planning and decision making essay

Characteristics and Process of Planning and Decision-Making

Definition of planning and decision-making.

Planning and decision-making are arguably the most essential managerial functions that are closely related. Planning is the process of selecting a course of action, while decision-making is simply selecting a course of action. Decision-making is a part of planning, so the two functions go hand in hand. A good manager must plan effectively and make decisions in real-time. The planning function requires managers to set goals and outline the ways and means through which the goals will be achieved. Planning is the foundation of all organizational future activities, and the most basic managerial function (Sager, 2002). To plan is to decide in advance what needs to be done to achieve the organizational goals. Planning further involves selecting one of the many alternatives available in order to achieve the desired result at a minimal cost. Managers have to constantly plan for the short-term and long-term future by studying the internal and external environment and by determining the organization’s own needs. Planning consists of two main components, including goals and action statements (Dye & Sibony, 2007). The goals are the targets and results that the managers want to accomplish, while action statements is how the organization attains those goals. From the organization’s management point of view, planning is thinking about what to be done, by who, and when. It requires thinking about the past and future opportunities as well as the underlying threats. For instance, manpower planning is an essential planning process that ensures that the right caliber of employees are hired at the right place, right time, and for the right kind of job within the organization.

Decision-making, on the other hand, is the process of identifying a range of alternatives and selecting a course of action from those alternatives. Decision-making begins with problem identification and ends with making a choice. Effective management involves constantly influencing the activities of an organization, and decision-making plays a key role in doing so (Havnes, 2009). When making a decision, a manager identifies a particular situation and establishes the potential opportunities that it offers as well as the underlying threats. The next step a manager does is to find the available alternatives to handle the situation. This is the stage where planning comes in handy. Through planning, a manager evaluates, measures, and tests the effectiveness of each alternative. After that, the manager then applies decision-making skills to select one course of action. Decision-making is, therefore, the core of the planning process. Unless a decision is made, then the implementation of a plan is impossible. Thus, planning and decision-making are interrelated and used hand in hand. Although a decision can be made without planning, no planning can succeed without making a decision. Both planning and decision-making need to be accurate for an organization to be successful.

Characteristics of Planning

Planning is not only the foundation of the other managerial functions (organizing, controlling, directing, and staffing) but also the most essential function of management. The other managerial functions rely on effective planning, so nothing can be achieved without proper planning. Planning has several characteristics, including goal-oriented, futuristic, intellectual, primary function, continuous, pervasive, and flexible (Papke-Shields & Boyer-Wright, 2017). Another feature of planning is that it involves choice and decision-making, and is designed for efficiency.

Goal-oriented  means that planning is meant to achieve the desired objectives of the organization. The goals set should be generally acceptable so that individual and team energies all count to the attainment of goals (Papke-Shields & Boyer-Wright, 2017). Planning further identifies the course of action that will lead to the achievement of goals quickly and at a minimal cost. Planning also offers a sense of direction on many activities undertaken by the organization.

Planning is Futuristic  implying that it is done for the future. It requires looking into the future by analyzing it and predicting what could happen (Papke-Shields & Boyer-Wright, 2017). Forecasting is required to enable the organization to handle future challenges effectively. Planning is, therefore, a mental predisposition of things that will happen in the business in the future.

Planning is an intellectual exercise  that involves thinking creatively and making sound judgments. Planning is not about guesswork but a rational thinking process that is based on facts, figures, and considered estimates (Papke-Shields & Boyer-Wright, 2017). Managers can only make effective decisions if they have sound judgment skills, imagination, and foresight.

Planning involves choice and decision-making  from a range of alternatives. It means that decision-making is an integral part of the planning process. If only one course of action is available, then planning is not required because there is no choice to be made (Papke-Shields & Boyer-Wright, 2017). In reality, managers are faced with a number of alternatives, so they have to choose the best one based on the available resources and the specific needs of the organization.

Planning is a primary function  of management that lays the foundation for the rest of the managerial functions. It acts as a guide for the controlling, staffing, directing, and organizing function of management (Papke-Shields & Boyer-Wright, 2017). Simply put, the rest of management functions work within the framework of the plans set. Thus, planning is not only a basic function but also a fundamental managerial function.

