Planning
and Decision Making
Dr. hab. Jerzy Supernat
Institute of Administrative Sciences
University of Wrocław
Planning and Decision Making
Planning and decision making
constitute the first managerial function
that organizations must address.
dr hab. Jerzy Supernat
Planning and Decision Making
All planning and decision making
occurs within an environmental context.
Thus understanding the environment is essentially
the first step in planning and decision making.
dr hab. Jerzy Supernat
Planning and Decision Making
Decision making is the cornerstone of planning. It is the
catalyst that drives the planning process:
organization’s goals
follow from decisions
made by various managers
•
the best plan for achieving
particular goals reflects
a decision to adopt
one course of action
as opposed to others
•
Decision making underlies every aspect of setting goals and formulating plans.
dr hab. Jerzy Supernat
Planning and Decision Making
Purposes of goals
goals provide guidance and a unified direction for people
in the organization
•
(effective) goal setting promotes good planning, and
good planning facilities future goal setting
•
(specific and moderately difficult) goals can serve as a
source of motivation to employees of the organization (especially if attaining the goal is likely to result in rewards)
•
•
goals provide a mechanism for control and evaluation
dr hab. Jerzy Supernat
Planning and Decision Making
Kinds of goals. Organization’s goals vary by:
level (an organization’s mission, strategic goals, tactical
goals, operational goals)
•
area (goals for operations, marketing, finance, quality,
productivity and so forth)
•
time frame (long-term goals, intermediate-term goals,
short-term goals; nb. some goals have an explicit time
frame and others have an open-ended time horizon)
•
dr hab. Jerzy Supernat
Planning and Decision Making
John A. Pearce II, Fred David:
An organization mission is a statement of its fundamental, unique purpose that sets a business apart from other
firms of its type and identifies the scope of the business’s
operations in product and market terms.
Jelfa SA mission statement:
The mission of Jelfa SA is to enhance the quality of life and
prolong the life span of society by manufacturing pharmaceuticals that come up to the highest world standards.
dr hab. Jerzy Supernat
Planning and Decision Making
A. Campbell, S. Yeung:
Creating a sense of mission, Long Range Planning, August 1991
Mission
 a relatively unchartered area of management
 a meaningless term – no two academics or managers agree on the
same definition:
 some describe mission in terms of organization strategy
(strategic view of mission)
 the other express mission in terms of philosophy and ethics
(mission is the cultural glue that enables an organization to function
as a collective unity)
dr. hab. Jerzy Supernat
Planning and Decision Making
Different interpretations of mission can be synthesized into a
comprehensive single description of mission. (…) it is an issue that
involves both the hearts (culture) and minds (strategy) of employees.
Our definition includes four elements:
 purpose
 strategy
 behaviour standards
 values
A strong mission exists when the four elements of mission link tightly
together, resonating and reinforcing each other.
dr. hab. Jerzy Supernat
Planning and Decision Making
Purpose
What is an organization for? For whose benefit is all the effort being put in?
Why should a manager or an employee do more than the minimum required?
For an organization the above questions are the equivalent of a person
asking, Why do I exist? The questions are deeply philosophical and can lead
managers and employees into heated debate.
 Organizations that exist to satisfy some of its stakeholders.
 Organizations that exist to satisfy all its stakeholders.
 Organizations that seek to identify a purpose that is greater from the
combined needs of the stakeholders, something to which all the stakeholders
can feel proud of contributing. In short, they aim toward a higher ideal.
We believe that leaders will find it easier to create employees with
commitment and enthusiasm if they choose a purpose aimed at higher ideal.
[…] Purposes expressed in terms of stakeholders tend to emphasize their
different selfish interests. Purposes aimed at higher ideals seek to deny these
selfish interests or at least dampen their legitimacy. This makes it easier to
bind the organization together.
dr. hab. Jerzy Supernat
Planning and Decision Making
Purpose of the European Union, the Treaty on EU, art. 3:
1. The Union’s aim is to promote peace, its values and the well-being of its peoples.
2. The Union shall offer its citizens an area of freedom, security and justice without internal frontiers,
in which the free movement of persons is ensured in conjunction with appropriate measures with
respect to external border controls, asylum, immigration and the prevention and combating of crime.
3. The Union shall establish an internal market. It shall work for the sustainable development of
Europe based on balanced economic growth and price stability, a highly competitive social market
economy, aiming at full employment and social progress, and a high level of protection and
improvement of the quality of the environment. It shall promote scientific and technological advance.
It shall combat social exclusion and discrimination, and shall promote social justice and protection,
equality between women and men, solidarity between generations and protection of the rights of the
child.
It shall promote economic, social and territorial cohesion, and solidarity among Member States.
It shall respect its rich cultural and linguistic diversity, and shall ensure that Europe’s cultural heritage
is safeguarded and enhanced.
4. The Union shall establish an economic and monetary union whose currency is the euro.
5. In its relations with the wider world, the Union shall uphold and promote its values and interests
and contribute to the protection of its citizens. It shall contribute to peace, security, the sustainable
development of the Earth, solidarity and mutual respect among peoples, free and fair trade,
eradication of poverty and the protection of human rights, in particular the rights of the child, as well
as to the strict observance and the development of international law, including respect for the
principles of the United Nations Charter.
6. The Union shall pursue its objectives by appropriate means commensurate with the competences
which are conferred upon it in the Treaties.
dr. hab. Jerzy Supernat
Planning and Decision Making
Strategy
To achieve a purpose there needs to be a strategy.
Four components of strategy:
•
•
•
•
scope/domain
resource allocation/deployment
distinctive competence (competitive advantage)
synergy
H. Igor Ansoff: Synergy is any effect which can produce a combined
return on the organization’s resources greater than the sum of its
parts.
dr. hab. Jerzy Supernat
Planning and Decision Making
Behaviour standards
Purpose and strategy are empty intellectual thoughts unless they can
be converted into action, into the policy and behavior guidelines that
help people to decide what to do on a day-to-day basis.
dr. hab. Jerzy Supernat
Planning and Decision Making
Values
Values are the beliefs and moral principles that lie behind the
organization’s culture. Values give meaning to the norms and
behaviour standards in the organization.
Linda Smircich:
Organizational culture „is a possession – a fairly stable set of takenfor-granted assumptions, shared meanings, and values that form a
kind of backdrop for action”
dr. hab. Jerzy Supernat
Planning and Decision Making
Values of the European Union, the Treaty on EU, art. 2:
The Union is founded on the values of respect for human dignity,
freedom, democracy, equality, the rule of law and respect for human
rights, including the rights of persons belonging to minorities. These
values are common to the Member States in a society in which
pluralism, non-discrimination, tolerance, justice, solidarity and
equality between women and men prevail.
dr. hab. Jerzy Supernat
Planning and Decision Making
Mission and Sense of Mission
A sense of mission is an emotional commitment felt by people toward the
organization’s mission. […] A sense of mission occurs (…) when there is a
match between the values of an organization and those of an individual. […]
The greater the link between organization policies and individual values, the
greater the scope for the individual sense of mission. We see the values
match as the most important part of the a sense of mission because it is
through values that individuals feel emotional about their organizations.
Personal nature of a sense of mission has two implications:
 No organization can hope to have 100 per cent of its employees with a
sense of mission, unless it is very small. People are too varied and have too
many individual values for it to be possible for a large organization to achieve
a values match for all its employees.
 Careful recruitment is essential. People’s values do not change when they
change organizations. By recruiting people with compatible values,
organizations are much more likely to foster a sense of mission.
dr. hab. Jerzy Supernat
Planning and Decision Making
Francis Bacon:
Nature is often hidden, sometimes overcome, seldom extinguished.
Nature draws more than ten oxen.
dr. hab. Jerzy Supernat
Planning and Decision Making
Mission and Sense of Mission
Mission is an intellectual concept that can be analyzed and discussed
unemotionally.
Sense of mission is not an intellectual concept: it is an emotional and
deeply personal feeling. The individual with a sense of mission has an
emotional attachment and commitment to the organization, what it stands
for, and what it is trying to do.
An organization with a clear mission does not necessarily have employees
with a sense of mission:
some individuals may have a sense of mission with varying degrees of
intensity;
 many will not.

