Planning involves defining the organization’s goal,

establishing strategies for achieving those goals, and developing plans to integrate and coordinate work activities.

Planning is concerned with both ends(what) and means(how).

When we use the term planning, we mean formal planning. In formal planning, specific goals covering a specific time

period are defined. These goals are written and shared with

organizational members to reduce ambiguity and create a common understanding about what needs to be done. Finally specific plan exist for achieving these goals.

What is Planning

To provides direction to managers and

non-managers To reduce uncertainty(anticipate change,

develop appropriate responses) To minimizes waste and redundancy To establish the goals or standards used in

controlling.

Why do Managers Plan?

Generally, there is a positive relationship between

planning and performance. (But we can’t say, the organizations that formally plan always outperform those don’t plan.

Formal planning is associated with positive financial results-higher profits, higher return on assets and so forth.

Good job planning and implementing those plans plays a bigger part in high performance than does how much planning is done.

Formal planning may not always perform because of external environment or forces(govt. regulations or labor union strike)

Planning-Performance relationship seems to be influenced by the planning time frame(time limitation).

Planning & Performance

Planning is often called the primary management function

because it establishes the basis for all the other things managers do as they organize, lead and control.

Planning involves two important aspects: goals and plans.

Goals(Objectives) are desired outcomes or targets. Goals guide management decisions and form the criteria against which work results are measured.

Plans are documents that outline how goals are going to be met. They usually include resource allocation, schedules(programs/agendas) and other necessary actions to accomplish the goal.

Goals & Plans

All organization has multiple goals. (e.g- business may want to

increase market share, keep employees loyal to the organization, develop harmonious work culture.)

Stated goals: Official statement of what an organization says- and what it wants its various stakeholders to believe-its goal are. (e.g- superior customer service, higher product quality, higher dividend)

Stated goals which can be found in an organization’s charter, annual report or public relations announcement or public statement by managers, which are often conflicting and influenced by what various stakeholders think an organization should do.

(e.g- Deutsche Bank’s goal is to be the leading global partner of

financial solutions for demanding clients creating exceptional value for our shareholders and people.)

Types of Goal

Real goal- Goals that an organization actually

pursues(follows), as defined by the actions of its members.

(e.g - goal of limiting class size, facilitate close relationship between student and faculty etc)

Types of Goal

a. Plan on the basis of Breadth:1. Strategic Plan: Plans that apply to an entire

organization and establish the organization’s overall goals.

Strategic Plan are broad. It is concerned with formulation of goals.

2. Operational Plan: The Plan that encompass(include) a particular operation area of an organization.Operational plans are narrow. It is concerned with ways of achieving goal.

Types of Plan

b. On the basis of Time frame:1. Long term plan: Plan with a time frame beyond three

years. 2. Short term plan: Plan covering one year or less.

c. On the basis of Specificity3. Specific Plan: Plans that are clearly defined and leave no

room for interpretation. They are clearly defined objective. There is no ambiguity and no problem with misunderstanding.

( A manger who seeks to increase his or her unit’s work output by 8 percent over a 12 month period might establish specific procedures, budget allocation, and schedules o activities to reach the goal.

Types of Plan

2. Directional Plan: Directional Plan are flexible

plans that set out general guidelines. Directional Plan focus but don’t lock managers into specific goals or course of action. They can be changed according to changes in environment.

(e.g- Instead of detailing specific plan to cut costs by 4 percent and increase by 6 percent in the next six months, managers might formulate a directional plan for improving profits by 5 to 10 percent over the next.)

Types of Plan

On the basis of frequency of use1. Single Use Plan(Annual Budget)A one-time plan specifically designed to meet the needs of a unique situation.

2. Standing Plan(Rules, Procedures, Policies)Ongoing plans that provide guidance for activities performed repeatedly.

Types of Plan

Goals provide the direction for all

management decisions and actions . Everything organizational members should be

oriented towards achieving goals. Goals can be set either through a process of

Traditional goal setting or by using Management By Objectives(MBO)

Approaches to Setting Goals

Goals are set by top managers ….flow down

through the organization and become sub-goals for each organizational area.

Traditional perspective assumes that top managers know what’s best because they see the “big picture”. And the goals passed down to each succeeding level to guide departments, units and individual employees as they work to achieve those assigned goals.

Problems with Traditional Goal Setting:Turning broad strategic goals into departmental, team and individual goals, can be a difficult and frustration process… ….Another problem with traditional goal setting is that when top managers define the organization's goal in broad terms- such as

Traditional Goal Setting

achieving sufficient profit or increasing market

share- these ambiguous goals have to be made more specific as they flow down through the organization. Managers at each level define the goals and apply their own interpretations and biases as they make them more specific.

Cont…Traditonal

MBO is a process of setting mutually agreed upon goals and using those

goals to evaluate employee performance.

Sitting with each member of team and set goals and periodically review whether progress was being made towards achieving the goal.

MBO is a management system in which specific performance goals are jointly determined by employees and their managers, progress toward accomplishing those goals is periodically reviewed, and rewards are allocated on the basis of this progress.

Goal specificityParticipative decision makingExplicit(clear) time periodPerformance feedback

Management by Objectives (MBO)

Goals should be written in terms of

outcomes rather than actions. Goals should be Measurable and

quantifiable. Goals should be clear as to a time

frame. Goals should be challenging yet

attainable. Goal should be communicated to all

necessary organizational members.

