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:
- 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.
- List alternative ways of reaching objectives. Manager should list as many available alternatives as possible for reaching those objectives.
- 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.
- 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.
- Develop plans to pursue the chosen alternative. After the alternative has been chosen, manager begins to develop strategic and tactical plans.
- 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:
- Profit is the motivating force for managers
- Service to customers justifies the existence of the business
- Managers have Social Responsibilities
Key areas to set management system objectives:
- Market standing
- Innovation
- Productivity
- Physical and financial resources
- Profitability
- Managerial performance and development
- Worker performance and attitude
- 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
- Let those responsible for attaining objectives have voice in setting them
- State objectives as specifically as possible
- Relate objectives to specific actions whenever necessary
- Pinpoint expected results
- Set goals high enough that employees have to strive to meet them
- Specify when goals are expected to be achieved
- Set objectives only in relation to other organizational objectives
- 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:
- All individuals are assigned a specialized set of objectives
- Performance reviews are conducted periodically
- Rewards are given to individuals
The MBO process:
- Review organizational objectives
- Set worker objectives
- Monitor progress
- Evaluate performance
- Give rewards
Factors Necessary for a Successful MBO Program
- Top management must be committed and set appropriate objectives
- Managers and subordinates must develop and agree on individual’s goals
- Employee performance should be evaluated against established objectives
- Management must follow through on employee performance evaluations
Advantages:
- Continually emphasize how to achieve organizational goals
- Secures employee commitment to attaining goals
Disadvantages:
- Development of objectives can be time consuming
- Increase the volume of paperwork in an organization
Most managers find MBO programs beneficial
Qualifications of Planners
Primary qualifications:
- Considerable practical experience within organization
- Know how all parts of the organization function and interrelate
- Define trends and determine how organization reacts to trends
- Ability to work well with others
Evaluation of Planners
Objective Indicators
Guidelines for evaluating the planners’ performance:
- Organizational plan is in writing
- Plan is the result of all elements of management team working together
- Plan defines present and possible future business of the organization
- Plan specifically mentions organizational objectives
- Plan identifies opportunities and suggests how to take advantage of them
- Plan emphasizes both internal and external environments
- Plan describes the attainment of objectives in operational terms