Managerial planning

Managerial PlanningManagerial Planning

Defining PlanningDefining Planning• Of the five management functions — planning,

organizing, staffing, leading and controlling — planningplanning is the most fundamental.

• All other functions stem from planning. • However, planning doesn't always get the

attention that it deserves; when it does, many managers discover that the planning process isn't as easy as they thought it would be — or that even the best-laid plans can go awry.

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Defining PlanningDefining Planning• Before a manager can tackle any of the other

functions, he or she must first devise a plan. • A plan is a blueprint for goal achievement that

specifies the necessary resource allocations, schedules, tasks, and other actions.

• A goal is a desired future state that the organization attempts to realize.

• Goals are important because an organization exists for a purpose, and goals define and state that purpose.

• Goals specify future ends; plans specify today's means.

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Defining PlanningDefining Planning• The word planning incorporates both ideas: • It means determining the organization's goals and

defining the means for achieving them. • Planning allows managers the opportunity to adjust to

the environment instead of merely reacting to it. • Planning increases the possibility of survival in

business by actively anticipating and managing the risks that may occur in the future.

• In short, planning is preparing for tomorrow, today. It's the activity that allows managers to determine what they want and how they will achieve it.

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Defining PlanningDefining Planning• Planning provide direction and a unity of

purpose for organizations, it also answers six basic questions in regard to any activity:– What needs to be accomplished?– When is the deadline?– Where will this be done?– Who will be responsible for it?– How will it get done?– How much time, energy, and resources are

required to accomplish this goal?5

Planning in ManagementPlanning in Management• Planning is deciding in advance what to do and

how to do. • It is one of the basic managerial functions. • Before doing something, the manager must

formulate an idea of how to work on a particular task.

• Thus, planning is closely connected with creativity and innovation.

• It involves setting objectives and developing appropriate courses of action to achieve these objectives.

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Planning DefinitionPlanning Definition

"Planning bridges the gap from where we are to where we want to go. It makes it possible for things to occur which would not otherwise happen"

- Koontz and O'Donnel.

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Importance of PlanningImportance of Planning

• Planning provides directions• Planning reduces the risks of uncertainty• Planning reduces overlapping and wasteful

activities• Planning promotes innovative ideas• Planning facilitates decision making• Planning establishes standards for

controlling.

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Features of planningFeatures of planning

• Planning focuses on achieving objectives• Planning is a primary function of

management• Planning is pervasive (spreading through)• Planning is continuous• Planning is futuristic• Planning involves decision making• Planning is a mental exercise

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Planning ProcessPlanning Process

• Setting objectives: Objectives may be set for the entire organisation and each department or unit within the organisation.

• Developing premises: Planning is concerned with the future which is uncertain and every planner is using conjuncture about what might happen in future.

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• Identifying alternative courses of action: Once objectives are set, assumptions are made. Then the next step would be to act upon them.

• Evaluating alternative courses: The next step is to weigh the pros and cons of each alternative.

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• Selecting an alternative: This is the real point of decision making. The best plan has to be adopted and implemented.

• Implement the plan: This is concerned with putting the plan into action.

• Follow-up action: Monitoring the plans are equally important to ensure that objectives are achieved.

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Planning PrinciplesPlanning Principles

• Planning is a dynamic process• It is very essential for every organisation

to achieve their ultimate goals • There are certain principles which are

essential to be followed so as to formulate a sound plan.

• They are only guidelines in the formulation and implementation of plans.

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• Principle of Contribution: – The purpose of planning is to ensure the

effective and efficient achievement of corporate objectives

– The basic criteria for the formulation of plans are to achieve the ultimate Objectives of the company.

– The accomplishment of the objectives always depends on the soundness of plans and the adequate amount of contribution of company towards the same.

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Planning PrinciplesPlanning Principles• Principle of Sound and Consistent

Premising: – Premises are the assumptions regarding the

environmental forces like economic and market conditions, social, political, legal and cultural aspects, competitors actions, etc.

– These are prevalent during the period of the implementation of plans.

