Situation Appraisal is a formal method whereby a manager, or an individual, sets time aside to look at current and future realities. Many managers and individuals do this informally, without doing a Situation Appraisal, but a formal Situation Appraisal gets the right people involved at the correct level. It also adds a consistent structure. There are four main steps involved in a Situation Appraisal.
Situation Appraisal: Identify Concerns
The first phase of a Situation Appraisal is to define what are the threats or opportunities that present themselves. Questions will be asked such as "Has a competitor gone bankrupt?", or "What production problems are there?", or "Is there any critical material or component that has only one supplier"? All potential threats and opportunities are listed, and no filtering is done at this stage.
Having listed the main items for discussion, they are then rationalized and clarified. The main questions to ask here are "What is meant by ... "? For example, define what is meant by "production problems". Does it mean yield issues, machine downtime, material shortages, and so on.
Situation Appraisal: Set Priority
After identifying what the concerns are, decisions need to be made about what to work on first. A priority is given to each concern that is based on how serious the threat is, how urgent the concern is in terms of time delay, and what the likely future impact is if there is no action taken. Safety issues will normally be the most serious. A scoring system is used to quantify all of these, so where possible it is useful to assign a financial impact measure to the seriousness, urgency and growth of the concern.
Situation Appraisal: Plan Next Steps
Now that the concerns have been separated, clarified, and prioritized, the next decision is what to do next with the ones that need action. It may be that another Situation Appraisal is needed on some of them, as they are very substantial concerns. For example, "Company cannot secure credit from bank" will not be solved with one action, but will need a series of actions such as delay spending, increase accounts payable, and reduce salaries bill.
Other concerns will need a Problem Analysis. Yet other concerns will need a Decision Analysis. For example, "Reduce Salaries bill" may be achieved by workforce reduction, furlough period, or base salary reduction. A Decision Analysis could be used to determine the best course of action.
Situation Appraisal: Plan Involvement
Having arrived at a series of actionable items, the final stage is to plan exactly how to implement the actions. The involvement of others is usually necessary, and in the example above the "base salary reduction" option would need the involvement of the Finanace Department, Line Managers and perhaps the Union. In the case where a Problem Analysis is required for a scrap issue, the Facilitator and team members need to be appointed.
Summary of Situation Appraisal
Situation Appraisal is a Kepner-Tregoe method that formalizes the key management strategy of setting priorities and deciding what to do next. The great strength of the Situation Appraisal is the consistent structure it brings, as well as the involvement of key stake-holders.
References for Situation Appraisal
The Situation Analysis process is described in detail, with worked examples, in The New Rational Manager. A software package is available that steps through all of the Kepner-Tregoe Rational Processes is also available at this link.
Other relevant articles include Business Excellence: Kepner-Tregoe, as well as Kepner-Tregoe Problem Analysis and Kepner-Tregoe Decision Analysis.
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