Managerial Planning - Web view3/2/2015 · For example the University of Ghana may establish specific goals which may include opening new campuses and designing new attractive programmes

Managerial Planning

DEPARMENT OF INFORMATION STUDIES. UG. INFS212. 2014/2015[Type text] Page 1

Introduction

If you don’t know where you’re going, any road will get you there. (Herbert Hicks).

Perhaps there is also truth in the thought: If you don’t know where you are going no road will get you there.

Whichever view is taken it is clear that individual and organizational activity without a plan is likely to be ineffective.

Planning is the first and a very important function of management. Before any managerial function can be undertaken, the direction, objectives and means of achieving them must be determined. In describing the work of managers many management scholars including Luther Gulick, Ernest Dale, Koontz and O’Donnell have mentioned planning as the most essential. Gulick describes the duties of a manager as POSDCORB, or planning, organizing, staffing, directing, coordinating, reporting and budgeting. Dale classifies them as: planning, organizing, staffing, direction, control, innovation and representation. Koontz and O’Donnell list the following as functions of the manager: planning, organizing, staffing, directing, and controlling. You can observe that while the lists vary, they all include planning which is always placed first. You may recall from the previous lecture that all other functions of management are dependent on planning. This lecture introduces managerial planning and explains planning in the context of an organization.

Planning DefinedTo explain what planning means it will be worthwhile to take look at a few definitions of planning. I begin with the definition offered by DuBrin (2003):

Planning involves setting goals and figuring out ways of reaching them….In planning, a manager looks at the future saying: This is what we want to achieve, and this is how we are going achieve it.

Stoner et al (1992) explain the planning function as follows:

Planning is the process of setting goals and choosing the means to achieve those goals. Without plans, managers cannot know how to organize people and resources effectively.

Kinard says as follows:

Planning is an activity we perform before taking action. It is anticipatory decision making … a process of deciding what to do and how to do it before


action is required. Its purpose is to facilitate progress and improve performance.

According to Hill and McShane (2008)

Planning is a process whereby managers select goals, choose actions (strategies) to attain those goals, allocate responsibility for implementing actions to specific individuals and units, measure the success of actions by comparing actual results against goals and revise plans accordingly.

What we can learn from all these definitions including a lot more we have not cited is that:

Planning is a decision making activity. It involves assessing the present and making decisions about the future direction of an organization.

It is concerned with setting organizational goals and objectives and determining the ways by which they can be achieved.

It involves determining what is to be done and how it should be done.

Planning is anticipatory in nature. This means that a decision has to be made now as to what to do and how to do it before it is actually done.

Planning focuses on desired future results. It is a means of ensuring that the important organizational objectives are accomplished as and when desired.

Following from above, planning involves finding answers to the following questions:

Where are we now?

Where do we want to go?

How do we get there?

How much will it cost us to get there?

How will we know when we have arrived?

You will notice from above that planning follows a step-by-step process for achieving goals and objectives. Let me illustrate this with a practical example.

Assume we plan to travel from Aburi to Nandom

We have to answer the five questions in a step-by-step fashion.

Where are we now? Aburi

Where do we want to go? Nandom

How do we get there? In this case we have several options:


We can go by public transport

We can go by private car

We can go by car to Nsawam and then by train to Kumasi and then by road to Nandom

We can go by bicycle if we have the courage

We can go by air

In each case, we must consider how much it will cost us.

We will have to determine the cost in advance. An estimate of the cost of each option will help us make appropriate decision on how to get there.

How do we know when we have arrived?

The milestones at Nsawam, Kumasi, Techiman, Bole and Wa will tell us we are arriving. The signpost at Nandom will tell us that we have finally arrived.

Essentially, therefore, Planning is a structured process for making important decisions. In the context of an organization, planning provides a direction; it tells everybody what the organization is trying to do, what its priorities are, where it is going and how it is going to get there.

Hill and Mcshane (2008) declare:

It is a process for marshalling resources and deciding who should do what – for allocating roles responsibilities and money. It is also a control mechanism: by comparing actual results against the plan, managers can determine whether the organization is attaining its goals and make adjustments if required.