– Plans are made on the basis of premises accordingly, and the future of the company depends on the soundness of plans they make so as to face the state of premises.

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Planning PrinciplesPlanning Principles• Principle of Limiting factors:

– The limiting factors are the lack of motivated employees, shortage of trained personnel, shortage of capital funds, government policy of price regulation, etc.

– The company requires to monitor all these factors and need to tackle the same in an efficient way so as to make a smooth way for the achievement of its ultimate objectives.

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• Principle of Commitment: – A commitment is required to carry-on the

business that is established. – The planning shall has to be in such a way that

the product diversification should encompass the particular period during which entire investment on that product is recovered.

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Planning PrinciplesPlanning Principles• Principle of Coordinated Planning:

– Long and short-range plans should be coordinated with one another to form an integrated plan, this is possible only when latter are derived from the former.

– Implementation of the long-range plan is regarded as contributing to the implementation of the short-range plan.

– Functional plans of the company too should contribute to all others plans i.e. implementation of one plan should contribute to all the other plans, this is possible only when all plans are consistent with one another and are viewed as parts of an integrated corporate plan.

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• Principle of Timing: – Number of major and minor plans of the organisation

should be arranged in a systematic manner. – The plans should be arranged in a time hierarchy, initiation

and completion of those plans should be clearly determined.

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Planning PrinciplesPlanning Principles• Principle of Efficiency:

– Cost of planning constitute human, physical and financial resources for their formulation and implementation as well.

– Minimizing the cost and achieving the efficient utilization of resources shall has to be the aim of the plans.

– Cost of plan formulation and implementation, in any case, should not exceed the organisations output's monetary value.

– Employee satisfaction and development, and social standing of the organisation are supposed to be considered while calculating the cost and benefits of plan.

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• Principle of Flexibility: – Plans are supposed to be flexible to favour the

organisation to cope-up with the unexpected environments.

– It is always required to keep in mind that future will be different in actuality.

– Hence companies, therefore, require to prepare contingency plans which may be put into operation in response to the situations.

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• Principle of Navigational Change: – Since the environment is always not the same as

predicted, plans should be reviewed periodically. – This may require changes in strategies, objectives, policies

and programmes of the organisation. – The management should take all the necessary steps while

reviewing the plans so that they efficiently achieve the ultimate goals of the organisation.

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• Principle of Acceptance: – Plans should be understood and accepted by the

employees, since the successful implementation of plans requires the willingness and cooperative efforts from them.

– Communication also plays a crucial role in gaining the employee understanding and acceptance of the plans by removing their doubts and misunderstanding about the plans also their apprehensions and anxieties about consequences of plans for achievement of their personal goal.

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Importance of PlanningImportance of Planning“Planning may be broadly defined as a concept of executive action that embodies the skill of anticipating, influencing, and controlling the nature and direction of change.”

- McFarland

• Planning throws the searchlight of human wisdom, experience, and ingenuity into the darkness of the future.

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Plan your work and work your plan

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Importance of PlanningImportance of Planning• Planning increases the organization's

ability to adapt to future eventualities: • The future is generally uncertain and things are likely

to change with the passage of time. • The uncertainty is augmented with an increase in the

time dimension. • With such a rise in uncertainty there is generally a

corresponding increase in the alternative courses of action from which a selection must be made.

• The planning activity provides a systematic approach to the consideration of such future uncertainties and eventualities and the planning of activities in terms of what is likely to happen.

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Importance of PlanningImportance of Planning• Planning helps crystallize objectives: • The first step in planning is to fix objectives

which will give direction to the activities to be performed.

• This step focuses attention on the results desired.

• A proper definition and integration of overall and departmental objectives would result in more co-ordinated inter-departmental activities and a greater chance of attaining the overall objectives.

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Importance of PlanningImportance of Planning• Planning ensures relatedness among

decisions: • A crystallization of objectives as mentioned

above would lead to relatedness among the decisions which would otherwise have been random.

• Decisions of the managers are related to each other and ultimately towards the goals or objectives of the enterprise.