Over time the number of employees with a sense of mission will increase as
the policies of the mission become implemented and embedded in the
organization culture.
dr. hab. Jerzy Supernat
Planning and Decision Making
Managing Multiple Goals
Organizations set many different
kinds of goals and sometimes experience conflicts or contradictions
among goals. To address such problems, managers must understand
the concept of optimizing.
Optimizing involves balancing and reconciling possible
conflicts between goals. Managers must look for inconsistencies and decide whether to:

pursue one goal to the exclusion of another

find a midrange target between the extremes
dr hab. Jerzy Supernat
Planning and Decision Making
Kinds of organizational plans
Given the clear link between organizational goals and
plans it is obvious that organizations establish many different kinds of plans. At a general level, these include:

strategic plans

tactical plans

operational plans
dr hab. Jerzy Supernat
Planning and Decision Making
Strategic Plans
Strategic plans are the plans developed to achieve strategic goals. They are long-range plans and address questions of
•
scope / domain
resource allocation / deployment
competitive advantage
•
synergy
•
•
dr hab. Jerzy Supernat
Planning and Decision Making
Tactical Plans
Tactical plans aim at achieving tactical goals. They are
intermediate plans developed to implement specific parts
of a strategic plan. Thus tactical plans are concerned
more with actually getting things done than with deciding
what to do.
dr hab. Jerzy Supernat
Planning and Decision Making
Operational Plans
Operational plans are short-range plans and focus on carrying out tactical plans to achieve operational goals. Two
basic forms of operational plans are:
Single-use plans (developed for nonrecurring situations)