Characteristics of Well Designed Goals

Managers should follow five steps when setting goals.1. Review the organization’s vision & mission, or purpose.Managers should review the mission before writing goals because goals should reflect(connect) the mission.(Vision: The statement mentioning what organization wanted to become in future)Mission- The statement of the purpose of an organization)

2. Evaluate available resourcesWith respect to resources, goals should be formulated/set. Goal should be challenging , they should be realistic but shouldn’t be impossible…

Steps in Goal Setting

3. Determine the goals individually or with input from others.

Managers should determined goal individually or with help from other organization members. Goals should be congruent(compatible) with organizational mission and other organizational area. These set goals should be measurable, specific and accomplished within certain time frame.4. Write down the goals and communicate them to all who need to know:

Written goals become visible and tangible evidence of importance of working toward something and pressurize the organizational members to work under right direction.

Making people aware of the goals ensures that they are all on the same page and working in ways to secure the accomplishment of the organizational goals.

Steps in Goal Setting

5. Review results and whether goals are being met. Periodical review the results from the actions which are taken to meet the goals, if goals aren’t being met, change them as needed and take necessary actions.

Steps in Goal Setting

The process of developing plans is influenced

by three contingency(unforeseen event/possibility) factors and planning approach.

Three Contingency factors affect the choice of plan:

(Contingency factors in Planning)a. Organizational Levelb. Degree of Environmental uncertaintyc. Length of future commitments

Developing Plans

1. Organizational Level:Lower Level managers do operational planning while upper level managers do strategic planning.Types or planning done is determined by Manager’s level in the organization.2. Degree of Environmental UncertaintyWhen uncertainty is high, plans should be specific(clear , detailed) but flexible. Managers must be prepared to change or amend plans. At times, managers may even have to abandon(leave) the plans.

Developing Plans

3. Length of future commitment The last contingency factor is related to time frame of the

plan.

Plan should be compatible with those commitments made today.

If the current plan affects the commitments made today, which will be fulfilled in future, the longer the time frame manager requires to plan.

Planning for too long or too short a time period is inefficient and ineffective.

Developing Plans

Uncertainty is one of the contingency factors that affect the types of

plans managers develop. In an uncertain environment, managers should develop

plans that are specific(not vague) but flexible.

(To be useful, plans need some specificity but the plans shouldn’t be set in stone.

Managers need to recognize that planning is an ongoing process. Plans serve as a road map, although the destination may change due to dynamic market condition. Managers should be ready to change directions if environment conditions warrant(permits).

Managers need to stay alert to environmental changes that may affect implementation and respond as needed.

Planning under Uncertainty

Making organizational hierarchy flatter helps

make planning more effective in dynamic environments. This means allowing lower organizational levels to set and develop plans because there is little time for goal and plans to flow down from top.

Managers should teach their employees how to set goals and to plan and then trust them to do it.

Cont..Planning in Uncertainty

Organizational plans can be best be understood by looking at who does the planning. Traditional Approach- Planning is done entirely by

top-level management who often are assisted by a formal planning department(a group of planning specialist whose sole responsibility is to help write the various organizational plan).

Under this approach, plans developed by top-level managers flow down through other organizational levels, much like traditional approach to goal setting.

As they flow down through the organization, the plans are tailored to the particular needs of each level.

Approach or Techniques of Planning

Participative approach Involving more organizational members in the planning process. In this approach, plans aren’t handed down from one level to the next but

instead are developed by organizational members at the various levels and in the various work units to meet their specific needs.

(e.g- Dell employees from production, supply management, and channel management meet weekly to make plans based on current product demand and supply. In addition, work teams set their own daily schedules and track their progress against their schedules. If a team falls behind, team members develop recovery plan to try to get back on schedule.

When organizational members are more actively involved in planning, they see that the plans are more than just something written down on paper. They actually see that the plans are used in directing and coordinating work.

Approach of Planning

1. Planning may create rigidity Formal plan can lock an organization into specific

goals to be achieved within specific time frames. When these goals were set, the assumption may have been that the environment wouldn’t change. If the environment changed, managers who follow a plan may face trouble.

Manager’s sticking on original instead of being flexible with the environment change(situation) can be a recipe for disaster.

Criticisms of Planning

2. Plans can’t be developed for a dynamic environment.• The basic assumption of plan is – environment won’t change. ; if

assumption becomes faulty-how plan be done?• Today’s business environment is often random and unpredictable,

Managing under those conditions requires flexibility, and that may mean not being tied(secured) to formal plans.

3. Formal plans can’t replace intuition and creativity• Formal plans, routine jobs(routine planning efforts) and

organizational formality, detailed planning may hamper creativity.

• Organizations often succeed because of someone’s innovation vision .

Criticisms of Planning

4. Planning focuses managers’ attention on today’s competition, not on tomorrow’s survival

• Formal planning has a tendency to focus on how to capitalize(take advantage of) on existing business opportunities within an industry but may not allow managers to consider creating or reinventing an industry.

• Consequently, formal plans may result in costly blunders when other competitors take the lead.

Criticisms of Planning

5. Formal Planning reinforces success, which may lead to failure.• Previously implemented successful formalize plan may

breed failure in an uncertain environment.• Successful plan always may not breed success.

6. Just Planning isn’t enough• It’s not enough for managers to plan. They have to start

doing/implementing actions/plans to achieve goals.• Managers have to put plan into motion and do it.• Managers need to plan, they also need to see that the

plan is carried out.

Criticisms of Planning

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