• Creativity and innovation of individuals is thus harnessed towards a more effective management of the company.

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Importance of PlanningImportance of Planning• Planning helps the company to remain

more competitive in its industry: • Planning may suggest the addition of a new

line of products, • Changes in the methods of operation, • A better identification of customer needs and

segmentation and timely expansion of plant capacity

• All of which render the company better fitted to meet the inroads of competition.

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• Adequate planning reduces unnecessary pressures of immediacy: • If activities are not properly planned in

anticipation of what is likely to happen, pressures will be exerted to achieve certain results immediately or a in a hurry.

• Thus adequate planning supplies orderliness and avoids unnecessary pressures.

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Importance of PlanningImportance of Planning• Planning reduces mistakes and oversights: • Although mistakes cannot be entirely

obviated, they can certainly be reduced through proper planning.

• Planning ensures a more productive use of the organization's resources: • By avoiding wasted effort in terms of men,

money and machinery, • Adequate planning results in greater

productivity through a better utilization of the resources available to the organization.

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Importance of PlanningImportance of Planning• Planning makes control easier: • The crystallization of objectives and goals

simplify and highlight the controls required.• Planning enables the identification of future

problems and makes it possible to provide for such contingencies.

• Planning can help the organization secure a better position or standing: • Adequate planning would stimulate

improvements in terms of the opportunities available.

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Importance of PlanningImportance of Planning• Planning enables the organization to

progress in the manner considered most suitable by its management: • Management, for example, may be interested in

stability and moderate profits rather than huge profits and risk of instability.

• In terms of its objectives, the plan would ensure the actions are taken to achieve such objectives.

• Planning increases the effectiveness of a manager: • As his goals are made clearer, adequate planning

would help the manager in deciding upon the most appropriate act.

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Types of PlansTypes of Plans• Objectives:

• Objectives are very basic to the organisation and they are defined as ends which the management seeks to achieve by its operations.

• They serve as a guide for overall business planning.• Strategy:

• Strategy is a comprehensive plan for accomplishing an organisation objectives.

• This comprehensive plan will include three dimensions, a) Determining long term objectives, b) Adopting a particular course of action, and c) Allocating resources necessary to achieve the

objective.

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Types of PlansTypes of Plans• Policy:

• They are guides to managerial action and decisions in the implementation of strategy.

• Procedure: • Procedures are routine steps on how to carry out

activities. • Procedures are specified steps to be followed in

particular circumstances.• Method:

• Methods provide the prescribed ways or manner in which a task has to be performed considering the objective.

• It deals with a task comprising one step of a procedure and specifies how this step is to be performed.

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Types of PlansTypes of Plans• Rule:

• Rules are specific statements that inform what is to be done.

• They do not allow for any flexibility or discretion.• Programme:

• Programmes are detailed statements about a project which outlines the objectives, policies, procedures, rules, tasks, human and physical resources required and the budget to implement any course of action.

• Budget: • It is a plan which quantifies future facts and figures. • It is a fundamental planning instrument in many

organisations.

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Using Plans to Achieve Using Plans to Achieve GoalsGoals

• Planning is a crucial activity, for it designs the map that lays the groundwork for the other functions.

• The plan itself specifies what should be done, by whom, where, when, and how.

• All businesses — from the smallest restaurant to the largest multinational corporation — need to develop plans for achieving success.

• But before an organization can plan a course of action, it must first determine what it wants to achieve.

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• Objectives, the end results desired by the organization, are derived from the organization's mission statement.

• The mission statement explains what the organization stands for and why it exists.

• A strong mission statement symbolizes legitimacy to external audiences, such as investors, customers, and suppliers.

• Likewise, a strong mission statement allows employees to identify with the overall purpose of the organization and commit to preserving it.

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• The mission statement is the basis for all goals and plans outlined throughout the organization.

• Therefore, managers must use effective planning and goal-setting techniques to ensure that internal policies, roles, performances, structures, products, and expenditures are in line with the mission of the organization.

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Criteria for effective Criteria for effective goalsgoals

• To make sure that goal setting benefits the organization, managers must adopt certain characteristics and guidelines.