Planning is a continuous process  that never ends due to the dynamic nature of businesses. In addition, plans are made for a specific period, but have to be subjected to review and re-evaluation based on the changing requirements and situations (Papke-Shields & Boyer-Wright, 2017). Planning in an organization never comes to an end until it ceases to exist. Overall, problems keep on emerging in an organization and they have to be addressed through effective planning.

Planning is pervasive  implying that it is essential in all organizational departments and at all levels of management. However, the scope of planning may be different from one level to the other (Papke-Shields & Boyer-Wright, 2017). For example, plans made at the top level of the organization affect the whole organization while plans made at the middle level and lower levels of management may affect specific departments.

Planning is highly flexible  since plans are made for the future and the future is highly unpredictable. It means that plans must leave some room to deal with changes in demand, supply, government policies, competition, and prices (Papke-Shields & Boyer-Wright, 2017). When things change, the original plans have to be re-evaluated in order to make them more practical and responsive to the changing needs.

Planning is designed to achieve efficiency,  so it leads to the attainment of goals at a minimal cost. Planning ensures that goals are achieved without wastage of resources, so there is optimal utilization of the available resources (Papke-Shields & Boyer-Wright, 2017). Thus, a plan is useless if it does not take into account the cost incurred to achieve it. Effective planning saves organizational effort, time, and money. Effective planning also utilizes the best methods, right materials, and machines, thus saving money.

Participants in the Planning Process and their Responsibilities

Participants in the planning process are those stakeholders who influence and those influenced by the plans set. These stakeholders include owners and top managers, middle and first-level managers, employees, and experts (Nichols, 2002). Owners and top managers carry the organization’s vision, so they have the best ideas and overview of how they want the planning process should be carried out. Their involvement in the planning process is essential because they improve unity of command and direction. The roles of owners and top managers include strategic decision-making as well as designing, facilitating, managing, and supporting other planning participants. Owners and top managers also review the organization’s mission and monitor the internal/external environment to identify potential opportunities and underlying risks.

Middle and first-level managers are involved in making plans more focused. They explain clear priorities to the employees and help them to deliver results. Middle and first-level managers also improve plans by offering their support and advice to the owners and top managers (Nichols, 2002). Through their input, feedback, and comments, they help an organization to introduce new practices. The involvement of middle and first-level managers is key to better internalization and improvement of goals and plans. Thus, their participation in the planning process increases the overall performance of the set goals compared to only having owners and top managers involved in the planning process.

Employees play a critical role in the planning process. Their participation allows them to understand the organization’s goals better and align their tasks to the company’s overall goals. Employees’ participation facilitates the acceptance of organizational strategic goals (Nichols, 2002). Middle and first-level managers have a responsibility of ensuring that employees understand how their work will influence the achievement of goals. Employees also possess the knowledge and skills that are useful in the planning process that owners, top managers, middle, and first-level managers may not have.

Specialists or experts are essential in offering advisory services as well as improving planning like managers. They provide feedback based on their experience in their respective areas of expertise. Experts are important assets to an organization as they constantly provide new ideas and improve the existing solutions (Nichols, 2002). Their knowledge is essential, so their involvement in the planning process is critical. Experts’ role in knowledge sharing is beneficial to other participants in the planning process. Their comments and feedback based on experience further improve the planning process. Thus, their involvement is beneficial in terms of adding tactical knowledge to the planning process.

Planning Constraints and Boundaries in the Planning Process

The implementation of an organization’s strategic plans is constrained by time, cost, and scope. Time constraints are related to the timeframe within which the set goals should be achieved. Inadequate time may affect the attainment of organizational goals, especially if due processes have to be followed (Rand, 2000). Proper scheduling is important when it comes to addressing time constraints. Scope constraints, on the other hand, define the specific functions, goals, features, and deliverables. The scope also defines the tasks that must be completed in order to achieve the set plan. In order to overcome scope constraints, the scope should be communicated regularly to all stakeholders. Processes to manage any changes should also be established to review and control the system (Rand, 2000). Cost constraints refer to budgetary requirements and financial resources needed to accomplish a particular plan in time. It should be understood that cost does not only refer to money for materials but also labor costs, vendor costs, quality control costs, and other related costs.

