DIPLOMA IN BUSINESS LEADERSHIP

MODULE 8
REVISED
NOVEMBER 2003
OPERATIONAL PLANNING
AND
DECISION MAKING
SOLVING THE PUZZLE
THROUGH EFFECTIVE
PLANNING AND SOUND
DECISION MAKING
OPERATIONAL PLANNING
AND
DECISION MAKING
MODULE 8
OB1ECTIVES
On completing this module delegates shall:
1. Describe the basic steps in planning process.
2. Describe how planning and controlling are linked.
3. Develop specific objectives and action plans.
4. Describe and utilie decision making and operation planning
techni!ues
". Describe and appl# the rational problem solving.
$. %ppl# the si& step approach to decision making
'. Describe the characteristics of a control s#stem.
(. %ppl# different control s#stems at work.
OPERATIONAL PLANNING
AND
DECISION MAKING
ACKNOWLEDGEMENTS AND REFERENCES
)iggs * +eath , -ritical .ath /cheduling 011(22
3eil - -hurch , .lanning and -ontrol 011(42
4.% /toner , 5anagement 4
th
6dition 011(12
7lo#d 7 8#ors , .lanning 9mplementation 011(42
)oss ). )eck , Operations 5anagement 011($2
7ouis %llen , :raining 5anual 011($2
. Drucker , :he .ractice of 5anagement 011"42
: Dewe# , +ow we think 0113;2
< + %gor , +ow -6O=s make decisions 011($2

>ideos provided b# the ?niversit# of -alifornia@ through .ageA-omms 0.vt.2 7td.
-alling the shots
5anagement at work
.rogramming for performance
Beeping track.
OPERATIONAL PLANNING
AND
DECISION MAKING
PART 1 - INTRODUCTION
DIPLOMA IN BUSINESS LEADERSHIP
DIPLOMA IN BUSINESS LEADERSHIP
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G-hance favours onl# the mind that is preparedH
G-hance favours onl# the mind that is preparedH
1
November 2003 R A Folcarelli
OB1ECTIVE
DIPLOMA IN BUSINESS LEADERSHIP
DIPLOMA IN BUSINESS LEADERSHIP
OPERATIONAL PLANNING
AND
DECISION MAKING
OPERATIONAL PLANNING
AND
DECISION MAKING
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%s we e&plained in 5odule 4 A /trategic 5anagement and in the modules covering
functional and situational leadership@ all managers are involved in .7%3393C@
O)C%39/93C@ 76%D93C and -O3:)O7793C.
+owever@ operations managers and most middle level line managers have the direct
responsibilit# of Ggetting the job doneH. :he# must provide the leadership that is needed
to produce the product or service demanded b# the customer.
<ith !ualit# and productivit# more competitivel# significant than ever before@
management has added behavioural and modelling approaches to its historical use of the
classicalJscientific schools of management planning techni!ues.
9n this module we have adopted an integrated approach to decisionAmaking and
operational planning. :his integrative framework includes the management process@
resource conversion and planning techni!ues.
Ray Folcarelli
DIPLOMA IN BUSINESS LEADERSHIP
DIPLOMA IN BUSINESS LEADERSHIP
OPERATIONAL PLANNING
AND
DECISION MAKING
OPERATIONAL PLANNING
AND
DECISION MAKING
INTRODUCTION
INTRODUCTION
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8usiness leaders must solve problems and make decisions. DecisionAmaking must be
made to fit particular circumstances.
6ffective business leaders do not merel# wait for problems to arise: the# activel# look for
problems and opportunities.
Opportunit# finding@ problem finding and problem solving are all important leadership
activities.
.rogrammed decisions are made b# habit@ polic# or standing proceduresK nonA
programmed decisions are made under new or unusual conditions and re!uire creative
thinking and rational considerations.
NON-PROGRAMMED DECISIONS
INTRODUCTION
INTRODUCTION
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5
% business organisation can be defined as an identifiable entit# created to accomplish a
specific purpose. 9t e&ists with and is part of a large environment.
:he organisation itself consists of numerous subAcomponents 0subAs#stems2@ all of which
interact in pursuing the organisational goals.
/everal important s#stems concepts underlie this definition of business. :he organisation
has:

7egal
A SYSTEMS APPROACH
A SYSTEMS APPROACH
INTRODUCTION
INTRODUCTION
9dentifiable goals that ma# be e&pressed in terms of profit@
service@ or other accomplishments.
8oundaries that limit the nature and t#pes of activities it
performs.
9s part of a larger environment 0another s#stem2.
9s made up of subAs#stems that are interrelated in man#
comple& wa#s.
6ngages in efforts and actions to ensure that it=s goals are
being achieved.
9dentifiable goals that ma# be e&pressed in terms of profit@
service@ or other accomplishments.
8oundaries that limit the nature and t#pes of activities it
performs.
9s part of a larger environment 0another s#stem2.
9s made up of subAs#stems that are interrelated in man#
comple& wa#s.
6ngages in efforts and actions to ensure that it=s goals are
being achieved.
One critical skills of all leaders involves the abilit# to select
the appropriate decision making process for each problem or
decision
0>ictor +. vroom2
One critical skills of all leaders involves the abilit# to select
the appropriate decision making process for each problem or
decision
0>ictor +. vroom2
:he business firm and its environment
6
The Business Firm - A Systems View
TIME FOR TEAM WORK
TIME FOR TEAM WORK
7
7egal
Covernment
:echnological
-hange
Other 3ations
-onsumers
Other
-ompanies
Ceneral
.ublic
/upervisors
3onAsupervisor# emplo#ees
.urchasing
/ales
/enior 5anagement
.roduction %ccounting
Dinance .ersonnel
5arketing 6ngineering
5D
1. 9n #our teams discuss the statement GBUSINESS IS AN OPEN SYSTEM.
)ecord #our comments.
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2. 8usiness ethics and decisions are closel# related. <hat ethical factors should we
consider when making a decisionM
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3. 7ist the major stakeholders #our decision ma# affect.
INTERNAL EXTERNAL
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THE FUNCTIONS OF MANAGEMENT
A FRAMEWORK FOR OPERATIONAL PLANNING
THE FUNCTIONS OF MANAGEMENT
A FRAMEWORK FOR OPERATIONAL PLANNING
PLANNING
PLANNING
:he manager selects the objectives for the subAs#stem of the organisation
and the policies@ procedures@ programmes and budgets for achieving the
objectives. :his stage also includes clarification of the role and focus on
his functional area in the overall corporate strateg# 05odule 42. 9t also
involves action planning and efforts directed towards product planning@
facilities design and the use of the conversion process.
:he manager selects the objectives for the subAs#stem of the organisation
and the policies@ procedures@ programmes and budgets for achieving the
objectives. :his stage also includes clarification of the role and focus on
his functional area in the overall corporate strateg# 05odule 42. 9t also
involves action planning and efforts directed towards product planning@
facilities design and the use of the conversion process.
ORGANISATION
ORGANISATION
:he establishment of an intentional structure of roles and information
flows within the function area. Determining the activities re!uired to
achieve the operational objectives and assigning responsibilit# and
authorit# for the achievement of objectives.
:he establishment of an intentional structure of roles and information
flows within the function area. Determining the activities re!uired to
achieve the operational objectives and assigning responsibilit# and
authorit# for the achievement of objectives.
LEADING
LEADING
9n e&ecuting the plan@ managers are clearl# concerned with how their
actions affected human behaviour. <e are also interested in the
behaviour of managers and subordinates@ especiall# their decisionA
making behaviour.
9n e&ecuting the plan@ managers are clearl# concerned with how their
actions affected human behaviour. <e are also interested in the
behaviour of managers and subordinates@ especiall# their decisionA
making behaviour.
CONTROLLING
CONTROLLING
8
PART 1
DECISION MAKING
:o ensure that plans are accomplished@ the manager must also e&ercise
control. Outputs must be measured and adjustments made as necessar#. 9f
feedback information indicates substantial variances@ then corrective
action must be taken. %ctual solutions to problems ma# not be so simple@
but feedback and control measures can often identif# the sources of
problems and suggest wa#s to solve them.
:o ensure that plans are accomplished@ the manager must also e&ercise
control. Outputs must be measured and adjustments made as necessar#. 9f
feedback information indicates substantial variances@ then corrective
action must be taken. %ctual solutions to problems ma# not be so simple@
but feedback and control measures can often identif# the sources of
problems and suggest wa#s to solve them.
DIPLOMA IN BUSINESS
LEADERSHIP
DIPLOMA IN BUSINESS
LEADERSHIP
THE FINE ART OF EXECUTIVE DECISION
CONSISTS IN NOT DECIDING QUESTIONS
THAT ARE NOT NOW PERTNENT, IN NOT
DECIDING PREMATURELY, IN NOT
MAKING DECISIONS THAT CANNOT BE
MADE EFFECTIVE AND IN NOT MAKING
DECISIONS THAT OTHERS SHOULD
MAKE...
(Chester Barnard)
THE FINE ART OF EXECUTIVE DECISION
CONSISTS IN NOT DECIDING QUESTIONS
THAT ARE NOT NOW PERTNENT, IN NOT
DECIDING PREMATURELY, IN NOT
MAKING DECISIONS THAT CANNOT BE
MADE EFFECTIVE AND IN NOT MAKING
DECISIONS THAT OTHERS SHOULD
MAKE...
(Chester Barnard)
9
:hese are broad comple& decisions which are basic to the overall pattern of activit#. :he#
are multiAdimensional. :his means that the# are concerned with man# factors at onceK
man# specialised areas@ man# assets and man# people.
:he problems are of such a t#pe that one ma# be less concerned to find the answer than to
define the problem.
:he limits of the problem are not alwa#s clear.
7astl#@ the# are uni!ue and need to be approached afresh ever# time the# occur. +abit
and precedent simpl# suppl# pitfalls.
:here are usuall# abundant in number and are in a minor ke#. :he problem will be
relativel# clearl# defined@ the objectives known@ information available and constraints
appreciated.
%ll that needs to be done is weigh the parts and come up with a solution that optimises
satisfaction@ econom# or whatever else is needed.
:hese are the da#AtoAda# decisions of middle management:
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TYPES OF BUSINESS DECISIONS
TYPES OF BUSINESS DECISIONS
THE STRATEGIC DECISION
THE STRATEGIC DECISION
THE OPERATIONAL DECISION
THE OPERATIONAL DECISION
+ow man# units shall we produceM
<hat price shall we chargeM
+ow shall we select peopleM
<here shall 9 bu# the materialM
+ow man# units shall we produceM
<hat price shall we chargeM
+ow shall we select peopleM
<here shall 9 bu# the materialM
10
9n classif#ing the decision one or all of the following factors should be considered:
DECISION CLASSIFICATION
DECISION CLASSIFICATION
:he time span of the decision. :he further ahead the less eas# to
reverse.
:he impact on other areas of the organisation.
:he relative proportions of !uantitative and !ualitative data. >alues@
people are usuall# made b# senior management.
:he fre!uenc# of the decision.
:he time span of the decision. :he further ahead the less eas# to
reverse.
:he impact on other areas of the organisation.
:he relative proportions of !uantitative and !ualitative data. >alues@
people are usuall# made b# senior management.
:he fre!uenc# of the decision.
TEAM WORK
TEAM WORK
Discuss in #our groups e&amples of recent decisions made b# the
group members and the process the# adopted to make the decision.
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Discuss in #our groups e&amples of recent decisions made b# the
group members and the process the# adopted to make the decision.
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GROUP DISCUSSION
VIDEO PRESENTATION
Discuss the points raised in the video under the following headingsK
COLLECT THE FACTS
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CONSULTATION
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CONSIDER OPTIONS
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COMMUNICATE
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TAKE ACTION
DECISIONS - DECISIONS
DECISIONS - DECISIONS
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FOLLOW UP
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DECISIONS AND INTERNAL CHANGE
Once a decision is set in motion it brings about changes within the compan#.
.ressure can then build up in ke# functional or operational areas:
Objectives and .lanning A must be clear@ concise@ measurable@ attainable@
realistic@ understood@ acceptable@ and fle&ible.
5arketing A above all other areas marketing has to adjust !uickl# to
decisions and change.
:he business operation can be seen as a flow or a
d#namic process where there e&ists a series of
repetitive events or a c#cle.
Dor this c#cle to function decisions must be taken and
under such circumstances a certain amount of change
is inevitable.
:he business operation can be seen as a flow or a
d#namic process where there e&ists a series of
repetitive events or a c#cle.
Dor this c#cle to function decisions must be taken and
under such circumstances a certain amount of change
is inevitable.
13
.ersonnel , :he human area is one where change is most readil# felt.
Organisational structure , :he larger the organisation the more painful the
change.
DECISIONS AND EXTERNAL CHANGE
5ost organisations e&perience pressure from outside the organisation. %mong
such e&ternal factors should include those set out below.
Covernment and 6conom# , :a& controls@ mone# and credit controls@ direct
intervention. .rivate and public s#stems.
Covernment in 7aw 5aking , 7aw constrains business in man# wa#sK tariffs@
barriers to entr#@ >%:@ /ales ta&@ price controls. /ome laws ma# also protect
business@ e.g. monopol# restrictions.
:echnological , /cience and technolog# continues to move forward at some time
or other.
-ompetition , 3ew entrants@ new products@ changes in taste and fashion. Dirms
must be fle&ible and adapt.
/t#les of 5anagement , 5anagement@ leadership@ the wa# people work@ power
sharing and team work. %ll companies are affected.
:o sta# in business and operate efficientl# business must
be prepared to adjust to an increasing rate of change.
:o sta# in business and operate efficientl# business must
be prepared to adjust to an increasing rate of change.
14
% process in an# action taken b# management to achieve organisational goals and
objectives.
<hen a business leader plans@ organises or controls heJshe is reall# making decisions.
STEPS IN THE PROCESS
% well known decision theorist@ +erbert %. /imon conceptualises three distinct phases in
the decision making process. :here are:
1. 9ntelligence %ctivit# , the militar# meaning of intelligence. /earching the
environment.
2. Design %ctivit# A 9nventing@ developing and anal#sing possible courses of action.
3. -hoice %ctivit# , the third and final stage is the actual choice@ selecting a particular
course of action.
THE DECISION MAKING PROCESS
THE DECISION MAKING PROCESS
15
1. COMPANY GOALS (STRATEGIC GOALS)
-entral to all decision making are organisational goals. 5ost companies have
strategic goals towards which the# are alwa#s striving. <hen such goals and their
specific operational objectives are not being achieved then the compan# is
encountering problems on which decisions have to be taken.
2. PROBLEM DIAGNOSIS
9n problem diagnosis there are reall# two stages that have to be followed.
.eter Drucker sees identif#ing the root cause as a vital part in the process. 6stablishing
the root cause must not be rushed.
THE APPROACH IN DETAIL
THE APPROACH IN DETAIL
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A WRONG DIAGNOSIS INVALIDATES
ALL THAT FOLLOWS
A WRONG DIAGNOSIS INVALIDATES
ALL THAT FOLLOWS
16
%s we shall discuss in detail later:
6&ample
3. CONSTRAINTS
%part from the general constraints@ it is important for a manager to recognise hisJher
immediate limits in arriving at a solution.
TIME SPENT IN RECONNAISANCE IS
NEVER TIME WASTED.
TIME SPENT IN RECONNAISANCE IS
NEVER TIME WASTED.
WHAT IS THE APPARENT PROBLEM?
WHAT IS THE REAL PROBLEM?
WHAT IS THE APPARENT PROBLEM?
WHAT IS THE REAL PROBLEM?
.rices too highM
Iualit# too lowM
Designs unsuitable for the marketM
5arket mi& wrongM
/ales to high for profitabilit# in the pastM
Di&ed costs to highM
/olving the wrong problems is often worse than doing
nothing at allO
.rices too highM
Iualit# too lowM
Designs unsuitable for the marketM
5arket mi& wrongM
/ales to high for profitabilit# in the pastM
Di&ed costs to highM
/olving the wrong problems is often worse than doing
nothing at allO
A drop in the level of sales.
A drop in the level of sales.
WHAT IS THE REAL PROBLEM?
WHAT IS THE REAL PROBLEM?
17
:ime is possibl# the most immediate limit.
DecisionAmaking is a ke# part of a manager=s activities. 9t pla#s a particularl# important
role when the manager is involved in planning. .lanning involves the most significant
and far reaching decisions a manager can make.
Decision Making , is the process through which a course of action is selected as the
solution to a specific problem.
5an# authors and managers use the term D6-9/9O3 5%B93C and .)O8765
/O7>93C interchangeabl#. %ccording to +uber@ decisionAmaking is making a choice
from a narrow range of alternatives. .roblem solving refers to a broad set of activities
involved in finding and implementing a course of action.
9s this the best time to tackle the problemM
:ime span of the decision. /ome problems are more urgent than others.
:ime of e&ecution.
:ime is mone#
9s this the best time to tackle the problemM
:ime span of the decision. /ome problems are more urgent than others.
:ime of e&ecution.
:ime is mone#
DECISION MAKING - THE HUBER MODEL
DECISION MAKING - THE HUBER MODEL
INTRODUCTION
INTRODUCTION
THE HUBER MODEL
0
.roblem 0
/olving 0
0
0
0
0 2
.roblem 0 2
/olving 0 2
0 2
0 2
-hoice 0 2 Decision
5aking 0 2 5aking
0 2
0 2
2
2
2
18
%ctivities dealing with determining
the e&ercise and importance of
problems
%ctivities dealing with identif#ing
defining and diagnosing problems
%ctivities dealing with generating
alternative solutions
9t is not alwa#s clear whether a situation presents a problem or an opportunit#. 5issed
opportunities also create problems.
PROBLEM FINDING
PROBLEM FINDING
%n operational problem is a deviation from a standard
or e&pectation. :o be effective in decisionAmaking@ a
manager must be aware of current problems and must
anticipate potential problems.
%n operational problem is a deviation from a standard
or e&pectation. :o be effective in decisionAmaking@ a
manager must be aware of current problems and must
anticipate potential problems.
/:%3D%)DJ6N.6-:%:9O3
Deviation P % .roblem
%-:?%7 .6)DO)5%3-6 O) /:%:6 OD %DD%9)/
/:%3D%)DJ6N.6-:%:9O3
Deviation P % .roblem
%-:?%7 .6)DO)5%3-6 O) /:%:6 OD %DD%9)/
.roblems endanger a compan#=s abilit# to reach its objective
Opportunities offer the chance to e&ceed organisational
objectives
.roblems endanger a compan#=s abilit# to reach its objective
Opportunities offer the chance to e&ceed organisational
objectives
19
%ctivities dealing with evaluating
and choosing among alternative
solutions
%ctivities dealing with implementing
and controlling the chosen solution
DECIDING TO DECIDE
3o business leader can handle ever# problem that arises. :o avoid getting bogged down
in trivial matters@ efficient managers onl# deal with problems that re!uire their input. %
manager who gives the same amount of attention to ever# problem will get ver# little
work done.
<hen should 9 refer the problem to m# bossM
Does the issue involve other departmentsM
<ill it have a major impactM
Does it re!uire information onl# available at the topM
9t is out of m# area of authorit# and responsibilit#M
% GE6/H to an# of the above indicates that #ou should referJdiscuss with #our boss.
9/ :+6 .)O8765 6%/E :O D6%7 <9:+M
59C+: :+6 .)O8765 )6/O7>6 9:/67DM
9/ :+9/ D6-9/9O3 5936 :O 5%B6M
9/ :+6 .)O8765 6%/E :O D6%7 <9:+M
59C+: :+6 .)O8765 )6/O7>6 9:/67DM
9/ :+9/ D6-9/9O3 5936 :O 5%B6M
20
:here are two forms of time available to a manager. :hese are:
DISCRETIONARY TIME
0output2
<hich is the manager=s time to use
creativit# or in pursuit of his critical
objectives
DEMAND TIME
0input2
Of which there are three t#pes:
5andator# demand
6&pected demand
)outine demand
6&pected demand at work comes from two important directions , the bossAimposed time
and e&pected demand from subordinates. 9t is this subordinateAimposed time which we
will look at in this chapter. 5ost managers spend much more subordinateAimposed time
than the# even faintl# imagine. +ere we shall use a monke#AonAtheAback analog# to
e&amine how subordinateAimposed time comes into being and what the manager can do
about it.
WHERE IS THE MONKEY?
-%/6 O36
MANAGERIAL DECISION MAKING
MANAGERIAL DECISION MAKING
TIME CONSTRAINTS
TIME CONSTRAINTS
GET THIS MONKEY OFF MY BACK
GET THIS MONKEY OFF MY BACK
5anager %llan meets a subordinate Dave in the passagewa#.
Dave GCood morning , b# the wa# we=ve a problemF #ou see this is
the troubleF..H
5anager %llan meets a subordinate Dave in the passagewa#.
Dave GCood morning , b# the wa# we=ve a problemF #ou see this is
the troubleF..H
21
+ere the manager recognises in this problem the same two characteristics common to all
the problems his subordinate has brought to his attention. :he manager 0a2 knows
enough to get involved@ but 0b2 not enough to make an immediate decision. /o the
conversation ends for the moment:
%llan is now a victim of Dave=s imposed time@ and the more often he is a victim@ the
more the subordinate will e&pect time from his boss.
Durthermore@ %llan has voluntaril# assumed a position subordinate to Date in two wa#s:
.erhaps later@ in order to ensure that %llan is working on it@ Dave will drop b# and ask@
G+ow=s it goingMH
-%/6 :<O
On arriving at a conclusion with subordinate -hris@ the manager=s parting words are:
Iuestion: <here is the monke#M
Ees@ it is on the subordinate=s 0-hris=s2 back but watch how it can leap.
-hris writes the memo and sends it to the manager. <hose move is it nowM :he manager.
9f he does not make a move soon@ he will get a reminder of some kind or another from
%llan G<ell@ Dave@ 9=m in a rush now@ but give
me a da# to think about it and 9=ll let #ou knowH.
Iuestion: <here was the Gmonke#H originall#M
Iuestion: <here is the it nowH
%llan G<ell@ Dave@ 9=m in a rush now@ but give
me a da# to think about it and 9=ll let #ou knowH.
Iuestion: <here was the Gmonke#H originall#M
Iuestion: <here is the it nowH
+e accepted responsibilit# from his subordinate.
+e has promised his subordinate a progress report.
+e accepted responsibilit# from his subordinate.
+e has promised his subordinate a progress report.
G:hanks -hris@ please send me a memo on what #ou are
going to do.H
G:hanks -hris@ please send me a memo on what #ou are
going to do.H
22
-hris. :he longer the manager dela#s@ the more frustrated becomes -hris with
accompan#ing growth of guilt on the manager=s part.
-%/6 :+)66
%t a meeting with .hil@ the manager agrees to provide all the necessar# backing for a
market research project he has authorised .hil to initiate. :he manager=s parting words
are:
-%/6 DO?)
3orman has just been transferred from another part of the compan# in order to launch
and eventuall# manage a new business venture. :he manager has told him that the#
should get together soon to hammer out a set of objectives for his new job and adds:
G9 will draw up an initial draft for discussion with #ou.H
9n each instance the manager and the subordinate assume that the matter under
consideration is a joint problem. 9n each case the donke# begins its career astride both
backs. <ith a little bit of skill@ the subordinate can !uite easil# shift the entire monke#
onto his boss=s back. 9t is possible to train monke#s to sta# on the subordinate. +owever@
it is easier 0and wiser2 to prevent them from straddling backs in the first place.
WHO IS WORKING FOR WHOM?
6arl# one /aturda# morning@ our manager driving to his office to put in some e&tra work
spies his subordinates on the nearb# gold course@ a foursome. /uddenl# it comes home to
him@ he=s working for his subordinates. +e also realises that the more he does for them
the more the# will e&pect of him. +e turns his car around@ drives home and contemplates
the situation. 8# /unda# evening he has plans for returning all monke#s to their rightful
owners. 9n return he will get more discretionar# time@ part of which he will spend with his
subordinates ensuring the# learn the difficult but rewarding managerial work called.
G4ust let me know how 9 can helpH
Iuestion: <ho=s got the monke# nowM
G4ust let me know how 9 can helpH
Iuestion: <ho=s got the monke# nowM
Iuestion: <ho has the monke# nowM
Iuestion: <h# does it happenM
Iuestion: <ho has the monke# nowM
Iuestion: <h# does it happenM
23
RETURNING THE MONKEYS
Our manager at the office on 5onda# late enough to find his four subordinates gathered
in his outer office waiting to see his about their monke#s. +e calls each subordinate
singl# and e&plains that he purpose of the interview is to shift the monke# on to the desk
between them and figure out together how the subordinate can best pick it up within the
ne&t 24 hours.
%s each subordinate leaves the office@ the manager is rewarded b# the sight of a monke#
leaving the office on his subordinate=s back. Dor the ne&t 24 hours the subordinate will
not be waiting for the manager@ instead@ the manager will be waiting for the subordinate.
3e&t da#@ at the perspective appointments@ the manager e&plains the principle:
G%t no time 9 am helping #ou with this or an# other problem will #our problem
become m# problem. :he instant #our problem becomes mine@ #ou will no longer
have a problem. 9 cannot help a person who hasn=t got a problem. <hen this
meeting is over@ the problem will go as it arrived@ on #our back. Eou ma# ask m#
help at an# appointed time and we will discuss the ne&t move and which of will
make it.
9n those rare instances where the ne&t move turns out to be mine@ #ou and 9 will
determine it together. 9 will not make an# move aloneH.
+aving said this to each of his four subordinates@ the manager realises the monke#s have
gone. :he# will return@ but b# appointment onl#.
DELEGATING
% purpose of a manager is to transfer authorit# and responsibilit# to subordinates and
keep them there. :o do this successfull#@ our manager needs to have sufficient authorit#
and responsibilit# to share out. %lso@ before a manager can develop initiative in the
subordinates@ he must ensure that the# have the initiative. 9f a manager takes back or is
given initiative these subordinates will no longer have it.
:here are five levels of initiative that an# subordinate can appl# with regard to the boss
and the s#stem level:
The care and feeding of monkeys.
The care and feeding of monkeys.
". Q %ct on own@ then report
4. Q %ct partiall#@ advising immediatel#
3. Q )ecommend
2. Q %sk what to do
1. Q <ait until told.
". Q %ct on own@ then report
4. Q %ct partiall#@ advising immediatel#
3. Q )ecommend
2. Q %sk what to do
1. Q <ait until told.
24
:he manager must:
HOW TO CARE AND FEED MONKEYS
+ere are five hard and fast rules 0violation of these rules will cost discretionar# time2:
CONCLUSION
Outlaw the subordinate=s use of 1 and 2K
6nsure that each problem leaving his office has an assigned
initiative level of 3 or more.
Outlaw the subordinate=s use of 1 and 2K
6nsure that each problem leaving his office has an assigned
initiative level of 3 or more.
5onke#s should be fed or shot. 0one or the otherK if the# suffocate to death #ou
will be obliged to waste valuable time on postAmortem or resuscitation2.
:he monke# population should be kept below the ma&imum number of manager
has time to feed. +is subordinates will find time to work as man# monke#s as
he finds time to feed. 9t should not take more than 2; minutes to feed a
properl# prepared monke#.
5onke#s should be fed b# appointment onl#. Eour subordinates must bring their
monke#s to #ouK never look for hungr# monke#s.
3ever feed monke#s b# memo or mail. Deed face to face or b# telephone.
6ver# monke# should have an assigned sitting@ or ne&t feeding time and an
appropriate level of initiative. :hese ma# be revised at an# time b# mutual
consent@ but it should never be allowed to become vague.
5onke#s should be fed or shot. 0one or the otherK if the# suffocate to death #ou
will be obliged to waste valuable time on postAmortem or resuscitation2.
:he monke# population should be kept below the ma&imum number of manager
has time to feed. +is subordinates will find time to work as man# monke#s as
he finds time to feed. 9t should not take more than 2; minutes to feed a
properl# prepared monke#.
5onke#s should be fed b# appointment onl#. Eour subordinates must bring their
monke#s to #ouK never look for hungr# monke#s.
3ever feed monke#s b# memo or mail. Deed face to face or b# telephone.
6ver# monke# should have an assigned sitting@ or ne&t feeding time and an
appropriate level of initiative. :hese ma# be revised at an# time b# mutual
consent@ but it should never be allowed to become vague.
6nlarge #our discretionar# time b# reducing 0even eliminating2 subordinateA
imposed time.
?se a portion of this new discretionar# time to ensure that all subordinates
possess initiative@ without which the# cannot e&ercise initiative and then see to it
that this initiative is indeed taken.
?se another portion of his increased discretionar# time to get and keep controls
for the timing and content of both bossAimposed and s#stemAimposed time.
6nlarge #our discretionar# time b# reducing 0even eliminating2 subordinateA
imposed time.
?se a portion of this new discretionar# time to ensure that all subordinates
possess initiative@ without which the# cannot e&ercise initiative and then see to it
that this initiative is indeed taken.
?se another portion of his increased discretionar# time to get and keep controls
for the timing and content of both bossAimposed and s#stemAimposed time.
25
Decision making is the process of selecting a course of action to solve a specific problem.
One criteria of a good decision is its )%:9O3%79:E@ the e&tent to which a chosen
course of action is designed to achieve an objective in an efficient manner.
MANAGERIAL DECISION MAKING
MANAGERIAL DECISION MAKING
TRADITIONAL DECISION MAKING
On the spot judgement calls
+ighl# intuitive in nature
%ssumptions and criteria vague
5echanical application of polic#
?nthinking responses.
TRADITIONAL DECISION MAKING
On the spot judgement calls
+ighl# intuitive in nature
%ssumptions and criteria vague
5echanical application of polic#
?nthinking responses.
They believe that the safest approach to change is to
proceed in the direction one has travelled in the past.
They believe that the safest approach to change is to
proceed in the direction one has travelled in the past.
A RATIONAL APPROACH
A RATIONAL APPROACH
Although rationality is an ideal to the sought, in
practice the decision maker must be content to settle
for something less. Rationality is bounded or limited
by time, cost, data collection and analysis.
Although rationality is an ideal to the sought, in
practice the decision maker must be content to settle
for something less. Rationality is bounded or limited
by time, cost, data collection and analysis.
26
THE PROCESS
THE PROCESS
One of the main barriers to rational decision making arises from the fact that managers
have to promote their own careers while making organisational decisions. :his often
results in compromises@ inconsistencies and conflict.
1. STATE THE APPARENT PROBLEM
Drom a !uick assessment of data and the use of intuition and e&perience@ decide on
the apparent problem.
2. INVESTIGATE THE SOLUTION
Discuss and anal#se the following:
A RATIONAL DECISION MAKING MODEL
A RATIONAL DECISION MAKING MODEL
1. 2. 3.
4. ". $.
'.
I KEEP SIX HONEST SERVICE MEN. THEY
TAUGHT ME ALL I KNOW. THEIR NAMES ARE
WHAT AND WHY AND WHEN AND HOW AND
WHERE AND WHO.
(Rudyard Kipling)
I KEEP SIX HONEST SERVICE MEN. THEY
TAUGHT ME ALL I KNOW. THEIR NAMES ARE
WHAT AND WHY AND WHEN AND HOW AND
WHERE AND WHO.
(Rudyard Kipling)
WHAT: A Describe the incidentJproblem. <hat happenedM
6stablish a clear picture of what took place.
WHO: - <ho was involvedM <hat are their viewsM Do
their actions contribute to the problemM
WHAT: A Describe the incidentJproblem. <hat happenedM
6stablish a clear picture of what took place.
WHO: - <ho was involvedM <hat are their viewsM Do
their actions contribute to the problemM
WHERE - <here did the incidentJproblem take placeM 9s it an
isolated event or widespreadM
WHEN A <hen did it happenM 9s the time of an#
significanceM 9s the problem onAgoingM
WHY A <h# did the incidentJproblem happenM
HOW A +ow did the problemJincident occurM
WHERE - <here did the incidentJproblem take placeM 9s it an
isolated event or widespreadM
WHEN A <hen did it happenM 9s the time of an#
significanceM 9s the problem onAgoingM
WHY A <h# did the incidentJproblem happenM
HOW A +ow did the problemJincident occurM
27
28
D6D936 :+6
)6%7
.)O8765
/:%:6 :+6
%..%)63:
.)O8765
93>6/:9C%:6
:+6
/9:?%:9O3
/676-: 86/:
%7:6)3A
%:9>6/
D6>67O.
%7:6)3%A
:9>6/
6>%7?%:6
%7:6)3A
%:9>6/
95.76563:
%3D DO77O<
?.
3. DEFINE THE REAL PROBLEM
:he real problem ma# or ma# not be the same as the apparent problem. .roblems
should be defined in terms of objectives.
4. DEVELOP ALTERNATIVES
Do not accept the first feasible solution. Do not evaluate as this stop participants from
generating new ideas. 9ndividual or group brainstorming techni!ues should be used.
BRAINSTORMING
5. EVALUATE ALTERNATIVES
%ll alternatives should be evaluated on the basis of three ke# !uestions:
6. SELECT THE BEST ALTERNATIVE
A decision making problem solving technique in which
participants try to improve creativity by spontaneously
proposing alternatives without concern for reality or
tradition. DO NOT EVALUATE
A decision making problem solving technique in which
participants try to improve creativity by spontaneously
proposing alternatives without concern for reality or
tradition. DO NOT EVALUATE
9s this alternative feasibleM Do we have the resourcesM Does it meet
legal and ethical considerationsM Does it meet with overall goalsM
<ill the people involved support itM
9s the alternative a satisfactor# solutionM Does it have a good chance
of successM <ill it correct the problemsM <ill it be acceptable.
<hat are the conse!uencesM <hat change will it make in other
areasM /hould other departments be consultedM 0/#stem approach2
<hat will be the e&ternal 0competitor2 and internal reactionM
9s this alternative feasibleM Do we have the resourcesM Does it meet
legal and ethical considerationsM Does it meet with overall goalsM
<ill the people involved support itM
9s the alternative a satisfactor# solutionM Does it have a good chance
of successM <ill it correct the problemsM <ill it be acceptable.
<hat are the conse!uencesM <hat change will it make in other
areasM /hould other departments be consultedM 0/#stem approach2
<hat will be the e&ternal 0competitor2 and internal reactionM
29
:his selection will be based on the evaluation 0" above2@ time and information
available. 9t could represent a compromise.
7. IMPLEMENT AND FOLLOW UP
:his step involves more than just giving orders. )esources ma# need to be ac!uired
and all allocated. )esponded. )esponsibilit# delegated. .rogress reports and controls.
8udgets and time schedules. %ll these can be covered b# the use of an %ction .lan.
OPPORTUNITY COSTS
<hen making a decision@ to consider onl# the financial cost is a narrow view of the
situation. <e must also consider the alternatives that have to be foregone in order to take
the action. <e must ask , cost relative to whatM :o the other opportunities or alternatives
open.
SOCIAL COST
<e must consider the impact of investment plans on the whole communit#.
:raditional methods of choice in decision making would probabl# not opt for activit# 0a2
0because of economic loss2 but would opt for activit# 0b2 0because of economic gain2.
:oda# the position is changing and organisations involved in investment make some
attempt to take the social aspect into account.
OPPORTUNITY AND SOCIAL COSTS
OPPORTUNITY AND SOCIAL COSTS
ACTIVITY
6conomic
gain
/ocial
Cain
6conomic
7oss
-+O9-6
/ocial
7oss
0a2 0b2
GROUP CASE STUDY
GROUP CASE STUDY
Croups have 1 +our to agree on a statement of the )6%7
.)O8765@ and decide what to do
Croups have 1 +our to agree on a statement of the )6%7
.)O8765@ and decide what to do
30
.aulo 6ngineering -ompan# manufacture small units. :he demand for the product is
growing. :he# recentl# increased their production b# introducing two new production
lines@ one working b# da# 14;; hours to 1(;; hours@ the second from 2;;; hours to 24;;
hours.
One of the components@ a switch circuit is soldered to the unit b# manual operation. :his
is a delicate operation and re!uires a high degree of skill to ensure that the circuit is
complete and the joint is well made.
:wo weeks after the introduction of the new production lines@ a number of customer
complaints were received. :he switching units were not functioning and the wiring joints
were breaking.
:he majorit# of the workers emplo#ed on the new production lines were #oung school
leavers@ who had onl# received two weeks training.
Dollowing further investigation@ it was discovered that the majorit# of the poor !ualit#
units had been assembled b# the da# shift. One vital aspect of the switch assembl# was
the voltage provided to the soldering e!uipment. 9t was essential that this remained at
22;J23; volts. %n# drop below 22; volts resulted in a soft joint@ which would not hold.
.ower supplied to the factor# was subjected to fluctuations during the da# due to the
draw down b# the heav# industries in the area. %fter 1';; hours when the majorit# of
the factories closed@ the suppl# was stead#.
2. Investigate the problem
(a) What happened? 0:r# and identif# cause not s#mptoms2
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
What do you consider to be the apparent problem? 0?se onl# the data contained
above. Do not read further.2
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LL
What do you consider to be the apparent problem? 0?se onl# the data contained
above. Do not read further.2
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LL
31
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
(b) Where did it happen? 08e specific2
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
(c) When did it happen? 0:ime of da# or week2
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
(d) Who was involved? 0.eople directl# involved2
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LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
(e) Why did it happen?
____________________________________________________________
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
____________________________________________________________
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
____________________________________________________________
(f) How did it happen?
___________________________________________________________
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
____________________________________________________________
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
____________________________________________________________
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
3. Define the Real Problem
__________________________________________________________________
32
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
4. Develop Solutions 0Do not limit #our alternatives. e.g. move to 8otswana2
0DO 3O: 6>%7?%:6 /?CC6/:9O3/ %: :+9/ /:%C62
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5. Evaluate and select the Best Solution )efer to paragraph " page 21 and socialJ
economic factors page 3;
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
6. Implement and Control
Develop a specific objective to implement #our decision:
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
AUTOCRATIC
CONSULTATIVE
GROUP
DECISION MAKING STYLES
DECISION MAKING STYLES
GROUP WORK
GROUP WORK
%9: Eou solve the problem or make the decision #ourself@ using information
available to #ou.
%11: Eou obtain information from #our subordinate0s2@ then decide on the
solution #ourself. Eour subordinates provide information rather than
generate alternatives.
%9: Eou solve the problem or make the decision #ourself@ using information
available to #ou.
%11: Eou obtain information from #our subordinate0s2@ then decide on the
solution #ourself. Eour subordinates provide information rather than
generate alternatives.
-1 : Eou share the problem with individuals@ get ideas and suggestions 0not as
a group2. :hen #ou make the decision which ma# or ma# not reflect
#our subordinates= influence.
-11 : Eou share the problem with #our subordinates as a group collectivel#
obtaining their ideas and suggestions. Eou make the decision which
ma# or ma# not reflect #our subordinates= influence.
-1 : Eou share the problem with individuals@ get ideas and suggestions 0not as
a group2. :hen #ou make the decision which ma# or ma# not reflect
#our subordinates= influence.
-11 : Eou share the problem with #our subordinates as a group collectivel#
obtaining their ideas and suggestions. Eou make the decision which
ma# or ma# not reflect #our subordinates= influence.
C1 : Eou share a problem with #our subordinates as a group.
:ogether #ou develop and evaluate alternatives and attempt to reach
-onsensus. Eour role is that of team coach. Eou are willing to accept
%nd implement a solution that has the support of the group.
C1 : Eou share a problem with #our subordinates as a group.
:ogether #ou develop and evaluate alternatives and attempt to reach
-onsensus. Eour role is that of team coach. Eou are willing to accept
%nd implement a solution that has the support of the group.
33
APPLYING THE MODEL
PROBLEM
ATTRIBUTES
DIAGNOSTIC
QUESTIONS
0%2. Iualit# of the decision 9s there a !ualit# re!uirementM
9s one solution more rationalM
082. :he leader=s knowledge@ e&pertise@
information
Do 9 have sufficient knowledge to make a
high !ualit# decisionM
0-2. /tructure of problem 9s the problem structuredM
0D2. %cceptance and -ommitment 9s acceptance b# subordinates criticalM
062. <ill an autocratic decision be
accepted
<ould #our G:heor# NH decision be
acceptedM
0D2 /ubordinate motivation and
commitment to compan# goals
Do subordinates share organisational
goalsM
0C2 /ubordinates conflict over
different solutions
9s conflict likel#M
CRITERIA
Quality of Decision
Acceptance of the Decision
Time available
CRITERIA
Quality of Decision
Acceptance of the Decision
Time available
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:+6 5%3%C6) DO6/ 3O: B3O<
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366D6D %3D <+6)6 :O C6: 9:.
34
CASE 1
CASE 2
Eou are building a main roadwa# and have to estimate #our
e&pected rate of progress in order to schedule the deliver# of
materials.
Eou know the terrain and have all the historical data in order to
calculate the mean and variance in the rate of speed. Eou are the
onl# person technicall# !ualified as an engineer.
9f #ou underestimate@ workers will stand idle and materials will be
tied up before being used.
.rogress to date has been good. %ll workers will receive bonuses
if the project is finished ahead of time. :he# are aware of this and
have worked ver# hard.
<hat decision making st#le would #ou use in making a detailed
time schedule of future work.
Eou are building a main roadwa# and have to estimate #our
e&pected rate of progress in order to schedule the deliver# of
materials.
Eou know the terrain and have all the historical data in order to
calculate the mean and variance in the rate of speed. Eou are the
onl# person technicall# !ualified as an engineer.
9f #ou underestimate@ workers will stand idle and materials will be
tied up before being used.
.rogress to date has been good. %ll workers will receive bonuses
if the project is finished ahead of time. :he# are aware of this and
have worked ver# hard.
<hat decision making st#le would #ou use in making a detailed
time schedule of future work.
Eou are in charge of twelve engineers@ each of similar e&perience and
!ualifications. :wo engineers are re!uired to proceed on an overseas
project for si& months. :he location is generall# regarded as an
undesirable one. :here are no apparent personal reasons for an#one to
sta# at home. :he# are highl# skilled professionals. <hich decision
making st#le would #ou useM
Eou are in charge of twelve engineers@ each of similar e&perience and
!ualifications. :wo engineers are re!uired to proceed on an overseas
project for si& months. :he location is generall# regarded as an
undesirable one. :here are no apparent personal reasons for an#one to
sta# at home. :he# are highl# skilled professionals. <hich decision
making st#le would #ou useM
35
Note:
<hat is more important@ !ualit# or acceptanceM
+ow critical is timeM
Does the manager have sufficient information to make the decisionM
9s the situation structuredM Does managers have sufficient
informationM
Note:
<hat is more important@ !ualit# or acceptanceM
+ow critical is timeM
Does the manager have sufficient information to make the decisionM
9s the situation structuredM Does managers have sufficient
informationM
WORKPAPER
CASE 1
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
CASE 2
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
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_____________________________________________________________
DECISION MAKING STYLES
DECISION MAKING STYLES
36
DECISION MAKING
0-33 * 3O):+ <6/: %9)7936/2
9n #our groups discuss the main points raised in the video and the ke# lessons #our team
learned.
GENERAL POINTS
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LESSONS
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VIDEO CASE STUDY
VIDEO CASE STUDY
37
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.%): 2
OPERATIONAL PLANNING
On completing this part delegates should be able to:
1. Describe the basic steps in the operational planning process.
2. %nal#se a need and design a specific objective and standards.
3. .repare a detailed action plan including programme steps@ schedules and budgets.
4. 9dentif# and describe management techni!ues that can make planning more
effective
DIPLOMA IN BUSINESS LEADERSHIP
DIPLOMA IN BUSINESS LEADERSHIP
38
:he overall objective of operational planning is to meet the compan#=s basic strategic
goals. :he compan#=s strateg# and strategic focus can be translated into operational
objectives which specif#:
OPERATIONAL PLANNING OB1ECTIVES
OPERATIONAL PLANNING OB1ECTIVES
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Iuantities and deliver# dates
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7abour relations
7abour cost control
5aterial cost control
Dacilit# utilisation
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Iuantities and deliver# dates
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7abour relations
7abour cost control
5aterial cost control
Dacilit# utilisation
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39
OPERATIONAL PLANNING
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40
OPERATIONAL PLANNING MODEL
OPERATIONAL PLANNING MODEL
input
OPERATIONAL FRAMEWORK
FOR OB1ECTIVE SETTING
OPERATIONAL FRAMEWORK
FOR OB1ECTIVE SETTING
:+6O)6:9-%7 +96)%-+E O.6)%:9O3%7 I?6/:9O3/
5ission and .urpose A 1. <here do we want to goM
A 2. <here are we nowM
/trategic Coals A 3. <hat have we to doM
Operational Objectives A 4. +ow are we progressingM
:+6O)6:9-%7 +96)%-+E O.6)%:9O3%7 I?6/:9O3/
5ission and .urpose A 1. <here do we want to goM
A 2. <here are we nowM
/trategic Coals A 3. <hat have we to doM
Operational Objectives A 4. +ow are we progressingM
%ssuming no
9nformation
0b2
%ssume information
%vailable
%ssuming no
9nformation
0b2
%ssume information
%vailable
59//9O3 %3D
.?).O/6
0<here toM2
93DO)5%:9O3
8%/6
0Data on marketing@
products@ finance@ etc.2
/:)%:6C9-
CO%7/
0<hat have we to doM2
O.6)%:9O3%7
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0+ow are we progressingM2
%-:9O3 .7%3/
8udgets
.rogrammes
.rocedures
/pecific Objectives
.olic#
41
Operational planning is a fundamental process and can be condensed into four
basic steps that can be adapted to all planning activities at all operational levels.
STEP 1 ESTABLISH A SET OF OB1ECTIVES
<ithout clear objectives limited resources ma# be spread to broadl#.
8ecause the setting of strategic goals or operational objectives are
the essential first step in planning@ managers who are unable to set
meaningful goals will be unable to make effective plans.
:here are a number of reasons wh# some managers hesitate or fail to
set goals and objectives.
Not willing to give up alternate goals or objectives .
/ometimes we find it difficult to give up desirable alternatives
and make a firm commitment to one goal
Fear of Failure
5anagers ma# see failure as a threat to their selfAesteem@ ma#
lose the respect of others and even as a threat to their job
securit#.
Lack of organisational knowledge
5anagers cannot set clear goals and objectives without having a
good working relationship with the organisation as a whole. %
new or uninformed manager ma# well hesitate to set objectives if
he thinks that these ma# conflict with goals set at higher levels.
% manager=s information network must be developed to avoid
fault# or unrealistic objectives.
FOUR BASIC STEPS IN
OPERATIONAL PLANNING
FOUR BASIC STEPS IN
OPERATIONAL PLANNING
42
Lack of Environmental Knowledge
:o set clear objectives the effective manger needs to understand
the e&ternal environment:
-ompetition
-ustomers
/uppliers
Covernment agencies
6tc
<ithout this knowledge managers ma# be confused about which
direction to take.
Lack of confidence
9f managers lack confidence in themselves or the organisation or
believe that the# do not have the support of senior management
the# will hesitate to set challenging objectives.
/teps to overcome or reduce the resistance to planning
Develop a viable information s#stem , regular team briefing
9nAhouse training programmes
-reate a supportive climate
)ecognition and reward s#stem
9nvolve all concerned groups in the process.
9ntroduce effective decision making techni!ues.
Develop project teams and interAdepartment contacts.
43
THE FOUR BASIC STEPS IN PLANNING
/:6. 1 /:6. 2
THE FOUR BASIC STEPS IN PLANNING
STEP 1 STEP 2
STEP 1 STEP 2
STEP 4 STEP 3
THE FOUR BASIC STEPS IN PLANNING
STEP 1 STEP 2
STEP 1 STEP 2
STEP 4 STEP 3
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44
:here are two main t#pes of operational plans. 012 /ingle use plans , these are developed
to achieve specific objectives and dissolved when the objective has been achieved. 022
DO FIRST THINGS FIRST
DO FIRST THINGS FIRST
PROGRAMMING AND SCHEDULING
9dentif# all ke# steps that have to be taken towards reaching #our specific objective.
7ist in order of priorit#. % time se!uence should then be allocated to each
programme step 0scheduling2.
ACCOUNTABILITY
Decide who is overall responsible for achieving the individual programme steps.
PROCEDURES
6nsure that correct operating procedures are in place. % detailed set of instructions
for performing a se!uence of actions.
BUDGET
%llocate financial and other resources to meet the re!uirements of each programme
step.
POLICIES
6nsure that all actions taken and decisions made are within the boundaries or
constraints of compan# polic#.
PROGRAMMING AND SCHEDULING
9dentif# all ke# steps that have to be taken towards reaching #our specific objective.
7ist in order of priorit#. % time se!uence should then be allocated to each
programme step 0scheduling2.
ACCOUNTABILITY
Decide who is overall responsible for achieving the individual programme steps.
PROCEDURES
6nsure that correct operating procedures are in place. % detailed set of instructions
for performing a se!uence of actions.
BUDGET
%llocate financial and other resources to meet the re!uirements of each programme
step.
POLICIES
6nsure that all actions taken and decisions made are within the boundaries or
constraints of compan# polic#.
OPERATIONAL PLANNING
SET SPECIFIC OB1ECTIVES
PROGRAMME AND SCHEDULES
ACCOUNTABILITY
PROCEDURES
BUDGETS
POLICY
OPERATIONAL PLANNING
SET SPECIFIC OB1ECTIVES
PROGRAMME AND SCHEDULES
ACCOUNTABILITY
PROCEDURES
BUDGETS
POLICY
45
/tanding plans , these are standardised approaches for handling recurrent and predictable
situations.
THE HIERARCHY OF OPERATIONAL PLANS
/ingle use .lans , .roblems that do not occur repeatedl#
/tanding .lans , 6stablished polic# to deal with recurring
events and activities
THE HIERARCHY OF OPERATIONAL PLANS
/ingle use .lans , .roblems that do not occur repeatedl#
/tanding .lans , 6stablished polic# to deal with recurring
events and activities
/:)%:6C9- CO%7/
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46
Civen background information about an organisation need@ #ou should be able to prepare@
without help@ a specific objective and accompan#ing statement of standards to meet that
need. 9n the response #ou prepare:
the specific objective will clearl# state the results necessar# to
meet the needK
the standards will be easil# understood and measurableK
and accountabilit# and completion time for achieving the specific
objective will be stated.
Note:
Developing Objectives is an important activit# performed b# the professional manager.
9t is also a comple& activit#@ dependent upon man# variables.
9n this module #ou will be shown the basic skills involved in developing objectives. :he
session to follow will discuss the application of these skills@ and give #ou practice in their
use.
OVERVIEW - THE ACTION PLAN
:he action plan is@ in effect@ a roadmap that enables us and our subordinates to achieve
organiational objectives effectivel# and efficientl#. %n introduction to needs anal#sis
and the components of the action plan follows.
Needs statement
<e first must determine the areas of need that e&ist within our unit. :hese needs ma#
concern current operating problems@ anticipated future problems@ or wa#s in which the
performance of ongoing work can be improved.
Specific Objective
:he specific objectives state that the result that must be accomplished to satisf# the need
we have identified. 9n short@ it answers the !uestion@ G<hat results do we wantMH
Standards
%ccompan#ing ever# specific objective is a standards statement. :his gives us a wa# to
measure whether or not the specific objective has been accomplished. 9t includes the
completion time for the objective and identifies the individual0s2 accountable for
achieving it. /tandards answer the !uestion@ G+ow will we know when we=ve
accomplished those resultsMH
Developing Objectives
47
48
Program Steps
Once we have our specific objective standards@ we need to think through the various steps
necessar# to accomplish the objective. <e call these program steps. :he# answer the
!uestion@ G<hat steps will we take to accomplish the resultsMH
Accountability
?suall# we won=t accomplish work all the program steps ourselves. %s managers@ our
job is to accomplish work through others. Dor each program step@ then@ we identif# the
person who will be accountable for carr#ing out the work. :he statement of
accountabilit# answers the !uestion@ G<ho will be responsible for accomplishing the
stepsMH
Needs Analysis
9n evaluating #our needs@ consider opinions other than #our own. -heck with those who
report to #ou@ with #our superior@ and with others concerned with the work of #our
component.
9n listing #our needs@ start b# making rough notes of those problems that are most
apparent in #our unit. :he objective@ at this point@ is to list in ver# rough form as man#
needs as possible.
Once #ou have noted the various problem areas@ go back and prepare #our statement of
each apparent need. :his should be a !uick description of what the need appears to be@
not an inAdepth anal#sis.
%fter #ou have listed each apparent need@ e&amine each situation as it currentl# stands.
-onsider what has happened@ where it has happened@ when it happened@ who was
involved@ and an# other pertinent factors.
%rmed with #our description of each situation@ determine its cause. 7ook beneath the
surface of the problem to determine wh# each need e&ists.
Dinall#@ state each real need. :hese ma# be the same as the apparent needs #ou have
described@ or ma# be modified as a result of #our evaluation of the situation. :r# to
pinpoint each need in just a few words. /tate onl# one primar# need at a time.

