Foundations of Planning

 What is Planning
 Why do Manager Plan
 Goals and Plans
 Setting Goal and Developing Plans
Decision Making Process
 What is Planning?
▪ Planning involves defining the organization’s goals, establishing strategies for
achieving those goals, and developing plans to integrate and coordinate
work activities. It’s 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 plans exist
for achieving these goals.

3
Why Do Managers Plan?

First, planning provides direction to managers and non managers alike.

Next, planning reduces uncertainty by forcing managers to look ahead,
anticipate change, consider the impact of change, and develop appropriate
responses. Planning minimizes waste and redundancy. When work
activities are coordinated around plans, inefficiencies become obvious and
can be corrected or eliminated. planning establishes the goals or
standards used in controlling. When managers plan, they develop goals
and plans. When they control, they see whether the plans have been
carried out and the goals met.
4
Planning and Performance

▪ Formal planning is associated with positive financial results—higher profits,

higher return on assets, and so forth. Second, it seems that doing a good job
planning and implementing those plans play a bigger part in high performance
than does how much planning is done.

▪ When external forces—think governmental regulations or powerful labour

unions—constrain managers’ options, it reduces the impact planning has on an
organization’s performance. Finally, the planning-performance relationship
seems to be influenced by the planning time frame.

5
Goals & Plans
▪ Goals (objectives) are desired outcomes or targets. They guide management
decisions and form the criterion against which work results are measured.
That’s why they’re often described as the essential elements of planning.

▪ Plans are documents that outline how goals are going to be met. They usually
include resource allocations, schedules, and other necessary actions to
accomplish the goals.

6
Types of Goals

Stated Goals
▪ The goals just described are stated goals—official statements of what an
organization says, and what it wants its stakeholders to believe, its goals are.
However, stated goals—which can be found in an organization’s charter,
annual report, public relations announcements, or in public statements made by
managers—are often conflicting and influenced by what various stakeholders
think organizations should do.
7
Types of Goals

Real Goals

▪ Organization’s real goals—those goals an organization actually pursues -

observe what organizational members are doing. Actions define priorities. For
example, universities may say their goal is limiting class sizes, facilitating
close student-faculty relations, and actively involving students in the learning
process, but then they put students into 300+ student lecture classes! Knowing
that real and stated goals may differ is important for recognizing what you
might otherwise think are inconsistencies.

8
 Goals & Plans
▪ For instance, Nike’s goal is “delivering inspiration and innovation to every athlete.”
Canadian company EnCana’s vision is to “be the world’s high performance
benchmark independent oil and gas company.” Deutsche Bank’s goal is “to be
the leading global provider of financial solutions, creating
lasting value for our clients, our shareholders and people and the communities
in which we operate.”

9
Types of Plans

10
Types of Plans

Strategic Plans are plans that apply to the entire organization and establish the organization’s overall
goals. Plans that encompass a particular operational area of the organization are called Operational
Plans. These two types of plans differ because strategic plans are broad while operational plans are
narrow.

We define Long-Term plans as those with a time frame beyond three years. Short-Term plans cover
one year or less. Any time period in between would be an intermediate plan. Although these time
classifications are fairly common, an organization can use any planning time frame it wants.

11
Types of Plans
▪ Specific Plans are clearly defined and leave no room for interpretation. A
specific plan states its objectives in a way that eliminates ambiguity and
problems with misunderstanding. For example, a manager who seeks to
increase his or her unit’s work output by 8 percent over a given 12-month
period might establish specific procedures, budget allocations, and schedules of
activities to reach that goal.
▪ However, when uncertainty is high and managers must be flexible in order to
respond to unexpected changes, directional plans are preferable. Directional
Plans are flexible plans that set out general guidelines. They provide focus but
don’t lock managers into specific goals or courses of action.
12
Types of Plans

Some plans that managers develop are ongoing while others are used only once. A Single-
use Plan is a one-time plan specifically designed to meet the needs of a unique situation. For
instance, when Walmart wanted to expand the number of its stores in China, top-level
executives formulated a single-use plan as a guide. In contrast, Standing Plans are ongoing
plans that provide guidance for activities performed repeatedly. Standing plans include
policies, rules, and procedures.

