Fundamentals of planning
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Planning allows managers to set objectives and determine how to accomplish them. Managers use different types of plans like strategic, operational, and single-use plans. Effective planning requires tools like forecasting, scenario planning, benchmarking, and techniques like management by objectives which involve jointly setting objectives and reviewing results.
Fundamentals of planning
- 2. Chapter 2 Study Questions Why and how do managers plan? What types of plans do managers use? What are the useful planning tools and techniques? How can plans be well implemented? 2
- 3. Study Question 1: Why and how do managers plan? Planning – The process of setting objectives and determining how to best accomplish them. Objectives – Identify the specific results or desired outcomes that one intends to achieve. Plan – A statement of action steps to be taken in order to accomplish the objectives. 3
- 4. Study Question 1: Why and how do managers plan? Steps in the planning process: – Define your objectives. – Determine where you stand vis-à-vis objectives. – Develop premises regarding future conditions. – Analyze and choose among action alternatives. – Implement the plan and evaluate results. 4
- 5. Figure 7.1 The roles of planning and controlling in the management process. 5
- 6. Study Question 1: Why and how do managers plan? Benefits of planning: – Improves focus and flexibility. – Improves action orientation. – Improves coordination. – Improves time management. – Improves control. 6
- 7. Study Question 1: Why and how do managers plan? Personal Time Management Tips: – DO say “no” to requests that distract from what you should be doing. – DON’T get bogged down in details that can be addressed later. – DO screen telephone calls, emails, and meeting requests. 7
- 8. Study Question 1: Why and how do managers plan? Personal Time Management Tips: – DON’T let drop-in visitors instant messaging use up your time – DO prioritize your important and urgent work – DON’T become calendar bound by letting others control your schedule – DO follow priorities; do most important and urgent work first. 8
- 9. Study Question 2: What types of plans do managers use? Short-range and long-range plans – Short-range plans = 1 year or less – Intermediate-range plans = 1 to 2 years – Long-range plans = 3 or more years People vary in their capability to deal effectively with different time horizons. Higher management levels focus on longer time horizons. 9
- 10. Study Question 2: What types of plans do managers use? Strategic and operational plans – Strategic plans — set broad, comprehensive, and longer-term action directions for the entire organization. – Operational plans — define what needs to be done in specific areas to implement strategic plans. • Production plans • Financial plans • Facilities plans • Marketing plans • Human resource plans 10
- 11. Study Question 2: What types of plans do managers use? Policies and procedures – Standing plans • Policies and procedures that are designed for repeated use. – Policy • Broad guidelines for making decisions and taking action in specific circumstances. – Rules or procedures • Plans that describe exactly what actions are to be taken in specific situations. 11
- 12. Study Question 2: What types of plans do managers use? Budgets and project schedules – Single-use plans • Only used once to meet the needs and objectives of a well-defined situation in a timely manner. – Budgets • Single-use plans that commit resources to activities, projects, or programs. • Fixed, flexible, and zero-based budgets. – Projects • One-time activities that have clear beginning and end points. • Project management and project schedules. 12
- 13. Study Question 3: What are the useful planning tools and techniques? Forecasting – Making assumptions about what will happen in the future. – Qualitative forecasting uses expert opinions. – Quantitative forecasting uses mathematical and statistical analysis. – All forecasts rely on human judgment. – Planning involves deciding on how to deal with the implications of a forecast. 13
- 14. Study Question 3: What are the useful planning tools and techniques? Contingency planning – Identifying alternative courses of action that can be implemented to meet the needs of changing circumstances. – Contingency plans anticipate changing conditions. – Contingency plans contain trigger points. 14
- 15. Study Question 3: What are the useful planning tools and techniques? Scenario planning – A long-term version of contingency planning. – Identifying alternative future scenarios. – Plans made for each future scenario. – Increases organization’s flexibility and preparation for future shocks. 15
- 16. Study Question 3: What are the useful planning tools and techniques? Benchmarking – Use of external comparisons to better evaluate current performance and identify possible actions for the future. – Adopting best practices of other organizations that achieve superior performance. 16
- 17. Study Question 3: What are the useful planning tools and techniques? Use of staff planners – Coordinating the planning function for the total organization or one of its major components. – Possible communication gaps between staff planners and line management. 17
- 18. Study Question 4: How can plans be well implemented? Project management… Makes sure activities required to complete a project are planned well and accomplished on time and within budget Projects – one-time activities with many component tasks that must be completed in proper order and within budget 18
- 19. Study Question 4: How can plans be well implemented? Gantt charts – graphic display of scheduled tasks required to complete a project CPM/PERT – a combination of the critical path method and the program evaluation and review technique Critical path – pathway from project start to finish that involves activities with the longest completion times 19
- 20. Study Question 4: How can plans be well implemented? Key issues and principles in the goal-setting process: – Set specific goals. – Set challenging goals. – Ensure goals are attainable. – Goals must be timely. – Make sure goals are measurable. 20
- 21. Study Question 4: How can plans be well implemented? Goal-setting theory – Participation in goal setting • unlocks the motivational potential of goal setting. • management by objectives (MBO) promotes participation. • when participation is not possible, workers will respond positively if supervisory trust and support exist. 21
- 22. Figure 7.2 A sample hierarchy 22
- 23. Study Question 4: How can plans be well implemented? Management by Objectives (MBO) – A structured process of regular communication. – Supervisor/team leader and workers jointly set performance objectives. – Supervisor/team leader and workers jointly review results. 23
- 24. Study Question 4: How does management by objectives operate? MBO involves a formal agreement specifying … – Workers’ performance objectives for a specific time period. – Plans through which performance objectives will be accomplished. – Standards for measuring accomplishment of performance objectives. – Procedures for reviewing performance results. 24
- 25. Figure 7.3 Management by objectives as an integrated planning and control framework. 25
- 26. Study Question 4: How does management by objectives operate? The MBO process: – Supervisor and workers jointly set objectives, establish standards, and choose actions. – Workers act individually to perform tasks; supervisors act individually to provide necessary support. – Supervisor and workers jointly review results, discuss implications, and renew the MBO cycle. 26
- 27. Study Question 4: How does management by objectives operate Types of MBO performance objectives – Improvement – Personal development – Maintenance Criteria for effective performance objectives – Specific – Time defined – Challenging – Measurable 27
- 28. Study Question 4: How does management by objectives operate? Pitfalls to avoid in using MBO – Tying MBO to pay. – Focusing too much attention on easily quantifiable objectives. – Requiring excessive paperwork. – Having managers tell workers their objectives. 28
- 29. Study Question 4: How does management by objectives operate? Advantages of MBO – Focuses workers on most important tasks and objectives. – Focuses supervisor’s efforts on important areas of support. – Contributes to relationship building. – Gives workers a structured opportunity to participate in decision making. 29
- 30. Study Question 4: How can plans be well implemented? Participation and involvement – Participatory planning requires that the planning process include people who will be affected by the plans and/or will help implement them. – Benefits of participation and involvement: • Promotes creativity in planning. • Increases available information. • Fosters understanding, acceptance, and commitment to the final plan. 30
- 31. Figure 7.4 How participation and involvement help build commitments to plans. 31