APPARENT NEEDS
MAINTENANCE DEPARTMENT
NOTES
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L
APPARENT NEEDS STATEMENT
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1. ?nscheduled downtime for minor
repairs to the electrical s#stem has
increased fift# percent in the last
three months.
1. :here is too much unscheduled
downtime for minor repairs to electrical
s#stem components.
2. 9t takes the electrical crew too long
to find a trouble spot in the s#stem@
and even longer to make the
necessar# repairs
2. :he electrical crew takes too lone to
locate trouble spots and make minor
repairs
3. :he safet# inspector=s last report
noted that the accumulation of
combustible materials and debris
around laboratories was approaching
the danger level. +e mentioned
li!uid solutions and other waste
materials@ as well as a general lack of
cleaning 0floors not swept@ bo&es left
l#ing around@ etc2.
3. :oo man# haards conditions e&ist in
and around laboratories.
4. :he safet# inspector also listed a
number of heating e!uipment items
that need repairs@ oiling@ replacement
of missing parts@ etc.
4. 5aintenance and minor repairs of
heating e!uipment are not handled
regularl#.
366D/ /:%:6563:/ DO3=: /%E %3E:+93C
%8O?: +O< :O /O7>6 :+6 .)O8765.
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O)D6) OD 95.O):%3-6.
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366D/ /:%:6563:/ DO3=: /%E %3E:+93C
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O)D6) OD 95.O):%3-6.
:+6 939:9%7 79/:93C DO6/ 3O: D6:6)5936 9D
:+6E %)6 %..%)63: 366D/ O) )6%7 366D/
49
". 6lectrical and heating crew members
could not perform minor repairs or
e&plain s#stem malfunctions on three
separate occasions.
". 5an# of the heating and electrical crew
members are not sufficientl# familiar
with the e!uipment and s#stems.
The specific Objectives
Eour first step in meeting the need #ou have identified is to think through the
specific@ concrete results #ou must achieve in order to satisf# that need. :he
hardest problem in developing a specific objective is to make it concrete , #our
objective should describe a specific result that can be accomplished within a
definite period of time.
+ere are some ideas that will help #ou write better specific objectives:
1. Describe results #ou can see@ feel@ weigh@ or otherwise measure. Don=t use
abstractions.
2. 7ist onl# one primar# result in #our specific objective. :his helps #ou
focus #our efforts.
3. 5ake sure #our specific objective is clear and concise.
4. 5ake sure that the result described in the specific objective will@ if
achieved@ satisf# the need #ou have identified.
+ere=s an e&ample of a specific objective designed to meet a need:
Need
/ales in )egion " are less than half of those in comparable regions@ and should be
brought into line.
Specific Objective
S.O.6.1. SALES INCREASE. :o raise sales volume in )egion " b# 2;R in the
first !uarter of this fiscal #ear@ whilst maintaining !ualit# and not increase in sales
e&penditure.
50
The Statement of Standards
Once we have defined what it is we want to accomplish b# developing a specific
objective@ we ne&t need to state what evidence will show us that we have met that
objective. <e need standards against which we can measure our performance and degree
of success.
Cood standards help us know that work is being done properl# and the objective has been
achieved. 8ecause standards designate the level and t#pe of performance re!uired@ we
can use them to help develop programs@ schedules@ and budgets.
9f we can=t measure the result we want@ we=ll never know when we=ve achieved it. <e
can use numbers@ percentages@ ratios@ or other appropriate units of measure to specif# the
results we must achieve.
One possible statement of standards for the specific objective we looked at a moment ago
is shown below.
Specific Objective
S.O.6.1 SALES INCREASE. :o raise sales volume in )egion Dive b# :went# percent
in the first !uarter of this fiscal #ear.
Standards:
a. Personnel. 3o new sale s people are hired.
b. Profit. % minimum profit margin of twent#Afive percent is maintained on all lines.
c. Distribution. 6&isting distribution channels are used.
d. Lines of Business . :here is no addition to e&isting service
Accountability: C. :iming: 5arch 31
51
THE SPECIFIC OB1ECTIVE MUST BE S.M.A.R.T
THE SPECIFIC OB1ECTIVE MUST BE S.M.A.R.T
SUMMARY
:o implement an# operational decision we must first clearl# outline what drafting a
specific objective re!uires.
1. 5ust be concise
2. 5ust be measurable:
:ime
-ost
Iuantit#
Iualit#
AVOID
3. 5ust be realistic
4. 5ust be fle&ible
". 5ust be understood
$. 5ust be accepted.
52
%s soon as possibleO
9n due course
.ull #our socks up etc
%s soon as possibleO
9n due course
.ull #our socks up etc
VIDEO DISCUSSION
Group Work
9n this video the word :%)C6: is used , not objective. Discuss the main points raised
and lessons #our group learnt:
Specific
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LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLL
Measurable
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LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLL
Agreed
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLL
Realistic
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LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLL
Time Bounded
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
53
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLL
GROUP WORK
:hink about a need from #our own work situation. <hat results if achieved@ would meet
that needM <rite the result in the form of a /.6-9D9- O846-:9>6 in the space below:
EO?) /.6-9D9- O846-:9>6:
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLL
54
GROUP WORK
E6/ 3O
012 9s the objective clear and conciseM
022 9s the objective result orientedM
032 9s the objective realisticM
042 9s the accountable manager identifiedM
0"2 9s each standard clearM
0$2 Do the standards specif# in measurable terms@ the re!uired
level of performanceM
0'2 %re all performance standards realisticM
-heck the /.6-9D9- O846-:9>6 #ou wrote against the following
list:
-heck the /.6-9D9- O846-:9>6 #ou wrote against the following
list:
9D :+6 %3/<6) :O %3E OD :+6/6
I?6/:9O3/ 9/ 3O )6<)9:6 EO?)
C)O?. O846-:9>6
9D :+6 %3/<6) :O %3E OD :+6/6
I?6/:9O3/ 9/ 3O )6<)9:6 EO?)
C)O?. O846-:9>6
55
GROUP WORK
Debtor collection at %8- 7td is poor. 5ost pa#ments due are $; da#s behind. 9n the last
financial #ear over S1@" million was written off as bad debts.
4ohn .hiri is the debtors clerk and he reports to the accounts supervisor.
:he latest schedules reflects the following position:

3; Da#s A S"4; ;;;
$; Da#s A S42; ;;;
1; Da#s and over A S24; ;;;
3; Da#s A S"4; ;;;
$; Da#s A S42; ;;;
1; Da#s and over A S24; ;;;
:he accountants /pecific Objective and /tandards:
G:he accounts supervisor shall reduce all debtors over 3; da#s and
follow up fre!uentl#H.
/tandards
)egular weekl# follow ups
%ll debtors over 3; da#s to be contacted and outstanding monies
collected.
:he accountants /pecific Objective and /tandards:
G:he accounts supervisor shall reduce all debtors over 3; da#s and
follow up fre!uentl#H.
/tandards
)egular weekl# follow ups
%ll debtors over 3; da#s to be contacted and outstanding monies
collected.
56
QUESTION
<hat=s wrong with the specific objective shownMMM
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
L
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
L
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
L
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
L
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
L
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
L
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
L
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
L
GROUP WORK
9n #our groups rewrite the /pecific Objective in line with the points discussed earlier:
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
L
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
L
S M A R T
57
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
L
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
L
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
L
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
L
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
L
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
L
SUMMARY
%n objective must meet an identified need. 9f results are achieved@ the need should be
satisfied.
:he statement of desired results must be e&pressed in clear@ concise terms.
/pecific objectives should be accompanied b# standards@ which provide a measure of
how well a given individual has done in accomplishing desired results.
:he standards should include a statement of who is accountable for accomplishing the
objective:
not necessaril# who is going to do the workK
rather@ who is accountable for seeing to it that the stated objective is
accomplished.
/tandards should also specif# a definite time for the completion of the objective.
/tandards should be:
measurable
realistic
fle&ible
58
understood and accepted
Programming,
Scheduling, and Budgeting
Programs, Schedules, and Budgets
Once #ou have completed #ou needs anal#sis and have developed the specific objectives
and standards@ #ou have effectivel# defined what #ou intend to achieve. Eour ne&t step is
to state how #ou will accomplish the results #ou have specified. :he management tools
for doing this are programs@ schedules@ and budgets.
8riefl#@ a program is a se!uential listing of the action steps necessar# to accomplish the
results stated in #our specific objective. :his includes a statement of who is accountable
for the accomplishment of each program step.
/chedules assign a time frame to #our plan , a starting date and a completion date for
each step and for the program as a whole.
8udgets are a means of allocating limited resources in the most effective manner.
8udgeting fre!uentl# involves tradeAoffs@ one of the most common being the acceptance
of a longer completion period in return for the e&penditure of fewer resources.
7et=s take a closer look now at the format used in programming@ scheduling@ and
budgeting.
Program Steps
Our first job is to determine precisel# how we will go about accomplishing our objective.
:his involves identif#ing the various program steps re!uired to get the results we have
specified. Dirst@ we list each step separatel#@ without tr#ing to define the precise
se!uence in which the# must be accomplished. :his gives us a good picture of
ever#thing we must do to achieve our objective.
Dollowing this@ we are read# to anal#se the flow of work. .erhaps some program steps
cannot start until others have been completed. 9n other situations@ its ma# be possible to
undertake several steps at the same time.
<e need to specif# accountabilit# for each step earl# in the planning process@ thus
avoiding misunderstandings about who is to do what. :his saves time and allows our
subordinates to organise more effectivel# to achieve unit objectives.
THE ACTION PLAN
THE ACTION PLAN
59
:he steps involved in setting up a program@ then@ are as follows:
1. /pecif# the various program steps to be accomplished.

