Management, 8/E: Powerpoint Presentation To Accompany Chapter 8 of

PowerPoint Presentation
to Accompany Chapter 8 of
Management, 8/e
John R. Schermerhorn, Jr.
.
Planning Ahead — Chapter 8 Study
Questions
 How do managers plan?
 What types of plans do managers use?
 What are the useful planning tools and
techniques?
 What is the control process?
 What are the common organizational
controls?
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Study Question 1: How do managers plan?
 Planning
– The process of setting objectives and determining how
to best accomplish them.
 Objectives
– Identify the specific results or desired outcomes that
one intends to achieve.
 Plan
– A statement of action steps to be taken in order to
accomplish the objectives.
 Steps in the planning process:

– Define your objectives.
– Determine where you stand vis-à-vis objectives.
– Develop premises regarding future conditions.
– Analyze and choose among action alternatives.
– Implement the plan and evaluate results.
Figure 8.1 The roles of planning and
controlling in the management process.
 Benefits of planning:
– Improves focus and flexibility.
– Improves action orientation.
– Improves coordination.
– Improves time management.
– Improves control.
Figure 8.2 A sample means-ends chain for
total quality management.
Study Question 2: What types of plans do
managers use?
 Short-range and long-range plans
– Short-range plans = 1 year or less
– Intermediate-range plans = 1 to 2 years
– Long-range plans = 3 or more years
 People vary in their capability to deal
effectively with different time horizons.
 Higher management levels focus on longer
time horizons.
managers use?
 Strategic and operational plans
– Strategic plans — set broad, comprehensive, and
longer-term action directions for the entire
organization.
– Operational plans — define what needs to be done in
specific areas to implement strategic plans.
• Production plans
• Financial plans
• Facilities plans
• Marketing plans
• Human resource plans
managers use?
 Policies and procedures
– Standing plans
• Policies and procedures that are designed for
repeated use.
– Policy
• Broad guidelines for making decisions and taking
action in specific circumstances.
– Rules or procedures
• Plans that describe exactly what actions are to be
taken in specific situations.
managers use?
 Budgets and project schedules
– Single-use plans
• Only used once to meet the needs and objectives of a well-
defined situation in a timely manner.
– Budgets
• Single-use plans that commit resources to activities, projects, or
programs.
• Fixed, flexible, and zero-based budgets.
– Projects
• One-time activities that have clear beginning and end points.
• Project management and project schedules.
Study Question 3: What are the useful
planning tools and techniques?
 Forecasting
– Making assumptions about what will happen in the
future.
– Qualitative forecasting uses expert opinions.
– Quantitative forecasting uses mathematical and
statistical analysis.
– All forecasts rely on human judgment.
– Planning involves deciding on how to deal with the
implications of a forecast.
 Contingency planning
– Identifying alternative courses of action that
can be implemented to meet the needs of
changing circumstances.
– Contingency plans anticipate changing
conditions.
– Contingency plans contain trigger points.
 Scenario planning
– A long-term version of contingency planning.
– Identifying alternative future scenarios.
– Plans made for each future scenario.
– Increases organization’s flexibility and
preparation for future shocks.
 Benchmarking
– Use of external comparisons to better evaluate
current performance and identify possible
actions for the future.
– Adopting best practices of other organizations
that achieve superior performance.
 Use of staff planners
– Coordinating the planning function for the total

organization or one of its major components.
– Possible communication gaps between staff

planners and line management.
 Participation and involvement

– Participatory planning requires that the planning
process include people who will be affected by the
plans and/or will help implement them.
– Benefits of participation and involvement:
• Promotes creativity in planning.
• Increases available information.
• Fosters understanding, acceptance, and commitment to the
final plan.
Figure 8.3 How participation and
involvement help build commitments to
plans.
Study Question 4: What is the
control process?
 Controlling
– The process of measuring performance and taking
action to ensure desired results.
– Has a positive and necessary role in the management
process.
– Ensures that the right things happen, in the right way, at
the right time.
– Organizational learning and after-action review.
control process?
 Steps in the control process:

– Step 1 — establish objectives and standards.
– Step 2 — measure actual performance.
– Step 3 — compare results with objectives and
standards.
– Step 4 — take corrective action as needed.
Figure 8.4 Four steps in the control
process.
control process?
 Step 1 — establishing objectives and

standards
– Output standards
• Measure performance results in terms of quantity,
quality, cost, or time.
– Input standards
• Measure effort in terms of amount of work
expended in task performance.
control process?
 Step 2 — measuring actual performance

– Goal is accurate measurement of actual performance
results and/or performance efforts.
– Must identify significant differences between actual
results and original plan.
– Effective control requires measurement.
control process?
 Step 3 — comparing results with objectives

and standards
– Need for action reflects the difference between
desired performance and actual performance
– Comparison methods:
• Historical comparison
• Relative comparison
• Engineering comparison
control process?
 Step 4 — taking corrective action
– Taking action when a discrepancy exists
between desired and actual performance.
– Management by exception
• Giving attention to situations showing the greatest
need for action.
• Types of exceptions
– Problem situation
– Opportunity situation
control process?
 Feedforward controls …
– Employed before a work activity begins.
– Ensures that:
• Objectives are clear.
• Proper directions are established.
• Right resources are available.
– Focuses on quality of resources.
control process?
 Concurrent controls …
– Focus on what happens during work process.
– Monitor ongoing operations to make sure they
are being done according to plan.
– Can reduce waste in unacceptable finished
products or services.
control process?
 Feedback controls …
– Take place after work is completed.
– Focus on quality of end results.
– Provide useful information for improving

future operations.
Figure 8.5 The role of feedforward,
concurrent, and feedback controls in
organizations.
control process?
 Internal and external control