Defining and Differentiating Terms

Philosophy is a discipline that studies the intrinsic nature of human knowledge, reality, and existence. A goal is the desired result that an individual or a group of people plan and commit to achieving in the future (Mumford et al., 2015). An objective is a purpose to be achieved or a strategic position that a person or a group of people want to attain. A functional objective relates to a specific function of a business such as marketing, finance, operations, and HRM. A policy is a written statement of intent to guide decision-making and achieve the desired outcome (Mumford et al., 2015). A procedure is an established way of performing a particular task. A method is a process of completing a particular task. A rule is a set of principles or regulations governing a particular conduct, behavior, procedure.

Goals are different from objectives because goals are achievable outcomes that are long-term in nature while objectives are short-term in nature (Getz et al., 2012). Procedures are also different from methods in the sense that procedures are simply a sequence of steps that are followed when performing a particular task, while methods are formalized ways of doing routine jobs. In addition, corporate objectives differ from functional objectives in the sense that corporate objectives are broad and cover the whole organization, while functional objectives are specific to a particular functional area like Finance.

Aspects of Project Management

Project management refers to the application of knowledge, skills, tools, and techniques to meet the requirements of a project (Gibson Jr et al., 2006). Projects involve several important aspects that must be understood for a project to be successful. These aspects include scope statement, risk management, resource planning, deliverables, budget, work breakdown structure, and effective communication. Other key aspects of project management include critical success factors, stakeholder list, schedule, and timeline.

The scope statement describes the objectives of the project, while the risk management component helps the project managers to identify and prevent potential risks. Resource planning involves assigning tasks to the team members on the basis of skills set, capacity, and talent (Levitt, 2011). Deliverables refer to what the team members plan to produce in terms of products and services. The critical success factors, on the other hand, are elements required for the team members to achieve the project’s short-term and long-term mission. A budget refers to financial estimates including estimated costs and revenues to keep the project on the course (Levitt, 2011). Stakeholders are all parties that have an interest in the project as well as those with parties with some influence on the project. A work breakdown structure simply breaks down a project into smaller achievable tasks. Effective communication is essential throughout the project to keep all stakeholders and team members updated on the progress of the project. Schedule and timeline help the project managers to complete the project goals within deadlines.

How to Evaluate a Decision’s Importance

Proper evaluation of decisions in terms of effectiveness is required to ensure that the decision taken benefits the organization. Key considerations like why the decision is important, who benefits from the decision, the cost of reversing the decision, what is the best for the organization, and who made the decision must be made (Hoover, 2009). Overall, important decisions require time for deliberations. Every decision has winners and losers because decisions are meant to bring change. However, leaders must ensure that everyone understands why a particular decision was made to minimize the level of resistance. In addition, an important decision is difficult and costly to reverse over less important decisions. The challenge managers and leaders face is determining what the organization requires them to do (Hoover, 2009). Therefore, when a decision seems unpopular, it may be the most sensible one to make because its long-term pain will outweigh the short-term gains by far. Thus, the most important decisions are the ones that are unpopular, costly to reverse, benefit a vast majority of the organizational members, and take time to deliberate.

Tools and Techniques Available to Aid in Decision-Making

Decision-making is a complex process that requires tools and techniques to help managers in selecting the best decision from a range of alternatives. Cost-benefit analysis, SWOT analysis, and Decision matrix are some of the most common tools and techniques available to help managers make decisions (Spencer et al., 2017). The cost-benefit analysis is a technique used to compare the projected costs and the estimated benefits associated with a particular decision to determine if it makes economic sense. The SWOT analysis identifies the strengths, weaknesses, opportunities, and threats associated with a particular decision to help managers understand all the factors that influence a decision (Spencer et al., 2017). A decision matrix is a tool that managers use to evaluate and select the best option from a range of options and choices. It is applicable when decision-making involves more than one option and there are several other factors that must be considered prior to making the final decision.