2. %rrange them in a logical se!uence.

3. /pecif# who is accountable for carr#ing out each program step.
Scheduling
Developing a realistic schedule and sticking to it is one of the most important means of
reaching a planned objective. % good method for preparing a realistic schedule is the
minimax techni!ue. :his involves estimating the minimum 0or optimistic2 time re!uired
to complete each program step@ and the ma&imum 0or pessimistic2 time for each step.
Eou ne&t draw on #our knowledge of factors that are likel# to affect the work and
estimate the most likel# completion time. :his third figure will generate fall somewhere
between the first two.
?se ever# available resource to help make these estimates realistic. 9f #ou or others have
carried out similar programs in the past@ consult the records to find out how long the work
actuall# took.
+ere are the steps:
1. Determine optimistic time.
8egin b# estimating when each program step will be completed if ever#thing goes
well. Don=t worr# about the desired completion date for the program at this
point. 9f #ou tr# to make #our estimate fit that completion date@ #ou ma# be
tempted to cut back time allotments unrealisticall# for some or all of #our
program steps.
9nstead of tr#ing to make the schedule fit the program completion date@ use the
scheduling process to verif# the feasibilit# of the desired date. <e=ll see in a
moment how to handle situations in which some of the estimated times add up to
a much longer period than desired.
2. Determine pessimistic time.
:his calls for assuming that things can go wrong@ will go wrong. %nticipate
possible obstacles@ dela#s@ and breakdowns for each step. :he resulting
pessimistic time will serve as a ma&imum limit for #our time estimate.
3. Determine most likely time.
60
61
:here are man# wa#s of estimating the most likel# time@ but most come down to
good judgement. /ometimes taking a point halfwa# between optimistic and
pessimistic times will be accurate enough.
Budgeting
<e now know what program steps have to be accomplishedK we have assigned
accountabilit# for their accomplishmentK and we have designated start and finish times
for each program step. 3e&t@ we need to allocate the resources necessar# to carr# out
these steps. 9n short@ we need to prepare a budget.
8udgets ma# be e&pressed in manAhours e&pended@ actual monetar# figures@ or in an#
other terms that make the process meaningful. 9n this program@ we will e&press our
budgets in GunitsH so as to have a common denominator representing the utiliation of
people@ materials@ tools@ facilities@ or whatever other resources are involved in
accomplishing our program steps.
8udgets represent the resources re!uired to carr# out the steps in the program.
<hen our resources are inade!uate to accomplish the program steps proposed@ we have to
make some tradeAoffs. 8# relating our budgets to our program steps@ we can decide
where to most effectivel# make these tradeAoffs. +ere is a simple techni!ue of budgeting
that incorporates these ideas:
1. -alculate the value of achieving the specific objective.
2. Determine the resources re!uired to complete each program step.
3. -onvert all costs into mone# 0or@ as in the case of this program@ units2 if feasible.
4. <eigh the costs of the program against the calculated value of the specific objective.
". 5ake tradeAoffs as re!uired.
)656586) , <e budget for the /9N G5TUs:
1. 5inutes 0:ime2
2. 5anpower
3. 5achines
4. 5aterial
". 5one#
$. 5ethods
DIRECTIONS
1. 7et=s use the programming@ scheduling@ and budgeting approach we=ve just
reviewed. .lease refer to the specific objective and standards #ou prepared as part
of the module on developing objectives 0.age "'2
2. 9n the space below@ write a program@ schedule@ and budget for the achievement of
that objective.
PROGRAM
STEPS
ACCOUNT-
ABILITY
SCHEDULE
Start/Finish
BUDGET
Units
62
Summary
:he steps involved in programming@ scheduling@ and budgeting are as follows:
1. )eview each specific objective.
2. 9dentif# the program steps necessar# to achieve each specific objective.
3. .ut the steps in se!uence and number them.
4. /pecif# accountabilit#.
". .repare a schedule@ using the minimax approach when it is helpful.
$. -alculate the value of achieving the specific objective.
'. Determine the cost of each program step.
(. -onvert all costs into mone#@ if feasible.
1. <eigh the costs of the program against the calculated value of achieving the
specific objective.
1;. 5ake tradeAoffs@ as re!uired.
MINI - MAX APPROACH
.6//959/:9- P1; D%E/
O.:959/:9- P $ D%E/
5O/: 79B67E P ( D%E/
0?/6 ( D%E/ 93 EO?) /-+6D?762
.6//959/:9- P1; D%E/
O.:959/:9- P $ D%E/
5O/: 79B67E P ( D%E/
0?/6 ( D%E/ 93 EO?) /-+6D?762
63

