Decision objectives

Decision Making
DECISION OBJECTIVES
PRESENTED BY; VIQAR A. USMANI 1

Unless the objectives of a decision are clear and well understood, managers
cannot possibly judge how far the preferred option will go towards
achieving their objectives.
In order to do so, we must first understand the nature of objectives.
Every objective, should be able to provide a point of reference in decision
making:-
 What are we trying to achieve?
 What are we trying to preserve?
 What are we trying to avoid?
 What are we trying to eliminate?

More Goals and Objectives Questions
· What would things look like if they were going right?
· What would be happening that isn’t?
· What wouldn’t be happening that is?
· What do we want we don’t have? What are we trying to achieve?
· What do we have we don’t want? What are we trying to eliminate?
· What do we not have that we don’t want? What are we trying to avoid?
· What do we have that we want to keep? What are we trying to preserve?
What results are we after?

• What will serve as evidence of success? Failure?
• How will we know the problem is solved?
• What is the “should be”? Who says?
Many alternative solutions should emerge in the process.
In fact it is helpful to have as many alternatives as possible.
This process may be time consuming and sometime exhausting but it is absolutely
necessary.
BUT
Eventually, we must first distinguish between three types of objectives, and these are:
1) Primary Objectives
2) Strategic Objectives
3) Operational Objectives

Primary Objectives
Primary Objectives reflect the fundamental reason for the organisation’s being.
Objectives are likely to include, survival of the company, independence from outside
control, profit, a desire for growth etc.
Strategic Objectives
Strategic Objectives guide the organisation’s long term directions towards the achievemet
of primary objectives.
Strategic objectives could include, developing innovative products, keep a presence in a
particular market, fund projects only from internally generated profits etc.
Operational Objectives
Operational Objectives interpret an organization’s strategic objectives into manageable
terms for shorter term decision making.
Operational objectives could include such things as controlling budgets tightly, giving
good delivery, keeping unit costs low and so on.

One difficulty in attempting to identify an Organization’s objectives is determining exactly
Who is chosen to communicate those objectives.
Is it the organization’s mangers?
Is it the company’s board of directors?
In reality, there are differences between the objectives of different groups within an
organization, OR
At least, a different emphasis between groups of objectives.
One study showed considerable difference in emphasis between the objectives of founders
or owners of firms, the managers of firms, and the board of directors.
The objectives of the founders were much more likely to be wide ranging including profit,
growth, producing a good product, and personal or company power.
Managers on the other hand, place more emphasis on profits and less on other goals.
Board of directors were exclusively concerned.

As described in previous lectures, decision can be positions in a Strategic- Operational Continuum.
In the same way are their objectives.
But strategic and operational objectives have different purposes and will be expressed in different ways.
However, the operational level objectives will have been shaped by whatever strategic objectives the
firm has adopted. Primary Objectives
There must, be some link between strategic
objectives and detailed operational objectives.
In fact there are different layers of such
objectives, which start broad and become more
specific as they approach the operational level.
This hierarchical structure is explained in the
figure:
Appropriate
Strategic Objectives
Operational Objectives
Appropriate & Consistent

If objectives exist at different levels in an organization, then, what is an objective to one
decision maker will be means of achieving a higher objective to a higher (hierarchically)
decision maker.
For example, the top decision maker in an organization might see one decision objective as
increasing the dividend payment to the stockholders of the organization.
The means of attaining this objective is to increase the profits of the company.
Slightly below him in the organizational hierarchy, the executive incharge of a division of the
company will have as his or her decision objective an increase in company’s profits.
The means of achieving this objective could be many and various, the point is, that the
objective to one decision maker will be the means of achieving a higher objective to another
decision maker.

Means Ends
Select new
advertising agency
Make Promotion
More effective
Means Ends
Increase sales
revenue
Means Ends
Increase Profits
Means Ends
Increase sales
revenue

This illustration is somewhat simplified.
There is rarely a single objective to a decision and there is usually more than one means
which can be employed to achieve an objective.
In practice, means-ends chains spread out and interconnect in a complex manner.
Several means being employed to achieve each of the many ends.
An objective is not a sufficient condition for achieving the next objective in the chain.
It should however, work towards the next objective.
This means there is considerable management discretion in what are put forward and
posted in the organization as objectives.
Two companies with identical end objectives might have completely different intermediate
and operational level objectives.
In other words, companies will have different strategies for achieving similar objectives, and
different strategies should imply different operational objectives.

Means-Ends chains then, explain how high level objectives are
progressively detailed and made more specific for each part of
the organization.
Starting from the few strategic objectives, the chain works
downward answering the question; HOW? Is the objective
going to be achieved? Starting from lower level objectives and
working upwards, it answers WHY? Take a particular course of
action?

Underlying all organisational decision behavior are the objectives of the organization.
These objectives may form an “invisible hand” which shapes decisions towards ultimate
goals in a quite and Non-obvious way.
Alternately, objectives can be clearly stated ‘signposts’ which are seen by all decision
makers, pointing the way in an unambiguous manner towards the company’s goals.
Unless objectives are:
1- Clearly and unambiguously stated (Preferably written down)
2- Fully understood by all decision makers within the organization
They can be subject to a variety of interpretations by different decision makers at different
points in time.
This may cause a lack of cohesion and direction in decision making.

Some important points when making objectives explicit are:
a) Do the objectives state what the organization does not want to
do?’... The concept of goals implies aims forgone, as well as those
which are south; otherwise all that remains is a set of Boy scout
maxim…’
b) Are the objectives a useful guide to action? Especially when guiding
the evaluation of decision alternatives. The objective “to diversify” is
less directive, therefore useful, than the objective' to diversify into
complementary industries’.
c) Are the objectives reasonably comprehensive? Objectives should
state the implications for all stakeholders in the organisation,
shareholders, managers, workers, suppliers, etc.

Objectives should be Clear.
 Specific (concrete, detailed, well defined)
 Measurable (numbers, quantity, comparison)
 Achievable (numbers, quantity, comparison)
 Realistic (considering resources)
 Time Specific (a defined time line)

 Objectives should be consistent)
Consistency in decision objectives at all levels can be maintained by :
1) Developing and communicating explicit objective statements
2) Sharing and agreeing objectives with those responsible for their achievement.
3) Reviewing how far objectives have been achieved at regular intervals.
4) Modifying objectives and action plans as a result.
M.B.O is perhaps the ideal example for the above.

 Objectives should be Agreed
Getting agreement from those who have to achieve the objectives is the main concern
of the management. (Sub ordinates and from peers).
The problem is not only one of getting people to agree that any particular objective is a
sensible one.
Knowing what should be done does not in itself get it done.
Rather, the problem is to get the necessary people to commit themselves to the
accomplishment of the objective.

Summary
The importance of clear objectives in decision making lies in their
ability to direct the decision making process in a purposeful way.
Decision objectives form a hierarchy with primary objectives
influencing strategic objectives, which in turn influence operational
objectives

Decision objectives

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