Ch.5 Management

Steps in Rational Decision-making

1) Define the problem 2) identify decision criteria 3) weight the criteria 4) generate alternative courses of action 5) evaluate each alternative 6) compute the optimal decision.

Steps involved in making plans that work

1) setting goals 2) developing a commitment to goals 3) developing effective actions plans 4) tracking progress 5) maintaining flexibility.

How can companies build flexibility into their plans?

1) using options-based planning: maintaining planning flexibility by making small, simultaneous investments in many alternative plans. *This type of planning is useful when uncertainty is high and you don't know how things will change or what will work. 2) taking a learning-based approach to planning by using learning-based planning: learning better ways of achieving goals by continually testing, changing, and improving plans and strategies.

SMART goals

Specific, Measurable, Attainable, Realistic, and Timely

How companies use plans at all levels of management?

o Top- strategies, mission, vision, high level goals (Distal Goals) o Middle- understanding top's goals, create action plans to achieve those goals. (Distal and Proximal Goals) o First line- operational goals (Proximal Goals)

Benefits and Cost of Planning

Benefits: • It intensifies effort. Managers and employees put forth greater effort when following a plan. • It bolsters persistence. Employees will work hard for long periods. • It imparts direction. Plans encourage managers and employees to direct their persistent efforts toward activities that help accomplish their goals and away from activities that don't. • It furthers development of task strategies. Planning encourages employees to think of better ways to do their jobs. • It boasts a proven track record. Planning has been proven to work for both companies and individuals. Costs: • It can impede change and prevent or block needed adaptation. Employees can become so committed to achieving the goals that they fail to see that their plan may not be working. • It can create a false sense of certainty. Plans are built on assumptions; if those assumptions are incorrect, you may not predict disasters. • It can suffer from the detachment of planners: Planners may be good at planning but may not be good at implementing. What good is a plan that is not put into action?

Proximal and Distal Goals? What's more effective?

Proximal- short-term goals or subgoals. They are often more motivating than waiting to achieve far-off distal goals. Distal- long-term or primary goals.