Summary of Chapter # 7 by Hassan Mohi

Foundation of Planning

Planning:

Planning involves defining the organization’s goals, making a strategy for achieving goals and developing plans for organizational work activities.

Planning may be formal or informal

Informal planning:

In informal planning nothing is written and there is no sharing of goals with others in the organization. it lacks continuity.

Formal planning:

In formal planning specific goals are defined and these goals are written and shared with other members in the organization to reduce ambiguity

Purposes of Planning.

Planning includes four different categories:-

1- Planning provide direction to managers and nonmanagers alike. It gives specific direction to employees that what is trying to accomplish.

2- Planning reduces uncertainty by forcing managers to look ahead, anticipate change and consider the impact of change.

3- Planning minimizes waste and redundancy. When different activities are coordinated redundancy can be minimized.

4- Planning establishes the goals or standard used in controlling. If we are unsure of what we trying to accomplish then how can we determine whether we’ve actually done so? So when managers plan they develop goals and plans in order to control their work activities.

Planning and Performance

Planning and performance are interrelated with other. If our planning is strong then our performance is obviously good and vice versa. Some organizations says that planning is good for performance. Without planning there would be no performance. But some says that it is not necessary that performance need planning. Sometimes external environment is a culprit. Finally planning/performance relationship seems to be influenced by the planning time frame.

The Role of Goals and Plans in Planning

Planning involves two tings: goals and plans.

Goals:

Goals are the desired outcomes for individuals, groups or entire organizations. They are our objectives.

Plans:

Plans are the documents that outlines how goals to be met. Plans include resource allocations, schedules and other necessary actions.

Types of Goals

Organizations may have a single or multiple goals. Example, some business firms have only a single goal which is earning a profit. Some organizations have more than one goal. For instance, a business also wants to increase market share and keep employees enthused about working for the organization. Goals can be classified as strategic or financial goals.

Financial Goals:

Financial goals are related to the financial performance of the organization.

Strategic Goals:
Strategic goals are related to the other activities of organization’s performance.

Example McDonald’s Corporation. Their strategic goal is “Play to Win”

Their financial goal is that business earns a lot of profit, identify and diverse intent.

Stated goals:

Stated goals are the official statement of what an organization says, and what it wants its various stakeholders to believe its goals.

Real goals:

The goals that an organization pursues, as defined by the actions of its members.

Example, Bill Ford, a chairman of Ford Motor Company says the goal that we’ll make a motor vehicle which is fuel efficient and environmentally friendly. Ford Motor Company is committed to its job. Environmentalist encourages by the company’s concern. Ford states “We develop, produce and market vehicles for retail customers.” Ford executive are well aware of the need to produce vehicles that the public demands and that add dollars to the bottom line.

Types of Plans

Strategic plans:

The plans that apply to the entire organization, establish the organizational overall goals, and seek to position the organization in term of its environment. Strategic plans tend to cover a longer time frame and a broader view of the organization. Strategic plans also include the formulation of goals.

Operational plans:

Plans that specify the details of how the overall goals are to be achieved are called operational plans. Operational plans define way ways to achieve the goals. Operational plans tend to cover shorter time periods-monthly, weekly, and day-to-day.

Long-term plans:

Plans with a time frame beyond three years.

Short-term plans:

Plans covering one year or less.

Specific plans:

Plans that are clearly defined and that leave no room for interpretation. They have clearly defined objectives.

Example, a manager who seeks to increase his unit’s work output by 8% over a given 12-month period might establish specific procedures, budget allocations, and schedules of activities to reach that goal.

Directional plans:

Plans that are flexible and that set out general guidelines.

Single-use plan:

A one time plan specifically designs to meet the needs of a unique situation. Example, when Wal-Mart decided to expand its stores in China, top-level executives formulated a single-use plan as a guide.

Standing plans:

Ongoing plans that provide guidance for activities performed repeatedly. It includes policies, rules, and procedures.

Establishing Goals And Developing Plans

Approaches to Establishing Goals

Traditional goal setting:

An approaches to goal setting in which goals are set at the top level of the organization and then broken into sub goals for each level of the organization. For example the president of a manufacturing business tells the vice president of production what he expects manufacturing costs to be for the coming year and tell the marketing vie president what level he expect sales o reach for the year. These goals are passed to the next organizational level and written down as so on so forth.

Means-end chain:

When the hierarchy of the goals is clearly defined, then it forms an integrated network of goals or means-end chain. This mans that higher level goals are linked to lower level goals. Achievement of goals at lower level becomes the mesa to reach the goals at the next level.

Management by objectives:

A process of setting mutually agreed –upon goals and using those goals to evaluate employee performance. In MBO, goals are jointly determined by employees and their managers.

Steps in a typical MBO program

1- Formulated overall objectives and strategies. 2- Objectives are given to departmental and divisional unit. 3- Unit managers collaboratively set objectives for their unites with their managers. 4- Specific objectives are collaboratively set with all members. 5- Action plans are specified and agreed upon by managers and employees. 6- Actions plans are implemented. 7- Reviewed and feedback is provided. 8- Objectives is reinforced by performance-based rewards.

MBO programs have four elements: goal specificity, participative decision making, explicit time period and performance feedback.

Characteristics of Well-Design Goals:

There are various characteristics of well-design goals:

1- A well-design goal should be written in term of outcomes rather than actions.

2- Goals should be measurable and quantifiable. Suppose a goal is “to produce a high-quality product.” We can define high quality in a number of ways, the goal should state specifically how you will measure whether the product is high quality. In the area where it is difficult to quantify our intent, we should try to find some specific ways whether hat goal is accomplished.

3- A well-design goal should also be clear as to a time frame. “open ended goals seems preferable because of their time frame flexibility, without a time frame make organization less flexible because we are not sure when the goals has been met”

4- A well-design goal should be challenging but attainable.

5- Goals should be written down. Written goals become visible and tangible evidence of the importance of working toward something.

6- Well-design goals are communicated to all organizational members.

Developing Plans

Contingency Factors in Planning:

There are three factors which affect planning:

1- Level in the organization.

2- Degree of environmental uncertainty.

3- Length of future commitment.

Contemporary Issues in Planning:

1- Planning may create rigidity.

2- Planning can’t develop for dynamic environment.

3- Formal plans can’t replace intuition and creativity.

4- Planning focuses managers attention on today’s competition, not on tomorrow’s survival.

5- Formal planning reinforces success, which may lead to failure.

6- Just planning isn’t enough.