ORGANIZATIONAL PLANNING AND GOAL SETTING

Chapter 7: MANAGEMENT 6th Edition By: Richard Daft

Prepared by: GREGAR DONAVEN E. VALDEHUEZA, MBA Lourdes College Instructor

Objectives:
 

 

Define goals and plans and explain the relationship between them. Explain the concept of organizational mission and how it influences goal setting and planning. Describe the types of goals an organization should have and why they resemble a hierarchy. Define the characteristics of effective goals Describe the four essential steps in the MBO process. Explain the difference between single-use plans and singlestanding plans. Describe and explain the importance of the three stages of crisis management planning. Discuss how planning in the new workplace differs from traditional approaches to planning.

Overview of goals and plans



Goal


a desired future state that the organization attempts to realize

Plan


a blueprint specifying the resource allocations, schedules, and other actions necessary for attaining goals.

Mission Stateme nt

External Message Legitimacy for: investors, suppliers, customers, community

Strategic Goals/Plans Senior Management

(organization as a whole)

Tactical Goals/Plans Middle Management (major divisions, functions)

Internal Message legitimacy, motivation, guides, rationale, standards

Operational Goals/Plans Lower Management (departments, individuals)

Purposes of goals and plans



Legitimacy. An organization mission describes what the organization stands for and its reason for existence. It symbolizes legitimacy to external audiences such as investors, suppliers, and customers. Source of motivation and commitment. Goals and plans facilitate employees identification with the organization and help motivate them by reducing uncertainty and clarifying what they should accomplish.

Goal provides the why of an organization or subunits existence, a plan tells the how. how.

Guides to action. Goals and plans provide a sense of direction. They focus attention on specific targets and direct employee efforts toward important outcomes. Rationale for decisions. Through goal setting and planning, managers learn what the organization is trying to accomplish. Standard of performance. Because goals define desired outcomes for the organization, they also serve as performance criteria.

Mission Statement

Strategic Goals/Plans Senior Management

(organization as a whole)

Tactical Goals/Plans Middle Management (major divisions, functions)

Operational Goals/Plans Lower Management (departments, individuals)

Goals in organizations


The overall planning process begins with a mission statement and strategic goals for the organization as a whole.

Mission


The organizations reason for existence.

Mission statement


A broadly stated definition of the organizations basic business scope and operations that distinguishes it from similar types of organizations.

Example:
Mission Statement for Mail Boxes Etc.
Our Mission

Making Business Easier Worldwide Through Our Service and Distribution Network, Delivering Personalized and Convenient Business Solutions With World-Class Customers Service.
Our Core Values

Caring Integrity

Honesty Trust

Fairness Respect

Commitment Accountability

Goals and plans



Strategic goals. Broad statements of where the organization wants to be in the future; pertain to the organization as a whole rather than to specific divisions or departments. Strategic plans. The actions steps by which an organization intends to attain strategic goals.

Tactical goals. Goals that define the outcomes that major divisions and departments must achieve in order for the organization to reach its overover-all goals. Tactical plans. Plans designed to help execute major strategic plans and to accomplish a specific part of the companys strategy.

Operational goals. Specific, measurable results expected from departments, work groups, and individuals within the organization. Operational plans. Plans developed at the organizations lower levels that specify action steps toward achieving operational goals and that support tactical planning activities.

MISSION

Manufacture both standard and custom metal products for various applications in the machine tool industry
STRATEGIC GOALS

President
12% return on investment; 5% growth No employee layoff; Excellent service to customer

TACTICAL GOALS

Finance V.P.
Keep outstanding accounts below $500,000 Keep borrowing below $2 million Provide monthly budget statements for departments Have delinquent accounts of no more than 2% of total

Production V.P.
Manufacture 1,200,000 products at average cost of $19 Increase manufacturing productivity by 2% Resolve employee grievances within 3 working days

OPERATIONAL GOALS

Accounts Receivable Manager

Issue invoices within 5 days of sale Check new customers credit within 1 working day Allow no account to be overdue more than 5 months Call delinquent accounts weekly

Supervisor Automatic Machines

Produce 150,000 standard units at average cost of $16 Have machine downtime of less than 7% Respond to employee grievances within 24 hours

Criteria of effective goals

Specific and measurable. When possible, goals should be expressed in quantitative terms, such as increasing profits by 2 percent.  Cover key result areas. Goals cannot be set for every aspect of employee behavior or organizational performance; if they were, their sheer number would render them meaningless.