Overall, planning is an important managerial function that helps managers to assess the goals of an organization critically in order to determine if they are realistic or not. Decision-making, on the other hand, helps managers to choose the best alternative from a range of options. Planning and decision-making are interrelated because decision-making is part of the planning process. Effective planning facilitates decision-making and helps managers to set smart, measurable, and achievable goals. It also helps in measuring the performance against the set goals. The involvement of the various stakeholders coupled with an understanding of the key aspects of project management is essential in ensuring that the organizational projects are successful.

Dye, R., & Sibony, O. (2007). How to improve strategic planning.  McKinsey Quarterly ,  3 , 40.

Getz, D., Svensson, B., Peterssen, R., & Gunnervall, A. (2012). Hallmark events: Definition and planning process.  International journal of event management research ,  7 (1/2), 47-67.

Gibson Jr, G. E., Wang, Y. R., Cho, C. S., & Pappas, M. P. (2006). What is preproject planning, anyway?.  Journal of management in engineering ,  22 (1), 35-42.

Havnes, A. (2009). Talk, planning and decision‐making in interdisciplinary teacher teams: a case study.  Teachers and Teaching: theory and practice ,  15 (1), 155-176.

Hoover, C. L. (2009).  Evaluating project decisions: case studies in software engineering . Pearson Education India.

Levitt, R. E. (2011). Towards project management 2.0.  Engineering project organization journal ,  1 (3), 197-210.

Mumford, M. D., Mecca, J. T., & Watts, L. L. (2015). Planning processes: Relevant cognitive operations. In  The Psychology of Planning in Organizations  (pp. 25-46). Routledge.

Nichols, L. (2002). Participatory program planning: Including program participants and evaluators.  Evaluation and program planning ,  25 (1), 1-14.

Papke-Shields, K. E., & Boyer-Wright, K. M. (2017). Strategic planning characteristics applied to project management.  International Journal of Project Management ,  35 (2), 169-179.

Rand, G. K. (2000). Critical chain: the theory of constraints applied to project management.  International Journal of Project Management ,  18 (3), 173-177.

Sager, T. (2002). Deliberative planning and decision making: An impossibility result.  Journal of Planning Education and Research ,  21 (4), 367-378.

Spencer, N. H., Lay, M., & Kevan De Lopez, L. (2017). Normal enough? Tools to aid decision making.  International Journal of Social Research Methodology ,  20 (2), 167-179.

Cite This Work

To export a reference to this article please select a referencing style below:

Related Essays

Disclosure of executive compensation in financial records, how neighborhood and localization play a role in-store design., cable prices not falling and competition, unique aspects of international procurement relation to project management, consumer behavior term paper: the key elements in consumer behavior, effective self-management techniques for leaders, popular essay topics.

• American Dream
• Artificial Intelligence
• Black Lives Matter
• Bullying Essay
• Career Goals Essay
• Causes of the Civil War
• Child Abusing
• Civil Rights Movement
• Community Service
• Cultural Identity
• Cyber Bullying
• Death Penalty
• Depression Essay
• Domestic Violence
• Freedom of Speech
• Global Warming
• Gun Control
• Human Trafficking
• I Believe Essay
• Immigration
• Importance of Education
• Israel and Palestine Conflict
• Leadership Essay
• Legalizing Marijuanas
• Mental Health
• National Honor Society
• Police Brutality
• Pollution Essay
• Racism Essay
• Romeo and Juliet
• Same Sex Marriages
• Social Media
• The Great Gatsby
• The Yellow Wallpaper
• Time Management
• To Kill a Mockingbird
• Violent Video Games
• What Makes You Unique
• Why I Want to Be a Nurse
• Send us an e-mail

• Business Essentials
• Leadership & Management
• Credential of Leadership, Impact, and Management in Business (CLIMB)
• Entrepreneurship & Innovation
• Digital Transformation
• Finance & Accounting
• Business in Society
• For Organizations
• Support Portal
• Media Coverage
• Founding Donors
• Leadership Team

• Harvard Business School →
• HBS Online →
• Business Insights →

Business Insights

Harvard Business School Online's Business Insights Blog provides the career insights you need to achieve your goals and gain confidence in your business skills.

