Chp3 Planning

8/6/2019 Chp3 Planning

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Essentials of Planning and

Management by Objectives(MBO)

Chapter 3


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Essentials of Planning (Class 5)

Contents Planning and its Importance

Advantages ofPlanning

Types ofPlans FormalPlanning Process

Level ofPlanning and Planning in theHierarchy of Organizations

Types ofPlans According to Their Use

Criticisms ofPlanning


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Planning:

Precede the execution of all other managerial functions.

Involves selecting missions & objectives and the actionsto achieve them.

Requires decision making i.e., choosing amongalternative future courses of action

Bridges the gap from where we are to where we want togo.

Requires that we consciously determine courses ofaction and base our decisions on purpose, knowledgeand considered estimates.


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WhyPlanning Is Important

Participation: all managers areinvolved in setting future goals.

Sense of direction and purpose:

planning sets goals and strategies for allmanagers.

Coordination: plans provide all parts of

the org with understanding about howtheir systems fit with the whole.

Control: Plans specify who is inchargeof accomplishing a goal.


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ADVANTAGES OF PLANNING:

Reduces uncertainty and Risk

Focuses attention on Objectives and Results

Improves efficiency.

Provides basis for controlling Improves coordination

Provides sense of direction

A useful way of participation of all managers in

decision making Encourages innovation and creativity.

Planning can reduce the impact of change.

It minimize waste and redundancy .


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Types of Plans

PlansDocuments/Statements that outline how goals are to be

accomplished

Describe how resources are to be allocated and establishactivity schedules

1. Mission or Purpose

It is the basic function or fundamental reasons forexistence.

Mission Statement:It is a broad statement of basic, unique purpose and scopeof operations that distinguish the organization from other ofits type.


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2.Goals or Objectives:

These terms are interchangeably used. These arefuture Targets orEnd results that an organization

wishes to achieve. Simply a desired outcome

3. Strategy:

It is a long term plan for interacting with theenvironment in order to achieve long term goals,adoption of courses of action and allocation ofresources necessary to achieve them.

4. Policies: Policies are plans and statements that guide or

channel thinking in decision making. Policies define an area within which a decision is to

be made and ensure that the decision will be

consistent with, and contribute to an objective.


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5. Procedures:

Procedures are plans that guides for actions in a detailedand exact manner. These are prescribed series of

related steps to be taken under certain recurringcircumstances

6. Rules:

These are statements that spell out specific actions to betaken or not taken in a given situation. Rules allow no

discretion and they reflect managerial decisions.7. Programs:

A comprehensive plan that coordinates a complex set ofgoals, policies, procedures, rules task assignments, stepto be taken, resources to be mobilize and other elements

necessary to carry out a given course of action8. Budgets: A budget is a statement ofexpected results expressed in

numerical terms. It may be called a Quantified plan orFinancial plan.


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Situational analysis/Aware of Opportunities

Identifying Alternative

Evaluation of theAlternatives

Selection of Goals and Plan

Implementation

Monitor and control

FormalPlanning StepsInformation collection ,opportunities seeking, Study past & futureconditions& forecast future, Internal recourses, org strengths &

weaknesses, ExternalEnvironment

What are the most promising alternatives to accomplishingthe objectives?

Best option is finally selected on the basis of evaluation

of various options (appropriate and feasible)

Monitor the actual performance in relation to the goals and plans,develop control systems to take corrective action

Setting Objectives Or Goals What we want to be, what we want to accomplish and when?

Implement properly, managers must understand the plan,

Have the necessary resources, and be motivated to implement it

Evaluate the advantages, disadvantages, and potential effectsof each alternative goal and plan, prioritize those goals considerthe implications of alternative plans


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Level ofPlanning

Strategic Planning decisions of senior executives about theorganizations long-term goals and strategies

Apply to the entire organization

Establish the organizations overall goals. Seek to position the organization in terms of its

environment.

strategic goals/Objectives - major targets that relateto the long-term survival, value, and growth of theorganization

strategy- pattern of actions and resource allocationsdesigned to achieve the goals of the organization

matches the skills and resources of the organization to

the opportunities found in the external environment


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Level ofPlanning

Tactical planning translates broad strategic goals and plans into

specific goals and plans that are relevant to a definiteportion of the organization

focuses on the major actions that a unit/departmentmust take to fulfill its part of the strategic plan

OperationalPlanning

identifies the specific procedures and processes

required at lowerlevels of the organization Cover short time period and focus on routine tasks


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Planning in the Hierarchy of Organizations

Tactical Planning


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Types ofPlans (contd)

Long-Term Plans Plans with time frames extending beyond

three years

Short-Term Plans

Plans with time frames on one year orless

Specific Plans

Plans that are clearly defined and leave no

room for interpretation DirectionalPlans

Flexible plans that set out general guidelines,provide focus, yet allow discretion in

implementation.