• The following describes these criteria:

• Goals must be specific and measurable. • When possible, use quantitative terms,

such as increasing profits by two percent

• Or decreasing student enrollment by one percent, to express goals. 41


• Goals should cover key result areas. • Because goals cannot be set for every

aspect of employee or organizational performance, managers should identify a few key result areas.

• These key areas are those activities that contribute most to company performance — for example, customer relations or sales.

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• Goals should be challenging but not too difficult. • When goals are unrealistic, they set

employees up for failure and lead to low employee morale.

• However, if goals are too easy, employees may not feel motivated.

• Managers must be sure that goals are determined based on existing resources and are not beyond the team's time, equipment, and financial resources.

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• Goals should specify the time period over which they will be achieved. • Deadlines give team members something to

work toward and help ensure continued progress.

• At the same time, managers should set short-term deadlines along the way so that their subordinates are not overwhelmed by one big, seemingly un accomplishable goal.

• It would be more appropriate to provide a short term goal such as, “Establish a customer database by June 30.”

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• Goals should be linked to rewards. • People who attain goals should be

rewarded with something meaningful and related to the goal.

• Not only will employees feel that their efforts are valued, but they will also have something tangible to motivate them in the future.

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Coordination of goalsCoordination of goals• All the different levels of management

should have plans that work together to accomplish the organization's purpose.

• The plans of the top-, middle-, and first-level managers of an organization should work together to achieve the main goal.

• All managers plan basically the same way, but the kinds of plans they develop and the amount of time they spend on planning vary.

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Coordination of goalsCoordination of goals• Top-level managers are concerned with

longer time periods and with plans for larger organizational units.

• Their planning includes developing the mission for the organizational units, the organizational objective, and major policy areas.

• These goals are called strategic goals or objectives.

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Coordination of goalsCoordination of goals• Middle-level managers' planning responsibilities center on

translating broad objectives of top-level management into more specific goals for work units.

• These goals are called tactical goals or objectives. • First-level managers are involved in day-to-day plans, such

as scheduling work hours, deciding what work will be done and by whom, and developing structures to reach these goals.

• These goals are called operational goals or objectives. • If a first-level manager develops a set of plans that

contradicts that of a middle-level manager, conflicts will result.

• Therefore, all managers must work together when planning their activities and the activities of others.

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Detailing Types of PlansDetailing Types of Plans• Plans commit individuals, departments,

organizations, and the resources of each to specific actions for the future.

• Effectively designed organizational goals fit into a hierarchy so that the achievement of goals at low levels permits the attainment of high-level goals.

• This process is called a means-ends chain because low-level goals lead to accomplishment of high-level goals.

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Detailing Types of PlansDetailing Types of Plans• Three major types of plans can help

managers achieve their organization's goals:

• Strategic, Tactical, and Operational. • Operational plans lead to the

achievement of tactical plans, which in turn lead to the attainment of strategic plans.

• In addition to these three types of plans, managers should also develop a Contingency plan in case their original plans fail. 50

Strategic plansStrategic plans• A strategic plan is an outline of steps

designed with the goals of the entire organization as a whole in mind, rather than with the goals of specific divisions or departments.

• Strategic planning begins with an organization's mission.

• Strategic plans look ahead over the next two, three, five, or even more years to move the organization from where it currently is to where it wants to be.

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Strategic plansStrategic plans• Requiring multilevel involvement, these plans

demand harmony among all levels of management within the organization.

• Top-level management develops the directional objectives for the entire organization, while lower levels of management develop compatible objectives and plans to achieve them.

• Top management's strategic plan for the entire organization becomes the framework and sets dimensions for the lower level planning.

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Strategic Planning Strategic Planning ProcessProcess

1. Environmental scan• Review your organisation's current local, political, social

and economic environment. • Identify needs, challenges, and opportunities. • How are you placed to deal with all these? • Run a SWOT analysis, an activity that identifies the

organisation's current strengths, weaknesses, opportunities and threats.

