Corporate Learning Course Seminar 3.5 Planning and Decision Making

1. Corporate Learning Course Seminar 3.5Planning and Decision Making

2. Objectives • 1. Define planning in an organizational setting • 2. Describe the steps in the planning process • 3. Explain the importance of strategic planning to an organization • Identify the two components in the process of decision making • Describe the context factors associated with decision making • Explain the decision support process

3. Decision making is crucial to effective managing…

4. Planning Process • State organizational objectives • List alternatives for reaching objectives • Develop assumptions about each alternative • Choose the best alternative • Develop plans to pursue the chosen alternative • Put the plans into action

5. Types of Planning • Strategic Planning • Long-range planning that focuses on the entire organization • Involves managers at the highest levels • 3-5 years for long-range planning • Strategies must be consistent with the purpose and mission of the organization

6. Types of Planning (cont.) • Tactical Planning • Short-term planning • One year or less • Mid-level managers • More detailed than strategic planning

7. Types of Planning (cont.) • Contingency Planning • What an organization does when something unexpected happens or when something needs changing • May cause manager to go back to the original plan or look for other alternatives • “What if” way of thinking

8. Two Components of Decision Making • Judgment – a process of evaluating alternatives • Choice – a process of selecting a specific alternative to implement

9. Characteristics of Human Information Processors • Selective perception – select relevant information and ignore irrelevant information • Framing – how a decision is oriented and organized • Escalation of commitment to a failing course of action – failure to ignore sunk costs (investments that are already gone and cannot be recovered) • Risk propensity – the orientation of the decision maker to either seek risk or avoid it • Hindsight bias – inability of a decision maker to remember correctly the circumstances that existed prior to implementing a choice once action has been taken • Over-confidence, complacency – give yourself credit for being more capable than you are / becoming more comfortable with a situation than is warranted by the level of risk

10. Context Factors for Decision Making • Degree of Certainty • |------------------|-----------------|--------------------|----------------------| • Certainty Risk Uncertainty Ambiguity • Urgency – how quickly do you have to decide • Importance – how much impact will the decision have • Life-span of Problem/Opportunity – how likely is the issue to go away on its own

11. Creating a Decision Support Process Recognize need for a choice Diagnose causal relationships Identify criteria for evaluation of alternatives and establish weights for criteria Identify all relevant alternatives Assess each alternative against the criteria – the judgment process Determine “score” for each alternative Choose alternative with “best” score

12. Steps in Decision Making • Identify the problem. • List alternatives. • Select the best alternative. • Implement the chosen alternative. • Evaluate.

13. Models of Individual Decision Making • Classical – aka Rational, Economic • Administrative – aka Behavorial • Intuitive – aka Seat of the Pants Selection • Political • Social

14. Summary • Planning determines how an organization can get to where it wants to go. • Steps in the planning process include: Stating organizational objectives, Listing alternatives for reaching objectives, Developing assumptions about each alternative, Choosing the best alternative, Developing plans to pursue the chosen alternative and putting the plans into action. • An organization needs strategic planning to develop strategies for achieving the objectives consistent with the purpose and mission of the organization over a long-range period.

15. Summary (cont.) 4. Two components in the process of decision making are judgment and choice. 5. The context factors associated with decision making are: • Selective perception – Select the relevant information and ignore the irrelevant information • Framing – how a decision is oriented and organized • Escalation of commitment to a failing course of action – failure to ignore sunk costs (investments that are already gone and cannot be recovered) • Risk propensity – orientation of the decision maker to either seek risk or avoid it • Hindsight bias – the inability of a decision maker to remember correctly the circumstances that existed prior to implementing a choice • Over-confidence, complacency – give yourself credit for being more capable than you actually are, being more comfortable with a situation than is warranted by the level of risk

16. Summary (cont.) 6. The decision support process includes: • Recognize need for a choice • Diagnose causal relationships • Identify criteria for evaluation of alternatives and establish weights for criteria • Identify all relevant alternatives • Assess each alternative against the criteria – the judgment process • Determine “score” for each alternative • Choose alternative with “best” score

17. Exercise – Winter Survival • Divide class into 2-3 groups of 5-7 people • Present situation • Rank items according to importance to your survival • Background information • Score results with key