Planning - Goals

Management
Thirteenth Edition
Chapter 8
Planning
Copyright © 2016, 2014, 2012 Pearson Education, Inc. All Rights Reserved
Why Do Managers Plan?
• Four reasons for planning
– Provides direction
– Reduces uncertainty
– Minimizes waste and redundancy
– Sets the standards for controlling
– There is a positive relationship between planning and
performance.
Planning and Performance
• Formal planning is associated with:
– Positive financial results
– The quality of planning and implementation affects
performance more than the extent of planning.
– The external environment can reduce the impact
of planning on performance.
What Is Planning?
• Planning – Defining the organization’s goals,
establishing strategies for achieving those goals,
and developing plans to integrate and coordinate
work activities.
• Goals should cover a specific period.

• Goals should be shared with other organizational
members.
• Goals should be documented
• Goal should be SMART
Goals should be SMART
S • Specific
• Goals are well defined and clear on what needs to be accomplished
M • Measurable
• Able to evaluate whether or not the goals were achieved or not.
A • Attainable
• Goals are realistic about what is possible given the available resources, time and knowledge.
R • Relevant
• Makes sense within your job functions.
T • Time based
• Specify when goals will be achieved
Goals and Plans
• Goals (objectives) – Desired outcomes or targets.
– Plans – Documents that outline how goals are going
to be met.
– Planning starts by defining goals and targets.
– Organizations need to have multiple goals (not single
goals)
Types of Goals
• Financial Goals – Related to the expected internal
financial performance of the organization.
• Strategic Goals (non-financial) – Related to the
performance of the firm relative to factors in its
external environment (e.g., competitors).
• Examples:
1. Increase net income by 5% next year
2. Open new stores in other cities.
Type of goals
Stated goals Real goals
• Publically shared statements • Actual goals
• What organizations say • Not shared with outsiders
• What stakeholders believe • Goals that an organization actually

pursues, as defined by the actions
• Stated goals are published and of its members
written in annual reports, press
releases, mission…etc
• Official statements of what an
organization says, and what it
wants its various stakeholders to
believe its goals are.
Stated
Financial
Real
Goals
Stated
Strategic
(non-
financial)
Real
Approaches to setting goals
Goal setting approaches

The traditional approach
(centralization)
Management by objectives
(MBO)
(Decentralization)
Approaches to Setting Goals (1 of 2)
• Traditional Goal-Setting – An approach

to setting goals in which top managers TOP
set goals that then flow down through the
organization and become subgoals for
each organizational area.
• This method assumes that top
level managers see the big
picture and they are aware of
everything going on in their
organizations. CEO
Goal: increase profits
• Major drawback VP VP VP
Finance Production Marketing
(disadvantage): top level Cut cost Increase production Increase marketing
managers set broad goals and

lower managers have to
make them more specific.
The Downside of Traditional Goal-Setting
• Lower level managers will • Means-Ends Chain – An
make their own interpretations
integrated network of goals
of the goals which could lead
to contradictions and conflicts in which the
at the lower department levels accomplishment of goals at
 which causes the core one level serves as the
value to be lost. means for achieving the
• Success of the traditional goal goals, or ends, at the next
setting approach relies heavily level.
on the presence of a good
organizational structure.
Approaches to Setting Goals
• Management by Objectives (MBO)  decentralized approach
– A process of setting mutually agreed upon goals and using
those goals to evaluate employee performance.
• Performance evaluation is done based on those goals
(comparing results with the MBO goals)
• Teamwork, motivation, and better performance.
• More inputs are provided by each team member.
• Disadvantage: time consuming and lack of accountability
Steps in Goal-Setting
1. Review the organization’s mission, or purpose.
(Relevant goals)
2. Evaluate available resources. (Attainable / achievable)
3. Determine the goals individually or with input from
others. (goals should be SMART)
4. Write down (documented) the goals and communicate
them to all who need to know. (share goals with other
organizational members)
5. Review results and whether goals are being met.
(evaluation)
Planning
• Definition: Planning is the fundamental management function, which involves deciding
beforehand, what is to be done, when is it to be done, how it is to be done and who is going to
do it. It is an intellectual process which lays down an organization's objectives and
develops various courses of action (plans or strategies), by which the organization can
achieve those objectives.
Types of
plans
Frequency
Breadth Time Frame Specificity of use
Strategic Operational Short term Long term Specific Directional Single Use Standing
Types of Plans
• Strategic Plans – Plans that apply to the entire
organization and establish the organization’s
overall goals.
Example: “BU wants to become the best university
in Palestine.”
This is an organization wide goal and thus it requires
a strategic plan to be accomplished.
Types of Plans
•
Operational Plans – Plans that encompass a particular operational area
of the organization.
•
Example: “ the school of Business at BU wants to become the best business
school in Palestine”
•
This is a narrow goal that does not impact the whole university, therefore it
requires an operational plan.
Types of plans
•
Long-Term Plans – plans with time frame beyond 3 years.
•
Short-Term Plans – plans that have a time frame of one year or less.
Types of Plans
• Specific Plans – Plans that are clearly defined and
leave no room for interpretation.
• Directional Plans – Plans that are flexible and set

out general guidelines.
Types of Plans
• Single-use Plan – A one-time plan specifically
designed to meet the needs of a unique situation.
• Standing Plans – Ongoing plans that provide

guidance for activities performed repeatedly.
Planning and Organizational Level
Strategic vs Operational
• STRATEGIC PLAN • OPERATIONAL PLANS

• Long term • Short term
• Directional • Specific
• Single use • Standing
•  set by upper level managers •  set by lower level managers
(mostly top level manager) (mostly first line managers)
Developing plans
• Level of management
• Degree of uncertainty
• Commitment Concept
Approaches to Planning
• Traditional approach
• Non-traditional approach
Contingency Factors in Planning (2 of 2)
• Environmental Uncertainty
– When uncertainty is high, plans should be specific,
but flexible.
– Managers must be prepared to change or amend
plans as they’re implemented.
– At times, they may even have to abandon the plans.
Approaches to Planning
• In the traditional approach, planning is done entirely
by top-level managers, often assisted by a formal
planning department.
– Formal planning department – A group of planning
specialists whose sole responsibility is helping to
write organizational plans.

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Management

• Goals should cover a specific period.

• What organizations say • Not shared with outsiders

• What stakeholders believe • Goals that an organization actually

Goal setting approaches

• Traditional Goal-Setting – An approach

managers set broad goals and

• Directional Plans – Plans that are flexible and set

• Standing Plans – Ongoing plans that provide

• STRATEGIC PLAN • OPERATIONAL PLANS

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