Principles of planning

General Characteristics of Planning:

- Defining Planning

- Purposes of Planning

- Planning: Advantages and Potential Disadvantages

- Primacy of Planning

Planning — is the process of determining how the organization can get where it wants to go, and what it will do to accomplish its objectives.

Purposes:

- Protective — minimize risk by reducing the uncertainties surroundings business conditions and clarifying the consequences of related management actions.

- Affirmative — increase the degree of organizational success.

- Coordination

- Fundamental

Advantages:

- Helps managers to be future-oriented (look beyond their everyday problems to project what situations may confront them in the future).

- Push managers to coordinate their decisions (no decisions should be made today without some idea of how it will affect a decision to be made tomorrow).

- Emphasizes organizational objectives (managers are continually reminded of exactly what their organization is trying to accomplish).

Disadvantages:

- Planning function is not well executed

- Take up too much managerial time

Planning as the foundation for organizing, influencing and controlling.

Steps in the Planning Process:

1. State organizational objectives. Before the planning, focuses on how management system will reach organizational objectives, a clear statement of those objectives is necessary before the planning can begin.
2. List alternative ways of reaching objectives. Manager should list as many available alternatives as possible for reaching those objectives.
3. Develop premises in which to base each alternative. Any alternative used to reach organizational goals is determined by the premises, or assumptions on which the alternative is based.
4. Choose the best one alternative for reaching objectives. An evaluation of alternatives must include an evaluation of the premises on which the alternative is based.
5. Develop plans to pursue the chosen alternative. After the alternative has been chosen, manager begins to develop strategic and tactical plans.
6. Put the plans into action. Once plans that furnish the organization with both long- range and short-range direction have been developed, they must be implemented.

Subsystem — is a system created as a part of the overall management system.

Organizational Objectives: Planning’s Foundation

Organizational Objectives — are the targets toward which the open management system is directed.

The Organizational Purpose — is what the organization exists to do, given a particular group of customers and customer needs.

Summary of organizational objectives for businesses:

1. Profit is the motivating force for managers
2. Service to customers justifies the existence of the business
3. Managers have Social Responsibilities

Key areas to set management system objectives:

1. Market standing
2. Innovation
3. Productivity
4. Physical and financial resources
5. Profitability
6. Managerial performance and development
7. Worker performance and attitude
8. Public Responsibility

Short-term objectives — targets to be achieved in one year or less.

Intermediate-term objectives — targets to be achieved in one to five years.

Long-term objectives — targets to be achieved in five or seven years.

Principle of the objective — the necessity of predetermining appropriate organizational objectives has lead to the development of management guideline.

Hierarchy of objectives — the overall organizational objective and the sub-objectives assigned to the various people or units of the organization.

Sub optimization — is a condition wherein sub objectives are conflicting or not directly aimed at accomplishing the overall organizational objective.

Guidelines for Establishing Quality Objectives

1. Let those responsible for attaining objectives have voice in setting them
2. State objectives as specifically as possible
3. Relate objectives to specific actions whenever necessary
4. Pinpoint expected results
5. Set goals high enough that employees have to strive to meet them
6. Specify when goals are expected to be achieved
7. Set objectives only in relation to other organizational objectives
8. State objectives clearly and simply

MBO (Managers by objectives) — some managers find organizational objectives such as an important and fundamental part of management approach based exclusively on them.

The MBO strategy:

1. All individuals are assigned a specialized set of objectives
2. Performance reviews are conducted periodically
3. Rewards are given to individuals

The MBO process:

1. Review organizational objectives
2. Set worker objectives
3. Monitor progress
4. Evaluate performance
5. Give rewards

Factors Necessary for a Successful MBO Program

1. Top management must be committed and set appropriate objectives
2. Managers and subordinates must develop and agree on individual’s goals
3. Employee performance should be evaluated against established objectives
4. Management must follow through on employee performance evaluations

Advantages:

1. Continually emphasize how to achieve organizational goals
2. Secures employee commitment to attaining goals

Disadvantages:

1. Development of objectives can be time consuming
2. Increase the volume of paperwork in an organization

Most managers find MBO programs beneficial

Qualifications of Planners

Primary qualifications:

1. Considerable practical experience within organization
2. Know how all parts of the organization function and interrelate
3. Define trends and determine how organization reacts to trends
4. Ability to work well with others

Evaluation of Planners

Objective Indicators

Guidelines for evaluating the planners’ performance:

1. Organizational plan is in writing
2. Plan is the result of all elements of management team working together
3. Plan defines present and possible future business of the organization
4. Plan specifically mentions organizational objectives
5. Plan identifies opportunities and suggests how to take advantage of them
6. Plan emphasizes both internal and external environments
7. Plan describes the attainment of objectives in operational terms