Planning can be formal or informal. In informal planning nothing is written down, and there is little or no sharing of goals with others in the organization. DuBrin (2003) has noted that informal planning is done in small businesses where the owner-manager has a vision of where he or she wants the business to go and how to get there and that although it is more common in smaller organizations informal planning does exist in some large organizations as well. It is important to mention also that there are small businesses which may have sophisticated planning processes and formal plans. One limitation of informal planning is its lack of continuity.

Formal planning on the other hand defines specific goals covering a period of years. These goals are written and shared with organizational members. Also specific action programmes exist for achieving these goals; that is, managers clearly define the path they want to take to get the organization and various work units from where they are to where they want to be.


Purpose of PlanningRobbins (2005), has given four reasons why planning is important:

Planning provides direction to managers and non-managers alike. When employees know where the organization or work unit is going and what they must contribute to reach goals, they can coordinate their activities, cooperate with each other, and do what it takes to accomplish those goals. Without planning, departments and individuals might work at cross purposes, preventing the organization from moving efficiently towards its goals.

Planning reduces uncertainty by forcing managers to look ahead, anticipate change, consider the impact of change and develop appropriate responses. While planning cannot eliminate change or uncertainty, the manager needs to plan in order to anticipate change and develop the most effective response to it.

Planning reduces overlapping and wasteful activities. When work activities are coordinated around established plans redundancy can be minimized. Furthermore when means and ends are made clear through planning, inefficiencies become obvious and can be corrected or eliminated.

Planning establishes the goals and standards that are used in controlling. If we are unsure of what we are trying to accomplish, how can we determine whether we have actually achieved it? In planning we develop the goals and plans. Then through controlling, we compare actual performance against the goals; identify any significant deviations, and then take necessary corrective action. Without planning there would be no way to control.


Classifying PlansIntroduction The outcome of every planning endeavour is a plan which Chandan (2002), defines as action statements proposed to help the organization achieve its objectives. This lecture takes a look at the various types of plans organizations use to achieve their goals.

Types of Plans

Robbins (1996) classifies plans in terms of their breadth, or where they are formulated in an organization (strategic, tactical and operational) time frame (long-term and short-term); specificity (directional and specific) and frequency of use (single-use and standing plans.)


Short and long range plansAs the names suggest short-range plans and long-range plans cover relatively short or long periods of time. Terry (1994) has pointed out that differences of opinion exist regarding the period that qualifies certain planning as long range and other planning as short range planning. However, he acknowledges that the generally accepted practice is to regard any plan covering periods of two years or less as short-range while a plan covering five years and over as long-range. Plans dealing with over two years and less than five years are termed short or long, depending upon the enterprise but the name intermediate- range or medium term planning might be more satisfactory.

Specific and directional plans They are established to achieve a specific objective and are terminated when the objective is accomplished. Specific plans have clearly defined objectives. It is not ambiguous and they are easy to understand. For example the University of Ghana may seek to increase student intake by 3% next academic year. To achieve this, the University might establish specific procedures, budget allocations and schedule of activities to reach that objective. These actions represent specific plans.

Directional plans identify general guidelines. They provide focus but do not tie managers to specific objectives or courses of action. In the above example the University may decide not to follow a specific plan to increase admissions by 3% next academic year. Rather the University might opt for a directional plan to increase admission by 1 to 2% every year for say five years.

Standing and single-use plans When plans are categorized according to their frequency of use, there are two types: Standing plans and single-use plans.

Standing Plans

They are designed to deal with organizational issues or problems that managers face frequently. In this sense the manager avoids the need to re-invent the wheel every time a particular situation occurs. For example managers may be concerned about employees’ absenteeism, a problem that may occur often in the entire workforce. The manager may decide to develop a standing policy to implement automatically each time an employee is late for work. Standing plans include policies, procedures and rules. Let’s examine each in turn.

Policies: are general statements that guide decision making. They define the boundaries within which decisions are made. Policies provide guidance to managers who must make decisions about circumstances that occur frequently within the organization. Most organizations establish policies to provide direction for decision-making. For example the University of Ghana has policies which govern sick leave,


vacation leave, study leave and benefit options. The Academic Affairs Directorate of the University maintain policies on admission to various academic programmes, grade appeals, the minimum period allowed to complete a programme etc.

The Human Resource and Organizational Development Directorate (HRODD) have policies in the areas of selecting, training, compensating employees, working conditions, employee service and industrial relations. The procurement office establishes policies for procurement, inventory management and quality control.