2. Plotting Direction• On the basis of your environmental scan, identify the

strategic decisions involved and decide what you need to do to respond to the major issues and opportunities you face.

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Strategic Planning Strategic Planning ProcessProcess

3. The Mission Statement • Review your Mission Statement (the reasons why your

organisation exists). • Draw up guiding principles that will provide guidance and

inspiration to staff and to the Board. 4. The Goals (or objectives, or outcome statements)

• On the basis of the mission statement, choose your specific priorities.

• What are the things that need to be accomplished for the organisation to achieve its mission?

• Goals or objectives should be designed and worded as much as possible to be specific, measurable, and realistic.

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Operational plansOperational plans

• The specific results expected from departments, work groups, and individuals are the operational goals.

• These goals are precise and measurable. • “Process 150 sales applications each week” or “Publish 20

books this quarter” are examples of operational goals. • An operational plan is one that a manager uses to

accomplish his or her job responsibilities. • Supervisors, team leaders, and facilitators develop

operational plans to support tactical plans. • Operational plans can be a single-use plan or an on-going

plan.

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Operational plansOperational plans

• Single-use plans • Apply to activities that do not recur or repeat. • A one-time occurrence, such as a special sales

program, is a single-use plan because it deals with the who, what, where, how, and how much of an activity.

• A budget is also a single-use plan because it predicts sources and amounts of income and how much they are used for a specific project.

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Operational plansOperational plans• Continuing or on-going plans • Are usually made once and retain their value over

a period of years while undergoing periodic revisions and updates.

• The following are examples of on-going plans: • A policy provides a broad guideline for managers to

follow when dealing with important areas of decision making.

• Policies are general statements that explain how a manager should attempt to handle routine management responsibilities.

• Typical human resources policies, for example, address such matters as employee hiring, terminations, performance appraisals, pay increases, and discipline.

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Operational plansOperational plans• A procedure is a set of step-by-step directions that explains how

activities or tasks are to be carried out. • Most organizations have procedures for purchasing supplies and

equipment, for example. • This procedure usually begins with a supervisor completing a

purchasing requisition. • The requisition is then sent to the next level of management for

approval. • The approved requisition is forwarded to the purchasing

department. • Depending on the amount of the request, the purchasing

department may place an order, or they may need to secure quotations and/or bids for several vendors before placing the order.

• By defining the steps to be taken and the order in which they are to be done, procedures provide a standardized way of responding to a repetitive problem.

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Operational plansOperational plans• A rule is an explicit statement that tells an

employee what he or she can and cannot do.

• Rules are “do” and “don't” statements put into place to promote the safety of employees and the uniform treatment and behaviour of employees.

• For example, rules about tardiness and absenteeism permit supervisors to make discipline decisions rapidly and with a high degree of fairness.

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Tactical plansTactical plans• A tactical plan is concerned with what the lower level

units within each division must do, how they must do it, and who is in charge at each level.

• Tactics are the means needed to activate a strategy and make it work.

• Tactical plans are concerned with shorter time frames and narrower scopes than are strategic plans.

• These plans usually span one year or less because they are considered short-term goals.

• Long-term goals, on the other hand, can take several years or more to accomplish.

• Normally, it is the middle manager's responsibility to take the broad strategic plan and identify specific tactical actions.

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Contingency plansContingency plans• Intelligent and successful management

depends upon a constant pursuit of adaptation, flexibility, and mastery of changing conditions.

• Strong management requires a “keeping all options open” approach at all times — that's where contingency planning comes in.

• Contingency planning involves identifying alternative courses of action that can be implemented if and when the original plan proves inadequate because of changing circumstances.

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Contingency plansContingency plans• Keep in mind that events beyond a manager's

control may cause even the most carefully prepared alternative future scenarios to go awry.

• Unexpected problems and events frequently occur. • When they do, managers may need to change their

plans. • Anticipating change during the planning process is

best in case things don't go as expected. • Management can then develop alternatives to the

existing plan and ready them for use when and if circumstances make these alternatives appropriate.