0:956 %77O<6D 1; 593?:6/2
9n #our groups
1. <rite specific objective for D67:% .)93:93C. Eou are the 5D writing to the
-hief 6ngineer.
2. %s the -hief 6ngineer 04O+3 DO3DO2 prepare #our %ction .lan and critical
path anal#sis for the project.
3. ?se the miniAma& approach for timings
4. :oda# is the '
th
/eptember 2;;N.
DELTA PRINTING
Eour compan# has purchased si& new printing machines which will be delivered b#
D)69C+: 93:6) on 1$ /eptember. :he e!uipment has been paid for including deliver#
to #our new factor# building.
:he machines must be installed@ tested and full# operational b# 2 October.
GROUP WORK
GROUP WORK
64
65
:he installation although comple& can be broken down into si& or seven ke# activities.
Eou have ade!uate resources to carr# our #our plan. % budget of S'@" million has been
provided for installation etcF
-hief 6ngineer is !ualified to install test etc. +e will be accountable for the operation.
Eour electrician will deal with all electrical re!uirements.
Eour technical training officer will give practical training to all operators. :his should
onl# take 2 0:wo2 full da#s@ as the# are alread# familiar with the machines and have
received a number of da#s theoretical training.
-oncrete beds and steel support has not #et been done. :his will take between 3 0three2
and ' 0seven2 da#s.
:ake deliver#@ check and install will take between 1 and 4 da#s
Dit new electrical switch bo&es will take between 3 and " da#s. .ower 0V6/%2 must be
disconnected before new cabling can be connected.
<ater has not #et been turned on at the new factor#. -it# of +arare re!uires onl# 2 da#s.
)econnection of power re!uires 1 da#. -an onl# be done after machines are installed.
:esting will take 3 da#s.
4ames 5o#o a contractor will make concrete beds he has alread# given #ou a !uotation
of S2 42" ;;; which #ou have accepted.
3o work can take place before the '

/eptember@ the date of specific objective.
Once #ou have drawn up #our action plan all staff must be full# briefed.
DO) .?).O/6/ OD .7%3393C , 9C3O)6
%77 <66B63D/ , -O?3: %77 D%E/ %/
<O)B93C D%E/.
DO) .?).O/6/ OD .7%3393C , 9C3O)6
%77 <66B63D/ , -O?3: %77 D%E/ %/
<O)B93C D%E/.
SPECIFIC OB1ECTIVE- PAGE 66
ACTION PLAN - PAGE 67
SPECIFIC OB1ECTIVE- PAGE 66
ACTION PLAN - PAGE 67
DRAW UP AN ACTION PLAN
DRAW UP AN ACTION PLAN
66
FORM 1
SPECIFIC OB1ECTIVES
Specific Objective
To_____________________________________________________________________
_______________________________________________________________________
_
_______________________________________________________________________
_
_______________________________________________________________________
_
_______________________________________________________________________
_
Standards
1.________________________________________________________________
2.________________________________________________________________
3.________________________________________________________________
4.________________________________________________________________
5.________________________________________________________________
Project Leader _______________________________Date_______________________
FORM 2
ACTION PLAN
Project Leader_________________ Completion Date__________________________
PROGRAMME STEPS ACCOUNTABLE SCHEDULE BUDGET/
COSTS
COMMENTS
START FINISH
67
PART 3
OPERATIONAL PLANNING AND
DECISION MAKING TECHNIQUES
OPERATIONAL PLANNING AND
DECISION MAKING TECHNIQUES
68
TYPES OF
DECISIONS
TRADITIONAL
METHODS
MORDEN
METHODS
.rogrammed:
)outine@ repetitive
Organisation has
specific process for
handling them.
1. +abit
2. -lerical routine
3. /tandard procedures
4. Organisational
structure:
-ommo
n e&pectations
/#stem
of subAgoals
Cood
information
channels
1. Iuantitative
methods
2. -omputers
3onAprogrammed:
One shot@ poorl#
structured@ novel.
+andled b# general
problem solving
process
1. 4udgement@ intuition@
creativit#.
2. )ule of thumb.
3. /election and
training of
e&ecutives.
-reative problem
solving techni!ues
applied to:
:raining
Devising new
computer techni!ues
69
DECISION MAKING TECHNIQUES
DECISION MAKING TECHNIQUES
SYSTEMS DECISION MODEL
HUMAN DECISION MODEL
DECISION MAKING
MODELS
DECISION MAKING
MODELS
%ssumptions
8ased Derived Operational
on from framework
6!uations
%ssumptions
8ased Derived Operational
on from framework
6!uations
-omputer
Decision
8ehaviour
.remises
.erson=s )ole
in life
.erception of
the environment
8ased Derived
on from .erson=s
.ersonalit#
Bnowledge
%nd thought
.erson=s )ole
in life
.erception of
the environment
8ased Derived
on from .erson=s
.ersonalit#
Bnowledge
%nd thought
+uman
Decision
8ehaviour
.remises
70
in
SPECIFIC PLANNING SYSTEMS
SPECIFIC PLANNING SYSTEMS
GENERAL MODEL
GENERAL MODEL
93.?:/ )andom fluctuations O?:.?:/
5onitor
%djustM output
Deedback
93.?:/ )andom fluctuations O?:.?:/
5onitor
%djustM output
Deedback
7a
nd
7a
bour
-a
pital
Co
ods
/er
vices
-onversion .rocess
-omparison:
actuals vs. desired
DEPARTMENT STORE
93.?:/ )andom fluctuations: O?:.?:/
7ate deliver#
)ecession
/taff turnover
0W or A2
Deedback
/tock levels
<ork 6fficienc#
/ales volumes
93.?:/ )andom fluctuations: O?:.?:/
7ate deliver#
)ecession
/taff turnover
0W or A2
Deedback
/tock levels
<ork 6fficienc#
/ales volumes
7and
8uildings
6!pt.
5erchandise
/tore 5gr
/ervic
e to
-ustomers
0Desir
ed
product2
-onversion .rocess
FARM
93.?:/ )andom Dluctuations O?:.?:/
<eather
9nflation
Covernment -ontrols
6!pt. 8reakdown
Deedback
-ropJ/oil -onditions
.rice received
93.?:/ )andom Dluctuations O?:.?:/
<eather
9nflation
Covernment -ontrols
6!pt. 8reakdown
Deedback
-ropJ/oil -onditions
.rice received
7and
7abour
:racto
rs
6!pt
8uildi
ngs
5anag
Crai
n
8eef
5ilk
-onversion .rocess
71
Variances and Exceptions
:he simplest and most effective control is a good s#stem of e&ception reporting. %s we
mentioned earlier@ this means that #ou become involved onl# when there is a significant
deviation from the plan.
5inor deviations are variances and can be corrected locall#. /ignificant deviations are
e&ceptions and call for immediate@ special reporting@ because if the# are not corrected promptl#
the entire program will be jeopardied. :o distinguish between the two@ establish control
limits. Deviations falling within the control limits are the variances@ while deviations falling
outside the control limits are the e&ceptions. % graphic representation of this is shown below:
06&ception A significant deviation from plan. )e!uires immediate@ special
report and prompt corrective action b# higher levels.2
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
0>ariance , can be corrected b# pers re!uire a special report or management
corrective action.2
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
/tandard
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
-ontrol limits must be specified in some unit of measure , percentages@ time periods@ or the
like. Dor instance@ one of the standards of a Data .rocessing 5anager=s action plan called for
routine maintenance of all e!uipment and s#stems once a month plus or minus two da#sK that
is@ within a fourAda# period. :he upper and lower control limits were one month plus or minus
one weekK that is@ within a twoAweek period.
9f routine maintenance fell outside the fourAda# period allowed for in the standard but within
the twoAweek period encompassed b# the control limits@ it was left to the Data .rocessing
manager to correct his performance. 8ut if routine maintenance was being carried out more
often than once ever# three weeks@ too much time was being spent on this activit#. /imilarl#@
if the periods between maintenance stretched be#ond five weeks@ the potential for problems
with the s#stems would increase significantl#. 9n either case@ e&ception reporting would be
re!uired.
6
v
v
6
72
73
One of the man# planning techni!ues for dealing with interdependent activities and resources
so that the# come together in a common goal is the -)9:9-%7 .%:+ %3%7E/9/ 0-...%.2
CRITICAL PATH ANALYSIS
CRITICAL PATH ANALYSIS
% /%5.76 36:<O)B
Eou are going to make an assembl# comprising of two parts. :he events are as follows:
-?: %3D .%/:6
Draw a network -...%. and determine the critical path.
74
GROUP WORK
GROUP WORK
WORK AREA
CRITICAL PATH ? DAYS
WORK AREA
CRITICAL PATH ? DAYS
C A /tartNA ;+ A .rocure .art 1 5aterial A CA 49 A .rocure .art 2
5aterial A CA 34 A 5achine .art 1 A+A $B A 5achine .art
2 A 9A "7 A %ssemble .art 1 and .art 2 A 4JBA 25 A 9nspect and
test A 7A 13 A Dinish A5A ;
C A /tartNA ;+ A .rocure .art 1 5aterial A CA 49 A .rocure .art 2
5aterial A CA 34 A 5achine .art 1 A+A $B A 5achine .art
2 A 9A "7 A %ssemble .art 1 and .art 2 A 4JBA 25 A 9nspect and
test A 7A 13 A Dinish A5A ;
9dentification
7etter
9mmediate
.redecessor
<ork
Da#s
75
6fficienc# relates to the ratio of outputs and inputs. .roduct or service outputs to land@ capital
or labour inputs.
GROUP WORK
PLANNING AND DECISION
MAKING TECHNIQUES
PLANNING AND DECISION
MAKING TECHNIQUES
ECONOMIC EFFICIENCY
ECONOMIC EFFICIENCY
6DD9-963-E P O?:.?: N 1;;R
0R2 93.?:
6DD9-963-E P O?:.?: N 1;;R
0R2 93.?:
5anagement sets an individual work standard reflecting an
average worker=s normal amount of output per unit of time
under normal working conditions. :he standard is 2;; widgets
in one hour. 9f the worker produces 1"; widgets per hour@ how
efficient is the operationM
7%8O?)
6DD9-963-E
%nswer R P
5anagement sets an individual work standard reflecting an
average worker=s normal amount of output per unit of time
under normal working conditions. :he standard is 2;; widgets
in one hour. 9f the worker produces 1"; widgets per hour@ how
efficient is the operationM
7%8O?)
6DD9-963-E
%nswer R P
M
76
5O3 , 1$; <6D , 14; D)9 , 1;;
:?6/ , 12" :+? , 14;
1(;A
1$;A
/:%3D%)D
14;A
12;A
1;;A
(;A
$;A
4;A
2;A
5O3 :?6 <6D :+? D)9
GROUP WORK
%n insurance claims office work standard is 1";
claims per da#. :his week@ 1$;@ 12"@ 14; and 1;;
claims have been processed dail#. :he work backlog is
increasing. .repare a graph of dail# efficienc#. <hat
does the graph indicateM <hat are #ou going to doM
GROUP WORK
%n insurance claims office work standard is 1";
claims per da#. :his week@ 1$;@ 12"@ 14; and 1;;
claims have been processed dail#. :he work backlog is
increasing. .repare a graph of dail# efficienc#. <hat
does the graph indicateM <hat are #ou going to doM
CLAIMS
77
/ales information at the %8- -ompan# was processed in a simple manner.
%nnual figures were recorded and listed in historical se!uence@ so that one could be compared
with another time se!uence.
ABC ANNUAL SALES RECORD
YEAR SALES
11(' A 22;
11(( A 234
11(1 A 21$
111; A 211
1111 A 211
1112 A 23;
1113 A 22(
1114 A 231
111" A 23;
WEIGHTED AVERAGE METHOD
WEIGHTED AVERAGE METHOD
PLOT SALES FOR ABC
/%76/
24; ,
23" ,
23; ,
22" ,
22; ,
21" ,
21; ,
2;" ,
2;; ,

