Week 1.

why do organizational plan

1.Strategic Planning: Why Do We
Need To Do It?
 

Regardless of whether your business is a small start-up or one of the biggest players in the
market, you will likely have heard stories of how other organizations have achieved success
through well thought-out strategic planning.

Is strategic planning still relevant for businesses today, however, or is it just an outdated
management fad? How exactly does it help an organization?

Effective strategic management can bring many benefits to any business – here are just
four examples.

It outlines a clear path for your company

No business can hope to succeed by not having a plan and simply hoping to stumble across
success.

A strategic plan works like a roadmap, clearly defining the best route for your organization
to take in the years ahead. Whether it covers one, three or five years into the future, a
strategic plan can help guide your organization to meet the challenges that lie in wait.

It brings a sense of focus

Because a strategic plan establishes a direction for your business to take, it will help it
sharpen its focus in order to get there.

Strategic planning can therefore help your organization develop the right goals and targets
and help everyone focus their efforts into meeting them.

It improves your business’s self-awareness

Taking the time to establish a comprehensive strategic plan means your business has a
better awareness of its strengths and weaknesses and where it stands in the market, both
individually and in relation to competitors.

It gives your employees something to work towards

Strategic planning isn’t just beneficial for those highest up in the management hierarchy – it
gives everyone in the organization a sense of purpose.
With a definitive mission and clear goals and objectives to work towards, your staff will know
their efforts count towards something and will be motivated to do their job.

2.Structure of Organization
An organization is basically a group of people who collectively work to
achieve common goals. Division of responsibilities under a ranking
system is the backbone of any organization. In order to understand an
organization, we need to take a close look at its organizational structure.
This will tell us how all members of the organization function.

Every organization comprises of people who run it. These people share
common goals and objectives. In order to achieve them, these people
also share roles and responsibilities with each other.

An organizational structure is simply the pattern or network of division

of these roles and responsibilities. Thus, which person has to perform
which task is what the organizational structure explains. Such a
structure also depicts the hierarchy in which members of an
organization rank themselves.

An organizational structure is not an end but rather the means to an end.

Members of an organization create it just to achieve their common aims.
When people divide responsibilities and coordinate with each other, it
becomes easy to function. This is basically the entire purpose of an
organization structure.

2.1 Purpose of Organizing

As we saw above, an organizational structure is not an end but a means

to an end. Every organization strives to achieve its targets and its
structure only facilitates this.
The main purpose of such a structure is to help the organization work
towards its goals. It brings members of the organization together and
demarcates functions between them.

Secondly, the structure also helps in ensuring smooth and efficient

functioning. In other words, it reduces time, money and efforts. This
happens only because every person knows what her responsibilities are.
Work happens with precise coordinationwith minimum wastage
of resources.

Browse more Topics under Organizing

 Concept and Importance of Organizing

 Authority and Responsibility
 Principles and Barriers of Delegation
 Centralization and Decentralization
 Formal Organization- Line Organization
 Formal Organization- Functional Organization
 Formal Organization- Line and Staff Organization
 Formal Organization- Project Management Organization
 Formal Organization- Matrix Organization
 Informal Organization
2.2 Nature of an Organizational Structure

The structure of an organization should always be dynamic. A static and

rigid structure only creates difficulties and hurdles. The structure must
conform to requisite changes at all times.
The main reason for this requirement is that external environments
influence all businesses. For example, social,
technological, economic and political factors play a huge role here. As a
result, the organization must be able to adapt to these changes at all
times.

Furthermore, it can become necessary for an organization to hire more

employees or cut down its task force. External factors are responsible
for this as well. If that happens, the structure always must be flexible
enough to mend itself.

Finally, an organizational structure must be clear. Each member must

expressly know what her responsibilities are. Ambiguities in the
division of responsibilities create many problems.

Development of an Organizational Structure

Every time an organization creates its structure, it has to consider

various factors. Since there are no fixed rules for this purpose, some
common guidelines can be of great help. Here are some considerations
one always must keep in mind while designing such structures.

1. Clear Definition of Objectives

Firstly, the main objectives of the organization must be absolutely clear.

These objectives determine what kind of structures are required. A
standard structure can never suit every kind of organizations.

2. Identification and Grouping of Activities

The next step here is to identify activities that members of the

organization have to perform. Since every business activity requires
many tasks, clear identification of them is important. After
identification, it is necessary to group these activities into classes on the
basis of their nature.

Almost all business organizations have various departments looking

after various functions. For example, there can be
production, marketing, accounting, and human resources departments.

3. Determination of the Structure

After completing the first two steps, the organizers finally determine the
overall structure. He defines the ranks and hierarchy in which people
will function. Creation of departments also happens in this step.
Consequently, managers and employees become aware of their exact
roles and responsibilities.

4. Revision of the Structure

Once the structure starts functioning, it can show up problems and

shortcomings. For example, the marketing and sales departments often
perform similar functions. Consequently, this can show up difficulties
in the clear demarcation of work between them.

The organizers must always try to find such problems and resolve them.
This the reason why organizational structures must be flexible and not
rigid.

Solved Examples on Organizational Structure

Question: Mention the missing word in the following sentences.

1. An organizational structure divides __________ and __________

amongst members.
2. Structures must always be __________ because they should be able
to adjust to changes.

3. Organizers can divide functions into __________ depending on their

functions.

Answers:               (1) roles and responsibilities               (2) dynamic   

           (3) departments

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Organizing

 Delegation of Authority

 Formal Organization- Project Management Organization

 Formal Organization – Functional Organization

 Formal Organization – Line and Staff Organization

 Formal Organization – Matrix Organization

 Authority and Responsibility

 Principles and Barriers of Delegation

 Centralization and Decentralization

 Formal Organization – Line Organization

 Structure of Organization

3.What are the types of plans how may they be classified?

There are three major types of planning, which include operational, tactical and
strategic planning. ... Tactical plans support strategic plans by translating them into
specific plans relevant to a distinct area of the organization.
 4 Types of Plan – Definition, Practice, Explained
with Examples
4 types of plans that managers create and apply to direct business operations,
monitor and control organizational activities for achieving set goals.

Types of Plans are;

1. Hierarchical plans,

2. Standing plans,

3. Single-use plans, and

4. Contingency plans.

1. Hierarchical Plans
These plans are drawn at three major hierarchical levels, namely, the
institutional, the managerial and the technical core.

The plans in these 3 levels are-

 Strategic

 Administrative and,

 Operational respectively.

Strategic plan

The strategic plan generally involves planning at the top institutional level of
an organization. Strategic plans define the organization’s long-term vision and
how the organization intends to make its vision a reality.
In short, strategic planning is the determination of the basic long-term
objectives of an enterprise and the adoption of courses of action and
allocation of resources necessary to achieve these goals.