– Internal control
• Allows motivated individuals and groups to exercise
self-discipline in fulfilling job expectations.
– External control
• Occurs through personal supervision and the use of
formal administrative systems.
Study Question 5: What are the common
organizational controls?
 Management by Objectives (MBO)

– A structured process of regular communication.
– Supervisor/team leader and workers jointly set
performance objectives.
– Supervisor/team leader and workers jointly
review results.
Figure 8.6 Management by objectives as
an integrated planning and control
framework.
 MBO involves a formal agreement specifying …

– Workers’ performance objectives for a specific time
period.
– Plans through which performance objectives will be
accomplished.
– Standards for measuring accomplishment of
performance objectives .
– Procedures for reviewing performance results.
 The MBO process:
– Supervisor and workers jointly set objectives,
establish standards, and choose actions.
– Workers act individually to perform tasks;
supervisors act individually to provide
necessary support.
– Supervisor and workers jointly review results,
discuss implications, and renew the MBO
cycle.
 Types of MBO performance objectives
– Improvement
– Personal development
– Maintenance
 Criteria for effective performance objectives
– Specific
– Time defined
– Challenging
– Measurable
 Pitfalls to avoid in using MBO

– Tying MBO to pay.
– Focusing too much attention on easily
quantifiable objectives.
– Requiring excessive paperwork.
– Having managers tell workers their objectives.
 Advantages of MBO
– Focuses workers on most important tasks and
objectives.
– Focuses supervisor’s efforts on important areas
of support.
– Contributes to relationship building.
– Gives workers a structured opportunity to
participate in decision making.
 Employee discipline systems
– Discipline is the act of influencing behavior
through reprimand.
– Discipline that is applied fairly, consistently,

and systematically provides useful control.
 To be effective, reprimands should …

– Be immediate.
– Be directed toward actions, not personality.
– Be consistently applied.
– Be informative.
– Occur in a supportive setting.
– Support realistic rules.
 Employee discipline systems

– Progressive discipline ties reprimands to the
severity and frequency of the employee’s
infractions.
– Progressive discipline seeks to achieve
compliance with the least extreme reprimand
possible.
 Important financial aspects of organizational
performance …
– Liquidity
• The ability to generate cash to pay bills.
– Leverage
• The ability to earn more in returns than the cost of debt.
– Asset management
• The ability to use resources efficiently and operate at
minimum cost.
– Profitability
• The ability to earn revenues greater than costs.
 Break-even analysis …
– Determination of the point at which sales
revenues are sufficient to cover costs.
– Break-Even Point = Fixed Costs / (Price –
Variable Costs)
– Used in evaluating:
• New products
• New program initiatives
Figure 8.7 Graphical approach to break-
even analysis.
 Purchasing control …
– A productivity tool
– Trends in purchasing control:
• Leveraging buying power
• Committing to a small number of suppliers
• Working together in supplier-purchaser partnerships
 Inventory control
– Goal is to ensure that inventory is just the right
size to meet performance needs, thus
minimizing the cost.
– Methods of inventory control:
• Economic order quantity
• Just-in-time scheduling
 Statistical quality control

– Quality control involves checking processes,
materials, products, and services to ensure that
they meet high standards.
– Statistical quality control involves:
• Taking samples of work.
• Measuring quality in the samples.
• Determining the acceptability of results.
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Copyright 2004 © John Wiley & Sons, Inc. All rights reserved.
Reproduction or translation of this work beyond that named in
Section 117 of the United States Copyright Act without the express
written permission of the copyright owner is unlawful. Requests for
further information should be addressed to the Permissions
Department, John Wiley & Sons, Inc. The purchaser may make
back-up copies for his/her own use only and not for distribution or
resale. The Publisher assumes no responsibility for errors, omissions,
or damages, caused by the use of these programs or from the use of
the information contained herein.

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 Steps in the planning process:

 Use of staff planners

– Coordinating the planning function for the total

– Possible communication gaps between staff

 Participation and involvement

 Steps in the control process:

 Step 1 — establishing objectives and

 Step 2 — measuring actual performance

 Step 3 — comparing results with objectives

– Take place after work is completed.

– Focus on quality of end results.

– Provide useful information for improving

 Internal and external control

 Management by Objectives (MBO)

 MBO involves a formal agreement specifying …

 Pitfalls to avoid in using MBO

 Employee discipline systems

– Discipline is the act of influencing behavior

– Discipline that is applied fairly, consistently,

 To be effective, reprimands should …

 Employee discipline systems

 Statistical quality control

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