CHAPTER 5

Organisational planning and

goal setting
 PLANNING

• Is the most fundamental of the 4 functions

– Other functions stem from planning
• Refers to identifying goals and deciding on the
tasks and resource use needed to attain them
 GOALS, PLANS AND
PERFORMANCE
• Goal
– A desired future state that the organisation attempts
to realise.
• Plan
– A blueprint specifying the resource allocations,
schedules and other actions necessary for attaining
goals.
 LEVELS OF GOALS OR PLANS AND THEIR
IMPORTANCE

5
PLANNING: LEVELS OF GOALS
• Planning needs to take account of how best to use the
Internet
• Goals and plans vary at different levels:
– Strategic goals
• Pertain to the organisation as a whole.
– Tactical goals
• Relevant to specific part of organisation
– Operational goals
• Developed at lower levels that specify action steps
towards achieving organisational goals that support
tactical planning activities
 MESSAGES AND VALUES
CONTAINED IN GOALS AND PLANS
Important in terms of:
• Legitimacy (external and internal)
• Source of motivation and commitment
• Resource allocation
• Guides to action
• Rationale for decisions
• Standard of performance
 GOALS IN ORGANISATIONS

• The top goal in an organisation is the mission. It is an

organisation’s reason for existing.
• The mission statement is a broad definition of the
mission.
• Strategic goals and plans need to be flexible
• The planning process comprises several steps and
links all parts of the organisation
 ALIGNING GOALS WITH
STRATEGY MAPS
• Effective goals are consistent and mutually supportive
so that achievements at lower levels logically lead to
attaining high-level goals
– Means-ends chain
• Strategy mapping is an increasingly popular tool for
planning
– Shows cause-effect relationships among goals and
plans
A STRATEGY MAP
 CRITERIA FOR EFFECTIVE
GOALS
• Effective goals share certain
characteristics
– Effective goals:
1. Are specific and measurable
https://www.youtube.com/watch?v=0Mi9_XEXQqc
2. Have a defined time period
3. Cover key result areas
4. Are challenging yet achievable
5. Are linked to rewards
CHARACTERISTICS OF
EFFECTIVE GOALS
MANAGEMENT BY OBJECTIVES

• Originated by Peter Drucker

• Manager and employees jointly set goals
• Comprises 4 major activities:
– Set goals (involves all employees at all levels)
– Develop action plans
– Review progress
– Appraise overall performance
MODEL OF THE MBO PROCESS
 BENEFITS OF MBO

• Focuses manager and employee efforts on activities

that will lead to goal attainment
• Can improve performance at all levels
• Improves employee motivation
• Aligns individual and departmental company goals
 PROBLEMS WITH MBO

• Problems occur when MBO is used inappropriately

– Over-emphasis on goal attainment can lead to
cutting corners
• MBO is not a stand-alone plan
• Alternative is MBM
– Management by means which focuses attention on
the methods and processes used to achieve goals
 SINGLE-USE AND STANDING
PLANS
• Single-use plans
– set of goals that are not likely to used again
• Events not likely to recur
• Standing plans
– provide on-going guidance for tasks performed
repeatedly in the organisation
• Processes and procedures
 BENEFITS OF PLANNING

• Planning is generally beneficial

• Goals and plans:
– Provide a source of motivation and commitment
– Guide resource allocation
– Are a guide to action
– Set a standard of performance
 LIMITATIONS OF PLANNING

• Planning can also hurt organisations

• Goals and plans:
– Can create a false sense of security or certainty
– Cause inflexibility in turbulent times
– Limits the benefit of intuition and creativity
 PLANNING IN A TURBULENT
ENVIRONMENT
Types of planning to counter the effects of today’s
turbulent environment:
• Contingency planning
• Scenario planning
• Crisis planning
 CONTINGENCY PLANNING

• Defines organisation response to specific situations

such as emergencies, setbacks or unexpected
conditions
• Brain storm worst case scenarios
• Develop strategies to counter impacts
 SCENARIO PLANNING

• A forecasting technique
– Is future-focused
• Possible scenarios based on extrapolating from current
trends and considering future discontinuities
• Two to five possible scenarios for each factor
• Strategies to deal with each scenario
• Shell Scenarios:
• https://www.youtube.com/watch?time_continue=3&v=n
wub4Bhr-aM
 CRITICAL PLANNING

• Firms engage in crisis planning to help them cope with

serious and unexpected events or disaster.
• Crisis planning enhances a company’s ability to
respond to events that may significant or even crippling
repercussions.
• Good crisis planning may well reduce the incidence of
trouble.
• Exhibit 7.7 on the next slide outlines the three primary
stages of a crisis.
 CRITICAL INFRASTRUCTURE
DISTURBANCE PROCESS (CIDP)
 CRISIS MANAGEMENT
PLANNING
• A good crisis management plan (CMP) can mitigate
the effects of sudden and devastating events. It should
cover:
– Pre-event preparation and planning
– Response and Recovery, and
– Post event strategies.
THE NEW PLANNING APPROACH
• Traditional approaches to planning:
– Centralised planning department
• A group of planning specialists who develop
plans for the organisation as a whole and its
major divisions and departments, and typically
report to the CEO.
• Modern approaches to planning:
– Decentralised planning staff
• A group of planning specialists assigned to
major departments and divisions to help
managers develop their own strategic plans.
INNOVATIVE APPROACHES TO
PLANNING
• Involving every one in the organisation
• Sometimes outside stakeholders are involved
• Guidelines for innovative planning:
– Set stretch goals
– Use performance dashboards
– Deploy intelligence teams
SUSTAINABLE DEVELOPMENT AND
GOAL SETTING

• Sustainable organisations set goals for their

environmental performance
– e.g. Reducing carbon footprint by 20% over 3 years
• This achieves systematic and disciplined
implementation rather than talk and no action