Strategies do not attempt to outline exactly how the enterprise is to

accomplish its objectives since this is the task of countless major and minor
supporting programs.

But they furnish a framework for guiding, linking and action.

Administrative or Intermediate plan

Administrative or intermediate planning is done at the level of middle

management.

It is cone to allocate organizational resources and coordinate internal

subdivisions of the organization. It is also a process of determining the
contributions that sub-units can make with allocated resources.

Operational plan

Finally, operational planning is the process of determining how specific tasks

can best be accomplished on time with available resources.

This is also done to cover the day-to-day operations of an organization. As

such, many operational plans are designed to govern the workings of the
organization’s technical core.

2. Standing Plans
Standing plans are drawn to cover issues that managers face repeatedly.

For example, managers may be facing the problem of late- coming quite
often.
Managers may, therefore, design a standing plan to be implemented
automatically each time an employee is late for work. Such a standing plan
may be called a standard operating procedure (SOP).

Mission or purpose, strategies, policies, procedures, rules are some of the

most common standing plans.

Mission or purpose

Mission or purpose, often used interchangeably, identifies the basic task of an

organization for which it is created.

For example, the mission of a University is to impart higher education.

The mission of the garments factory is to produce and sell ready-made

garments and so on.

Strategy

The strategy is another type of broad-based standing plan which helps the
determination of the basic long-term objectives of an enterprise and the
adoption of courses of action and allocation of resources necessary to achieve
these objectives.

Policies

Policies are, in most cases, standing plans. Policies provide guidelines for
repetitive actions.

They define an area or provide limits within which decisions are to be made
and ensure that the decision will be consistent with, and contribute to, an
objective.

Policies are types of plans that allow decision-makers some discretion to carry
out a plan.

Otherwise, there will be no difference between policies and rules.

Policies must allow for some discretion. Policies help decide issues before they
become problems and make it unnecessary to analyze the same situation
every time it comes up.

It permits managers to delegate authority and still maintain control over

subordinates about the matter.

There are many types of policies.

Instances are found in the policies of hiring only university-trained engineers,

promotion from within, encouraging an employee suggestion system for
improved organizational performance, setting competitive prices, etc.

Some policies could originate from customary and general ways of behavior in
an organization.

Some of them are put in place through verbal statements or in writing.

For example, there might be a policy in an organization that “except for token
gifts of very nominal value or advertising value, no employee shall accept any
gift from any supplier.”

Such formal policies are usually written down in company manuals or

regulations for employees.

The policy is a means of encouraging discretion and initiative but within limits.
The amount of discretion usually depends on the policy and the position and
authority occupied in the organization.

Since policies are general, they provide guidelines as to how the employees
will carry out their jobs.

While policies provide managers with some flexibility in approaching various

organizational problems, this generality again makes policies rather vague.

Control becomes difficult when people start interpreting policy meaning and
purpose differently.
Rules

Rules Like policies, rules, too, are standing plans that guide action. Rules spell
out specifically what employees are supposed to do or not to do.

For example, the no-smoking campaign launched by some organizations is

supported by some organizational rules. As opposed to policies, rules do not
permit the exercise of individual discretion.

Instead, rules specify what actions will be taken (or not taken) and what
behavior is permitted or not. Policies, on the other hand, tell people how to
think about decisions to be made about actions.

Procedures

Procedures Like rules, procedures are standing plans that guide action rather
than speculation.

They are plans that establish a required method of handling future activities.

Procedures establish customary ways for handling certain activities like hiring
a clerk, promoting employees, obtaining a loan from a bank.

The major characteristic of a procedure is that it represents a chronological

sequencing of events.

It specifies a series of steps that must be taken to accomplish a task. A

specified series of steps that are required to be taken for admission into the
MBA program of AUB is an example of the procedure.

3. Single-use Plans
Single-use plans are prepared for single or unique situations or problems and
are normally discarded or replaced after one use.

Generally, four types of single-use plans are used. These are—

1. objectives/goals,

2. programs,

3. projects,

4. budgets.

Objectives or Goals

Objectives or goals, often used interchangeably, are the ends toward which
activity is aimed.

They represent not only the endpoint of planning but also the end toward
which all other managerial functions are aimed.

Objectives are set about a particular period and thus the same objective is not
repeated year after year, month after month or day after day.

Objectives or goals are divided into 3 types.

Programs

Programs are plans of action followed in proper sequence according to

objectives, policies, and procedures.

Thus a program lays down the major steps to be taken to achieve an objective
and sets an approximate time frame for its fulfillment.

Programs are usually supported by budgets.

A program may be a major or a minor one or long, medium or short-term one.

Since it is not used in the same form once its task is over it belongs to the
single-use plan category.

Projects
A project is a particular job that needs to be done in connection with a general
program. So a single step in a program is set up as a project.

A project has a distinct object and clear-cut termination.

“Projects have the same characteristics as programs but are generally narrower
in scope and less complex. Projects are frequently created to support or
complement a program.”

Budgets

A budget is a statement of expected results expressed in numerical terms.” It is

sometimes called the enumerated program and most commonly expressed in
terms of money i.e. Rupee, Euro, Dollar, etc.

They may also be expressed in terms of any measurable unit like an hour,
metric ton, etc.

It covers a particular time, and once the period is over, a new budget comes
into being. It not only a planning tool but also works as a controlling tool.

4. Contingency Plans
As we already know, the process of planning is based on certain assumptions
about what is likely to occur in the environment of an organization.

Contingency plans are made to deal with situations that might crop up if these
assumptions turn out to be wrong.

Thus contingency planning is the development of alternative courses of action

to be taken if events disrupt a planned course of action.

A contingency plan allows management to act immediately if such unforeseen

events as strikes, boycotts, natural disasters or major economic changes
render existing plans inoperable or unsuitable.
4.Functional Plans
Managers need a clear understanding of how they are currently
operating the business. This understanding of how the business is
currently functioning can be clarified, shared and refined (tactical
planning?) through documentation.
Functional Plans
(Appendix to Step 5 of Business Planning)

Part of developing and documenting an overall farm plan is to develop detailed plans for specific activities
or functions. The categories of functions include:

 production

 marketing

 financial management

 capital budgeting

 labor management

 risk management

 research and development of new ideas

 conservation and environmental management

 recordkeeping

 income and self-employment tax management

 retirement and estate planning

Some of the functional activities or plans may be enterprise specific, such as production and marketing
plans. Other functional plans may apply to the whole-farm, such as income tax management. The farmer
will need to decide whether the functional plan encompasses the whole-farm or only parts of the
operation.

