Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin

Management A Practical Introduction

Third Edition

Angelo Kinicki &Brian K. Williams

Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin2

Chapter 5: Planning

The Foundation of Successful Management

Planning & UncertaintyFundamentals of PlanningThe Planning/Control CycleManagement by ObjectivesProject Planning

Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin3

5.1 Planning & Uncertainty

HOW CAN PLANNING HELP MANAGERS DEAL WITH UNCERTAINTY?

Planning: defined as setting goals and deciding how to achieve them

Another definition: Planning is coping with uncertainty by formulating future courses of action to achieve specified results.

Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin4

5.1 Planning & Uncertainty

HOW CAN PLANNING HELP MANAGERS DEAL WITH UNCERTAINTY?

Planning is used together with strategic management and evolves from the company’s mission and vision

Planning covers strategic planning (done by top managers, tactical planning (done by middle managers), and operational planning (done by first-line managers)

Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin5

5.1 Planning & Uncertainty

Figure 5.1: Planning and Strategic Management

Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin6

5.1 Planning & Uncertainty

WHY NOT PLAN?

Managers need to be cautious when planning for two reasons:

1. Planning requires managers to set aside their regular responsibilities to develop plans

2. Managers need to be flexible enough to react to new events because there may not always be enough time to plan

Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin7

5.1 Planning & Uncertainty

HOW DOES PLANNING HELP?

There are four main benefits of planning:1. Organizations can use plans to check their progress toward their goals2. Plans define the responsibilities of a firm’s departments and coordinates their activities3. Planning requires managers to consider what may happen in the future4. Planning for unpleasant contingencies helps managers deal with uncertainty

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McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

Why not plan?

Planning requires you to set aside time to do it

Most managers are time-starved

Hard to set aside time to plan

You may have to make some decisions without a lot of time to plan

Even in today’s computer age, you may not have time to plan a decision

Plan need not be perfect to be executable

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McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

The Benefits of Planning

1) Planning helps you check on your progress

2) Planning helps you coordinate activities

3) Planning helps you think ahead

4) Above all, planning helps you cope with uncertainty

Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin10

5.1 Planning & Uncertainty

There are three types of uncertainty:

1. State Uncertainty

2. Effect Uncertainty

3. Response Uncertainty

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Three Types of Uncertainty

“What possible harmful event could occur?”

State Uncertainty: when the environment is considered unpredictable.

Example: the uncertainty regarding the weather

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McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

Three Types of Uncertainty

“What possible harmful impact might an environmental change have?”

Effect Uncertainty: when the effects of environmental changes are unpredictable.

Example: losing the trail in a snowstorm and risking hypothermia.

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Three Types of Uncertainty

“What possible harmful consequence might a decision have?”

Response Uncertainty: when the consequences of a decision are uncertain.

Example: you might have a cell phone in a snowstorm, but someone has to receive the call.

Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin14

Chapter 5: Planning

CLASSROOM PERFORMANCE SYSTEM

A firm that is analyzing what possible harmful event could occur is looking at

A) response uncertaintyB) effect uncertaintyC) defense uncertaintyD) state uncertainty

Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin15

Chapter 5: Planning

CLASSROOM PERFORMANCE SYSTEM

A firm that is analyzing what possible harmful event could occur is looking at

A) response uncertaintyB) effect uncertaintyC) defense uncertaintyD) state uncertainty

Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin16

5.1 Planning & Uncertainty

Raymond E. Miles and Charles C. Snow suggested that firms will adopt one of four strategies to respond to uncertainty:

1. Defenders

2. Prospectors

3. Analyzers

4. Reactors

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Responding to Uncertainty

Defenders: are expert at producing and selling narrowly defined products and services.

Analyzers: let the other organizations take the risks of product development and marketing and then imitate what seems to work best.

Prospectors: focus on developing new markets or services and in seeking out new markets rather than waiting for things to happen.

Reactors: make adjustments only when finally forced to by environmental pressures.

Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin18

5.1 Planning & Uncertainty

Miles and Snow also argued that firms continuously make decisions about three kinds of business problems:

1. entrepreneurial - selecting and making adjustments of products and markets

2. engineering - producing and delivering the products

3. administrative - establishing roles, relationships, and organizational processes

Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin20

5.2 Fundamentals Of Planning

WHAT IS INVOLVED WITH PLANNING?

Planning translates an organization’s mission (purpose or reason for being) into objectives The mission statement answers the question “what is our reason for being?”The vision statement answers the questions “what do we want to become where do we want to go strategically?”Planning begins with the mission statement

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Mission Statement

Outline of the fundamental purposes of the

organization

Should address:

Organization’s self-concept

Company philosophy and goals

Long-term survival

Customer needs

Social responsibility

Nature of company’s product or service

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McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

The World Bank’s Mission

1) In the last chapter, we learned about the World Bank.

2) Go to http://web.worldbank.org

3) Explore the “about us” section

4) What is the World Bank’s mission?

5) Does this mission statement meet the criterion laid out in this chapter?

Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin23

5.2 Fundamentals Of Planning

Figure 5.2: Making Plans

Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin24

5.2 Fundamentals Of Planning

Having clearly defined mission and vision statements allows three things to happen:1. strategic planning by top management where long-term goals are determined and available resources are identified 2. tactical planning by middle management where contributions their departments or similar work units can make are determined3. operational planning by first-line managers where how specific tasks will be accomplished using available resources is determined

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Types of Planning

Strategic planning: top managers decide what the organization’s long-term goals should be for the next 1-5 years with the resources they expect to have available.

Tactical planning: middle managers decide what contributions their departments or similar work units can make with their given resources during the next 6-24 months.

Operational planning: first-line managers determine how to accomplish specific tasks with available resources within the next 1-52 weeks.

Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin26

5.2 Fundamentals Of Planning

Figure 5.3: Three Levels of Management, Three Types of Planning

Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin27

5.2 Fundamentals Of Planning

The purpose of planning is to set goals and then formulate action plans Specific commitments to achieve a measurable result within a stated period of time are known as goals or objectivesGoals are put in a means-end chain where the achievement of objectives is the means to achieve goals or ends

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Types of Goals

Strategic Goals: are set by and for top management and focus on objectives for the organization as a whole.

Tactical Goals: are set by and for middle managers and focus on the actions needed to achieve strategic goals.

Operational Goals: are set by and for first-line managers and are concerned with short-tem matters associated with realizing tactical goals.

Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin29

Chapter 5: Planning

CLASSROOM PERFORMANCE SYSTEM

Goals set by top management that focus on objectives for the organization as a whole are

A) tactical goalsB) operational goalsC) strategic goalsD) organizational goals

Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin30

Chapter 5: Planning

CLASSROOM PERFORMANCE SYSTEM

Goals set by top management that focus on objectives for the organization as a whole are

A) tactical goalsB) operational goalsC) strategic goalsD) organizational goals

Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin31

5.2 Fundamentals Of Planning

Once goals are set, the firm makes an action plan which defines the course of action needed to achieve stated goalsAn operating plan defines how the firm will conduct business based on the action plan - it identifies clear targets such as revenues, cash flow, and market share Plans developed for activities that occur repeatedly over a period of time are called standing plansStanding plans consist of policies (a standing plan that outlines the general response to a designated problem or situation), procedures (a standing plan that outlines the response to a particular problem or circumstance), and rules (a standing plan that designates specific required action)

Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin32

Chapter 5: Planning

CLASSROOM PERFORMANCE SYSTEM

“No smoking anywhere in the building” is an example of a

A) policyB) procedureC) ruleD) request

Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin33

Chapter 5: Planning

CLASSROOM PERFORMANCE SYSTEM

“No smoking anywhere in the building” is an example of a

A) policyB) procedureC) ruleD) request

Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin34

5.2 Fundamentals Of Planning

Plans developed for activities that are not likely to be repeated in the future are called single-use plans Single-use plans can be either programs (encompass a range of projects or activities) or projects (have less scope and complexity than a program)

Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin35

5.2 Fundamentals Of Planning

WHAT ARE SMART GOALS?

