# Presentation: 097233

## Corporate Learning Course  Seminar 3.5Planning and Decision Making

## 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*

## Decision making is crucial to effective managing...

## 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

## 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

## Types of Planning (cont.)

- Tactical Planning
-  Short-term planning
-  One year or less
-  Mid-level managers
-  More detailed than strategic planning

## 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

## Two Components of Decision Making

-  Judgment – a process of evaluating alternatives
-  Choice – a process of selecting a specific alternative to implement

## 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

## 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

## 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

## Steps in Decision Making

- Identify the problem.
- List alternatives.
- Select the best alternative.
- Implement the chosen alternative.
- Evaluate.

## Models of Individual Decision Making

-  Classical – aka Rational, Economic
-  Administrative – aka Behavorial
-  Intuitive – aka Seat of the Pants Selection
-  Political
-  Social

## 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.

## 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

## 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

## 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