Let’s look at a few examples of policies.

When recruiting employees, consider only those candidates who are technically competent or show promise of becoming technically competent and who show good personal character and motivation.

Sexual harassment will not be tolerated in any form in this institution, whether committed by a Senior Member, a Junior Member, a Senior Staff, or a Junior Staff.

No employees at the procurement office shall accept gifts and/or

entertainment outside the organization that are substantial enough in value to cause undue influence over one’s decisions on behalf of the organization.

Policies require interpretation in their use by the manager. They also allow him a measure of discretion in making decisions. For example a manager attempting to implement policy regarding employment would have to interpret technical competence, show promise of becoming technically competent, and perhaps be able to measure technical competence before he can select the most qualified candidate.

Rules. Rules are specific statements of what may or may not be done. Rules, according to Lewis et al (2001) are the strictest type of standing plan found in organizations”. Quite commonly policy is confused with a rule. Unlike policy a rule is definite; it does not permit organizational members to exercise individual discretion. Instead rules specify what actions will be taken or will not be taken and what behaviour is allowed or prohibited. For instance No Smoking means just that. No interpretation is required. A rule is intended always to be applied the same way.

The University of Ghana has rules on examinations, the minimum grade point average necessary to obtain a particular class of degree, the period within which a grade can be appealed after a course is completed etc.

Some of the rules governing the conduct of examinations include the following:


All candidates are expected to present valid university identity cards for inspection during the course of examinations.

Chief invigilators should make announcements at the beginning of every session of examination to request students who do not have valid University I.D cards to report to the Academic Affairs Directorate for Provisional ID cards

Candidates should be seated 30 clear minutes before the start of examinations.

No mobile phones are allowed in examination halls.

These rules are very specific and clear. They prescribe for students and examiners what they should and should not do

Procedures: A Procedure is another type of standing plan. A procedure is a series of related tasks that make up the chronological sequence and the established way of performing the work to be accomplished. They guide action rather than thinking. In other words procedures are designed to give specific instructions on how to complete a recurring task. Normally a procedure would include how each task will take place, when it will take place, and by whom it is to be performed. Most organizations maintain policies and operational procedures. In the words of Dunham the major distinguishing feature of a procedure is that it specifies a chronological series of steps that may be taken to accomplish a particular task.

For instance the organization for which you work may have a policy which states that

Employees who complete a degree programme or any course of study which is considered beneficial to the organization must be reimbursed for their cost of study, provided they complete the course successfully.

An employee seeking re-fund may be asked to follow a procedure such as

Pick a claim form from the Human Resource Division.

Complete forms in triplicate and attach all necessary documents.

Submit the claim forms duly completed and signed by you to your unit head.

After vetting and granting approval for payment, the unit head forwards the forms to the Human Resource Division for attention.

Human Resource Division checks application for authenticity.

Forms are forwarded to Accounts where audit checks are made before clearance is given for payment.

Accounts issues you with a cheque covering all expenses you incurred whilst in school


The University of Ghana’s admission procedure may include the following actions:

The University advertises its programmes to be offered in a particular year.

Prospective candidates/students would be requested to secure / purchase application forms, complete them as directed and submit the form together with the necessary attachments to the appropriate office.

The University determines the number of candidates to be admitted to each programme.

Admission forms are sorted out according to programmes

Admission Board meets to select qualified students to programmes.

Admission Officer writes to qualified students offering them admission to specific programmes in the University of Ghana.

You see then that a procedure such as outlined above would spell out the series of steps that should be taken in respect of admissions.

Single-use plans.

Unlike standing plans single-use plans are designed to address a specific organizational situation. They are plans for attaining a one-time goal. There are two types of single-use plans: Budgets and Projects.

Budgets. A budget describes the resources that are allocated to implement a plan. It is a financial plan that covers a specified period of time. Budgets determine how funds will be raised and applied for procuring resources such as labour, raw materials etc.

The budget, like all plans, is forward looking. Nothing can be done about the past and what you are doing in budgeting is planning for things that are to happen.

It is the normal practice for organizations to prepare budgets which span a one-year period. When a specific budget period ends, the value of that budget as a planning device is finished even though it may form the basis for the budget for the following year. (Chandan: 2002).