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Specific Versus DirectionalPlans


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Types ofPlans (contd)

Single-Use Plan

A one-time plan specifically designed to meetthe need of a unique situation.

Standing Plans

Ongoing plans that provide guidance foractivities performed repeatedly.


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Criticisms ofPlanning

Planning may create rigidity.

Plans cannot be developed fordynamicenvironments

Formal plans cannot replace intuition andcreativity.

Planning focuses managers attention on

todays competition not tomorrows survival. Formal planning reinforces todays success,

which maylead to tomorrows failure.


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Management by MBO (Class 6)

Contents

Goal or Objectives

Characteristics of Goals/Objectives Steps in Goal Setting

Approaches to Establishing Goals Traditional Objective Setting

Management By Objectives (MBO)

Steps in MBO processes

Strength And Weaknesses Of MBO


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Goals/Objective

These are future Targets orEnd

results that an organization wishes toachieve.

Simply a desired outcome


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Characteristics of Goals/Objectives

S M A R T S. Specific and clearly understandable

M. Measurable and quantifiable

A. Attainable/Achievable andchallenging

R. Realistic and relevant to the

purpose of the organization. T. Time limited (defined period of

completion)


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Objective:Increase the number of scholarships available to Business& Law students by introducing 3 new scholarships for

students to apply in 2008. Each scholarship awarded willbe a minimum $3,000 per scholarship.

Breakdown of Objective

Specific - says what the staff member will do (increasethe number of scholarships offered to Business & Lawstudents)

Measurable - states how many scholarships to beintroduced (3) and how much is to be awarded ($3,000per scholarship)

Achievable - staff member has the necessary contactsand resources from previous years, other faculties andrelevant policies to refer to

Relevant - links with the faculty's goal to increasestudent attraction and retention numbers

Timely - indicates that new scholarships must be readyfor students to apply by2008.


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Steps in Goal Setting

1. Review the organizations mission statement.1.Do goals reflect the mission?

2. Evaluate available resources.

1.Are resources sufficient to accomplish themission?

3. Determine goals individually or with others.

1.Are goals specific, measurable, and timely?

4. Write down the goals and communicate all theemployees.

1. Is everybody on the same page?

5. Review results and whether goals are being met.

1.What changes are needed in mission, resources, orgoals?


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Approaches to Establishing Goals

Traditional Goal Setting Broad goals are set at the top of theorganization.

Goals are then broken into sub goals for each

organizationallevel. Assumes that top management knows best

because they can see the big picture.

Goals are intended to direct, guide, andconstrain from above.

Goals lose clarity and focus as lower-level managersattempt to interpret and define the goals for theirareas of responsibility


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Traditional Objective Setting


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Approaches to Establishing Goals (contd)

Management By Objectives (MBO)

MBO is a process through which specific goals are

set collaboratively for the organization as a wholeand every unit and individual within it. The goals are

then used as a basis forplanning, managingactivities and assessing performance and rewarding

contributions.

Key elements of MBO:

Goal specificity, participative decisionmaking, an explicit Time period andperformance feedback


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Cascading of Objectives

Overall

organizational

objectives

Divisional

objectives

Departmental

objectives

Individual

objectives


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Steps in MBO processes1. Develop Overall OrganizationalGoals

These goals are essentially strategic goals set bythe top management.

2. Establish Specific goals forVarious Divisions,Departments, Sections and Individuals

These goals are usually developed in collaborationwith the managers at the next Lowerlevels.

3. Formulate Action Plan

Once the goals are set, action plans must be

developed that focus on the methods or activitiesnecessary to achieve them.

Describes What is to be done, How, When, where,and By whom to achieve a goal.


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Steps in MBO processes4. Implement and Maintain Self control

After developing action plans, individuals aregiven considerable latitude in carrying outthese activities.

5. Review Progress Periodically

Regular reviews provide a good opportunity forchecking performance to date, identifying andremoving obstacles and updating action plans.

6. Appraise Performance

The appraisal session includes achievement oftargets, reasons for short falls, actions forrectification and prevention. It also includespraise, rewards and recognition for goodperformance


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STRENGTHAND WEAKNESSES OF MBO

Strengths or Benefits:

Fosters employs motivation

Facilitates vertical and Horizontalcommunication

Helps clarify priorities and expectations

Development of effective controls thatmeasure results and lead to correctiveactions

Encouragement of commitment topersonal and organizational goals


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STRENGTHAND WEAKNESSES OF MBO

Weaknesses orDisadvantages:Needs considerable training of

managers

Can be misused as a punitivedevice

Lack of flexibility in changing goalsdue to environmental changes

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