• Career Development
• Communication
• Decision-Making
• Earning Your MBA
• Negotiation
• News & Events
• Productivity
• Staff Spotlight
• Student Profiles
• Work-Life Balance
• AI Essentials for Business
• Alternative Investments
• Business Analytics
• Business Strategy
• Business and Climate Change
• Creating Brand Value
• Design Thinking and Innovation
• Digital Marketing Strategy
• Disruptive Strategy
• Economics for Managers
• Entrepreneurial Marketing
• Entrepreneurship Essentials
• Financial Accounting
• Global Business
• Launching Tech Ventures
• Leadership Principles
• Leadership, Ethics, and Corporate Accountability
• Leading Change and Organizational Renewal
• Leading with Finance
• Management Essentials
• Negotiation Mastery
• Organizational Leadership
• Power and Influence for Positive Impact
• Strategy Execution
• Sustainable Business Strategy
• Sustainable Investing
• Winning with Digital Platforms

8 Steps in the Decision-Making Process

• 04 Feb 2020

Strong decision-making skills are essential for newly appointed and seasoned managers alike. The ability to navigate complex challenges and develop a plan can not only lead to more effective team management but drive key organizational change initiatives and objectives.

Despite decision-making’s importance in business, a recent survey by McKinsey shows that just 20 percent of professionals believe their organizations excel at it. Survey respondents noted that, on average, they spend 37 percent of their time making decisions, but more than half of it’s used ineffectively.

For managers, it’s critical to ensure effective decisions are made for their organizations’ success. Every managerial decision must be accompanied by research and data , collaboration, and alternative solutions.

Few managers, however, reap the benefits of making more thoughtful choices due to undeveloped decision-making models.

Access your free e-book today.

Why Is Making Decisions Important?

According to Harvard Business School Professor Leonard Schlesinger, who’s featured in the online course Management Essentials , most managers view decision-making as a single event, rather than a process. This can lead to managers overestimating their abilities to influence outcomes and closing themselves off from alternative perspectives and diverse ways of thinking.

“The reality is, it’s very rare to find a single point in time where ‘a decision of significance’ is made and things go forward from there,” Schlesinger says. “Embedded in this work is the notion that what we’re really talking about is a process. The role of the manager in managing that process is actually quite straightforward, yet, at the same time, extraordinarily complex.”

If you want to further your business knowledge and be more effective in your role, it’s critical to become a strong decision-maker. Here are eight steps in the decision-making process you can employ to become a better manager and have greater influence in your organization.

Steps in the Decision-Making Process

1. frame the decision.

Pinpointing the issue is the first step to initiating the decision-making process. Ensure the problem is carefully analyzed, clearly defined, and everyone involved in the outcome agrees on what needs to be solved. This process will give your team peace of mind that each key decision is based on extensive research and collaboration.

Schlesinger says this initial action can be challenging for managers because an ill-formed question can result in a process that produces the wrong decision.

“The real issue for a manager at the start is to make sure they are actively working to shape the question they’re trying to address and the decision they’re trying to have made,” Schlesinger says. “That’s not a trivial task.”

2. Structure Your Team

Managers must assemble the right people to navigate the decision-making process.

“The issue of who’s going to be involved in helping you to make that decision is one of the most central issues you face,” Schlesinger says. “The primary issue being the membership of the collection of individuals or group that you’re bringing together to make that decision.”

As you build your team, Schlesinger advises mapping the technical, political, and cultural underpinnings of the decision that needs to be made and gathering colleagues with an array of skills and experience levels to help you make an informed decision. .

“You want some newcomers who are going to provide a different point of view and perspective on the issue you’re dealing with,” he says. “At the same time, you want people who have profound knowledge and deep experience with the problem.”

It’s key to assign decision tasks to colleagues and invite perspectives that uncover blindspots or roadblocks. Schlesinger notes that attempting to arrive at the “right answer” without a team that will ultimately support and execute it is a “recipe for failure.”

3. Consider the Timeframe

This act of mapping the issue’s intricacies should involve taking the decision’s urgency into account. Business problems with significant implications sometimes allow for lengthier decision-making processes, whereas other challenges call for more accelerated timelines.

“As a manager, you need to shape the decision-making process in terms of both of those dimensions: The criticality of what it is you’re trying to decide and, more importantly, how quickly it needs to get decided given the urgency,” Schlesinger says. “The final question is, how much time you’re going to provide yourself and the group to invest in both problem diagnosis and decisions.”