Projects. A project is a single-use plan designed to carry out a special activity, solving a problem or achieving a group of related goals. This project is not intended to be in existence over the entire life of the organization like standing plans.

To solve the accommodation problem on campus for instance the University may embark on a project to build new halls of residence for students. The Department of


Information Studies may want to establish three more computing laboratories for its students.

All these are one-time projects regardless of the time it takes to complete a particular project. Once the programme goals are achieved, that programme is discontinued.

Characteristics of a good PlanKinard holds the view that every sound business plan must have these characteristics: the plan must be objective; it must be able to project into the future; it must be flexible, stable. comprehensive, clear and simple.

Plans should first of all be based on objective thinking. It should be factual, logical and realistic. It also should be directed to achieving organizational goals rather than personal objectives. Since a plan is forecast of some future action, it must have the quality of being able to project into the future.

Plans must be flexible. Because no one can see into the future planning must me flexible. Plans must adjust smoothly and quickly to changing conditions without seriously losing their effectiveness. The more difficult it is to predict the future, the more flexible the plans must be.

Plans must be stable. Stability is related to flexibility. A stable plan will not have to be abandoned because of long-term changes in the company’s situation. It may be affected by long-range developments, but it should not change materially from day to day.

A business plan must be comprehensive enough to provide adequate guidance. It should cover everything required of people, but not in such detail that it inhibits initiative.

Although a good plan must be comprehensive, it should also be simple. A plan should not be ambiguous. Lack of clarity makes understanding and implementing difficult.

Good access to information: For any organization to successfully plan, it needs to access information which will enable it to assess all the required options. In addition, the organization needs to be able to determine the extent to which its plans are being achieved. This intelligence gathering will be hindered by poor access to information.

Commitment: Authorities have noted that many management tasks fail through inadequate commitment. This commitment is especially important in a task or duty as vital to organizational success as planning.


Levels of Plans Strategic Plans

Strategic planning is the process of analyzing and deciding on the organization’s mission objectives and courses of action, and major resources allocations.

The outcome of strategic planning is strategic plan. Strategic plans generally address long-range goals or objectives. Upper level management produces strategic plans because they are responsible for directing organizations.

In effect, a strategic plan states the corporate mission, sets direction and provides momentum for activities at functional levels. In addition, strategic plans may include an outline of activities for reaching corporate goals, although great detail is not required. What is important in strategic planning is that strategic goals and objectives must be communicated effectively to appropriate personnel and incorporated within lower-level plans.

Unlike tactical and operational planning strategic planning or top management planning is primarily concerned with solving long-term problems associated with external, environmental influences.

A manager engaged in strategic planning would ask these questions

What business are we in?

What business should we be in?

Where will we be in ten years if we continue doing what we are now doing?


Typically, a strategic plan encompasses a time frame of five or more years. Projects and tasks included within strategic plans generally require a year of more to complete, or even a year or more before project activities begin.

Tactical PlansTactical planning is the process of making detailed, medium term decisions concerning what to do, who will do it, and how it will be done. The outcome of tactical planning is a tactical plan. Departmental managers or middle level managers in an organization are often involved in tactical planning. This means that tactical planning occurs at the middle level in the organization’s hierarchy. Generally the process includes:

developing annual budgets for each department,

choosing specific means of implementing strategic plans,

deciding on courses of actions for improving current operations. In this sense a tactical plan describes specific activities for implementing the strategic plan. Tactical planning deals with work sequences and efficient use of resources.

Operational Plans An operational plan adds another level of detail to planning. The activities described in a tactical plan are defined further to include those who perform each task and specific work schedules. That is, an overall operation is broken down into smaller tasks; and start and completion dates are included, as well as quantitative criteria for completion success.


Operational planning is concerned with the efficient, day-to-day use of resources allocated to a department manager’s area of responsibility.

Operational plans generally are more tangible and less conceptual than strategic or tactical plans, and thus are not difficult to implement. Operational tasks can be divided into segments; each segment can be assigned to a specific worker or functional position within the organization.

The tactical plan includes a statement of resource requirements. These requirements can be used to develop a step-by-step sequence of tasks that encompasses allocations of equipment, personnel, and facilities. As each step is completed, then, the project proceeds along a course of action first described as a strategic goal.

Information Needs Information is needed for planning activities at all the three levels of the organization’s hierarchy : supervisory level, middle management level and top levels of managerial hierarchy.