The information compiled in the functional plans has several uses. One, the information can be used in
developing budgets. For example, the production plan should provide details about the type, quantity, and
timing for inputs. This information can then be used in the development of enterprise budgets and the
whole-farm cash flow budget. Two, the information can be used in assessing whether there are adequate
resources to operate the business. For example, the labor management plan should provide an indication
as to whether there will be sufficient workers available throughout the year. Three, the plans should
indicate how resources will be managed. Examples would include the labor management plan and the
capital budget. They should reveal how employees will be directed or when capital assets will be
acquired.

Collectively, the functional plans could be considered an overall strategy or plan describing how, when,
and where the objectives and goals will be accomplished for each function as well as for the entire
business. Plans for production, marketing, and financing are the minimum that need to be developed.
Depending on the business, additional plans can be integrated into the strategic plan. For example, an
estate plan describing the type of ownership arrangements, on- and off-farm investment actions,
retirement plans, intended intergenerational transfers, and other legal issues will likely be an important
functional plan.
The purpose of planning is to help make decisions. Strategic planning is the process of allocating
resources and initiating actions to accomplish predetermined objectives and goals. A strategic plan is the
framework that results in the combining and coordinating of the functional plans. The challenging part is
coordinating the various aspects of the different functions and some functions are easier than others.
These functional steps include concrete, specific actions, and the time frame for when they are to be
performed.

The size and complexity of the farm business impacts the coordination task. Strategic planning is a skill
that becomes easier as the owners proceed with the planning and coordinating efforts. Moreover, the
more accustomed the owners are to strategic planning, the more comfortable they will be when adding
detail to their plan. Success is a great motivator and the rewards of strategic planning can provide the
incentive to continue the process to improve the business' plan and performance.

The following sections suggest ideas farmers may want to consider as they prepare functional plans.

Production Plan
A production plan is an opportunity to specify the production practices for crops (such as no-till,
minimum-till, organic, or conventional) and/or for livestock (such as cow-calf, feeder, dairy, or layers).
Attention to labor requirements and crop or grazing rotation requirements could be critical for the
enterprise. Even if it does not appear to be critical at this point, it could become critical as the whole farm
plan is put together. For example, raising sugar beets requires a three year rotation whereas winter wheat
requires the crop be planted in the fall. Therefore, winter wheat may not be able to follow sugar beets
every year, especially during late harvest seasons for sugar beets.

The expected yields for the enterprise can be taken from step 3, but the owners may want to specify a
range of yields. Step 9 addresses specifying benchmarks (or milestones) for the farm business. If the
expected yields for the first year are used in the analysis, the long-run profitability could be understated. If
the expected yields for the later years are used, the short-run profitability could be overstated and there
are no guarantees that the long-run expected yields can be achieved. In addition, the range of expected
yields can be considered during step 8 in testing the sensitivity of profitability to changes in yields.

Marketing Plan
In the marketing category, the owners can identify the consumer of the output of the enterprise. This
allows the owners to adjust their production practices to better match the market. The availability of
markets is an important factor for some commodities because a farmer could have a product that cannot
be sold. Assessing the availability of markets could be important, depending on the commodity, and can
be tested as price variation as part of step 8. Also, the owners can specify whether they plan to forward
contract, hedge in the market, or assume the risk of marketing. These are only a few suggested
questions; there may be other factors that the owners feel are important -- depending on the enterprise or
commodity.
Financing Plan

The operation needs cash to operate. The farmer may have the cash; but more likely, the farmer will need
to borrow some. A financing plan addresses who to borrow from (lending institutions, suppliers, relatives),
when to borrow, when to pay back (fall, winter, spring, monthly), how long the repayment period should
extend (e.g., 6 months, 1 year, 5 years, 30 years), and which aspects of the farm will be financed with
borrowed capital (operating, equipment purchases, land purchases).

Capital Budgeting Plan

Capital assets is the theme of this functional plan. Some questions might include what assets will be
acquired; when will they be acquired; whether they will be purchased or leased; and if purchased, what
will be the likely source of cash for completing the purchase. Likewise, a capital budgeting plan may
address when assets will be disposed of, and whether they will be sold to a co-owner of the business.

Labor Management Plan

A labor management plan may address family workers, employees or both. Issues might include defining
tasks and jobs; assigning responsibilities and tasks; devising a communication system; designing a
procedure for performance evaluations; determining the form and amount of compensation; assesssing
need for additional laborers; and recruiting, training, and supervising employees.

Risk Management Plan

This functional area primarily addresses how risk exposure will be managed. Most farmers do not want to
eliminate risk exposure because that also eliminates most opportunities for earning a profit. But farmers
will want to manage their risk exposure through diversification, insurance, enrolling in government farm
programs, or entering into contractual arrangements. Part of this functional plan has been addressed in
earlier steps when the farmer identified risks the operation is exposed to. The issue of risk management
also is addressed in more detail in step 8.

As a member of the food industry, each firm also needs to consider how their activities impact the final
consumer product both in terms of quality and safety. For example, producers are increasingly being
expected to address where or how, within their business, the safety of the final food product may be
compromised. Accordingly, producers may consider adopting good agricultural practices (GAP) as the
norm for their operation.
Research and Development Plan
Many business managers recognize the value of testing new ideas and incorporating into their business
those ideas that appear to offer the best opportunity. Managers also recognize there is a cost and risk
associated with testing and adopting new ideas. Accordingly, business managers may want to consider
developing a vision or plan for identifying and assessing new ideas. A research and development plan
most likely would include 1) identifying innovations to test, 2) estimating the resources these efforts will
require, 3) establishing a preliminary time for conducting the research or test, and 4) defining an outcome
or level of performance necessary to justify continuing to test and possibly adopt the innovation.
Conservation and Environmental Management Plan
Businesses must comply local, state and federal resource management laws. In addition, there are often
opportunities for businesses to participate in incentive programs. Managers need to develop a plan for
how they will maintain an awareness of relevant legal requirements, how they will fulfill those
requirements, and they may take advantage of available programs or incentives to assist in meeting the
legal requirements.
Recordkeeping
Agricultural producers are increasingly being expected to document their production practices, ...
Accordingly, a recordkeeping system that tracks production practices need to be part of the overall
business management strategy. Questions producers need to ask themselves is what is the status of their
recordkeeping system and what changes need to be made to assure they have documented the
information being required by buyers, regulators, insurers, etc.
Income and Self-Employment Tax Management Plan
Tax management could identify tactics to follow to assure that a reasonable level of income and self-
employment tax is paid by the owners. The goal should not be to eliminate these taxes, but to maximize
after-tax income.

Plan to Transfer Ownership of Assets and Business

Acquiring a business also means that someday ownership will be relinquished. For most family
businesses, one person's sale or disposal is another person's opportunity to acquire. Therefore, this
functional plan will likely address when does someone else become a co-owner of the business, when will
ownership of assets transfer to someone else, does an artificial entity hold ownership of assets so only
ownership of the business needs to change over time. This is a complex area that often has ramifications
throughout the business and family. Professional counsel is highly recommended in the development of
this plan.

