Essentials of Management
Foundation of Planning
Planning A primary managerial activity that involves: Defining the organizations goals Establishing an overall strategy for achieving those goals Developing plans for organizational work activities. Types of planning Informal: Not written down, short-term focus; specific to an organizational unit. Formal: Written, specific, and long-term focus, involves shared goals for the organization. Purposes of Planning Provides direction Reduces uncertainty Minimizes waste and redundancy Sets the standards for controlling Elements of Planning Goals (also Objectives) Desired outcomes for individuals, groups, or entire organizations Provide direction and evaluation performance criteria Plans Documents that outline how goals are to be accomplished Describe how resources are to be allocated and establish activity schedules Types of Goals Financial Goals Are related to the expected internal financial performance of the organization. Strategic Goals Are related to the performance of the firm relative to factors in its external environment (e.g., competitors). Stated Goals versus Real Goals Broadly-worded official statements of the organization (intended for public consumption) that may be irrelevant to its real goals (what actually goes on in the organization).
Prepared by Shoaib Waqas
Page 1
Essentials of Management
Types of Plans Strategic Plans Apply to the entire organization. Establish the organizations overall goals. Seek to position the organization in terms of its environment. Cover extended periods of time.
Prepared by Shoaib Waqas
Page 2
Essentials of Management
Operational Plans Specify the details of how the overall goals are to be achieved. Cover short time period. Long-Term Plans Plans with time frames extending beyond three years Short-Term Plans Plans with time frames on one year or less Specific Plans Plans that are clearly defined and leave no room for interpretation Directional Plans Flexible plans that set out general guidelines, provide focus, yet allow discretion in implementation.
Single-Use Plan A one-time plan specifically designed to meet the need of a unique situation. Standing Plans Ongoing plans that provide guidance for activities performed repeatedly.
Establishing Goals and Developing Plans
Traditional Goal Setting Broad goals are set at the top of the organization. Goals are then broken into sub goals for each organizational level. Assumes that top management knows best because they can see the big picture. Goals are intended to direct, guide, and constrain from above. Goals lose clarity and focus as lower-level managers attempt to interpret and define the goals for their areas of responsibility.
Prepared by Shoaib Waqas
Page 3
Essentials of Management
Maintaining the Hierarchy of Goals MeansEnds Chain The integrated network of goals that results from establishing a clearly-defined hierarchy of organizational goals. Achievement of lower-level goals is the means by which to reach higher-level goals (ends). Management By Objectives (MBO) Specific performance goals are jointly determined by employees and managers. Progress toward accomplishing goals is periodically reviewed. Rewards are allocated on the basis of progress towards the goals. Key elements of MBO: Goal specificity, participative decision making, an explicit performance/evaluation period, feedback
Prepared by Shoaib Waqas
Page 4
Essentials of Management
Reason for MBO Success Top management commitment and involvement Potential Problems with MBO Programs Not as effective in dynamic environments that require constant resetting of goals. Overemphasis on individual accomplishment may create problems with teamwork. Allowing the MBO program to become an annual paperwork shuffle. Steps in Goal Setting 1) Review the organizations mission statement. Do goals reflect the mission? 2) Evaluate available resources. Are resources sufficient to accomplish the mission? 3) Determine goals individually or with others. Are goals specific, measurable, and timely? 4) Write down the goals and communicate them. Is everybody on the same page? 5) Review results and whether goals are being met. What changes are needed in mission, resources, or goals?
Prepared by Shoaib Waqas
Page 5
Essentials of Management
Criticisms of Planning Planning may create rigidity. Plans cannot be developed for dynamic environments. Formal plans cannot replace intuition and creativity. Planning focuses managers attention on todays competition not tomorrows survival. Formal planning reinforces todays success, which may lead to tomorrows failure. Effective Planning in Dynamic Environments Develop plans that are specific but flexible. Understand that planning is an ongoing process. Change plans when conditions warrant. Persistence in planning eventually pay off. Flatten the organizational hierarchy to foster the development of planning skills at all organizational levels.
Prepared by Shoaib Waqas
Page 6
Essentials of Management
Establishing a formal planning department Groups of planning specialists who help managers write organizational plans. Planning is a function of management; it should never become the sole responsibility of planners. Involving organizational members in the process Plans are developed by members of organizational units at various levels and then coordinated with other units across the organization.
Contingency Factors in A Managers Planning Managers level in the organization Strategic plans at higher levels Operational plans at lower levels Degree of environmental uncertainty Stable environment: specific plans Dynamic environment: specific but flexible plans Length of future commitments Commitment Concept: current plans affecting future commitments must be sufficiently long-term to meet those commitments.
Prepared by Shoaib Waqas
Page 7