(' (( (1 1; 11 12 13 14 1"
E6%)
PLOT SALES FOR ABC
/%76/
24; ,
23" ,
23; ,
22" ,
22; ,
21" ,
21; ,
2;" ,
2;; ,

(' (( (1 1; 11 12 13 14 1"
E6%)
GROUP WORK
9n #our groups plot the %8- sales data on the above graph and draw a sales line.
Dorecast what the sales might be in 111$ and 111'.
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
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9f #ou found it difficult to forecast because the raw data had not been processed
into a form to help #ou@ the moving or weighted average method should be used.
%verage the three #ear periods to produce what is called a :)63D 7936
0smoothing effect2.
78
PLOT YOUR SALES AND TREND LINE AND FORECAST 1996 AND 1997
/%76/ %3D :)63D 7936
SALES RECORD WEIGHTED AVERAGE
SALES RECORD WEIGHTED AVERAGE
5O>93C
E6%) /%76/ :O:%7
11(' A 22;
11(( A 234
11(1 A 21$ FFFFFFFFF$';
111; A 211 FFFFFFFFF$$1
1111 A 211 FFFFFFFF F$4$
1112 A 23; FFFFFFFFF.$$;
1113 A 22( FFFFFFFFF.$$1
1114 A 231 FFFFFFFFF.$1'
111" A 23; FFFFFFFFF.$1'
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0$';J32 P 0$$1J32 P
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11(( A 234
11(1 A 21$ FFFFFFFFF$';
111; A 211 FFFFFFFFF$$1
1111 A 211 FFFFFFFF F$4$
1112 A 23; FFFFFFFFF.$$;
1113 A 22( FFFFFFFFF.$$1
1114 A 231 FFFFFFFFF.$1'
111" A 23; FFFFFFFFF.$1'
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79
9n toda#=s world@ it is not eas# to ma&imise a situation because of the cost of
information. 5ost companies will /%:9/D9-6 0%mericanism2 which means
accept a satisfactor# return.
Eou are currentl# running a small shop. Eou purchase ";; loaves bread each da#
from the baker#. :he average bread stock left at the end of each da# is 2" loaves.
:he cost of bread from the baker# is S2@;; per loaf. Eou sell the old 0stale left
over2 bread for S;@"; cents per loaf. 9f more accurate information was available
to reflect customer throughAput@ what would #ou will willing to pa# for this
information. 9f #ou run out of bread and cannot suppl# the customer@ the sale of
other commodities will drop. -omment after considering 6.>...9.
1. +ow much does it cost to sign a S";; che!ueMM
2. :enders , what do the# costMM
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
EXPECTED VALUE OF PERFECT
INFORMATION (E.V.P.I)
EXPECTED VALUE OF PERFECT
INFORMATION (E.V.P.I)
GROUP WORK
GROUP WORK
DON`T SPEND $1,00 TO RECOVER 10 CENTS
DON`T SPEND $1,00 TO RECOVER 10 CENTS
REMEMBER, THE SEARCH FOR MORE FACTS
REACHES A POINT OF DIMINISHING
RETURNS.
~SELECT CRITICAL FACTS
REMEMBER, THE SEARCH FOR MORE FACTS
REACHES A POINT OF DIMINISHING
RETURNS.
~SELECT CRITICAL FACTS
80
Eour division is organising a trade displa#. Eou want to make as much mone# as
possible. -onsider the model below and comment.
<hich route would #ou chooseM
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LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
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LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
DECISION MAKING TREE
DECISION MAKING TREE
-hange .rofit
Dailure A S 2 ;;;
)ain ;.'"
3o )ain /uccess A S ( ";;
;.2"
Dailure A S 4 ;;;
)ain ;.'"
3o )ain /uccess A S ' ;;;
;.2"
-hange .rofit
Dailure A S 2 ;;;
)ain ;.'"
3o )ain /uccess A S ( ";;
;.2"
Dailure A S 4 ;;;
)ain ;.'"
3o )ain /uccess A S ' ;;;
;.2"
GROUP WORK
GROUP WORK
81
+old Outdoors
+old 9ndoors
Discuss the following problem and comment. :ake the risk factor into account.
Draw a decision tree.
<hat advice would #ou give #our board of directorsM
GROUP WORK
GROUP WORK
The ABC Company is making a choice between embarking or
continuing with the one in hand. Make the following assumptions:
Probability of existing programme being successful - 0,8: that of a
new programme 0,2; expected profit from existing programme
$500 000 if successful and $50 000 if not. From new programme
$1 500 000 if successful and $750 000 if not.
The ABC Company is making a choice between embarking or
continuing with the one in hand. Make the following assumptions:
Probability of existing programme being successful - 0,8: that of a
new programme 0,2; expected profit from existing programme
$500 000 if successful and $50 000 if not. From new programme
$1 500 000 if successful and $750 000 if not.
WORK AREA
(EACH LEG IS AN INDEPENDENT VARIABLE, DO NOT
NETT OFF)STRATEGYOUTCOMESCONDITIONAL
VALUEEXPECTED VALUE
WORK AREA
(EACH LEG IS AN INDEPENDENT VARIABLE, DO NOT
NETT OFF)STRATEGYOUTCOMESCONDITIONAL
VALUEEXPECTED VALUE
82
-onsider a team that assembles electronic games@ man# of which fail !ualit#
control inspection. :he supervisor has been trained in !ualit# circle techni!ues
and decides to use the team in solving the problem of defective games. %s the
team identifies the reasons for rejection@ the supervisor lists them on the flipchart:
3e&t the team decides to track the number of times a defect occurs during the
month of 4une. :he# take readings on ever# 3
rd
working da#@ for a total of seven
readings during 4une@ as shown in the table below. %t the end of the month@ the#
review their chart and find that a Gloose wireH occurred most often@ followed b#
two other common defects: wrong alignment and loose screw. +ere=s what the#
found:
DEFECT
FREQUENCY IN 1UNE BY DATE
TOTAL 3 ( 11 1$ 21 24 21
7oose screws 2 3 $ 2 13
7oose wire 3 3 4 2 4 1$
5issing part 1 1 1 1 4
<rong alignment 4 3 1 3 4 1"
/cratches 1 1 4 3
3o adhesive 2 1 1 2 3 1
Other 1 1 2
:he team ranks the defects from largest number to the least. Dor this data@ the# do
not need to use consensusAseeking@ since the defects are !uantifiable. %fter
ranking the list@ the# calculate the percentage for each defect.
TOOLS USED BY QUALITY CIRCLES
TOOLS USED BY QUALITY CIRCLES
83
Loose screw
Loose wire
Missing part
Wrong alignment
Scratches
Pieces didnt adhere
DEFECT NUMBER PERCENTAGE
7oose screws 1$ 2$
7oose wire 1" 24
5issing part 13 21
<rong alignment 1 1"
/cratches 4 '
3o adhesive 3 4
Other 2 3
:O:%7 $2 1;;
3e&t@ the team takes steps towards drawing a .%)6:O D9%C)%5 to
summarise the fre!uenc# of defects. <hen a diagram is constructed properl#@ it
illustrates the major and minor problems. :he first thing the team does is
construct a histogram. :he ma&imum number of defects we=re plotting is $2@ so
we=re using $;A'; as our highest.
8# calculating the cumulative line@ the team can transform the histogram into a
measurement tool. Dirst@ the team finds the point where the largest number defect
is located on the left side of the diagram. :he largest number was 1$ 0for loose
wire2@ which accounted for 2$R of all the defects. :he 2$R is plotted on the right
side of the diagram at the same level as 1$. :heir cumulative sum of 31 is located
on the cumulative line in parenthesis. :heir cumulative percentage is calculated
b# adding 2$R and 24R. :he ";R is plotted on the right side of the diagram at
the same level as 31. :he rest of the cumulative sums and percents are plotted in
the same wa#. %s long as no errors have been made@ the total cumulative sum of
defects@ $2@ is at the same level as 1;;R plotted on the right side of the diagram.
:hen a cumulative line is drawn at the points where each cumulative defect
intersects with the corresponding cumulative percentage. :he# have now drawn a
.areto Diagram
PARETO DIAGRAM
PARETO DIAGRAM
84
-10
10
30
50
70
Loose Wire Wrong
alignment
Loose screw No Adhasive Missing Part Scratches Other
3umber
of
Defects
01$2
:he advantage of plotting the cumulative line is that it enables the team to see where to invest
their problem solving energies. :he curve is relativel# steep over the first four reasons for
reject@ which account for ($R of all rejects. 8ut the remainder of the curve is relativel# flat@
reflecting the fact that the remaining three reasons for reject onl# account for 14R of all
rejects. :his is the familiar Glaw of diminishing returnsH at work: the results of tackling the last
three t#pes of defect ma# not be worth the effect involvedF at least until the steeper part of the
curve@ where the percentages are greater@ have been tackled. 5oreover@ the team ma# have also
had a Gripple effectH and reduced the less fre!uent defects through improvements made on the
more fre!uent ones.
%nother feature of the diagram is that teams can place two consecutive .areto Diagrams sideA
b#Aside to demonstrate if the corrective action worked. Dor e&ample@ we=ve placed 4une=s
diagram n e&t to 4ul#=s so #ou can see the difference after the team took corrective action.
:here are several features of the diagram that illustrate improvement. :he number of defects
has gone from $2 to 3;@ resulting in a reduction in the sie of bars@ the appearance of fewer
bars 0since the less fre!uent defects have been eliminated entirel#2@ and a lower cumulative
line.
$'
Pareto Diagrams are a ver# effective device in making presentations to managers since the#
can visuall# e&plain the major problems and the GbeforeH and GafterH fre!uencies.
0$22
85
3
o