Conclusion

Individuals with formalized plans for production, marketing, and financing may find that modifying these
plans is all that is required. One focus might be to reconcile existing practices with current goals and
objectives. For individuals who are formalizing their production, marketing, and finance plans for the first
time, new questions may appear as the owners record their plans on paper.

These are only some of the functional plans that the owners may want to develop for their farm business.
Some businesses may find that they have other topics that deserve detailed planning; perhaps a plan for
leasing assets may be appropriate.

4.1 One Time Investment Plan | Mutual Fund Investment Plans One-Time Investment.
The one-time investment plan (lump sum investment) is an ideal mode of investment
for seasoned investors who prefer to invest a chunk of money in one go during market
downturns rather than investing at regular intervals via a 

4.2 What is the definition of a standing plan? 

Standing plans are often policies, procedures and programs developed to ensure the
internal operations of a given business are operating smoothly. Standing plans are
often developed once and then modified to suit the business' needs as required.
4.3 What is contingency plan? - Definition from WhatIs.com
A contingency plan is a course of action designed to help an organization respond
effectively to a significant future event or situation that may or may not happen.
A contingency plan is sometimes referred to as "Plan B," because it can be also used
as an alternative for action if expected results fail to materialize.

5. Common Strategic Planning

Questions, Answered organizational
After years of helping organizations simplify their strategy
and reporting processes, we’ve heard many of the same
strategic planning questions time and time again. Because
all these questions are important—and the answers tend
to help 

After years of helping organizations simplify their strategy and

reporting processes, we’ve heard many of the same strategic
planning questions time and time again. Because all these
questions are important—and the answers tend to help
organizations get a better grip on their strategy—we decided to
write out the nine we hear most frequently below.

9 Common Strategic Planning Questions

1. What time frame should our strategic plan cover?
Your strategic plan should look as far into the future as you’re comfortable looking. But
keep in mind, you need to be confident that your company’s environment will be stable
during the period of time you choose. In the 1980s, Japanese automotive companies
were looking out 40 years into the future—but this probably isn’t realistic for your
organization. Most companies feel comfortable with a three- to five-year strategic
planning horizon so long as they review their plan on a regular basis.
 2. How often should we review progress on our strategic
plan?
The frequency of plan review varies depending on the goal of the review:

 Monthly, to check progress on key themes or goals.

 Quarterly, to check progress for your entire strategic plan.
 Annually, to ensure your strategic plan is still valid (see question #3).

3. When should we change or update our strategic plan?

As mentioned in #2, an annual review of your strategic plan helps ensure the key
elements in your plan are still valid. If they are not—perhaps due to a change in the
marketplace or the economy—conduct a strategy refresh to keep the elements of your
plan that are valid and adjust the parts that are not.

4. Do we need a strategic planning office?

All organizations—even those with only two employees—need to spend time on
strategy. If your company fails to prioritize strategic planning, it could get left behind
during times of environmental uncertainty or in a tumultuous business market. So while
your organization may not be large enough to have an entire strategic planning office or
department, you do need to ensure that at least one person in your company has time
on their calendar dedicated to your strategic plan.

5. Do we have to use a Balanced Scorecard?

No. That said, the Balanced Scorecard has proven to be a powerful and time-honored
way to plan and execute strategy. Regardless of whether you stick to the Norton-Kaplan
methodology or use a variation, understanding the basic principles of a BSC—having
clear goals, linking your projects to those goals, and setting up leading and lagging
indicators—could help your strategy immensely.

6. What is the difference between a strategic plan and an

operational workplan?
 A strategic plan is built off a long-term vision for your company’s future. It
typically looks out three to five years, involves your key goals, and is broad-reaching
across your organization.
 An operational work plan tends to be an annual plan for a division or
department. It is built with a budget in mind and lists the key activities you commit to
executing in a particular year.
Linking your operational work plan to your strategic plan is the ideal scenario. That way,
the issues your department or division is focused on for the year are in line with your
strategic plan.

7. How many measures should our strategic plan include?

At each level in your organization—the enterprise level, division level, and department
level—we recommend having 20-30 measures. We’ve found that a number in this range
helps each level stay focused on what’s important, and review key data in meetings
without distraction or fatigue.

Of course, 20-30 measures in every division described above could leave your
company with hundreds of measures, but don’t worry—the goal is never to review every
single measure in the organization at the same time. You should plan on reviewing only
the information critical to your strategy in your department or division every quarter.
That said, use common sense. If one of the measures at the division level above
you or the team level below you is red, you might want to look at it before your review
to make sure that it doesn’t impact your team.

8. How do we make our strategic plan flexible to allow for

changes?
The best way to make your strategic plan flexible is to have a clear distinction between
your goals, measures, and projects, as this enables you to make changes, additions, or
deletions more easily. Goals should be updated every one to five years, and measures
should be updated every six to 24 months. Projects can be adjusted on a quarterly
basis.

9. Should we consider strategic planning software?

Your strategic plan should touch a variety of departments and divisions. Even if you’re
extremely well-organized, keeping track of all the data coming from different individuals
and in different formats is very difficult. Automating the process with software helps
tremendously and will, in the long run, save your company a great deal of time and
energy.
 6.Most businesses use the SMART model for goal setting: Specific, Measurable,
Achievable, Relevant and Timed. These are specific characteristics used in
successful goal setting.

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SMART OBJECTIVES AND GOALS:

DEFINITION, CHARACTERISTICS
AND EXAMPLES

by Adi Bhat
Global VP - Sales and Marketing at QuestionPro
Home Consumer Insights Market Research
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What are SMART Objectives?
SMART Objectives are defined as a set of objectives and goals that
are put in place by parameters, that bring structure and tractability
together. SMART goal setting creates a verifiable trajectory towards
a certain objective with clear milestones and an estimated timeline
to attain the goals. SMART is an acronym that stands for:

 S – Specific
 M – Measurable
 A – Achievable
 R – Relevant
 T- Time-based
One of the most widely used words today, in this modern,
technology-driven world is “SMART”.

This word is widely used in various industries because of high-

efficiency and objectivity. SMART method also happens to be a very
practical resource that certainly can be a lifesaver for relevant
people working in competitive fields like marketing, sales,
advertising, market research and similar.

Many objects that we use in our day-to-day lives such as phones,

television and so on have this word prefixed to the name, such as
“smartphone”, “smart television”. Now we all understand that this
reference is made to something that within its qualities is intelligent,
due to its operation and its technological development.

