MGT 201: Principles of Management

Chapter 8
Foundations of Planning
What is plan ? ( by Wikipedia )

সর্বপ্রথম
What is Planning?
Why do Managers Plan?
Why do Managers Plan?
How do Managers Plan?
Elements of Planning
Planning involves two important elements

1. Goals (also objectives)

– Desired outcomes for individuals, groups, or entire organizations
– Provide direction and evaluation performance criteria
– Represent the criteria against which actual work accomplishments can
be measured

2. Plans
– Documents that outline how goals are to be accomplished
– Describe how resources are to be allocated and establish activity
schedules
 How do Managers Plan?
Types of Goals
– All organizations have multiple objectives
– No single measure can evaluate whether an organization is successful

Financial goals
Are related to the expected internal financial performance of the organization

Strategic goals
Are related to the performance of the firm relative to factors in its external
environment (e.g., competitors).

- Survival not specifically mentioned as a goal, however, it is extremely important.

Organizations must survive if other goals are to be achieved
How do Managers Plan?
Stated Objectives From Large US Companies
 How do Managers Plan?
Types of Goals
– Another way of describing goal is in terms of whether they are Real or
Stated

Stated goals
Official statements of what an organization says, and what it wants its
various stakeholders to believe, its goals are
– Can be found in an organization’s charter, annual report, public
relations announcements or in public statements made by managers

Real goals
Those goals that an organization actually pursues, as defined by the
actions of its members
– Actions define priorities
How do Managers Plan?
Types of Plans
– Most popular way to describe organizational plans are by their
• Breadth – strategic vs operational
• Time frame – long term vs short term
• Specificity – directional vs specific
• Frequency of use – single vs standing

The planning classifications are not independent

Breadth Time Frame Specificity Frequency of use

Strategic Long term Directional Single use

Operational Short term Specific Standing

 How do Managers Plan?
Types of Plans

Strategic Plans
• Apply to the entire organization.
• Establish the organization’s overall goals.
• Seek to position the organization in terms of its environment.
• Cover extended periods of time.

Operational Plans
• Specify the details of how the overall goals are to be achieved.
• Cover short time period

Long term Plans

• Plans with time frames extending beyond 3 years
• Definition of long term has changed with increasingly uncertain
organizational environments
Short Term Plans
• Plans with time frames of one year or less
 How do Managers Plan?
Types of Plans

Specific Plans
• Plans that are clearly defined and leave no room for interpretation
• Required clarity and predictability often do not exist

Directional Plans
• Flexible plans that set out general guidelines, provide focus, yet
allow discretion in implementation (does not limit course of action)

Single Use Plans

• A one-time plan specifically designed to meet the need of a unique
situation

Standing Plans
• Ongoing plans that provide guidance for activities performed
repeatedly
• Include policies, procedures and rules
How do Managers Plan?
Specific Versus Directional Plans
Establishing Goals and Developing Plans
Approaches to establishing goals
Management by Objective (MBO): A management system in
which
– Specific performance goals are jointly determined by
employees and managers.
– Progress toward accomplishing goals is periodically reviewed.
– Rewards are allocated on the basis of progress towards the
goals.

Key elements of MBO:

– Goal specificity, participative decision making, an explicit
performance/evaluation period, feedback
 Establishing Goals and Developing Plans
Approaches to establishing goals

Does MBO Work?

Reason for MBO Success:

– Top management Commitment and employee involvement
– Increases employee performance and organizational productivity
>>> depends on support of top managers for MBO

Problems with MBO

– 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
Establishing Goals and Developing Plans
Steps in a typical MBO Program
1. The organization’s overall objectives and strategies are formulated.
2. Major objectives are allocated among divisional and departmental
units.
3. Unit managers collaboratively set specific objectives for their units
with their managers.
4. Specific objectives are collaboratively set with all department
members.
5. Action plans, defining how objectives are to be achieved, are
specified and agreed upon by managers and employees.
6. The action plans are implemented.
7. Progress toward objectives is periodically reviewed, and feedback is
provided.
8. Successful achievement of objectives is reinforced by performance-
based rewards.
Establishing Goals and Developing Plans
Approaches to Planning
• Traditional, top-down approach
– Planning done by top manager
– Formal planning department – specialists whose sole
responsibility is to help to write organizational plans
– Plans float down to lower levels
• Tailored to particular needs at each lower level
– Most effective if plan is a workable document used by organizational
members for direction and guidance
• Inclusive approach
– Employees at each level develop plans suited to their needs
– Employees acquire greater sense of the importance of planning
when they participate in the process
– Plans more likely to be used in directing and coordinating work
 Contemporary Issues in Planning
 Criticisms of Planning
1. Planning may create rigidity
 unwise to force a course of action when the environment is fluid
2. Plans can’t be developed for a dynamic environment
 flexibility required in a dynamic environment
 can’t be tied to a formal plan
3. Formal plans can’t replace intuition and creativity
 mechanical analysis reduces the vision to some type of programmed
routine
4. Planning focuses managers’ attention on today’s competition, not on
tomorrow’s survival
 plans concentrate on capitalizing on existing business opportunities
 hinders managers who consider creating or reinventing an industry
5. Formal planning reinforces success, which may lead to failure
 success may breed failure in an uncertain environment
 Contemporary Issues in Planning

 Effective Planning in Dynamic Environments

 Develop plans that are specific but flexible.

 Understand that planning is an ongoing process.

 Change plans when conditions warrant.

 Persistence in planning eventually pay off.

 Flatten the organizational hierarchy to foster the
development of planning skills at all organizational
levels.