o
f

D
e
f
e
c
t
s
1;;R
1;;R
3
o

o
f

D
e
f
e
c
t
s
3;
';
$;
";
4;
3;
2;
1;
;
7oose <rong 7oose 3o 5issing /cratches Other
<ire %lignment /crew %dhesive .art
1;;
1'
13
($
'1
-umulative
"; .ercent
2;
;
-umulative line
0312
0442
0"32
0"'2
0$;2
%fter the team completes the .areto Diagram@ it is now read# to e&amine the
causes for the major problem. )ecall that the team we=ve been working with
found that the major causes of defects is the Gloose wireH. :he supervisor now
uses another !ualit# circle tool@ G-ause and 6ffect Diagram@H also referred to as
the GfishAbone diagram@H to determine possible causes of loose wire. :he
supervisor draws the diagram@ placing the four possible causes in each of four
bo&es and the Gloose wireH defect at the end of the arrow. :he supervisor then
adds several lines under each cause so that specific causes can be recorded.
3ow@ we=d like #ou to become a member of our fictitious team. On each of the
lines@ place the specific causes that #ou feel might result in the Gloose wireH.
<e=ve placed Glack of de&terit#H on the chart under the 5anpower bo&. Eou
need to know that the loose wires in !uestion are soldered into place b# workers
seated at a work station and e!uipment with an electric soldering gun@ solder@ flu&
0rosin , to remove o&ide2@ and a hand tool 0GstripperH2 to remove insulation from
the ends of the wires to be soldered. Civen this information@ see if #ou can come
up with several possible causes under each of the four headingsF one=s that
might be contributing to the high incidence of loose wires. <hen #ou=ve entered
#our guesses on the horiontal lines@ turn the page and compare #our answers
with ours.
CAUSE AND EFFECT DIAGRAM
CAUSE AND EFFECT DIAGRAM
86
5%3.O<6) 5%:6)9%7/
5%-+936/ 56:+OD
7OO/6
<9)6
?sing the brainstorming techni!ue@ the team fills in the possible causes of the
Gloose wireH. :he more causes brainstormed@ the better the diagram. %ll ideas are
written down on the diagram.
%fter likel# causes have been brainstormed and listed on the diagram@ consensus
seeking reduces the list to the most probable causes.
87
Distractions <rong Dlu&
7ack of Defective Dilaments
De&terit#
9nade!uate >isual %bilit#
<rong :#pe /older
8oredc
)ush 4ob
8rittle .lastic
%ssembl#A7ine -oating
+andling
-onnecting /e!uence
OutAof %djustment 9mproperl# Dlu&ed
.ackaging
/oldering 9ron
3ot hot enough /older :emperature
9mproper %lignment
Of parts
9nsufficient 6&posed <ire
9mproper +andling in 0not enough insulation
Dinal assembl# stripped2
5%3.O<6) 5%:6)9%7/
5%-+936/ 56:+OD
7OO/6
<9)6
9n a Gtrue consensusH situation@ the team would agree on the most probable
causes and subse!uent rankings without voting. ?suall# this occurs in mature
teams that are at earlier stages of development@ decisions are reached b# voting
for the most likel# causes.
/ince the team under discussion is in its earlier stages@ the supervisor asks the
members to vote for as man# causes as the# want. :he number of votes for
Gassembl#Aline handlingH is 1; Gsolder temperaturesH and also receives a 1;. :he
supervisor sees that two causes ties for the highest vote.
3ow the supervisor asks the team to vote for one of the topAranked causes. :he
team votes G$H for Gsolder temperatureH and G4H for Gassembl#Aline handling.H
/ince the team ranks Gsolder temperatureH as the most likel# cause for the loose
wire@ it must now decide on possible solutions. :he solutions are brainstormed@
listed and@ using consensusAseeking@ are ranked in order of human and machine
implementation costs. :he team decides to raise the temperature of the solder b#
1;; degrees for one week and plot the number of Gloose wiresH for the week on
88
%ssembl#A7ine
+andling
>ote 1:1;
>ote 2 : 4
/older :emperature
>ote 1: 1;
>ote 2 : $
5%3.O<6) 5%:6)9%7/
5%-+936/ 56:+OD
7OO/6
<9)6
the .areto Diagram. 9f the solution does not improve the number of defects@ the
team will implement the problemAsolving process all over again.
SOME QUESTIONS FOR YOUR CONSIDERATION:
1. <hen should the team address the Gassembl#Aline handlingH cause. 9f so@
howM
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2. +ow can #ou appl# these techni!ues to a problem in #our own work situationM
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GROUP WORK
GROUP WORK
89
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DIPLOMA IN BUSINESS LEADERSHIP
MODULE 8
PART 4
Controlling
-arefull# prepared specific objectives@ programs@ schedules@ and budgets help a
manager plan the accomplishment of that work most important to the success of
the unit. <ith the implementation of these plans@ however@ comes the need to
assess and regulate work in progress and to assess results secured. 9n short@ #ou
must perform the management function of controlling.
.art of #our controlling work involves developing performance standards. :hese
standards are guidelines to successful performance of the work.
Eou also need to measure performance. 5easure@ in the sense@ includes all the
work #ou do to get information about how work in progress is proceeding.
Once #ou have this feedback@ #ou can evaluate performance , decide whether or
not performance is acceptable in terms of #our standards@ and if it is not@ wh#.
Dinall#@ if the performance is not acceptable@ #ou=ll need to correct performance ,
help bring performance back into line with #our plans.
90
CONTROL
LING
CONTROL
LING
:hese four activities of controlling , developing performance standards@
measuring performance@ evaluating performance@ and correcting performance ,
are covered in more detail on the following pages.
1. THE NEED FOR CONTROL
+aving determined our course of action or plan@ we must ensure to keep it.
<e need guidelines and means of identif#ing an# tendenc# to err from our
path. /uch is the re!uirements for managerial control. 9t is an integral part of
planning and should alwa#s accompan# it. -ontrol involves receiving ke#
information on the activities and measuring results against predetermined
standards. 9t must permeate all areas of the organisation. 6&amples of this in
the different departments are as follows:
-ontrols enable management to take corrective action to bring one back into
course. -hecking during the plan rather than just after completion gives guidance
for the future as opposed to holding an in!uest. -ontrols also allow greater
confidence in delegation. One can !uickl# monitor performance on work@ which
THE CONTROL FUNCTION
THE CONTROL FUNCTION
5anaging director and the board re!uire control information to show the
e&tent of compliance or deviance from overall compan# policies and
objectives as well as the divisional objectives@ e.g.@ checking return on
investment@ turnover@ profitabilit#@ etc.
.roduction department re!uires control information to check progress on
production relative to output objectives@ e.g. targets@ labour@ material and
consumption.
5arketing department re!uires control information to check progress on
sales relative to objectives for projects@ territories@ sales force@ etc. these
ma# also involve warehouse performance and distribution performance
objectives.
:he accounts department provides the whole management information
control s#stem. :he# need to control the overall financial performance.
:he personnel department re!uires control information to check levels of
wages@ salaries@ absenteeism@ staffing levels@ skills availabilit#@ etc.
5anaging director and the board re!uire control information to show the
e&tent of compliance or deviance from overall compan# policies and
objectives as well as the divisional objectives@ e.g.@ checking return on
investment@ turnover@ profitabilit#@ etc.
.roduction department re!uires control information to check progress on
production relative to output objectives@ e.g. targets@ labour@ material and
consumption.
5arketing department re!uires control information to check progress on
sales relative to objectives for projects@ territories@ sales force@ etc. these
ma# also involve warehouse performance and distribution performance
objectives.
:he accounts department provides the whole management information
control s#stem. :he# need to control the overall financial performance.
:he personnel department re!uires control information to check levels of
wages@ salaries@ absenteeism@ staffing levels@ skills availabilit#@ etc.
91
has been delegated. One has a read# tool for monitoring. :he process of control is
like driving a car , each deviation needs corrective measures. <ithout it one ma#
end up in disaster. :he main purpose of control@ therefore@ is not checking up on
people but taking corrective action to ensure the desired results are obtained.
5anagers should set their own control criteria. 9n this wa# the# e&ercise a greater degree of
selfAcontrol. .lanning and control therefore is a good tool in management development. 9t
assists selfAdevelopment.
-ontrol re!uires the establishment of standards. :hese are criteria against which performance
can be measured.
2. CONCEPTS OF CONTROL
Measurement: 5easurement must be designed to aid interpretation. <hat are the facts that
#ou reall# need to knowM %re the# measurableM <hat should #ou be measuringM
Interpretation: -ontrols should not onl# provide statements of fact to the manager but should
also give interpretation. )eporting on the performance is good but interpretation of
performance is going one stage better. 5anagers often do not have the time or the patience to
wade through the masses of figures. >isual presentation of facts in forms such as graphs@
charts@ etc.@ also assist interpretation.
Concepts of the Vital Few (Pareto`s Law); 9n an# elements to be controlled@ a small function
in terms of number of elements alwa#s accounts for a large fraction in terms of effects. One@
therefore@ needs to separate the vital few and control them and then forget the rest. /elect the
ke# factors and concentrate on them. Do not complicate matters b# raising too man# figures.
Accountability and Controllability: :he greater potential for control tends to e&ist at the
point where the action takes place. 9t is often the supervisors in manufacturing or sales who
usuall# spend most of the mone#@ produce most of the goods and manage most of the people.
-ontrol the supervisors. +owever@ the# can onl# be held accountable if:
:he# know what the# are e&pected to achieveK
:he# know what the# are actuall# achievingK and
9t is within their personal control to regulate which is
happening.
:he# know what the# are e&pected to achieveK
:he# know what the# are actuall# achievingK and
9t is within their personal control to regulate which is
happening.
92
3. SETTING STANDARDS
Dor a person to obtain consistentl# e&cellent results@ he must know the difference
between good work and poor work. :his distinction should be made from careful
stud# from what can be reasonabl# achieved. /tandards are #ardsticks. :he
overall #ard stick is the plan itself split into the component objectives. /tandards
must be fi&ed to ensure the objectives are objectives are obtained. One must bear
the following aspects in mind:
/tandards must be realisticK the# onl# service as an incentive for improvement if
the# are attainable and seen to be attainable. .ast achievements should be
anal#sed and areas for improvement. -an standards be increasedM Does the
emplo#ee have the necessar# resources to reach this standardM
/tandards should be fle&ibleK just as plans need to be fle&ible to allow for
changes in circumstances so should be the standards. :he standards need revising
ever# time the plan changes. /ometimes #ou can build in fle&ible standards to
#our plan.
/tandards must be measurableK one needs to ascertain whether or not the
objectives have been met. One also needs to know how far short one has failed
from attaining the standards.
4. PERFORMANCE MONITORING AND EVALUATION
Deedback of information on actual results has to be compared with the standards
and budgets set previousl#. %ctual performance needs to be compared with
standards. )eports should be concise and understandable. Details in reports
would usuall# get progressivel# less the higher up the organisation one goes.
)eports should be prompt. Outdated reports ma# be too late to take corrective
action.
>ariance anal#sis is the process of determining the e&tent of deviation from the
standards b# the actuals. /ome variables are tolerable whilst others ma# not be.
:he manager must know to what e&tent variances are allowed. %re the#
significant or notM %re the# something he can deal with or do the# need to be
93
reported further up the organisationM 9t is necessar# therefore to determine
acceptable levels of variance in advance so that the manager knows where he
stands.
8udgets e&press the plan in financial terms. Dor e&ample@ #ou ma# have planned
to build a new shop. Eou would have prepared a capital e&penditure budget. 9t
will probabl# take several months and a schedule should have been prepared
showing the various tasks and timescale for them. 6ach month@ or possibl# more
fre!uentl#@ comparisons will need to be done of the actual costs incurred against
the budgeted costs. Eou ma# discover that #ou have overspent on la#ing the
floor. 9s the variance significant or notM 9f it is@ what corrective action should be
taken. Eou can then possibl# prevent the same problems happening in the future
or else change the plan to allow for the changed circumstances. /uppose the shop
is now running but e&penses are apparentl# over budgeted e&penses. <h#M 9n
what areasM <hat can be done about itM
/tandards and budgets should be used in all aspects of the business covering e.g.
marketing@ manpower@ finance and capital e&penditure.
5. TAKING CORRECTIVE ACTION
-ontrol is onl# effective to the e&tent it motivates managers to take prompt
corrective action. :his must be accepted as an integral part of the planning and
controlling function of management. Decisions have to be taken promptl# rather
than later. Obviousl#@ some decisions will take time because of the serious nature
of them one will need to get more facts. +owever@ the need is still there@ a
decision had to be made. %lternativel#@ some problems should be put to higher
management for their decision on corrective action. :he manager should know
his limits of authorit#.
-orrect action can come in two t#pes: operating action and management action.
:he former is shorter term first aid action when variances occur@ e.g. deliveries
ma# be falling behind schedule so another man should be immediatel# put on the
job in order to get back to standard. 5anagement action in this case would be
anal#sing the reasons wh# deliveries were falling behind the standard. One needs
to delve further into the problems and ascertain whether perhaps the standards
were too tight or perhaps one person was slacking.
9n taking corrective action@ it will sometimes be necessar# to change the
standards or the budget if the# are proved to be at fault. One must alwa#s keep
this possibilit# in mind.
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6. THE CONTROL CYCLE
Once the s#stem of control is functioning@ it becomes selfAsustaining. :here
should be a control c#cle: example in the case of labour cost control the objective
is to reduce an allowed labour cost for a given programme b# "R. :he c#cle of
control is:
Operative record on time sheets the details of that production
output and time takenK
:he production output is evaluated in terms of standard times
and these are compared with actual times taken with the results
being set out in a cost control reportK
<here deviations from standards are seen to occur@ corrective
action is taken b# the supervisor.
Operative record on time sheets the details of that production
output and time takenK
:he production output is evaluated in terms of standard times
and these are compared with actual times taken with the results
being set out in a cost control reportK
<here deviations from standards are seen to occur@ corrective
action is taken b# the supervisor.
THE CONTROL FUNCTION
THE CONTROL FUNCTION
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95
MEASUREMENT - FEEDBACK
AD1USTMENT
96
MANAGER
PERFORMANCE
5
e
a
s
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e
m
e
n
t
%
d
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Deedback
FEEDBACK TO VARIOUS RECIPIENTS
.erformance
8eing measured
.erformance
8eing measured
Deedback
/enior
5anagers
.erforming
Department
.erforming
9ndividuals
/taff
9n #our groups discuss how #ou would use the .areto .rinciple in the following
situations:
DEBTORS SCHEDULE RE1ECT PRODUCTS
S
-56D 4$ ;;; Despatch 11R
D?7E/ 3 ;;;
%9)V95 3( ;;; <arehouse 1(R
D%)5 93- 2 ;;;
.C 93D 1$ ;;; .roduction 7ine 012 21R
4* D 4 ;;;
:+%56/ 2 ;;; %ssembl# "R
3.).V (1 ;;;
%3C7O %56)9-%3 32; .aint /hop 41R
D%)56)/ -OAO. 21;
569B76/ "4; .roduction 7ine 022 4R
8%)8O?)/ 1 ";;
THE PARETO PRINCIPLE
(80/20 RULE)
MANAGEMENT BY EXCEPTION
97
6&pectations
>ariance >ariance
/tandards /tandards
>ariance >ariance
6&pectations
6&pectations
>ariance >ariance
/tandards /tandards
>ariance >ariance
6&pectations
POINT OF CONTROL
FEEDBACK CONTROL LOOP
98
0%s near to the scene of the action as possible , <here the process changes2
I- I-
I- I-
I- I-
I- P Iualit# -ontrol
.?)-+%/6/ /:O)6/ -?:
D)97793C C)93D93C 597793C
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Deedback -ontrol 7oop
Difference
Desired
6ffector provides
control action
9nterpretation of
difference and
command to effector
.rocess
-omparison of actual
and desired
/ensor
measures
actual
THE CONTROL PROCESS
VIDEO BASED DISCUSSION
<hat t#pe of control does the companies in the video useM Discuss in #our
groups. <hat other lessons did #ou learnM
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Dinancial -ontrols
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Iualit# -ontrol
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9nventor# -ontrol
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Other points of interest
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KEEPING TRACK
99
SUMMARY
6ffective controls are important because the# let managers correct mistakes.
:he# help managers to cope with change@ create faster production c#cles@ add
value to products and services@ unifies workers@ build teams and facilitate
delegation.
-ontrols provide the link between plans and decisions. -ontrols measure and
feedback data on performance to decision makers.
Designing a control s#stem re!uires consideration of WHAT - HOW and
WHEN to measure
-ontrols are not mechanical , the# operate in s#stems affected b# perception and
volition. %s a result controls produce a mi& of anticipated and unanticipated@
wanted and unwanted conse!uences as people perceive@ interpret and respond to
measurement and feedback on their performance. % clear understanding of the
behavioural effects of control is a most important asset to an# manager.
)a# Dolcarelli
100