical budget items.

An approved budget shows the total amount of money the manager is authorized to spend together with how much on which budget item. Typically, the proposed budget and approved budget is hardly ever the same. Usually, the approved budgets involve cutbacks from the proposed budgets mostly for the purpose of controlling and reducing costs. 

Decision making is the process of finding or identifying problems/opportunities in order to resolve them. This involves making a choice from available options. The process of decision making can be described as involving seven steps (Figure 4.2).

The decision-making process starts with identifying a problem or opportunity. In order to initiate the decision-making process, one should feel the need to decide. The need to decide can be external or internal. If a problem or opportunity is brought to the attention of the relevant person or people by outside parties, then the trigger for decision making is external. If the decision maker takes initiative and chooses to come to a decision, then there is an internal trigger for taking a decision. Sometimes people can be driven to decide both internally and externally.

The decision-making process does not end with implementation, because there is the possibility of not realizing expected results. That is why, the decision makers need to follow up on the realization of expected results.

The rational decision-making model is a step-by-step process for making logically sound decisions. This model assumes that the decision maker has full or perfect information.