In the world of marketing, business and similar fields, SMART

objectives have a totally different relevance. SMART objectives in
the fields mentioned are for all those people who want to meet a
specific goal. This is called the SMART method. It doesn’t matter,
what the size of the objective or the goal is, this method is
applicable to anyone or any organization or business that has a
time-bound, relevant and clear objectives related to achieving their
goals.

Many times, before starting a new project or implementing a

strategy, it becomes a little difficult to define objectives straight
away. So, to give your team members a proper objective to work
with, start making an excellent approach by using the SMART
method.

More than just Theory : 300+ Ready Made Survey Templates to

evaluate your SMART Objectives and Goals

SMART Method for SMART Objectives and Goals

Take a few minutes to clear your head; let us analyze through the
SMART method to achieve SMART objectives and SMART Goals. With
constant practice, it will be easier to apply this method. However,
for starters let us understand what each alphabet in the word
“SMART” mean.

S-SPECIFIC: Dwelling deeper into details is a good start. This is the

beginning of everything, so put more attention and great efforts to
take care of the minutest details. The important thing is to resolve
issues surrounding what, when, where, who, with what and how. I
have jokingly named this the 5 Wives and 1 Husband technique to
remember the Ws and H.

More the information you can contribute, better will be the results
and it will be easier for you to reach your goals since defining the
path to reach your goals will be clearer. If you are heading an
organization or are at a position where you are making strategic
decisions for your organization or similar positions, from this point
onwards, you will see if you have enough resources to achieve your
goals or do you need to something extra to make things fruitful.
M-MEASURABLE: For a goal to be an objective clearly, you must
have a quantitative way of measuring that you have effectively
achieved it. For this, it is necessary to involve some numbers in
definition, for example, percentages or exact amounts. If your goal
is to get an ROI then you should say something like “increase the
ROI by 23%”.

It is not enough just to say “increase the number of clients”, it is

best to do an analysis of the clients that you have now, of those that
you need to get, as well as the total number of client to be achieved
in a certain period of time, which is also important to define clearly.

The more quantitative data you have, the more control you can

have over the advances.

A-ACHIEVABLE: Did you know that many objectives are not met

because they seem impossible? Many others remain in the air
because they are little presumptuous.

It is advisable to know that there is going to be difficult tasks to

achieve and that you have no choice but to achieve them. We all
want to be the first to achieve something and that feeling can be a
motivator for some people, however, setting virtually impossible
goals can make the team frustrated.  So to avoid negations, to make
an objective achievable, you need a prior analysis of what you have
done and achieved so far. This will help you know and understand
the leap you want to take or a step back and analyze what you have
missed.

R-RELEVANT: To define relevant and realistic goals, you must

measure the scope of your potential and of those who are
associated with you in your organization or business. One very
important aspect of setting up relevant goals is to know if you have
the right resources to achieve it.  

In addition, it is important here to remove the believes that

commonly adversely affect such as “I cannot”, maybe it will be
easier to create a realistic and attainable goal. Relevant goals can
only be achieved if you have everything in place, right from the
ideation stage to knowing the resources that are going to help you
achieve these goals.

Remember that unreachable goals should not be thrown overboard.

It is essential to make new strategies and stay persistent to achieve
these goals. This will not only send out a positive message amongst
employees but also befitting replies to your competitors who have
ever doubted your abilities to succeed.   

T-TIME-BASED: Perhaps this is one of the most important factors

that determine whether or not an objective is met. If you do not put
a start time and an end time, chances are you never achieve the
objective.

Schedule and put a time to the objective. This will help you to know
if what you are doing is optimal to reach the goal in time, or maybe
it would be better if you give a little more speed.

In case you are a little out of time and you are not reaching the
goals in the period you defined, do not worry, you should also learn
to be flexible. Just do not abuse this flexibility as there is a thin line
with breaking commitment.

Why should you clearly define Objectives and

Goals?
Do you know what is the importance of objectives and goals?

1. Time doesn’t pass in vain for anyone, more importantly not for
organizations or businesses. Every minute, every second a new
idea is conceptualized and with these ideas growing, there is a
growing competition out there.
2. Every day there is a new organization or business that is ready
to give a tough competition to its counterparts and competitors. In
this competitive atmosphere, it is also essential to win customers
and also understand customer satisfaction levels. Not only this,
you have to constantly monitor to verify that every department in
your business or organization is working efficiently just like a
perfect machinery.  
3. This may sound like a tedious process in which one question
leads you to more questions and then it seems like a never-ending
story because not everyone knows how to land their thoughts.
Remember, putting down your goals and objectives on a paper will
help you put your thoughts and your imagination to work in reality.
To summarize it in a very short and very significant sentence:
walking without objectives is like navigating without a compass.
Imagine the immensity of the open sea and you in the middle of it, it
is a moment in which you do not know what to do, nor do you know
the resources you can count on and much less know which side of
the ocean or sea will be better to go.

The best thing is to start making some kind of effort to move

forward, right? You cannot stay there, however, it is difficult to know
at that stage, if everything you are doing will have optimal results
and will bring you closer to the right path. The most likely thing is
that these efforts might exhaust you and you do not know if
everything you did will be worthwhile for something, on the
contrary, if you know the goal you should reach, it would be easier
to use your energy to achieve it once and for all.

The same happens with the objectives of a company. From the

particular to a general, people, groups, and systems need clear,
structured and well-defined objectives. We all have an end to this
life and we cannot get up everyday thinking about facing when are
we approaching the end because in this way there will come a time
when we feel that we are not doing enough to sustain in this world.

Learn more: Demographic Segmentation

Management by Objectives (MBO)

SMART goals and objectives are directly derived out of management
by objectives (MBO). This was an effective way of completing tasks
by prioritizing objectives. SMART goals are a primary way to collect
feedback and communicate within the organization. Feedback is
important because it showcases the room for improvement and is an
insight into the company. Feedback includes periodic checks to
measure current result vs expected and current result vs end
objective. The progress can be recorded by asking basic questions
like:

1. Is the plan being executed in the right manner?

2. Are the efforts tangible that they are aiding to the progress of
the project?
3. Are changes required to be made to the current plan?
SMART objectives help break down these questions and goals even
further where scope of every milestone is measured. SMART
objectives helps in setting up smart goals and play an important role
in checking periodic progress so that the end objective is met.
SMART goals help in following through on goals and prevent from
getting distracted. Through SMART goals, different objective goals
can be set up, namely:

 Long Term Goals: These include tasks or projects that span

across years, like research projects. SMART goals are set on a
periodic basis to monitor progress and map deficit to completion
of the project.
 Intermediate Term Goals: These goals usually stretch out
for a quarter or a few months. SMART goals help in setting up a
milestone based approach where efficiency helps in reducing the
time to completion.
 Short Term Goals: Short term goals are worked out on the
basis of small pieces of work that can take days and even hours.
This goal setting is important to avoid all distractions and meet
deadlines.