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.


Planning types and performance

Purpose of planning and goal setting is to help the organization achieve high performance.
1.Management 1. Management by Objectives (MBO) 2.Single2. Single-use Plans 3.Standing 3. Standing Plans 4.Contingency 4. Contingency (or scenario) Plans

Management by Objectives (MBO)



Is a method whereby managers and employees define goals for every department, project, and person and use them to monitor subsequent performance.
4 major activities: activities: 1. Set goals 2. Develop action plans 3. Review progress 4. Appraise overall performance

Step 1: Set Goals

Step 2: Develop Action Plans

Corporate Strategic Goals Departmental Goals Individual Goals

Action Plans

Review Progress

Step 3: Review Progress

Take Corrective Action

Appraise Performance

Step 4: Appraise Overall Performance

Benefits of MBO

Problems with MBO

1. Manager and employee efforts 1. Constant change prevents MBO from are focused on activities that will taking hold. lead to goal attainment. 2. Performance can be improved at all company levels. 2. An environment of poor employeremployee relations reduces MBO effectiveness. 3. Strategic goals may be displaced by operational goals. 4. Mechanistic organizations and values that discourage participation can harm the MBO process. 5. Too much paperwork saps MBO energy.

3. Employees are motivated.

4. Departmental and individual goals are aligned with company goals.

SingleSingle-use Plans


Plans that are developed to achieve a set of goals that are unlikely to be repeated in the future.

SINGLE-USE PLANS Program Plans for attaining a one-time organizational goal Major undertaking that may take several years to complete Large in scope; may be associated with several projects

Examples:

Building a new headquarters Converting all paper files to digital

Project Also a set of plans for attaining a one-time goal Smaller in scope and complexity than a program; shorter time horizon Often one part of a larger program Renovating the office Setting up a company intranet

Examples:

Standing Plans
Ongoing plans that are used to provide guidance for tasks performed repeatedly within the organization.

STANDING PLANS Policy Broad in scope a general guide to action Based on organizations overall goals/strategic plan Defines boundaries within which to make decisions Drug-free workplace policies Sexual harassment policies Narrow in scope Describes how a specific action is to be performed May apply to specific setting
No-smoking rule in areas of plant where hazardous materials are stored

Examples:

Rule

Example:

Procedure Sometimes called a standard operating procedure (SOP) Defines a precise series of steps to attain certain goals Procedures for issuing refunds Procedures for handling employee grievances

Examples:

Contingency Plans


Plans that define company responses to specific situations, such as emergencies, setbacks, or unexpected conditions.

Crisis Management Planning



A special type of contingency plan.

STAGES OF CRISIS MANAGEMENT Prevention Build relationships Detect signals from environment. Preparation Designate crisis management team and spokesperson. Create detailed crisis management plan. Set up effective communications system. Containment Rapid response: Activate the crisis management plan. Get the awful truth out. Meet safely and emotional needs. Return to business.

Traditional approaches to planning



Top executives  Consulting firms  Central planning department

A group of planning specialists who develop plans for the organization as a whole and its major divisions and departments and typically report directly to the president or CEO.

New workplace approaches to planning



Involvement of everyone in the organization  Sometimes outside stakeholders

Decentralized planning
Managers work with planning experts to develop their own goals and plans.

Guidelines for planning in the new workplace



Start with a strong mission  Set stretch goals  Create a culture that encourages learning  Design new roles for planning staff  Use temporary task forces  Planning still starts and stops at the top