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Recognizing the Advantages Recognizing the Advantages of Planningof Planning

• The military saying, “If you fail to plan, you plan to fail,” is very true.

• Without a plan, managers are set up to encounter errors, waste, and delays.

• A plan, on the other hand, helps a manager organize resources and activities efficiently and effectively to achieve goals. 63


• The advantages of planning are numerous. Planning fulfils the following objectives:

• Gives an organization a sense of direction. • Without plans and goals, organizations merely react to

daily occurrences without considering what will happen in the long run.

• For example, the solution that makes sense in the short term doesn't always make sense in the long term.

• Plans avoid this drift situation and ensure that short-range efforts will support and harmonize with future goals.

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• Focuses attention on objectives and results. • Plans keep the people who carry them

out focused on the anticipated results. • In addition, keeping sight of the goal

also motivates employees.

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• Establishes a basis for teamwork. • Diverse groups cannot effectively cooperate in

joint projects without an integrated plan. • Examples are numerous: Plumbers, carpenters,

and electricians cannot build a house without blueprints.

• In addition, military activities require the coordination of Army, Navy, and Air Force units.

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• Helps anticipate problems and cope with change. • When management plans, it can help forecast future

problems and make any necessary changes up front to avoid them.

• Of course, surprises — such as the 2011 quadrupling of oil prices — can always catch an organization short, but many changes are easier to forecast.

• Planning for these potential problems helps to minimize mistakes and reduce the “surprises” that inevitably occur.

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• Provides guidelines for decision making. • Decisions are future-oriented. • If management doesn't have any plans for the future,

they will have few guidelines for making current decisions.

• If a company knows that it wants to introduce a new product three years in the future, its management must be mindful of the decisions they make now.

• Plans help both managers and employees keep their eyes on the big picture.

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• Serves as a prerequisite to employing all other management functions. • Planning is primary, because without knowing

what an organization wants to accomplish, management can't intelligently undertake any of the other basic managerial activities: organizing, staffing, leading, and/or controlling.

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Identifying Barriers to Identifying Barriers to PlanningPlanning

• Various barriers can inhibit successful planning.

• In order for plans to be effective and to yield the desired results, managers must identify any potential barriers and work to overcome them.

• The common barriers that inhibit successful planning are:

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• Inability to plan or inadequate planning. • Managers are not born with the ability to plan. • Some managers are not successful planners

because they lack the background, education, and / or ability.

• Others may have never been taught how to plan.

• When these two types of managers take the time to plan, they may not know how to conduct planning as a process.

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• Lack of commitment to the planning process. • The development of a plan is hard work; it is much

easier for a manager to claim that he or she doesn't have the time to work through the required planning process than to actually devote the time to developing a plan.

• (The latter, of course, would save them more time in the long run!)

• Another possible reason for lack of commitment can be fear of failure.

• As a result, managers may choose to do little or nothing to help in the planning process.

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• Inferior information. • Facts that are out-of-date, of poor

quality, or of insufficient quantity can be major barriers to planning.

• No matter how well managers plan, if they are basing their planning on inferior information, their plans will probably fail.

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• Focusing on the present at the expense of the future. • Failure to consider the long-term effects

of a plan because of emphasis on short-term problems may lead to trouble in preparing for the future.

• Managers should try to keep the big picture — their long-term goals — in mind when developing their plans.

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• Too much reliance on the organization's planning department. • Many companies have a planning department

or a planning and development team. • These departments conduct studies, do

research, build models, and project probable results, but they do not implement plans.

• Planning department results are aids in planning and should be used only as such.

• Formulating the plan is still the manager's responsibility.

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• Concentrating on controllable variables. • Managers can find themselves

concentrating on the things and events that they can control, such as new product development, but then fail to consider outside factors, such as a poor economy.

• One reason may be that managers demonstrate a decided preference for the known and an aversion to the unknown. 76


• The good news about these barriers is that they can all be overcome.

• To plan successfully, managers need to use effective communication, acquire quality information, and solicit the involvement of others.

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Thank youThank you

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Managerial planning