Principles in setting up SMART Goals and

Objectives
The “how” of setting up SMART goals and objectives is as important
as each acronym in the process? The principles of goal-setting
theory are:

 Clarity: There has to be absolute clarity in the goal and

objective setting process as well as the end objective so that task-
based or milestone work isn’t hampered by ambiguity.
 Challenge: If the objectives become repetitive or aren’t
stimulating enough, boredom sets in. To avoid this, the SMART
objectives need to be challenging enough.
 Commitment: This goes without saying that lack of
commitment is a recipe for disaster as it derails goal and objective
management.
 Feedback: Periodic feedback is a prerequisite for effective
management of objectives and goals. People operating without
feedback do not know if their efforts are moving the project
towards completion in the right manner and can get easily
disoriented and disinterested.
 Task Complexity: Complex tasks take precedence over
menial tasks because the people doing them aren’t motivated to
work on something that is below their intellectual capability.
Hence it is important to find that right blend into SMART goals and
objectives where the tasks are complex enough to complete but
stimulate the brain of the person completing the task.

Importance of SMART Goals and Objectives

 Clarifies end objective: SMART goals and objectives provide
an end-objective. Setting them provides all relevant stakeholders
an idea of the amount of work to be put in and the outcome of this
effort. There is no ambiguity than in the respective role of a
person and the value a person adds to the team.
 Effective time management: When the end goal or
objective is known well in advance, it is easier and efficient to
work. This also reduces the waste of resources and helps manage
work smarter in case of replication of personnel.
 Reminds you of priorities: SMART objectives help in
constantly being aware of the work to be done for the upcoming
milestone. SMART goals help in being aware of the end goal to be
achieved in the project.
 Obliges to take action: Due to the nature of the periodic
check model of SMART goals and objectives, it obliges the person
carrying out the tasks to work and meet the milestones.

SMART Objectives and Goals Examples

 Here are a few examples to help you strategize and define your
organization’s SMART objectives and Goals :

1. It is true, that defining objectives requires, time, patience and

also the complete know-how of how an organization functions but
above anything else it needs clarity. For example, many
organization fail in defining clear objectives and that reflects in
many ways. But with SMART objectives and method, it is possible
to clearly define goals.
2. To clearly define objectives one may need to sit down and ask
questions, for example, “What is that I would like my organization
or business to achieve? Why do I want to achieve these targets?
Do I have the necessary resources to achieve these objectives?”,
among many other questions that you need to ask yourself, let’s
accept it feel like this is boring and absolutely unnecessary.  
3. You might be even tempted to think that the process is a
complete waste of your time and instead of wasting your valuable
time on speculating and penning down your thoughts it is
advisable to get down to do some real work and start with the
action plan, take a step back and think, do you even know how
many companies have suffered bankruptcy because they didn’t
feel the need to define their objectives?
4. Taking actions even before concretely understanding facts and
figures will not take you anywhere. On the contrary, this will waste
your time, effort, work, quality and even your reputation in the
market. While you may have decided to start functioning without a
plan, there are hundreds of companies that take the time to do it
step by step and then achieve the objectives in a faster way,
winning customers, reducing customer churn,  taking away place
and even unseat everything you have already achieved.
5. To avoid all the tragedy previously reported, are you still
thinking that this is a waste of time? Do you still believe that it is
better to postpone it? If your answer is NO, congratulations!
SMART method is easier than you imagined it to be.  
Learn more: Customer Satisfaction Surveys

Let us take an example to understand how SMART objectives and

SMART goals help save our time. Image an organization that works
for removing plastic bags and similar waste from the entire city has
objectives and goals defined as:
“Our goal is to make the entire city clean and free of any plastic and
plastic waste”.

This goal is a little vague. However, if the objective and goal were
rewritten as, “As an organization, we aim to clean the city and make
it free from any plastic waste in the next two years with the help
and support of our volunteers.”

Second time when the goal and objective were rewritten, it has a
certain timeline, specific activity is mentioned, who will be helping
the organization is clear and what they want to achieve is quite
certain.

In this manner, people who are associated with the organization

know what their tasks are, what is the timeline in which they need
to achieve it. This helps avoid any confusion and activities go on
smoothly without hesitation.

Advantages  of SMART goals and objectives

 They are not vague: Since SMART goals and objectives are
extremely procedural, each milestone and feedback is planned
and monitored in complete detail. This mitigates the factor of
uncertainty.
 Missed work is easy to track: Each person is given a certain
responsibility and hence when work is not completed, it is very
easy to troubleshoot the gaps in delivery. This makes everyone
extremely accountable and any loss of work is easy to track.
 Goals are divided into small achievable
objectives: SMART goals have an end goal but SMART objectives
are further divided into bite-sized milestones. Hence, no matter
the scale of the end goal, it is very easily achievable.

Disadvantages of SMART goals and objectives

 No importance to other tasks: Due to the rigidity of the
system, all other work gets ignored. Also, there is lesser scope for
innovation or trying to complete work differently because the work
is milestone based.
 Lots of pressure: There is immense pressure to complete
work in a given time frame and this makes the environment
extremely stressful and tough to work under.
 Different interpretation by different people: The pressure
to complete goals and objectives are open to interpretation to
different people. The urgency or rigidity of the process is
construed differently by different people.

Conclusion
SMART objectives and Goals are an important part of a company’s
growth. It is essential that the Managers and Directors of Marketing,
Sales, Human Resources and many other areas, are fully involved in
defining these goals

For all, the growth of the company also implies personal growth. The
only way to achieve this is by having order, and structure that
clearly defines the objectives.

Do not waste more time doing actions that won’t yield the desired
results. Start defining your SMART objectives and give your team
enough reasons why they should get down to work as soon as
possible. Giving them a good goal is part of the motivation everyone
in the organization needs. Remember increasing team productivity
is always favorable and does wonders to achieve overall growth of
the organization.

7.Managers are the people in charge of employees and the facilities

they work for. As a manager, your job is to plan and promote the daily
schedule of employees and the business, interview, hire, and
coordinate employees, create and maintain budgets, and coordinate
with and report to senior management in the company

Efficient Use of Resources

All organizations, large and small, have limited resources. The planning process provides the

information top management needs to make effective decisions about how to allocate the resources

in a way that will enable the organization to reach its objectives. Productivity is maximized and

resources are not wasted on projects with little chance of success.

Establishing Organizational Goals

Setting goals that challenge everyone in the organization to strive for better performance is one of

the key aspects of the planning process. Goals must be aggressive, but realistic. Organizations

cannot allow themselves to become too satisfied with how they are currently doing – or they are

likely to lose ground to competitors.

