FOUNDATION OF PLANNING

Chapter No. 07

TOPICS TO BE COVERED….

What is Planning?

What are types of Planning?

Purpose of Planning

Planning Performance Relationship

Elements of Planning

Types of Goals

Level/Nature of Goals

Types of Plans

TOPICS TO BE COVERED….

What are SMART Goals?

Goal Setting Process

Concept of MBO

WHAT IS PLANNING

Planning

A primary managerial activity that involves:

• Defining the organization’s goals

• Establishing an overall strategy for achieving those goals

• Developing plans for organizational work activities.

WHAT ARE 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

PURPOSE OF PLANNING

Provides direction

Reduces uncertainty

Minimizes waste and redundancy

Sets the standards for controlling

PLANNING PERFORMANCE RELATIONSHIP

The Relationship Between Planning And Performance Formal planning is associated with:

Higher profits and returns on assets.

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,

Formal planning must be used for several years before planning begins to affect performance.

ELEMENTS OF PLANNING

Goals (also Objectives)

Desired outcomes for individuals, groups, or entire organizations

Provide direction and evaluation performance criteria

We may say that objectives are present part of long term goals

Plans Way or mean to do certain action.

Predefined course of action to achieve organizational goals.

Documents that outline how goals are to be accomplished

Describe how resources are to be allocated and establish activity schedules

TYPES OF GOALS

Stated Goals versus Real Goals

Broadly-worded official statements of the organization (intended for public consumption) that may be irrelevant to its real goals (what actually goes on in the organization).

(McDonald’s Corporation)

Execute strategic roadmap—“Plan to Win.”

Grow the business profitably.

Identify and develop diverse talent.

Promote balanced, active lifestyles.

LEVEL/NATURE OF GOALS

1. Strategic Goals - 'What?'Strategic decisions deal with the big picture of your business. The focus of strategic decisions is typically external to the business and usually future oriented. Strategic decision-making creates the forward thrust in the business.

It includes decisions about: What business are you in? What is your vision for the business? What's your business' identity? What do you stand for? Which direction is the business headed? How will the business compete? Corporations often capture their overall business strategy in a "Statement of Intent"

and it's an excellent term for describing what strategic decision-making is. Too often people confuse strategic decisions with tactical decisions and fail to really examine the big picture. It can lead to stagnation in the business and an inability to move forward.

2. Tactical Goals - 'How?'

Tactical decisions involve the establishment of key initiatives to achieve the overall strategy. For example, if you have decided to be the Number 1 provider in your market (a strategic decision) then you will develop tactics (e.g. implement a marketing system, increase number of therapists) to achieve that outcome. In a small business you may have 4 or 5 key tactics that you are going to use to achieve your overall strategy.

Again this layer of decision-making can sometimes be overlooked yet it isthe glue that creates a strong connection between your long-term visionand your day-to-day activities. Tactical decision-making is the domain of'mission' statements.

Think in terms of the battlefields from which the term has emerged. Theoverall strategy, that is, what the army is there to do, is to win the war. Thenyou have a number of 'missions' you send troops on, preferably diplomaticones, the cumulative effect of which is intended to win the war.

3. Operational Goals - 'How will we deploy resources?‘Operational decisions determine how activities actually get done. They

are the 'grass roots' decisions about who is going to do what and when. It includes:

How will we spend our money this month? How will we service that client? What is our procedure for delivering an order? Who will be doing quality control? SOPs If you are making decisions involving processes and procedures they

are usually operational decisions. Operational decisions are often made in 'real time' and are the result of needing to make quick adjustments or change to achieve the desired outcome.

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 three years

Short-Term Plans Plans with time frames on one year or less

Specific Plans Plans that are clearly defined and leave no room for

interpretation

Directional Plans Flexible plans that set out general guidelines, provide

focus, yet allow discretion in implementation.

Single-Use Plan

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.

WHAT ARE SMART GOALS?

The acronym SMART stands for specific, measurable, attainable, relevant and timely. Using SMART creates a clear-cut path to preset goals. With a defined timeline to achieve the SMART standards, businesses are able to plan their future by examining the past. Through planning and organization.

S Specific Smart goals are specificenough to suggest action.

Save enough money to geta refrigerator, not justsave money.

M Measurable You need to know whenyou’ve achieved your goal,or how close you are.Goals which aren'tmeasurable, like "I'd liketo have more money," aremuch harder to achieve -and you don't even knowwhen you get there.

A refrigerator costs $600,and you have $300already saved.

A Attainable The steps towardreaching your goal needto be reasonable andpossible.

I know I can save enoughmoney each week toarrive at my goal withinone year.

R Relevant The goal needs to makecommon sense. You don'twant to struggle or worktoward a goal that doesn'tfit your need.

You don't need to savemoney for 18 pairs ofshoes.

T Time Bound Set a definite target date. The repairman says myrefrigerator won't lastanother year. I need anew fridge in the next sixmonths.

GOAL SETTING PROCESS

1. REVIEW the organization’s mission statement.

Do goals reflect the mission?

2. Evaluate available resources.

Are resources sufficient to accomplish the mission?

3. Determine goals individually or with others.

Are goals specific, measurable, and timely?

4. Write down the goals and communicate them.

Is everybody on the same page?

5. Review results and whether goals are being met.

What changes are needed in mission, resources, or goals?

CONCEPT OF MBO

Management By Objectives (MBO)

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

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.