Definition of Planning and Decision-Making
Planning and decision-making are arguably the most essential managerial functions that are closely related. Planning is the process of selecting a course of action, while decision-making is simply selecting a course of action. Decision-making is a part of planning, so the two functions go hand in hand. A good manager must plan effectively and make decisions in real-time. The planning function requires managers to set goals and outline the ways and means through which the goals will be achieved. Planning is the foundation of all organizational future activities, and the most basic managerial function (Sager, 2002). To plan is to decide in advance what needs to be done to achieve the organizational goals. Planning further involves selecting one of the many alternatives available in order to achieve the desired result at a minimal cost. Managers have to constantly plan for the short-term and long-term future by studying the internal and external environment and by determining the organization’s own needs. Planning consists of two main components, including goals and action statements (Dye & Sibony, 2007). The goals are the targets and results that the managers want to accomplish, while action statements is how the organization attains those goals. From the organization’s management point of view, planning is thinking about what to be done, by who, and when. It requires thinking about the past and future opportunities as well as the underlying threats. For instance, manpower planning is an essential planning process that ensures that the right caliber of employees are hired at the right place, right time, and for the right kind of job within the organization.
Decision-making, on the other hand, is the process of identifying a range of alternatives and selecting a course of action from those alternatives. Decision-making begins with problem identification and ends with making a choice. Effective management involves constantly influencing the activities of an organization, and decision-making plays a key role in doing so (Havnes, 2009). When making a decision, a manager identifies a particular situation and establishes the potential opportunities that it offers as well as the underlying threats. The next step a manager does is to find the available alternatives to handle the situation. This is the stage where planning comes in handy. Through planning, a manager evaluates, measures, and tests the effectiveness of each alternative. After that, the manager then applies decision-making skills to select one course of action. Decision-making is, therefore, the core of the planning process. Unless a decision is made, then the implementation of a plan is impossible. Thus, planning and decision-making are interrelated and used hand in hand. Although a decision can be made without planning, no planning can succeed without making a decision. Both planning and decision-making need to be accurate for an organization to be successful.
Characteristics of Planning
Planning is not only the foundation of the other managerial functions (organizing, controlling, directing, and staffing) but also the most essential function of management. The other managerial functions rely on effective planning, so nothing can be achieved without proper planning. Planning has several characteristics, including goal-oriented, futuristic, intellectual, primary function, continuous, pervasive, and flexible (Papke-Shields & Boyer-Wright, 2017). Another feature of planning is that it involves choice and decision-making, and is designed for efficiency.
Goal-oriented means that planning is meant to achieve the desired objectives of the organization. The goals set should be generally acceptable so that individual and team energies all count to the attainment of goals (Papke-Shields & Boyer-Wright, 2017). Planning further identifies the course of action that will lead to the achievement of goals quickly and at a minimal cost. Planning also offers a sense of direction on many activities undertaken by the organization.
Planning is Futuristic implying that it is done for the future. It requires looking into the future by analyzing it and predicting what could happen (Papke-Shields & Boyer-Wright, 2017). Forecasting is required to enable the organization to handle future challenges effectively. Planning is, therefore, a mental predisposition of things that will happen in the business in the future.
Planning is an intellectual exercise that involves thinking creatively and making sound judgments. Planning is not about guesswork but a rational thinking process that is based on facts, figures, and considered estimates (Papke-Shields & Boyer-Wright, 2017). Managers can only make effective decisions if they have sound judgment skills, imagination, and foresight.
Planning involves choice and decision-making from a range of alternatives. It means that decision-making is an integral part of the planning process. If only one course of action is available, then planning is not required because there is no choice to be made (Papke-Shields & Boyer-Wright, 2017). In reality, managers are faced with a number of alternatives, so they have to choose the best one based on the available resources and the specific needs of the organization.
Planning is a primary function of management that lays the foundation for the rest of the managerial functions. It acts as a guide for the controlling, staffing, directing, and organizing function of management (Papke-Shields & Boyer-Wright, 2017). Simply put, the rest of management functions work within the framework of the plans set. Thus, planning is not only a basic function but also a fundamental managerial function.
