ORGANIZATIONAL GOAL SETTING

AND PLANNING
• A goal provides the “why” of an organization’s
or subunit’s existence.
• A plan tells the “how.” A plan lets employees
know what actions to undertake to achieve
the goal.
• Purpose of Goal setting & Planning:
1. Resource allocation
2. Guides to action
3. Rationale for decisions
4. Standard of performance
 Types of Goals and Plans
1) Strategic goals: Broad statements describing
where the organization wants to be in the
future, pertaining to the organization as a whole
rather than to specific divisions or departments
1-A) Strategic plans define the action steps by
which the company intends to attain strategic
goals
 Types of Goals and Plans
2) Tactical goals: Goals that define the outcomes
that major divisions and departments must
achieve for the organization to reach its overall
goals
2-A) Tactical plans are designed to help execute
major strategic plans and to accomplish a
specific part of the company’s strategy.
 Types of Goals and Plans
3) Operational goals: Specific, measurable
results expected from departments, work
groups, and individuals within the organization

3-A) Operational plans: are developed at the

lower levels of the organization to specify action
steps toward achieving operational goals and to
support tactical plans.
Over view of Goals and Plans
EXHIBIT 5.3

Hierarchy of Goals
for a Manufacturing
Organization
 Criteria for Effective Goals
• Specific and measurable: Not all goals can be
expressed in numerical terms, but vague goals
have little motivating power for employees.
• Cover key result areas: Goals cannot be set for
every aspect of employee behavior or
organizational performance. Managers should
identify a few key result areas, 4-5 maximum.
 Criteria for Effective Goals
• Challenging but realistic: Goals should be
challenging but not unreasonably difficult
• Defined time period: Goals should specify the
time period over which they will be achieved.
• Linked to rewards. The ultimate impact of
goals depends on the extent to which salary
increases, promotions, and awards are based
on goal achievement. People who attain goals
should be rewarded.
 Planning Types
Management By Objectives (MBO)

A method whereby managers and employees

define goals/objectives for every department,
project, and person and use them to monitor
subsequent performance
 Planning
PlanningTypes
Types
• SINGLE-USE AND STANDING PLANS
• single-use plans
– plans that are developed to achieve a set of goals
that are unlikely to be repeated in the future.
• standing plans
– ongoing plans that are used to provide guidance
for tasks performed repeatedly within the
organization.
 Planning Types
• Contingency plans
– Contingency plans define company responses to be
taken in the case of emergencies, setbacks, or
unexpected conditions
– Scenario building involves looking at current trends
and discontinuities and visualizing future possibilities.
– Rather than looking only at history and thinking about
what has been, managers think about what could be.
– Managers cannot predict the future, but they can
rehearse a framework within which future events can
be managed.
 Shell Example
One scenario Shell managers rehearsed in 1970, for example, focused on
an imagined accident in Saudi Arabia that severed an oil pipeline, which in
turn decreased supply. The market reacted by increasing oil prices, which
allowed the Organization of Petroleum Exporting Countries (OPEC)
nations to pump less oil and make more money. This story caused
managers to reexamine the standard assumptions about oil price and
supply and imagine what would happen and how they would respond if
OPEC increased prices. By rehearsing this scenario, Shell’s managers were
much more prepared than the competition when OPEC announced its first
oil embargo in October 1973. This speedy response to a massive shift in
the environment enabled Shell to move within two years from being the
world’s eighth largest oil company to being number two.
 Planning Types
Crisis Management Planning
1) Prevention:
 Though unexpected events and disasters will
happen, managers should do everything they can
to prevent crises.
 Building trusting relationships with key
stakeholders such as employees, customers,
suppliers, governments, unions, and the
community
 Example: Nike Launch in Saudi Arabia
 Planning Types
Crisis Management Planning
2) Preparation:
Three steps in the preparation stage are;
A) Designating a crisis management team and
spokesperson
B) Creating a detailed CMP
C) Setting up an effective communications system.
 Planning Types
Crisis Management Planning
3) Containment:
 Some crises are inevitable no matter how well
prepared an organization is.
 When crisis hits, a rapid response is crucial. The
team should be able to immediately implement
the crisis management plan, so training and
practice are important.
 Example: Duke University Hospital CMP
Crisis Management Planning
THE STRATEGIC
MANAGEMENT
PROCESS
 Strategic Management

It is the set of decisions and actions used to

formulate and implement strategies that will
provide a competitively superior fit between the
organization and its environment so as to
achieve organizational goals
 Strategy

The plan of action that describes resource

allocation and activities for dealing with the
environment, achieving a competitive
advantage, and attaining the organization’s goals