programs
projects
Standing plans



policies
standard operating procedures
rules and regulations
dr hab. Jerzy Supernat
Planning and Decision Making
Murphy’s Law
To err is human, to forgive is not company policy.
dr hab. Jerzy Supernat
Planning and Decision Making
Contingency Planning
Contingency planning is important for most organizations
and necessary for those operating in particularly complex
or dynamic environments. The essence of contingency
planning is the determination of alternative courses of
action to be taken if an intended plan of action is unexpectedly disrupted or rendered inappropriate.
Contingency: an event which may or may not occur; that which is possible or probable; a fortuitous event; a chance.
dr hab. Jerzy Supernat
Contingency plans
should be periodically
updated and revised.
Peter F. Drucker
(1909-2005)
Planning and Decision Making
Peter F. Drucker on decision making
•
Making good decisions is a crucial skill at every level.
•
Decision making is the specific executive task.
Most discussions of decision making assume that only
senior executives make decisions or that only senior
executives' decisions matter. This is a dangerous mistake.
•
Whenever you see a successful business, someone once
made a courageous decision.
•
Plans are only good intentions unless they immediately
degenerate into hard work.
•
dr hab. Jerzy Supernat
Planning and Decision Making
Whatever a manager does he does through making
decisions.
Those decisions may be made as a matter of routine. Indeed, he may not even realize that he is making them. Or
they may affect the future existence of the enterprise and
require years of systematic analysis. But management is
always a decision-making process.
dr hab. Jerzy Supernat
Planning and Decision Making
Progressive stages
of decision-making process

defining the problem

analyzing the problem

developing alternative solutions

deciding upon the best solution

converting the decision into effective action
dr hab. Jerzy Supernat
Planning and Decision Making
Stage 1: Defining the problem
•
finding the real problem and defining it
•
determining the objectives for the solution and the rules that limit the solution
dr hab. Jerzy Supernat
Planning and Decision Making
Quod tibi fieri non vis, alteri ne feceris (Do not do unto
others what you do not want done to yourself).
The Gospel according to Matthew 7, 12:
„Do for others what you want them to do for you”.
George Bernard Shaw (1856-1950):
Do not do unto others as you would expect they should
do unto you. Their tastes may not be the same.
dr hab. Jerzy Supernat
Planning and Decision Making
Peter M. Senge (born 1947)
distinguishes:
•
fundamental solutions
•
symptomatic solutions
Peter F. Drucker:
The manager (…) must assume that
symptoms do lie. Knowing that very different
organizational problems produce the same set
of symptoms, and that the same problem
manifests itself in an infinite variety of ways,
the manager must analyze the problem rather
than use symptomatic diagnosis.
dr hab. Jerzy Supernat
Planning and Decision Making
Stage 2: Analyzing the problem
•
•
classifying the problem

the futurity of the decision

the impact of the decision on other
areas and functions

the number of qualitative considerations that enter into the decision

the uniqueness or periodicity of the
decision
finding the facts (relevant data)
The manager will never be able to get all the facts he should
have. Most decisions have to be based on incomplete knowledge
– either because the information is not available or because it
would cost too much in time and money to get it.
dr hab. Jerzy Supernat
Planning and Decision Making
Aaron Bernard Wildavsky (1930-1993): Organizations exist to suppress data. Some data are
screened in but most are screened out. The
very structure of organizations – the units, the
levels, the hierarchy – is designed to reduce
the data to manageable and manipula-table
proportions. (…) at each level there is not
only compression of data but absorption of uncertainty. It
is not the things in themselves but data – reduction summaries that are passed up until, at the end, executives
are left with mere chains of inferences. Whichever way
they go, error is endemic: If they seek original sources,
they are easily overwhelmed; if they rely on what they
get, they are easily misled.
dr hab. Jerzy Supernat
Planning and Decision Making
Stage 3: Developing alternative solutions
Alternative solutions are the heart of what is meant by the scientific
method. It is the characteristics of the really first-class scientist that
he always considers alternative explanations, no matter how familiar
and commonplace the observed phenomena.
What the alternatives are will vary with the problem. But one solution
should always be considered: taking no action at all.
Some problems are so complex that you have to be highly intelligent and well-informed just to be undecided
about them.
Laurence J. Peter
dr hab. Jerzy Supernat
Planning and Decision Making
Alex F. Osborne (1888-1966) – the man who
invented brainstorming:
It is easier to tone down a wild idea than to
think up a new one.
dr hab. Jerzy Supernat
Planning and Decision Making
Stage 4: Deciding upon the best solution
There are four criteria for picking the best from among
the possible solutions:
•
•
•
•
risk
economy of effort
timing
limitation of resources
No decision can be better
than the people who have to carry it out.
dr hab. Jerzy Supernat
Planning and Decision Making
Stage 5: Converting the decision into effective action
(…) it is of the essence of manager’s decision that other
people must apply it to make it effective. A manager’s decision is always a decision concerning what other people
should do. (…) It requires that any decision become „our
decision” to the people who have to convert it into action.
This in turn means that they have participate responsibly
in making it.
dr hab. Jerzy Supernat
Planning and Decision Making
Decision making and problem solving
Problem solving sensu largo
Problem solving sensu stricto
Stage 1
Stage 2
Stage 3
Stage 4
Stage 5
Decision
making
sensu stricto
Decision making sensu largo
Decision making sensu largissimo
Peter F. Drucker: Management is not concerned with knowledge for its
own sake; it is concerned with performance.
dr hab. Jerzy Supernat