The goal setting process can be a wake-up call for managers that have become

complacent. The other benefit of goal setting comes when forecast results are

compared to actual results. Organizations analyze significant variances from forecast

and take action to remedy situations where revenues were lower than plan or expenses

higher.

Managing Risk And Uncertainty

Managing risk is essential to an organization’s success. Even the largest corporations

cannot control the economic and competitive environment around them. Unforeseen

events occur that must be dealt with quickly, before negative financial consequences

from these events become severe.

Planning encourages the development of “what-if” scenarios, where managers attempt

to envision possible risk factors and develop contingency plans to deal with them. The

pace of change in business is rapid, and organizations must be able to rapidly adjust

their strategies to these changing conditions.

Team Building and Cooperation

Planning promotes team building and a spirit of cooperation. When the plan is

completed and communicated to members of the organization, everyone knows what

their responsibilities are, and how other areas of the organization need their assistance

and expertise in order to complete assigned tasks. They see how their work contributes

to the success of the organization as a whole and can take pride in their contributions.

Potential conflict can be reduced when top management solicits department or division

managers’ input during the goal setting process. Individuals are less likely to resent

budgetary targets when they had a say in their creation.

Creating Competitive Advantages

Planning helps organizations get a realistic view of their current strengths and

weaknesses relative to major competitors. The management team sees areas where

competitors may be vulnerable and then crafts marketing strategies to take advantage

of these weaknesses. Observing competitors’ actions can also help organizations

identify opportunities they may have overlooked, such as emerging international

markets or opportunities to market products to completely different customer

groups CISION MAKING -

8. ecision-making is an integral part of modern management. ... Decisions play
important roles as they determine both organizational and managerial activities. A
decision can be defined as a course of action purposely chosen from a set of
alternatives to achieve organizational or managerial objectives or goals.

What is Decision Making - Management Study Guide

 Decision Making

Decision making is termed as the process of finding or identifying any certain

problem/opportunity in order to resolve them professionally through legal and logical
ways. Besides, it can be said that making a decision is the preparation for practical
actions.

Concept of Managerial Decision Making in

Management
In the field of management, decision-making is known as a cognitive process, which
results in a collection of a set of actions from current multiple alternatives. At some
point, decision –making is the process which is performed by every individual in daily
life; nobody can deny it. Regarding businesses, decision-making is a regular process or
simply a habit.

Managerial Decision Making is one of the most critical processes in every organization.
Successful and effective decision making gives profitable outcomes, whereas
unsuccessful decision making causes a great loss. The use of several tools and
techniques is possible in the entire process, as the management team has to choose
one beneficial decision from a range of many. Besides, several perceptions can also
help to identify and solve any issue. Additionally, a few managers also like to make
decisions on their own or give priority to a collective decision.
As decision-making is a hard process, so sometimes, it involves dissatisfaction of
another party. For preventing all the major conflicts and hurdles in decision-making,
managers should follow the professional process of making managerial decisions. The
following is the entire process of managerial decision making.

Managerial Decision Making Process

The decision making process involves the following 8 main and important steps. Each
step may cover different techniques and tools. The main steps are: purpose
identification, gathering information, alternatives judgment principles, analyzing the
choices and brainstorming, alternatives evaluation, pick the best alternative, decision
executions and results evaluation.

1. Purpose Identification

In the problem purpose identification steps, the problem is analyzed entirely in order to
find its basic symptoms and possible loss. When it comes to identifying the problem,
the following questions can provide enough help.

 What is the problem?

 Why it should be solved?
 What parties are affected by it?
 Any specific period or deadline of the problem?

Asking theses questions to oneself will eventually find the problem, its impact, affected
parties, and future possible losses.

2. athering Information

The main target of the problem can either be one of the shareholders or all of them.
While on the other hand, it may involve many factors that are affected by it. In order to
have a complete look at the problem, the information should be gathered thoroughly,
which relates to the involved shareholders or factors. Techniques and tools like “Check
Sheets” can help a lot in the step of gathering information and it can be used effectively
and efficiently.

3. Alternatives Judgment Principles

The ultimate focus of this step is to set baseline criteria for the alternatives in order to
judge them appropriately. Regarding criteria, the corporate culture and goals of the
organization should be considered also. For example, the profit is the only one and the
most needed factor of every organization and is also an important factor that should be
considered while decision-making. Nothing should be done that may cause the
decrement of the profit, unless there is an exceptional case that cannot be resolved
without sacrificing a little profit. Aside from it, baseline criteria should comprise entire
relation to the problem

4. Brainstorming and Analyzing the Choices

Brainstorming refers to listing down all the ideas and ways to solve the problem. At very
first, it is necessary to understand the possible causes of the problem and classifying
them in the priority order such as from the most to the least effective cause. Cause-
and-Effect diagrams & Pareto Chart tool can provide the needed help in this step.
Cause-and-Effect diagram will help the management team to identify the certain causes
of the problem, whereas Pareto Chart will perform its role in classifying them from the
highest effect and identifying the level of the causes. After that now further steps can
be taken for generating all the possible alternatives of the problem.

5. Alternatives’ Evaluation

After performing logical and professional steps, the next is to use one’s own judgment
based on decision-making skills and experience along with judgment power. Find out
the pros and cons of every alternate and eventually evaluate them on such basis to find
out the one which seem to be more effective than the rest. Comparing different
alternative can also give efficient output.

6. Pick the Best Alternative

After following the above methodology from step 1 to 5, this step is very easy.
Probably, one might have found the best alternative after comparing the pros and cons
of different alternatives, yet the one should be 100% confident and sure to pick the
best possible alternative.

7. Execute the Decision

The second last step in the process of Decision Making is to give a practical shape to
the decision by converting it into a plan, which contains a sequence of actions to be
performed. It can be done alone or with the help of the management team.

8.Results Evaluation
ow that every step is performed and the decision is converted into a plan, eventually there is
need of evaluating the outcome of the decision which will help the team of managers to learn
from the problem and prepare precautions for the future time. Besides, it is the best practice to
improve managerial decision making.

9. TYPES OF DECISION MAKING

There are many ways of classifying decision in an organization but the
following types of decisions are important ones :

1. Tactical and Strategic Decisions

Tactical decisions are those which a manager makes over and over again
adhering to certain established rules, policies and procedures. They are of
repetitive nature and related to general functioning. Authority for taking tactical
decisions is usually delegated to lower levels in the organization.

Strategic decisions on the other hand are relatively more difficult. They
influence the future of the business and involve the entire organization.
Decisions pertaining to objective of the business, capital expenditure, plant
layout, production etc., are examples of strategic decisions.