Good goals are SMART:they should be stated in specific terms they should be measurable or quantifiablethey should be challenging but attainablethey should be results-oriented and support the organization’s vision they should specify target dates by which they should be accomplished

Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin36

Chapter 5: Planning

CLASSROOM PERFORMANCE SYSTEM

Good goals should have all of the following characteristics except

A) results-orientedB) target dateC) supportiveD) attainable

Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin37

Chapter 5: Planning

CLASSROOM PERFORMANCE SYSTEM

Good goals should have all of the following characteristics except

A) results-orientedB) target dateC) supportiveD) attainable

Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin38

5.3 The Planning/Control Cycle

WHY HAVE PLANNING AND CONTROL?

Once an organization has a plan, it needs to make sure it stays on trackThe planning/control cycle has two planning steps, and two control steps:planning steps: make the plan, and carry out the plancontrol steps: control the direction by comparing results with the plan, and control the direction by taking corrective actions

Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin39

Chapter 5: Planning

Figure 5.5: The Planning/Control Cycle

Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin40

5.4 Promoting Goal Setting: Management By Objectives

HOW CAN MANAGERS PROMOTE GOAL

SETTING?

Peter Drucker developed a system called Management by Objectives (MBO) designed to motivate employees to achieve goalsMBO has four steps:1. Managers and employees jointly set objectives for the employeeGoals should include improvement objectives, personal development objectives, and maintenance objectives

Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin41

5.4 Promoting Goal Setting: Management By Objectives

2. Managers develop action plansAction plans should be developed at each level describing how goals will be attained

3. Managers and employees periodically review the employee’s performanceFormal and informal meetings are used to review progress and provide feedback

4. The manager makes a performance appraisal and rewards the employee according to the results Performance that meets objectives should be rewarded, and poor performance should be addressed

Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin42

5.4 Promoting Goal Setting: Management By Objectives

If MBO is to be successful, three things must occur:

1. Top management must be committedCommitment translates to productivity gains

2. It must be applied organization-wideTo be successful, MBO must be applied in all divisions and departments

3. Objectives must cascadeMBO works by cascading objectives down through the organization

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Three Types of Objectives Used in MBO

Improvement objectives: Increase sport utility sales by 10%

Personal development objectives: attend five days of leadership training

Maintenance objectives: continue to meet the increased sales goals specified last quarter

Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin44

5.5 Project Planning

WHAT IS PROJECT PLANNING?

The preparation of single-use plans or projects is called project planningProject management involves achieving a set of goals through planning, scheduling, and maintaining progress of the activities that comprise the project Project planning reduces the risk of uncertainty and speeds up the process of getting things done

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Why Project Planning Is Important Today

1. Project Planning1. Preparation of single-use plans or projects,

followed by…

2. Project Management 1. Achieving a set of goals through planning,

scheduling, and maintaining progress of the activities that comprise the project

2. Fastest way of getting things done

3. Works outside usual chain of command

4. Brings people with different skills together on a temporary basis

Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin46

5.5 Project Planning

Figure 5.6: The Project Life Cycle

Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin47

5.5 Project Planning

All projects go through a life cycle:1. In the definition stage, the problem is stated, assumptions and risks are identified, goals and objectives are determined, and the budget and schedule are set2. In the planning stage, facilities and equipment are identified, people and their duties are selected, and the schedule is considered3. During the execution stage, the management style and control tools are established4. Closing occurs when the client accepts the project

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The Project Life Cycle: The Predictable Evolution of a Project

1. Definition 1. State the problem and identify goals

and objectives

2. Planning 1. Identify resources needed and

schedule of activities required

3. Execution 1. Actual work stage

2. On time and under budget

4.4. ClosingClosing1.1. Client accepts projectClient accepts project

Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin49

Chapter 5: Planning

CLASSROOM PERFORMANCE SYSTEM

At what stage in the project life cycle is the budget determined?

A) definitionB) planningC) executionD) closing

Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin50

5.5 Project Planning

WHY IS PROJECT PLANNING IMPORTANT?

Deadlines are an essential component in the project planning process

Deadlines help keep managers on track and provide feedback