Planning is a continuous process that never ends due to the dynamic nature of businesses. In addition, plans are made for a specific period, but have to be subjected to review and re-evaluation based on the changing requirements and situations (Papke-Shields & Boyer-Wright, 2017). Planning in an organization never comes to an end until it ceases to exist. Overall, problems keep on emerging in an organization and they have to be addressed through effective planning.
Planning is pervasive implying that it is essential in all organizational departments and at all levels of management. However, the scope of planning may be different from one level to the other (Papke-Shields & Boyer-Wright, 2017). For example, plans made at the top level of the organization affect the whole organization while plans made at the middle level and lower levels of management may affect specific departments.
Planning is highly flexible since plans are made for the future and the future is highly unpredictable. It means that plans must leave some room to deal with changes in demand, supply, government policies, competition, and prices (Papke-Shields & Boyer-Wright, 2017). When things change, the original plans have to be re-evaluated in order to make them more practical and responsive to the changing needs.
Planning is designed to achieve efficiency, so it leads to the attainment of goals at a minimal cost. Planning ensures that goals are achieved without wastage of resources, so there is optimal utilization of the available resources (Papke-Shields & Boyer-Wright, 2017). Thus, a plan is useless if it does not take into account the cost incurred to achieve it. Effective planning saves organizational effort, time, and money. Effective planning also utilizes the best methods, right materials, and machines, thus saving money.
Participants in the Planning Process and their Responsibilities
Participants in the planning process are those stakeholders who influence and those influenced by the plans set. These stakeholders include owners and top managers, middle and first-level managers, employees, and experts (Nichols, 2002). Owners and top managers carry the organization’s vision, so they have the best ideas and overview of how they want the planning process should be carried out. Their involvement in the planning process is essential because they improve unity of command and direction. The roles of owners and top managers include strategic decision-making as well as designing, facilitating, managing, and supporting other planning participants. Owners and top managers also review the organization’s mission and monitor the internal/external environment to identify potential opportunities and underlying risks.
Middle and first-level managers are involved in making plans more focused. They explain clear priorities to the employees and help them to deliver results. Middle and first-level managers also improve plans by offering their support and advice to the owners and top managers (Nichols, 2002). Through their input, feedback, and comments, they help an organization to introduce new practices. The involvement of middle and first-level managers is key to better internalization and improvement of goals and plans. Thus, their participation in the planning process increases the overall performance of the set goals compared to only having owners and top managers involved in the planning process.
Employees play a critical role in the planning process. Their participation allows them to understand the organization’s goals better and align their tasks to the company’s overall goals. Employees’ participation facilitates the acceptance of organizational strategic goals (Nichols, 2002). Middle and first-level managers have a responsibility of ensuring that employees understand how their work will influence the achievement of goals. Employees also possess the knowledge and skills that are useful in the planning process that owners, top managers, middle, and first-level managers may not have.
Specialists or experts are essential in offering advisory services as well as improving planning like managers. They provide feedback based on their experience in their respective areas of expertise. Experts are important assets to an organization as they constantly provide new ideas and improve the existing solutions (Nichols, 2002). Their knowledge is essential, so their involvement in the planning process is critical. Experts’ role in knowledge sharing is beneficial to other participants in the planning process. Their comments and feedback based on experience further improve the planning process. Thus, their involvement is beneficial in terms of adding tactical knowledge to the planning process.
Planning Constraints and Boundaries in the Planning Process
The implementation of an organization’s strategic plans is constrained by time, cost, and scope. Time constraints are related to the timeframe within which the set goals should be achieved. Inadequate time may affect the attainment of organizational goals, especially if due processes have to be followed (Rand, 2000). Proper scheduling is important when it comes to addressing time constraints. Scope constraints, on the other hand, define the specific functions, goals, features, and deliverables. The scope also defines the tasks that must be completed in order to achieve the set plan. In order to overcome scope constraints, the scope should be communicated regularly to all stakeholders. Processes to manage any changes should also be established to review and control the system (Rand, 2000). Cost constraints refer to budgetary requirements and financial resources needed to accomplish a particular plan in time. It should be understood that cost does not only refer to money for materials but also labor costs, vendor costs, quality control costs, and other related costs.
