PLANNING Management Concepts

Planning Primary function of management Prerequisite of effective management Making decisions regarding what to do, when to do, where to do, who is to do and how to do Blueprint for future course action Planning – Process Plan- outcome Management Concepts

What is planning Identifying and selecting appropriate goals and courses of action for an organization. The organizational plan that results from the planning process details the goals and specifies how managers will attain those goals Management Concepts

Contd/- To perform the planning task, managers: Establish where an organization is at the present time Determine its desired future state Decide how to move it forward to reach that future state Management Concepts

Features Primary function Adaptive to environment Future oriented Goal oriented Pervasive Intellectual process Efficient Flexible Involves decision making Feedback Management Concepts

Advantages of Planning It gives direction to managers and nonmanagers alike. Planning can reduce the impact of change. It minimize waste and redundancy. Planning establishes objectives or standards that facilitate control. Management Concepts

Disadvantages of Planning Planning may create rigidity. Plans can’t be developed for a dynamic environment. Formal plans can’t replace intuition and creativity. Planning focuses managers’ attention on today’s competition, not on tomorrow’s survival. Formal planning reinforces success, which may lead to failure. Management Concepts

Making plan effective Climate for planning Clear cut Objectives Management Information System Careful premising Top management Support Participation in planning Sound Communication Integration of Plans Open systems approach Cost benefit analysis Management Concepts

Planning Encompasses: Defining the organization’s objectives or goals. Establishing an overall strategy for achieving those goals. Developing a comprehensive hierarchy of plans to integrate and coordinate activities. Management Concepts

Essentials of a sound plan Should be based on clearly defined objectives Simple and understandable Flexible or adaptable to changing conditions Balanced in all respects and should be reasonably comprehensive Management Concepts

Contd/- Should provide standards for evaluation of performance and actions Should be practicable and action oriented Should be prepared with the consultation of concerned persons Different plans must be properly integrated and harmonized with one other Should provide for proper analysis and classifications of actions Management Concepts

Elements of Planning Goals (also Objectives) Plans 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 Management Concepts

Managers Planning -Process Step 1 Situational Analysis Step 2 Alternative Goals and Plans Step 3 Goal and Plan Evaluation Step 4 Goal and Plan Selection Step 5 Implementation Step 6 Monitor and Control Management Concepts

Decision Making Stages and Formal Planning Steps Management Concepts

Steps in Goal Setting Review the organization’s mission statement. Do goals reflect the mission? Evaluate available resources. Are resources sufficient to accomplish the mission? Determine goals individually or with others. Are goals specific, measurable, and timely? Write down the goals and communicate them. Is everybody on the same page? Review results and whether goals are being met. What changes are needed in mission, resources, or goals? Management Concepts

Developing Plans Manager’s 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: current plans affecting future commitments must be sufficiently long-term to meet those commitments. Management Concepts

Types of Plans Breadth Time frame Specificity Frequency of use Strategic Long term Directional Single use Tactical Short term Specific Standing Management Concepts

Hierarchy of Goals and Plans Management Concepts

Management Concepts

Strategic and Tactical Plans Strategic plans are plans that apply to the entire organization, establish the organization’s overall objectives, and seek to position the organization in terms of its environment. Tactical plans (sometimes referred to as operational plans) specify the details of how the overall objectives are to be achieved. Strategic and tactical plans differ in three primary ways—their time frame, scope, and whether they include a known set of organizational objectives. Management Concepts

Strategic Planning Strategic planning Strategic goals A set of procedures for making decisions about the organization’s long-term goals and strategies Strategic goals major targets or end results that relate to the long-term survival, value, and growth of the organization. Management Concepts

Strategic Planning Where will we be active? How will we get there? How will we win in the marketplace? How fast will we move and in what sequence will we make changes? How will we obtain financial returns Management Concepts

Tactical and Operational Planning Tactical planning A set of procedures for translating broad strategic goals and plans into specific goals and plans that are relevant to a distinct portion of the organization, such as a functional area like marketing. Management Concepts