4. Establish Your Approach

In the early stages of the decision-making process, it’s critical to set ground rules and assign roles to team members. Doing so can help ensure everyone understands how they contribute to problem-solving and agrees on how a solution will be reached.

“It’s really important to get clarity upfront around the roles people are going to play and the ways in which decisions are going to get made,” Schlesinger says. “Often, managers leave that to chance, so people self-assign themselves to roles in ways that you don’t necessarily want, and the decision-making process defers to consensus, which is likely to lead to a lower evaluation of the problem and a less creative solution.”

5. Encourage Discussion and Debate

One of the issues of leading a group that defaults to consensus is that it can shut out contrarian points of view and deter inventive problem-solving. Because of this potential pitfall, Schlesinger notes, you should designate roles that focus on poking holes in arguments and fostering debate.

“What we’re talking about is establishing a process of devil’s advocacy, either in an individual or a subgroup role,” he says. “That’s much more likely to lead to a deeper critical evaluation and generate a substantial number of alternatives.”

Schlesinger adds that this action can take time and potentially disrupt group harmony, so it’s vital for managers to guide the inner workings of the process from the outset to ensure effective collaboration and guarantee more quality decisions will be made.

“What we need to do is establish norms in the group that enable us to be open to a broader array of data and decision-making processes,” he says. “If that doesn’t happen upfront, but in the process without a conversation, it’s generally a source of consternation and some measure of frustration.”

Related: 3 Group Decision-Making Techniques for Success

6. Navigate Group Dynamics

In addition to creating a dynamic in which candor and debate are encouraged, there are other challenges you need to navigate as you manage your team throughout the decision-making process.

One is ensuring the size of the group is appropriate for the problem and allows for an efficient workflow.

“In getting all the people together that have relevant data and represent various political and cultural constituencies, each incremental member adds to the complexity of the decision-making process and the amount of time it takes to get a decision made and implemented,” Schlesinger says.

Another task, he notes, is identifying which parts of the process can be completed without face-to-face interaction.

“There’s no question that pieces of the decision-making process can be deferred to paper, email, or some app,” Schlesinger says. “But, at the end of the day, given that so much of decision-making requires high-quality human interaction, you need to defer some part of the process for ill-structured and difficult tasks to a face-to-face meeting.”

7. Ensure the Pieces Are in Place for Implementation

Throughout your team’s efforts to arrive at a decision, you must ensure you facilitate a process that encompasses:

• Shared goals that were presented upfront
• Alternative options that have been given rigorous thought and fair consideration
• Sound methods for exploring decisions’ consequences

According to Schlesinger, these components profoundly influence the quality of the solution that’s ultimately identified and the types of decisions that’ll be made in the future.

“In the general manager’s job, the quality of the decision is only one part of the equation,” he says. “All of this is oriented toward trying to make sure that once a decision is made, we have the right groupings and the right support to implement.”

8. Achieve Closure and Alignment

Achieving closure in the decision-making process requires arriving at a solution that sufficiently aligns members of your group and garners enough support to implement it.

As with the other phases of decision-making, clear communication ensures your team understands and commits to the plan.

In a video interview for the online course Management Essentials , Harvard Business School Dean Nitin Nohria says it’s essential to explain the rationale behind the decision to your employees.

“If it’s a decision that you have to make, say, ‘I know there were some of you who thought differently, but let me tell you why we went this way,’” Nohria says. “This is so the people on the other side feel heard and recognize the concerns they raised are things you’ve tried to incorporate into the decision and, as implementation proceeds, if those concerns become real, then they’ll be attended to.”

How to Improve Your Decision-Making

An in-depth understanding of the decision-making process is vital for all managers. Whether you’re an aspiring manager aiming to move up at your organization or a seasoned executive who wants to boost your job performance, honing your approach to decision-making can improve your managerial skills and equip you with the tools to advance your career.

Do you want to become a more effective decision-maker? Explore Management Essentials —one of our online leadership and management courses —to learn how you can influence the context and environment in which decisions get made.

This article was update on July 15, 2022. It was originally published on February 4, 2020.

About the Author