2. Programmed and Non-programmed Decisions

Prof. Herbert Simon (June 15, 1916 - February 9, 2001), an American economist
and psychologist, has used computer terminology in classifying business
decisions. These decisions are of a routine and repetitive nature. The
programmed decisions are basically of a routine type for which systematic
procedures have been devised so that the problem may not be treated as a
unique case each time it crops up.

The non-programmed decisions are complex and deserve a specific treatment.

In the above example, if all the professors in a department stop their teaching
work the problem cannot be solved by set procedural rules. It becomes a
problem which requires a thorough study of the causes of such a situation and
after analysing all factors a solutio

3. Basic and Routine Decisions

Prof. Katona has classified decisions as basic and routine. Basic decision are
those which require a good deal of deliberation and are of crucial importance.
These decisions require the formulation of new norms through deliberate thought
provoking process. Examples of basic decisions are plant location, product
diversification, selecting channels of distribution etc.

Routine decisions are of repetitive nature and hence, require relatively little
consideration. It may be seen that basic decisions generally relate to strategic
aspects, while routine decisions are related to tactical aspects of a organization.

4. Organizational and Personal Decisions

Organizational decisions are those which an executive takes in his official

capacity and which can be delegated to others. On the other hand, personal
decisions are those which an executive takes in his individual capacity but not
as a member of organization.

5. Off-the-Cuff and Planned Decisions

Off-the-cuff decisions involve "shooting from the hip". These decisions can be
taken easily and may be directed towards the purposes of the enterprise. On the
other hand, planned decisions are linked to the objectives of organization. They
are based on facts and involve the scientific process in problem solving.

. Policy and Operating Decisions

Policy decisions are those which are taken by top management and which are
of a fundamental character affecting the entire business. Operating decisions
are those which are taken by lower management for the purpose of executing
policy decisions. Operating decisions relate mostly to the decision marker's own
work and behaviour while policy decisions influence work or behaviour pattern of
subordinates.

7. Policy, Administrative and Executive Decisions

Ernest Dale (born in Hamburg, Germany and died at the age of 79) has
classified decisions in business organization as under.

(a) Policy decisions,

(b) Administrative decisions and

(c) Executive decisions.

Policy decisions are taken by top management or administration of an

organization. They relate to major issues and policies such as the nature of the
financial structure, marketing policies, outline of organization structure.
 Administrative decisions are made by middle management and are less
important than policy decisions. According to Ernest Dale the size of the
advertising budget is a policy decision but selection of media would be an
example of administrative decision.

Administrative decisions are made by middle management and are less

important than policy decisions. According to Ernest Dale the size of the
advertising budget is a policy decision but selection of media would be an
example of administrative decision.

Executive decisions are those which are made at the point where the work is
carried out. Distinguishing between these three types of decisions Dale writes,
"policy decisions set forth goals and general courses of action, administrative
decisions determine the means to be used and executive decisions are those
made on a day-to-day basis as particular cases come up".

10.Steps of the Decision Making Process

The following are the seven key steps of the decision making process.

 Identify the decision. The first step in making the right decision is recognizing
the problem or opportunity and deciding to address it. Determine why this decision will
make a difference to your customers or fellow employees.
 Gather information. Next, it’s time to gather information so that you can make a
decision based on facts and data. This requires making a value judgment, determining
what information is relevant to the decision at hand, along with how you can get it. Ask
yourself what you need to know in order to make the right decision, then actively seek
out anyone who needs to be involved.
 “Managers seek out a range of information to clarify their options once they
have identified an issue that requires a decision. Managers may seek to determine potential
causes of a problem, the people and processes involved in the issue and any constraints
pla Identify alternatives. Once you have a clear understanding of the issue, it’s time to
identify the various solutions at your disposal. It’s likely that you have many different
options when it comes to making your decision, so it is important to come up with a
range of options. This helps you determine which course of action is the best way to
achieve your objective.
 Weigh the evidence. In this step, you’ll need to “evaluate for feasibility,
acceptability and desirability” to know which alternative is best, according to
management experts Phil Higson and Anthony Sturgess. Managers need to be able to
weigh pros and cons, then select the option that has the highest chances of success. It
may be helpful to seek out a trusted second opinion to gain a new perspective on the
issue at hand.
 Choose among alternatives. When it’s time to make your decision, be sure that
you understand the risks involved with your chosen route. You may also choose a
 combination of alternatives now that you fully grasp all relevant information and
potential risks.
 Take action. Next, you’ll need to create a plan for implementation. This involves
identifying what resources are required and gaining support from employees and
stakeholders. Getting others onboard with your decision is a key component of
executing your plan effectively, so be prepared to address any questions or concerns
that may arise.
 Review your decision. An often-overlooked but important step in the decision
making process is evaluating your decision for effectiveness. Ask yourself what you did
well and what can be improved next time.
“Even the most experienced business owners can learn from their mistakes … be ready
to adapt your plan as necessary, or to switch to another potential solution,” Chron Small
Business explains. If you find your decision didn’t work out the way you planned, you
may want to revisit some of the previous steps to identify a better choice.
Common Challenges of Decision Making
Although following the steps outlined above will help you make more effective decisions,
there are some pitfalls to look out for. Here are common challenges you may face,
along with best practices to help you avoid them. 
 Having too much or not enough information. Gathering relevant information is
key when approaching the decision making process, but it’s important to identify how
much background information is truly required. “An overload of information can leave
you confused and misguided, and prevents you from following your intuition,”
according to Corporate Wellness Magazine.
In addition, relying on one single source of information can lead to bias and
misinformation, which can have disastrous effects down the line.

 Misidentifying the problem. In many cases, the issues surrounding your

decision will be obvious. However, there will be times when the decision is complex and
you aren’t sure where the main issue lies. Conduct thorough research and speak with
internal experts who experience the problem firsthand in order to mitigate this. It will
save you time and resources in the long run, Corporate Wellness Magazine says.
 Overconfidence in the outcome. Even if you follow the steps of the decision
making process, there is still a chance that the outcome won’t be exactly what you had
in mind. That’s why it’s so important to identify a valid option that is plausible and
achievable. Being overconfident in an unlikely outcome can lead to adverse results.
Decision making is a vital skill in the business workplace, particularly for managers and
those in leadership positions. Following a logical procedure like the one outlined here,
along with being aware of common challenges, can help ensure both thoughtful
decision making and positive results.

If you are interested in business management topics like these, consider Concordia
University, St. Paul’s online MBA program. You can also download our free guide,
“Climbing the Corporate Ladder: Your Guide to the MBA and Beyond,” for an in-depth
look at the value of the MBA.
ced on the decision-making process,” Chron Small Business says.

-Managers must have problem solving strategies to thrive in the workplace. ... Once they see
a potential issue, they think through whether this is a problem they can ... Once the best
solution has been identified, a good manager develops a solid ...