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Foundations of Planning

Planning
It involves defining the organization’s goals, establishing strategies for
achieving those goals, and developing plans to integrate and coordinate
work activities.

The term planning means formal planning. In formal planning, specific


goals covering a specific time period are defined. These goals are written
and shared with organizational members to reduce ambiguity and create
a common understanding about what needs to be done. Specific plans
exist for achieving these goals.
Why Do Managers Plan?
1. Planning provides direction to managers and non-
managers alike.
2. Planning reduces uncertainty by forcing managers to look
ahead, anticipate change, consider the impact of change,
and develop appropriate responses.
3. Planning minimizes waste and redundancy.
4. Planning establishes goals or standards used in controlling.
Two Important Aspects of Planning
1. GOALS – desired outcomes or targets; objectives; they
guide management decision and form the criterion against
which work results are measured.

2. PLANS – documents that outline how goals are going to be


met; they usually include resource allocations; schedules,
and other necessary actions to accomplish the goals.
Types of Goals
Financial goals – are related to the financial performance of the
organization.
Strategic goals – are related to all other areas of an organization’s
performance.
Stated goals – official statements of what an organization says and what it
wants its various stakeholders to believe.
Real goals – goals that an organization actually pursues, as defined by the
action of its members.
Types of Plans
TYPES OF PLANS

Breadth Time Frame Specificity Frequency of Use

Strategic Long term Directional Single use

Operational Short term Specific Standing


Types of Plans
Strategic plans – are plans that apply to the entire organization and establish the
organization’s overall goals.
Operational plans – plans that encompasses a particular operational area of the
organization
Long-term plans – those with a time frame beyond three years.
Short-term plans –cover one year or less.
Specific plans – are clearly defined and leave no room for interpretation.
Directional plans – are flexible plans that set out general guidelines.
Single-use plans – is a one-time plan specifically designed to meet the needs of a
unique situation.
Standing plans – are on going plans that provide guidance for activities performed
repeatedly. It includes policies, rules, and procedures.
Approaches to Setting Goals
TRADITIONAL GOAL SETTING – goals set by top managers flow down
through the organization and become sub-goals for each organizational
area.

This traditional perspective assumes that top managers know what’s best
because they see the big picture. The goals passed down to each
succeeding level guide individual employees as they work to achieve
those assigned goals.
Approaches to Setting Goals
MANAGEMENT BY OBJECTIVES (MBO) – a process of setting mutually
agrees-upon goals and using those goals to evaluate employee
performance.

Four elements:
1. Goal specificity
2. Participative decision making
3. Explicit time period
4. Periodically review whether progress was being made toward
achieving those goals.
Steps in MBO
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 towards objectives is periodically reviewed, and feedback is provided.
8. Successful achievement of objectives is reinforced by performance-based
rewards.
Well-Written Goals
1. Written in terms of outcomes rather than actions
2. Measurable and quantifiable
3. Clear as to a time frame
4. Challenging yet attainable
5. Written down
6. Communicated to all necessary organizational
members
Developing Plans
Three contingency factors affecting the process
of developing plans:
1. Organizational level
2. Degree of environment uncertainty
3. Length of future commitments

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