MODULE III

Planning, Organising & Decision

Making
 Definition
Planning is the function that determines in advance what
should be done. It consists of selecting the enterprise
policies, programmes, procedures and other means of
achieving these objectives. – Haimann

Planning decides in advance what to do, how to do it,

where to do it & who is to do it. It involves anticipating
the future & consciously choosing the future course of
action.

When we fail to plan, we plan to fail.

 Features/Nature/Characteristics
• Goal oriented
• Primary function
• All-pervasive
• Intellectual & Rational
• Continuous
• Forward looking
• Involves choice
• Integrated
• Efficiency oriented
 Approaches to Planning
❖ Top Down • Inactive
❖ Bottom up • Reactive
❖ Team • Pre-active (predict)
❖ Composite • Proactive (create)
(Delphi method)
The Planning Process (Steps in planning)

•Determine objectives/goals
•Develop Planning premises
•Formulate strategies/Determine alternative courses of action
•Select a course of action
•Develop derivative plans
•Integrate derivative plans
•Implement plans
•Review & Revise plans

•Identify problems/needs
 Importance
• Focuses attention on objectives & results
• Reduces uncertainty & risk
• Provides sense of direction for action (Futurity)
• Encourages innovation & creativity
• Helps in coordination
• Guides decision making
• Improves morale & motivation
• Provides efficiency in operations
• Facilitates control
Types of Planning
•Scope
•Group/sectional

•SBU/ Departmental/divisional
•Corporate

•Time span
•Long range/Strategic

•Medium/Intermediate
•Short term/Operational/contingency

•Use
•Standing

•Single use
 Types of plans

•Standing plans
•Strategies, Objectives, Policies, Procedures, Methods, Rules
•Single use plans
•Programmes, Budgets, Projects, Schedules
 Policies
• Policies are general statements that guides in
decision-making.
• A policy refers to a continuing decision which applies
to repetitive situations. It is a standing answer to a
recurring question.
• Policy decisions are taken by the Chief Executive and
Board.
• Policies may be in the form of written statements or
just by way of oral understandings. Policies should be
clear, stable, understandable and observable.
• Examples: Break times, dress code, leave, promotions,
credit policy, recruitment policy
 Types of Policies
• Originated Policy
• Appealed Policy
• Imposed Policy
• Written & Implied Policy

Limitations: (i) Broad framework (ii) have to be

adjusted to changes in envt. (iii) Applied without
discretion may lead to friction or confusion
 Procedure
• A “procedure” is a term used in a variety of industries to define a series
of steps (chronological), taken together, to achieve a desired result.
• Procedures explain how to accomplish a task.
• A procedure is sometimes called a work instruction.
• Standard operating procedure / compliance procedure

Why have procedure:

• Compliance
• Operational Needs (i.e. consistency)
• Manage Risks
• Continuous Improvement

Examples: Filling a form, executing an order, operating equipment

Limitations: (i) Rigidity (ii) No scope for innovation/improvements (iii) May

become obsolete
 Standard Operating Procedure
• Standard operating procedures (SOPs) are
detailed, written instructions that outline the
precise steps and processes required to
perform a specific task or function
consistently and effectively.
• Eg – instructions on dealing with customer
complaints
 Compliance Procedures
• Compliance procedures are a set of systematic
actions and policies designed to ensure that
an organization adheres to legal, regulatory,
and internal standards.
• Eg, Safety measures before operating a
machinery; forms to file with government
agency for permission to set up new plant.
 Difference between policies &
procedures
Policies Procedures
• General guides to thinking & • Operational guides to action
decision making
• Lay down broad area • Provide route through the
area
• Strategic • Tactical
• Top Management • Middle & Lower level
• Derived from objectives • Derived from policies
 Methods
• One best way of doing something
• Aid in simplification, standardization and
systematization of work
• Brings in Uniformity
• Prevents confusion & ad hoc-ism
 Rules
• Rules are firmly prescribed guides for conduct or
action
• Rigid & definite, leaving no scope for discretion or
deviation
• Established authoritatively and enforced
rigorously
• Ensures desired behaviour among employees
• Set of rules may be a procedure
• Penalty attached to violation
 Limitations of Planning
• Lack of Accurate information
• Time & Cost
• Inflexibity
• Resistance to change
• Lack of ability
• False sense of security
 Decision making
“Decision making is a process of selection from a set of alternative
courses of action which is thought to fulfill the objective of the
decision problem more satisfactorily than others.”