Operational Level

You will recall that the operational level is the domain for lower-level managers or supervisors such as foremen who must ensure that specific tasks are planned and carried out properly. At this level the information needed by managers should be well-defined, detailed and accurate. Dunham has noted that lower level managers use information frequently, so it is often available and reported routinely through their organization’s data-processing system. To meet the needs of operating managers, the organization’s information system must provide a variety of information designed to help them direct and control the resources and activities for which they are responsible.

A manager supervising salaries for instance may need operational information concerning the daily rate payable to employees, the hours worked each week by employees, their rate of pay per hour, details of deductions and for the purpose of wage analysis, details of the time each man spent on individual jobs during the week. In this example the information is required weekly but, more urgent operational information, such as the amount of raw materials required in a production process may be needed daily or hourly. A manager in the human resource division may require figures on any job openings on daily or hourly basis, information on matters such as attendance records, turn-over records, safety, and so on.

Most of the information needed at this level is generated internally and includes all printouts of the organization’s information system such as control and monitoring reports , investigative reports, budgets job descriptions, organizational charts, correspondence, regular and detailed transaction reports, procedures manuals, and the like. Operating managers need this type of information to plan and implement


production, to exercise inventory control, and to manage credit and other types of activities at lower levels of this organization.

Managers at this level are concerned with the current and future performance of their units and generally require summarized information that compares present and past performance. What they need mostly is internal information, but they also require information from some external sources.

Production managers need timely information about inventories, short-term purchasing requirements, materials and labour costs, productivity measurements, budgetary control, labour turnover statistics within the department, schedules to be met and so on. Much of the information needs at this level is obtained through interpersonal interaction.

Senior Managers / Top-Level Management

Managers at the top level devote much of their time on strategic planning. They use strategic information to plan the objectives of their organization and to assess whether the objectives are being met.

Because strategic planning deals with broad policies and goals, senior managers have a crucial need for information that addresses their organization’s relationship to its environment. Strategic planners usually need summarized, aggregated information, much of it obtained from external sources. For strategic planning, upper management requires information regarding general economic conditions, technological developments, actions of competitors, political and legal developments and so on.

To meet the needs of senior managers, the information system in the organization must gather, process, and provide information about conditions outside an organization. External information is obtained from formal or informal sources. Formal sources include published reports, government statistics, scientific and technical abstracts, commercial data, banks, special investigations. Examples of informal sources are discussions, social contacts of all types, media coverage, conferences, business and holiday trips at home and abroad, correspondence.

It is important that whatever the information and whatever the managerial level at which it is needed, the organization’s information system must provide it effectively and efficiently to those in need.

The Planning ProcessIntroductionDuBrin (2003) describes planning as a complex and comprehensive process involving a series of overlapping and interrelated elements or stages, including strategic, tactical, and operational plans.


Define the present situation

Establish goals

Develop premises

Determine a course of action

Develop budgets

Implement plans

Control the plans

You have learned that strategic planning establishes master plans that lead the organization towards its established goals. Tactical planning which supports strategic planning translates strategic plans into specific goals and plans that are most relevant to a particular organizational unit. Operational planning identifies the specific procedures and actions required at lower levels in the organization.

The steps in the planning process


Planning ProcessThe following are the steps any manager is required to follow in planning

define the present situation

establish goals and objectives,

develop premises upon which the plan should be based

develop action plans to reach goals and objectives

develop budgets

implement the plans

control the plans

Step One Define the Present SituationThis is a very important step in the planning process. It is at this stage that managers create a foundation from which they will develop their plans for the next planning period. It is important that the manager defines the present situation which includes measuring success and examining internal capabilities and external threats. Success in this regard means the achievements of organizational goals. Internal capabilities refer to the strengths and weaknesses of the organization or the unit engaged in planning.

Dunham (1990) suggests that because the past is instrumental in determining where an organization expects to go in the future, managers at this point must understand their


organization and its history. The further you look back, the further you can see ahead.

Step Two Establishing GoalsThe second step in planning is to establish goals and identify objectives that contribute to the attainment of goals. In this step specific goals are established. Just as your goal is to make a first class, managers set specific goals at various levels in the organization’s hierarchy.

