Management : Planning

Definition

• The process of setting goals and actions necessary to achieve those goals

Planning must be

• Effective - set the right goals and actions
• Must analyze the company and also it's environment

Who should plan?

• All managers ( top, middle and first-line managers )
• The scope and time-frame of planning are different according to the levels of management

The benefits / importance of planning ( why managers plan? )

Better coordination

• Planning is a mechanism for coordination
• A plan will define the responsibilities of work group and also coordinate their activities
• It directs the efforts of the organizational members groups to achieve common organizational goals

Focus on forward thinking

• Planning forces the managers to think ahead in terms of opportunities and threats that the organization may face in the future
• In this way the organization can prepare to perform more effectively and efficiently in the future. They must plan effectively so that they can survive in the market lace

Participatory work environment

• Planning creates participatory work environment where people must work together to achieve the goals of the organization
• Employees are also involved in the planning process
• This participatory work environment will : 

          - allow the firm to have access to the expertise and knowledge of it's employees
          - make the employees support and committed to the plan made by the managers ( they are
            also involved in the planning process )

More effective control system

• A plan provides the basis for control of the process and progress of the company
• The progress of the performance can be monitored and the actual performance can be evaluated based on the planning made earlier

Replanning is necessary when factors in environment changes

Type of plan

Mission Statement ( Board Goals )

Strategic Goals                                        Strategic Plan

Operational Objectives                                                               Operational Plans

Single Use Plan               Standing Plan

Strategic Planning Versus Operational Planning

Strategic Planning

• The organization makes decisions and take actions that effect it's long run performance
• It is a long-range planning made by top level management
• Plans designed to achieve the organizational broad goals
• The purpose is to develop and maintain a competitive advantages in the market
• The plan affects the whole organization

Levels of strategic planning ( 3 levels )

1) Corporate strategic planning

• It determine mix of business units that the company maintains to meets the company's goals
• Long-term planning and made by top level management

2) Business strategic planning

• It defines the strategy for each business unit - how the business units will operate in the market arena
• Develop strategy that will maintain competitive advantage to achieve organizational success
• It is made by top managers and the managers in the business unit

3) Functional strategic planning

• It defines the actions plans of the functional areas ( the activities necessary to implement the corporate and business strategy )
• Functional areas - R&D, marketing, production, financial, human resources etc

Operational Planning

• Planning of the day-to-day activities to achieve the strategic goals
• They are more specific and tackles shorter-term issues
• Planning made by middle level and first-line managers for their workgroup / unit

Two types of operational plan:

1) Standing Plans

• Plans for situations that occur frequently ( routine activities )
• It ensures recurring situations are handled consistently ( in prescribed ways )
• They limit employees' flexibility in meeting the needs of the customer

Policies

• General guidelines for decision making
• Provides directions for decision making

Procedures

• Instructions on how to complete a certain task
• They show steps to do the job

Rules

• Detailed and specific regulations for actions
• Specific actions to be taken or not to be taken

2) Single-use Plans:

• Plans for situations which do not occur repeatedly ( for non-recurring activities ). They are used only once

Programs

• A set of activities designed to accomplish a particular set of goals
• It explains the major steps and actions required, the people who are responsible for it and timing of the activities

Projects

• It directs the efforts of the individuals or work group toward the achievement of a specific goal
• They are less comprehensive and narrower in focus than program

Budgets

• Plans that specify how the financial resources should be allocated ( for specific programs and projects )

The process of planning

I) Establish goals

• Determine what the organization wants in the future
• Goals must be clear, specific, measurable
• Must include the time-frame of the planning

II) Define the present situation of the organization

• Must analyze the current performance of the business
• How far is it from it's new goals?
• What resources are available?
• Must get correct information about the organization

III) Identify the aids and barriers to the goals

• Aids - the factors that help to achieve the goals
• Barriers - the factors that will cause problems to the firm
• Aids and barriers - could be from internal and external sources
• The managers must see also the future situations ( future aids and barriers )

IV) Develop a set of actions for achieving the goals

• Develop many alternative actions
• Evaluate those actions
• Select the most effective actions that could achieve the goals

Barriers to effective planning

Barriers

By managers                      By subordinates

( reluctant to establish goals )( reluctant to accept changes )

Demand on manager's time

• Managers are too busy and don't have enough time to plan
• However manager must plan so that they can perform their job effectively and efficiently

Ambiguous and uncertain environment

• Managers find it difficult to plan in an uncertain environment ( conditions of uncertainty )
• Factors in the environment change ( market, social factors, etc )

They are unwilling to give up the existing goals

• They are comfortable with the existing goals

Fear of failure in achieving the goals

• Failure will affect their self-esteem, respect from subordinates and their job

Lack of knowledge about the organization

• Information about the various functions and units in the organization

Lack of knowledge about the environment

• Information about the external environment - customers, competition, economic situation, etc

Overcome the barriers to planning

Involve employees in decision making ( planning process )

• Managers must get the opinions / ideas of employees in developing plans
• Managers must also communicate the plans and their consequences to them
• Managers can give support and commitment from employees in implementing the plans

Tolerate a diversity of view

• Managers must be tolerant - must accept the different views or ideas given by other people. They can look at things from many perspectives
• These different views and perspective will help them to come up with better plans

Encourage strategic thinking

• Planning requires strategic thinking and employees must be provided with the training necessary to develop strategic thinking. Thinking is a skill and it can be developed though training

Provide incentives to managers to encourage them to plan

• Managers must be given recognition or rewards for successful performance

Managers must be encouraged to develop realistic goals

• Develop goals that they can achieve to reduce failure and also to increase confidence

Provides the necessary knowledge about the organization to managers

• Establish an efficient information system in the organization

Provide enough knowledge about the environment

• Establish contacts and smart partnership with the people outside the organization