Constraints
✔Time
✔Information

Phases
Explore
Speculate
Evaluate
Select
Steps in decision making
Identify the
problem
Diagnose the
problem
Search & scan
the
environment
Discover
alternatives
Evaluate the
alternatives
(certainty, risk,
uncertainty)
Select &
Implement
Follow up,
Evaluate &
Control
•Decision making
•Imperfect knowledge/information
•Risk
•(Information asymmetry)
•Moderate ambiguity

•Uncertainty
•(Information unknown)
•High ambiguity

•Perfect knowledge/information
•Certainty
•(Information known)
•Low ambiguity
 Types of decisions

• Strategic (Tactical) and Operational

• Major and Minor
• Programmed (Routine) and Non- programmed
• Simple and Complex
• Long-run and Short run
• Individual and Group
 Organising

Organisation in a general sense means

systematic arrangement of activities (verb) or a
structure of roles, responsibilities and positions
(noun)

Organising follows Planning

 Definition
• The process of identifying & grouping the work to
be performed, defining & delegating
responsibility & authority and establishing
relationships for the purpose of enabling people
to work most effectively together in accomplishing
objectives. – David Allen

• The process of defining and grouping the

activities of the entire process and establishing
the authority & responsibility among them –
Theo Haimann
 Concepts
• People (Skills, abilities, qualifications)
• Tasks (Objectives/Goals)
• Resources (Limited/Expensive))

• What are the tasks to be performed....are there 2 or more tasks

that are similar & performed by people with same K,S,A
(identifying, defining).
• Who will do the tasks (designation)
• Where will they be located (departmentation/structure)
• Who will they take permission (authority) from, for the use of
resources (delegation)
• Who will they be answerable to (responsibility) for the use of
resources & performance of tasks.
• How many subordinates will be ideal per supervisor (span of
management)
 Organisation structure
• Explains the position & official relationship
between various individuals in the
organisation

• An organisation chart is a diagrammatic

representation of organisation structure
showing names, designation & functions of
personnel in an organisation.
 Formal & Informal Organisations
• Work – being productive in a way that meets human needs - an
activity which results in paid employment, reward or contract.

• An organization is made up of a group of people who are working

together to achieve certain goals.

• The Management creates lines of authority & responsibility to

connect these people which creates a structure or hierarchy.

• Formal & Informal organisations originate from these structures

 Formal Organisations
• Created by the Management
• Rules & Regulations, plans & policies
• Rationally designed based on vision, mission &
goals
• Clearly visible in every organisation
• Stable and do not change very quickly
• Legal – Management, Government, Statutory
bodies
 Informal Organisations
• Not created by the Management -
spontaneous
• Not governed by strict rules & regulations but
by norms
• Not normally bound by any legal matters
• Developed on basis of personal linkages –
social affinity, interests & hobbies
• May not be visible to others
 Difference between formal & informal
organizations
Formal Organisation Informal Organisation
• Structure of authority • Network of social relationships
relationships created by the arising out of interaction among
management employees
• Arises as a result of company • Arises as a result of social
rules & policies interaction
• Authority by virtue of position
in management • Arises out of personal qualities
• No set behaviour pattern
• Behaviour directed by rules
• Flow of communication in any
• Communication through scalar direction
chain • Flexible
• Rigid • Leaders may or may not be
• Managers - leaders managers
 Span of Management
The Span of Management refers to the number
of subordinates who report directly to a
manager
Factors affecting span of Management
Line & Staff Organisation
 Types of Organizational charts
• Hierarchical
• Flat (Horizontal)
• Matrix
• Divisional
 Uses of organizational charts
• Clarifying reporting relationships
• Improving Communication
• Facilitating planning & organization
• Personnel management
• Streamlining workflows