For example the University of Ghana may establish specific goals which may include opening new campuses and designing new attractive programmes. Objectives to support these goals would include establishing target dates for opening new campuses, designing new programmes and advertising these programmes.

Step Three Establishing PremisesDuring the third step of the planning process, managers establish the premises, or assumptions, on which their action statements are built. Dunhan (1990) points out that the quality and success of any plan depends on the quality of the assumptions on which it is based. Even one inappropriate assumption can produce a poor or unrealistic decision. Throughout the planning process, assumptions must be stated, monitored, and updated as and when necessary.

Managers rely heavily on information to plan. They obtain information by scanning their organization’s internal and external environments. They use this information to make assumptions about the likelihood of future events. In the next phase of the planning process, they will develop action statements based on these assumptions. Developing premises therefore, involves forecasting what is likely to happen inside and outside an organization.

Step Four Determine a Course of ActionIn the fourth stage of the planning process, managers decide how to move from their current position toward their goal. They develop an action statement that specify what needs to be done, when, how, and by whom. The way in which the organization gets from its current position to its desired future position is determined by the course of action that managers choose. Choosing a course of action involves: determining alternatives by drawing on research, experimentation, and experience; evaluating alternatives in the light of how well each would help the organization reach its goals or approach its desired domain; and selecting a course of action after identifying and carefully considering the merits of each alternative.


Step Five Develop BudgetsPlanning usually results in action plans that require money to implement. Money must be budgeted for every element included in the action plan. The budget would indicate how much money a manager can afford to spend on each action plan.

Step Six Implement plansIf plans are developed, they should be implemented for the benefit of the organization. The planning process is considered incomplete until the plan is accepted implemented.

Step Seven Control PlansPlanning does not end with implementation because plans may not always proceed as conceived.

The control process (which is the subject of Unit 6) measures progress towards goal attainment and indicates corrective action if too much deviation is detected.

Through the controlling function, mangers observe activities which go on in the organization, compare it to the goals formulated during the planning process, and take corrective action if they observe unexpected and unwanted deviations.

Benefits and Limitations of PlanningBenefits of PlanningManagement literature provides some benefits if planning.

Planning enhances communication

This is particularly true when a plan is written. All participants can refer to the same information, understand the intent, and identify activities to be completed. Again employees need information to help them solve work related problems. Good plans provide a framework, giving people the information they need and want. Plans that specify individuals’ exact areas of accountability convey messages much more forcefully than do messages directed to entire groups.

Planning provides a framework for the organization

Plans establish desired results and identify the work necessary to accomplish them. When managers organize they determine what tasks are needed to accomplish their plans, who should do them, and how people can work together most effectively.

Resources usually are allocated and utilized more effectively


Equipment and supplies can be used more efficiently because only those tasks associated with a plan require action. With the plan as a guide, only those items necessary to support authorized actions need be purchased and stocks.

Plans include start and completion times for all events and elements. When these factors are known, control can be enhanced. Standards of performance can be defined and implemented on the basis of stated plans.

Plans help monitor work

Work is often evaluated after it has been completed. If costly mistakes are made, the causes can be identified and prevented from happening again.

Plans tend to provide direction for the reduction of unproductive work

With a plan is in place, efforts of contributors can be directed toward accomplishment of identified results.

Plans help motivate employees

People work harder when they know what is expected of them. Planning provides an objective-focused performance. When a plan is tied to performance standards and reward systems it encourages employees to work better.

Planning helps shape the future

Unless managers know what they want to accomplish, they go through their daily activities without a sense of direction. Plans help managers to project into the future. When managers clarify their goals they are more likely to achieve them.

Limitations of PlanningThe following are some potential limitations of planning

Usefulness of a plan is limited to the extent of the accuracy of the information it provides

One limitation of planning is the accuracy of information and facts regarding the future. We have already noted that planning concerns future activity. The usefulness of a plan is affected by the subsequent correctness of the assumptions regarding the future which were used in formulating the plan. No manager can predict completely and accurately the event of the future. If conditions under which the plan is drawn change significantly from those assumed by the planner, much of the value of the plan may be lost.

Planning can be expensive

Planning may require significant amounts of time and effort, which involve business funds. Obviously, plans are designed to provide a return on investment. There are professionals, however, who believe that the resources devoted to planning might be better used in performing actual work.


