MGT - CH-8 - Planning Work Activities

MGT 201: Principles of Management
Chapter 8
Foundations of Planning
CHAPTER 8: Planning Work Activities

Robbins, S. P. & Coulter, M. (2016)
Management (13th Edition), Pearson
Education Limited
What is Planning?
Planning
– A primary functional managerial activity that involves:
• Defining the organization’s goals
• Establishing an overall strategy for achieving those goals
• Developing a comprehensive set of plans to integrate and
coordinate organizational work
– Concerned with both ends (what is to be done) and means (how’s it to
be done)
– Types of Planning
• Informal: not written down, short-term focus, specific to an
organizational unit
• Formal: written, specific, and long-term focus, involves shared goals for
the organization
Why do Managers Plan?
Purposes of Planning
– Planning provides direction to managers: planning is the primary
management function that establishes the basis for all other
management functions. Without planning, departments and
individuals might work at cross purposes, preventing the organization
from moving efficiently towards its goals
– Planning reduces uncertainty by forcing managers to look ahead,
anticipate change, consider the impact of change, and develop
appropriate responses
– Planning minimizes waste and redundancy: when work activities
are coordinated around established plans, it reduces overlapping and
wasteful activities
– Planning establishes the standard for controlling: in planning we
develop the goals and the plans. Then through controlling, we
compare actual performance against the goal and identify significant
deviations and take necessary corrective actions. Without planning,
there would be no way to control
Why do Managers Plan?
Relationship between Planning and Performance
Numerous studies have looked at the relationship between planning and
performance. We can draw following conclusions from these studies
1. Formal planning is associated with:

- Higher profits and returns of assets.
- Positive financial results
2. The quality of planning and implementation affects performance more than

the extent of planning.
3. The external environment can reduce the impact of planning on performance,
4. Planning / Performance relationship is influenced by the planning time-frame.

Formal planning must be used for several years before planning begins to affect
performance.
How do Managers Plan?
Elements of Planning
Planning involves two important elements
1. Goals (also objectives)

– Desired outcomes for individuals, groups, or entire organizations
– Provide direction and evaluation performance criteria
– Represent the criteria against which actual work accomplishments can
be measured
2. Plans
– Documents that outline how goals are to be accomplished
– Describe how resources are to be allocated and establish activity
schedules
Types of Goals
– All organizations have multiple objectives
– No single measure can evaluate whether an organization is successful
Financial goals
Are related to the expected internal financial performance of the organization
Strategic goals
Are related to the performance of the firm relative to factors in its external
environment (e.g., competitors).
- Survival not specifically mentioned as a goal, however, it is extremely important.

Organizations must survive if other goals are to be achieved.
Stated Objectives From Large US Companies
Types of Goals
– Another way of describing goal is in terms of whether they are Real or Stated
Stated goals
Official statements of what an organization says, and what it wants its various
stakeholders to believe, its goals are
– Can be found in an organization’s charter, annual report, public relations
announcements or in public statements made by managers
Real goals
Those goals that an organization actually pursues, as defined by the actions of its
members
– Actions define priorities
Types of Plans
– Most popular way to describe organizational plans are by their
• Breadth – strategic vs operational
• Time frame – long term vs short term
• Specificity – directional vs specific
• Frequency of use – single vs standing
The planning classifications are not independent
Breadth Time Frame Specificity Frequency of use
Strategic Long term Directional Single use
Operational Short term Specific Standing

Types of Plans
Strategic Plans
• Apply to the entire organization.
• Establish the organization’s overall goals.
• Seek to position the organization in terms of its environment.
• Cover extended periods of time.
Operational Plans
• Specify the details of how the overall goals are to be achieved.
• Cover short time period
Long term Plans

• Plans with time frames extending beyond 3 years
• Definition of long term has changed with increasingly uncertain organizational
environments
Short Term Plans
• Plans with time frames of one year or less
Types of Plans
Specific Plans
• Plans that are clearly defined and leave no room for interpretation
• Required clarity and predictability often do not exist
Directional Plans
• Flexible plans that set out general guidelines, provide focus, yet allow
discretion in implementation (does not limit course of action)
Single Use Plans

• A one-time plan specifically designed to meet the need of a unique
situation
Standing Plans
• Ongoing plans that provide guidance for activities performed repeatedly
• Include policies, procedures and rules
Specific Versus Directional Plans
Establishing Goals and Developing Plans
Approaches to establishing goals
Management by Objective (MBO): A management system in
which
– Specific performance goals are jointly determined by
employees and managers.
– Progress toward accomplishing goals is periodically reviewed.
– Rewards are allocated on the basis of progress towards the
goals.
Key elements of MBO:

– Goal specificity, participative decision making, an explicit
performance/evaluation period, feedback
Approaches to establishing goals
Does MBO Work?

Reason for MBO Success:
– Top management Commitment and employee involvement
– Increases employee performance and organizational productivity
- depends on support of top managers for MBO
Problems with MBO

– Not as effective in dynamic environments that require constant
resetting of goals
– Overemphasis on individual accomplishment may create
problems with teamwork
– Allowing the MBO program to become an annual paperwork
shuffle
Steps in a typical MBO Program
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 toward objectives is periodically reviewed, and feedback is
provided.
8. Successful achievement of objectives is reinforced by performance-
based rewards.
Approaches to Planning
• Traditional, top-down approach
– Planning done by top manager
– Formal planning department – specialists whose sole
responsibility is to help to write organizational plans
– Plans float down to lower levels
• Tailored to particular needs at each lower level
– Most effective if plan is a workable document used by organizational
members for direction and guidance
• Inclusive approach
– Employees at each level develop plans suited to their needs
– Employees acquire greater sense of the importance of planning
when they participate in the process
– Plans more likely to be used in directing and coordinating work
Contemporary Issues in Planning
 Criticisms of Planning
1. Planning may create rigidity
 unwise to force a course of action when the environment is fluid
2. Plans can’t be developed for a dynamic environment
 flexibility required in a dynamic environment
 can’t be tied to a formal plan
3. Formal plans can’t replace intuition and creativity
 mechanical analysis reduces the vision to some type of programmed
routine
4. Planning focuses managers’ attention on today’s competition, not on
tomorrow’s survival
 plans concentrate on capitalizing on existing business opportunities
 hinders managers who consider creating or reinventing an industry
5. Formal planning reinforces success, which may lead to failure
 success may breed failure in an uncertain environment
Contemporary Issues in Planning
 Effective Planning in Dynamic Environments

 Develop plans that are specific but flexible.
 Understand that planning is an ongoing process.
 Change plans when conditions warrant.
 Persistence in planning eventually pay off.

 Flatten the organizational hierarchy to foster the
development of planning skills at all organizational
levels.

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MGT 201: Principles of Management

CHAPTER 8: Planning Work Activities

1. Formal planning is associated with:

2. The quality of planning and implementation affects performance more than

3. The external environment can reduce the impact of planning on performance,

4. Planning / Performance relationship is influenced by the planning time-frame.

1. Goals (also objectives)

- Survival not specifically mentioned as a goal, however, it is extremely important.

The planning classifications are not independent

Breadth Time Frame Specificity Frequency of use

Strategic Long term Directional Single use

Operational Short term Specific Standing

Long term Plans

Single Use Plans

Key elements of MBO:

Does MBO Work?

Problems with MBO

 Effective Planning in Dynamic Environments

 Understand that planning is an ongoing process.

 Change plans when conditions warrant.

 Persistence in planning eventually pay off.

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