13
Setting Goals and Developing Plans
These goals can be set either through a traditional process or by using management by objectives.
In traditional goal setting, goals set by top managers flow down through the organization and
become sub goals for each organizational area. This 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 guide individual employees as they work to achieve those assigned goals.

14
Setting Goals and Developing Plans

When the hierarchy of organizational goals is clearly defined, as it is at

Carrier-Carlyle Compressor, it forms an integrated network of goals, or a
means-ends chain. Higher level goals (or ends) are linked to lower-level goals,
which serve as the means for their accomplishment. In other words, the goals
achieved at lower levels become the means to reach the goals (ends) at the next
level. And the accomplishment of goals at that level becomes the means to
achieve the goals (ends) at the next level and on up through the different
organizational levels. That’s how traditional goal setting is supposed to work.

15
Management By Objectives
Many organizations use management by objectives (MBO), a process of setting
mutually agreed-upon goals and using those goals to evaluate employee
performance. If Managers were to use this approach, they would sit down with
each member of their team and set goals and periodically review whether progress
was being made toward achieving those goals. MBO programs have four
elements: goal specificity, participative decision making, an explicit time period,
and performance feedback.

16
Steps in Management By Objectives (MBO)
1. The Organization’s overall objectives and strategies are formulated.
2. Major objectives are allocated among divisional and departmental units.
3. Units managers collaboratively set specific objectives for their units with their managers.
4. Specific objectives are collaboratively set with all department members.
5. Action plans; defining how objectives are to be achieved, are specified and agreed upon by managers
and employee.
6. The action plans are implemented.
7. Progress toward objectives is periodically reviewed, and feedback is provided.
8. Successful achievement of objectives is re-inforced by performance-based rewards.

17
Characteristics of Well-Written Goals.
Goals aren’t all written the same way. Some are better than others at making the desired outcomes clear.
Steps In Goal Setting. Managers should follow five steps when setting goals.

1. Review the organization’s mission, or purpose.

2. Evaluate available resources.
3. Determine the goals individually or with input from others
4. Write down the goals and communicate them to all who need to know.
5. Review results and whether goals are being met.

18
Steps in Goal Setting
1. Review the organization’s mission, or purpose.

A mission is a broad statement of an organization’s purpose that provides an overall guide to what
organizational members think is important. Managers should review the mission before writing goals
because goals should reflect that mission.

2. Evaluate Available Resources

You don’t want to set goals that are impossible to achieve given your available resources. Even
though goals should be challenging, they should be realistic. After all, if the resources you have to
work with won’t allow you to achieve a goal no matter how hard you try or how much effort is
exerted, you
shouldn’t set that goal. 19
Steps in Goal Setting
3. Determine the goals individually or with input from others.
The goals reflect desired outcomes and should be congruent with the organizational mission and goals
in other organizational areas. These goals should be measurable, specific, and include a time frame for
accomplishment.
4. Write down the goals and communicate them to all who need to know.
Writing down and communicating goals forces people to think them through. The written goals also
become visible evidence of the importance of working toward something.
5. Review results and whether goals are being met.
If goals aren’t being met, change them as needed.

20
Developing Plans
The process of developing plans is influenced by three contingency factors and by
the planning approach followed.

Contingency Factors in Planning.

Three contingency factors affect the choice of plans: Organizational Level,
Degree of Environmental Uncertainty, and Length of Future Commitments.

21
Developing Plans
For the most part, lower-level managers do operational planning while upper-level
managers do strategic planning.
The second contingency factor is environmental uncertainty. When uncertainty is
high, plans should be specific, but flexible. Managers must be prepared to change
or amend plans as they’re implemented. At times, they may even have to abandon
the plans.
The last contingency factor also is related to the time frame of plans. The
commitment concept says that plans should extend far enough to meet those
commitments made when the plans were developed. Planning for too long or too
short a time period is inefficient and ineffective.
22