Plans and Planning Techniques Exploring Management Chapter 5 Plans and Planning Techniques

Chapter 5 How and why do managers use the planning process? What types of plans do manager use? What are some useful planning tools and techniques? Planning has many benefits even when the plan doesn't work.

5.1 How and Why Managers Plan Planning is one of the four functions of management. Planning is the process of setting objectives and identifying how to achieve them. Planning improves focus and action orientation. Planning improves coordination and control. Planning improves time management. Planning also improves communications, provides a sense of direction among group members and allows efficient use of resources like time, money and people.

How and why managers plan The Planning Function Planning sets objectives and identifies how to achieve them. Of the four functions of management, planning may be the most important and definitely is the most controversial. A number of managers view it as a waste of time because many things do not go according to plan. They probably aren’t the most successful!

How and why managers plan Planning Steps Define objectives Stretch goals – performance targets that require hard work Determine current status compared to objectives Develop premises regarding future conditions and generate alternative scenarios for what may happen Analyze alternatives and make a plan Implement and evaluate the plan Setting objectives that are challenging but doable is important. If you set them too high, employees will become frustrated and will soon not put forth the effort. Notice that planning is a process that includes implementation and control. It not unusual for some managers to generate a plan and then forget it and go on doing what they were doing. It’s important to have some control measures to determine if progress is being made.

How and why managers plan Reasons for Planning Good planning makes us: Action oriented—keeping a results-driven sense of direction Priority oriented—making sure the most important things get first attention Advantage oriented—ensuring that all re-sources are used to best advantage Change oriented—anticipating problems and opportunities so they can be best dealt with It is important to remember that a good plan is flexible. Situations change and organizations may need to adapt.

How and why managers plan Reasons for Planning Planning improves focus and action orientation Action orientation Clear priorities Avoid complacency trap With clear priorities, it’s easier to stay motivated and make decisions regarding the use of time and resources.

How and why managers plan Reasons for Planning Improved coordination and control Planning links with control so success can be measured Hierarchy of objectives – lower level objectives help accomplish higher ones Planning and control are strongly linked in high performance organizations. Beginning with the mission, planning the work and measuring results.

How and why managers plan Reasons for planning Planning improves time management Planning helps clarify priorities for using many resources, especially time.

Managers use short-range and long-range plans. 5.2 Types of plans Managers use short-range and long-range plans. Managers use strategic and operational plans. Organizational policies and procedures are plans. Budgets are plans that commit resources to activities. There are many types of plans; long range, short range, strategic and operational. They clarify the goals of various stakeholders and how they can help achieve the strategic goal.

Types of plans Time Frames Short-range plans usually cover a year or less. Long-range plans Usually cover three years or more The number of variables in the internal and external environment increase tremendously as time frames get longer. That makes it much tougher to make accurate plans, much like planning outdoor activities weeks in advance. Weather is much too variable to plan with any certainty.

Types of plans Time Frames Jaques’s Findings on Long-Term Thinking Most people are comfortable with 3-month time spans. Some work well with a 1-year time span. Only the rare person can handle a 20-year time span. Having a clear vision helps.

Types of plans Strategy Strategic Plans identify long-term directions for the organization. Vision is the purpose for the organization Strategic plans set the direction for the entire organization. It’s the foundation upon which other plans are built.

Types of plans Strategy Operational Plans identify activities to implement strategic plans. Functional plans identify roles of functional areas Production Plans Financial Plans Marketing Plans Facilities Plans Human Resource Plans The operational plans must support the strategic plan.

Types of plans Policies and procedures Policy communicates broad guidelines for making decisions Procedure defines specific actions to be taken in specific situations Good policies and procedures are in line with the strategic and operational plans and provide a guide for uniform decision-making and smooth daily operations.

Budgets commit resources to activities, programs or projects Types of plans Budgets Budgets commit resources to activities, programs or projects Types of budgets Financial budgets project cash flows and expenses Operating budgets anticipate sales and revenue Nonmonetary budgets allocate resources These are just a few of the many types of plans. The key point is that all plans should support each other and the corporate objective. For example, if the budget does not support the project plan, it is unlikely that the project will be successfully completed.

Fixed budgets allocate set amounts to a specific purpose Types of plans Budgets More types of budgets Fixed budgets allocate set amounts to a specific purpose Flexible budgets vary in proportion to a level of activity Zero based budgets start from scratch These are just a few ways to determine budgets.

5.3 Planning tools and techniques Forecasting tries to predict the future. Contingency planning creates back-up plans for when things go wrong. Scenario planning crafts plans for alternative future conditions. Benchmarking identifies best practices. Staff planners provide special expertise. Participatory planning improves implementation. Goal setting helps align plans and activities. There are many different types of planning tools available. Managers tend to use those with which they are most comfortable.

Tools and techniques Forecasting Forecasting attempts to predict the future Qualitative forecasting relies on expert opinions Quantitative forecasting relies on mathematical models and statistical analysis Long range forecasts are notoriously inaccurate. There are too many variables that cannot be foreseen.

Tools and techniques Contingency and Scenario planning Contingency planning identifies alternative courses of action when things go wrong. Scenario planning identifies future scenarios and how to deal with them. Contingency planning is very difficult. Quite often, it is something that you did not think of that causes a problem. Nevertheless, contingency planning can prevent know potential problems from occurring. Always have a plan “B”. Possibly even more than that.

Tools and techniques Benchmarking Benchmarking identifies best practices used by others External comparisons provide insight for planning Best practices are methods that provide superior performance Many organizations spend a great deal of time observing competition, determining their competitive advantages and using those as benchmarks in planning.

Tools and techniques Planners and Participation Staff planners provide expertise in the planning process Participatory planning improves the implementation process Acceptance by those that must implement the plan is critical to building the commitment needed for successful implementation.

Tools and techniques Goals Goal setting aligns plans and activities Specific clearly target key results and outcomes to be accomplished Timely linked to specific timetables and “due dates” Measurable described so results can be measured without ambiguity. Challenging include a stretch factor that moves toward real gains. Attainable although challenging, realistic and possible to achieve. Good goals are relevant, challenging and easy to measure.