Tactical and Operational Planning The process of identifying the specific procedures and processes required at lower levels of the organization. Management Concepts

Short-term and Long-term Plans Short-term plans are plans that cover less than one year. Long-term plans are plans that extend beyond five years. Their differences lie in the length of future commitments and the degree of variability organizations face. Management Concepts

Specific and Directional Plans Specific plans have clearly defined objectives and leave no room for misinterpretation. Directional plans are flexible plans that set out general guidelines. Management Concepts

Single-use Plans Single-use plans are used to meet the needs of particular or unique situation. Developed for a one-time, nonprogrammed issue. Programs: integrated plans achieving specific goals. Project: specific action plans to complete programs. Management Concepts

Standing Plans Standing plans are ongoing, and provide guidance for repeatedly performed actions in an organization. Use in programmed decision situations Policies are general guides to action. Rules are formal written specific guides to action. Standard operating procedures (SOP) specify an exact series of actions to follow. Management Concepts

Scenario Planning Scenario Planning (Contingency Planning) The generation of multiple forecasts of future conditions followed by an analysis of how to effectively respond to those conditions. Management Concepts

Management by Objectives (MBO) A comprehensive management system based on measurable participatively set objectives that leverages the motivational power of objectives. Management Concepts

Objectives An objective is a firm commitment to achieve a measurable result within a specified period. Emphasis on four aspects: Goal Definiteness Scope Direction Management Concepts

Writing Good Objectives Objectives should be expressed in quantitative, measurable, and concrete terms. What specific result is to be achieved? When is the result to be achieved? How the result is to be measured? Who will be responsible for achieving the result? Management Concepts

The Importance of Objectives (Uses of) Targets: sets specific goals to achieve. Measuring sticks: gages how much was achieved. Commitment: encourages pursuit of the objective. Motivation: provides a challenge for achievement. Management Concepts

What Is MBO? MBO is a system in which specific performance objectives are jointly determined by subordinates and their supervisors, progress toward objectives is periodically reviewed, and rewards are allocated on the basis of that progress. Management Concepts

Features of MBO Participation Integration Links Objective to performance Continuity Management Concepts

The Common Elements in a MBO Program Commitment Goal specificity Participative decision making Top management support An explicit time period Performance feedback. Autonomy Review Management Concepts

Objectives of MBO Promotes subordinate’s participation in the goal setting process Facilitates fast and effective decision making Coordinates individual goals with organizational goals Improves communication amongst managers and subordinates Serves as the basis for control by setting objective standards of performance Management Concepts

Steps in a Typical MBO Program The organization’s overall objectives and strategies are formulated. Major objectives are allocated among divisional and departmental units. Unit managers collaboratively set specific objectives for their units with their managers. Specific objectives are collaboratively set with all department members. Action plans, defining how objectives are to be achieved, are specified and agreed upon by managers and employees. The action plans are implemented. Progress toward objectives is periodically reviewed, and feedback is provided. Successful achievement of objectives is reinforced by performance-based rewards. Management Concepts

Cascading of Objectives Overall organizational objectives Divisional objectives Departmental objectives Individual objectives Management Concepts

How does a manager set employee objectives? Identify an employee’s key job tasks. Establish specific and challenging goals for each key task. Allow the employee to actively participate. Prioritize goals. Build in feedback mechanism to assess goal progress. Link rewards to goal attainment. Management Concepts

Contd/- Reason for MBO Success Top management commitment and involvement Helps in setting realistic goals Helps in making planning effective Helps in creating effective communication network Improves employer-employee relationship Facilitates control Basis of change Management Concepts

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. Management Concepts

Potential Problems Employees tend to focus on the goals by which they will be judged. Specific goals encourage individual achievement rather than a team focus. Specific goals may have a tendency to limit employees’ potential and discourage efforts for continuous improvement. Management Concepts