Employees tend to resist change

By nature, people resist change. Thus, to many employee, plans are threatening and represent sources of pressure and tension. For these people, plans mean that future change is certain and they must prepare to adjust to new situations. Those who feel this way often believe that just the act of planning accelerates the rate of change.

Planning can be overdone

Planning efforts may turn out to be too much of a good thing. Planners must keep in mind that their function is to produce a plan within a specific timeframe. There can be a tendency among planners to attempt to foresee and prepare for every emergency and to eliminate every risk. Such planners collect more data and require more reviews and modifications than are necessary, as well as prepare too many formal reports.

Planning stifles initiative

It is believed that planning sometimes stifles employee initiative and forces managers to go into rigid mode of performing their work. This may tend to make the work of the manger more difficult than it need be.

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Management by Objectives (MBO) The concept was made popular through the writings of Peter Drucker, a famous writer in management. He emphasized that business performance required that each job be directed towards the objectives of the whole business.

Lewis et el (2001) refers to MBO as a special planning technique which provides a method of developing personalized plans that guide the activities if individual members of the organization. The concept assumes that involving subordinates in the planning process leads to commitment and if employees participate in setting goals and objectives as well as setting standards of measurement of performance then such employee would be motivated to perform better, and in a manner that directly contributes to the achievement of organizational objectives. The philosophy underlying this method of planning is that if all corporate goals are to be attained each organizational unit and employee must work towards that end.

Essentially, therefore, MBO is both an aid to planning as well as a motivating factor for employees. The primary purpose of MBO is to improve the effectiveness of the individual and the organization as a whole.

In its simplest terms, MBO involves formal agreement between a supervisor and subordinates concerning:

the subordinate’s performance objectives for a given time period.

the plans through which they will be accomplished


standards for measuring whether or not they have been accomplished and

procedures for reviewing results.

Although this approach is mostly discussed in the context of profit oriented companies, MBO is also a valuable management tool for non profit organizations.

The MBO ProcessThe MBO process involves a series of steps.

The process starts when employees and managers develop goals which become the foundation for developing their work plans.

Once the employee and manager agree on goals they identify the criteria for assessing work performance.

Step three requires that the employee formulates and implements action plans which he considers necessary to achieve the goals.

Then at intervals during the normal operating period, the worker and the manager check to see if the objectives are being reached.

At the end of the normal operating period the worker’s performance is established, judged by the extent to which the worker reached the objectives.

The employee is either rewarded or not, depending performance. Once the cycle is complete the employee establishes a new set of objectives for the next MBO cycle.

How can MBO be Implemented SuccessfullyEstablishing an MBO programme does not assure that individual employee will automatically be integrated into the overall plan of the organization.

Factors which are essential to the success of an MBO programme include:

Top management must openly support the programme and must establish overall organizational goal.

The goals must take into consideration the future economic outlook, the firm’s strengths, weaknesses and its opportunities and problems.


Statement of goals should be clear, concise and consistent with policies procedures and other plans adopted by the company.

Managers and subordinates together must develop and agree on each individual’s goals. Both managers and subordinates must feel that the individual objectives are just and appropriate if each party is to seriously regard them as guide for action.

Subordinates must be given equal voice in the setting of objectives.

Supervisors must be trained properly in the process and mechanics involved.

Objectives must be modified as and when appropriate.

Employee performance should be carefully evaluated against established objectives. This evaluation helps determine whether the objectives are fair and if appropriate means are being used to attain them.

Management must follow through an employee performance evaluations by rewarding employees accordingly.

Benefits and Limitations of MBOLewis et al summarize the benefits and limitations of MBO as follows:

Benefits

Results in better overall management and the achievement of higher performances levels.

Forces managers to establish standards of performance that can be measured.

Encourages participation of individual employees and managers in establishing objectives.

Facilitates the process of control.

Provides opportunity for career development for managers and employees.

Let individuals know what is expected of them.

Improve communication within the organization.

Help identify staff for promotion.

Facilitate the organization’s ability to change.

Increase motivation and commitment of employees.


Disadvantages

Requires time and commitment of top-level managers diverting their activities away from other important activities.

May require excessive paperwork, thereby complicating administrative processes.

Managers may fail to support the performance fully.


Documents

Managerial Planning - Web view3/2/2015 · For example the University of Ghana may establish specific goals which may include opening new campuses and designing new attractive programmes