Defining and Differentiating Terms
Philosophy is a discipline that studies the intrinsic nature of human knowledge, reality, and existence. A goal is the desired result that an individual or a group of people plan and commit to achieving in the future (Mumford et al., 2015). An objective is a purpose to be achieved or a strategic position that a person or a group of people want to attain. A functional objective relates to a specific function of a business such as marketing, finance, operations, and HRM. A policy is a written statement of intent to guide decision-making and achieve the desired outcome (Mumford et al., 2015). A procedure is an established way of performing a particular task. A method is a process of completing a particular task. A rule is a set of principles or regulations governing a particular conduct, behavior, procedure.
Goals are different from objectives because goals are achievable outcomes that are long-term in nature while objectives are short-term in nature (Getz et al., 2012). Procedures are also different from methods in the sense that procedures are simply a sequence of steps that are followed when performing a particular task, while methods are formalized ways of doing routine jobs. In addition, corporate objectives differ from functional objectives in the sense that corporate objectives are broad and cover the whole organization, while functional objectives are specific to a particular functional area like Finance.
Aspects of Project Management
Project management refers to the application of knowledge, skills, tools, and techniques to meet the requirements of a project (Gibson Jr et al., 2006). Projects involve several important aspects that must be understood for a project to be successful. These aspects include scope statement, risk management, resource planning, deliverables, budget, work breakdown structure, and effective communication. Other key aspects of project management include critical success factors, stakeholder list, schedule, and timeline.
The scope statement describes the objectives of the project, while the risk management component helps the project managers to identify and prevent potential risks. Resource planning involves assigning tasks to the team members on the basis of skills set, capacity, and talent (Levitt, 2011). Deliverables refer to what the team members plan to produce in terms of products and services. The critical success factors, on the other hand, are elements required for the team members to achieve the project’s short-term and long-term mission. A budget refers to financial estimates including estimated costs and revenues to keep the project on the course (Levitt, 2011). Stakeholders are all parties that have an interest in the project as well as those with parties with some influence on the project. A work breakdown structure simply breaks down a project into smaller achievable tasks. Effective communication is essential throughout the project to keep all stakeholders and team members updated on the progress of the project. Schedule and timeline help the project managers to complete the project goals within deadlines.
How to Evaluate a Decision’s Importance
Proper evaluation of decisions in terms of effectiveness is required to ensure that the decision taken benefits the organization. Key considerations like why the decision is important, who benefits from the decision, the cost of reversing the decision, what is the best for the organization, and who made the decision must be made (Hoover, 2009). Overall, important decisions require time for deliberations. Every decision has winners and losers because decisions are meant to bring change. However, leaders must ensure that everyone understands why a particular decision was made to minimize the level of resistance. In addition, an important decision is difficult and costly to reverse over less important decisions. The challenge managers and leaders face is determining what the organization requires them to do (Hoover, 2009). Therefore, when a decision seems unpopular, it may be the most sensible one to make because its long-term pain will outweigh the short-term gains by far. Thus, the most important decisions are the ones that are unpopular, costly to reverse, benefit a vast majority of the organizational members, and take time to deliberate.
Tools and Techniques Available to Aid in Decision-Making
Decision-making is a complex process that requires tools and techniques to help managers in selecting the best decision from a range of alternatives. Cost-benefit analysis, SWOT analysis, and Decision matrix are some of the most common tools and techniques available to help managers make decisions (Spencer et al., 2017). The cost-benefit analysis is a technique used to compare the projected costs and the estimated benefits associated with a particular decision to determine if it makes economic sense. The SWOT analysis identifies the strengths, weaknesses, opportunities, and threats associated with a particular decision to help managers understand all the factors that influence a decision (Spencer et al., 2017). A decision matrix is a tool that managers use to evaluate and select the best option from a range of options and choices. It is applicable when decision-making involves more than one option and there are several other factors that must be considered prior to making the final decision.
Conclusion
Overall, planning is an important managerial function that helps managers to assess the goals of an organization critically in order to determine if they are realistic or not. Decision-making, on the other hand, helps managers to choose the best alternative from a range of options. Planning and decision-making are interrelated because decision-making is part of the planning process. Effective planning facilitates decision-making and helps managers to set smart, measurable, and achievable goals. It also helps in measuring the performance against the set goals. The involvement of the various stakeholders coupled with an understanding of the key aspects of project management is essential in ensuring that the organizational projects are successful.
References
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