Management Principles (MLA Format) 3 Pages min Of Full Text

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Planning work activities

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What Is Planning? (8.1)

Planning – defining the organization’s goals, establishing strategies for achieving those goals, and developing plans to integrate and coordinate work activities.

Formal planning

Specific goals covering a specific time period

Written and shared with organizational members

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Planning involves defining the organization’s goals, establishing strategies for achieving those goals, and developing plans to integrate and coordinate work activities. It’s concerned with both ends (what) and means (how).

When we use the term planning, we mean formal planning. In formal planning, specific goals covering a specific time period are defined. These goals are written and shared with organizational members to reduce ambiguity and create a common understanding about what needs to be done. Finally, specific plans exist for achieving these goals.

Why Do Managers Plan? (8.1)

Four reasons for planning

Provides direction

Reduces uncertainty

Minimizes waste and redundancy

Sets the standards for controlling

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So why should managers plan? We can give you at least four reasons.

First, planning provides direction to managers and nonmanagers alike. When employees know what their organization or work unit is trying to accomplish and what they must contribute to reach goals, they can coordinate their activities, cooperate with each other, and do what it takes to accomplish those goals.

Next, planning reduces uncertainty by forcing managers to look ahead, anticipate change, consider the impact of change, and develop appropriate responses. Although planning won’t eliminate uncertainty, managers plan so they can respond effectively.

In addition, planning minimizes waste and redundancy. When work activities are coordinated around plans, inefficiencies become obvious and can be corrected or eliminated.

Finally, planning establishes the goals or standards used in controlling. When managers plan, they develop goals and plans. When they control, they see whether the plans have been carried out and the goals met.

Planning and Performance (8.1)

Formal planning is associated with:

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Positive financial results – higher profits, higher return on assets, and so forth.

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.

The planning-performance relationship seems to be influenced by the planning time frame.

Numerous studies have shown generally positive relationships between planning and performance.

Formal planning is associated with positive financial results—higher profits, higher return on assets, and so forth.

Doing a good job of planning and implementing those plans plays a bigger part in high performance than how much planning is done.

In those studies where formal planning didn’t lead to higher performance, the external environment often

was the culprit. When external forces—think governmental regulations or powerful labor unions—constrain managers’ options, it reduces the impact planning has on an organization’s performance.

Finally, the planning-performance relationship seems to be influenced by the planning time frame. It seems that at least four years of formal planning is required before it begins to affect performance.

Goals and Plans (8.1)

Goals (objectives) - desired outcomes or targets…classified as strategic or financial

Plans - documents that outline how goals are going to be met and how results are to be achieved

Goals (objectives) are desired outcomes or targets. They guide management decisions and form the criterion against which work results are measured. That’s why they’re often described as the essential elements of planning. You have to know the desired target or outcome before you can establish plans for reaching it.

Plans are documents that outline how goals are going to be met. They usually include resource allocations, schedules, and other necessary actions to accomplish the goals. As managers plan, they develop both goals and plans.

Goals are desired outcomes or targets Two Types of Goals (objectives) (8.4)

Financial Goals – related to the expected internal financial performance of the organization.

Strategic Goals – related to the performance of the firm relative to factors in its external environment (e.g., competitors, market share).

Both can be:

Stated Goals – official statements of what an organization says, and what it wants its various stakeholders to believe its goals are. OR

Real goals – goals that an organization actually pursues, as defined by the actions of its members.

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We can classify most company’s goals as either strategic or financial. Financial goals are related to the financial performance of the organization, while strategic goals are related to all other areas of an organization’s performance. For instance, McDonald’s states that its financial targets are 3 to 5 percent average annual sales and revenue growth; 6 to 7 percent average annual operating income growth; and returns on invested capital in the high teens. Here’s an example of a strategic goal from Bloomberg L.P.: “We want to be the world’s most influential news organization.”

Plans: documents that outline how goals are going to be met Types of Plans (8.2)

Strategic plans - plans that apply to the entire organization and establish the organization’s overall goals(long term, directional, single use)

Operational plans - plans that encompass a particular operational area of the organization (i.e. production or sales) short term, specific, standing

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 leave no room for interpretation

Directional plans - plans that are flexible and set out general guidelines

Single-use plan - a one-time plan specifically designed to meet the needs of a unique situation

Standing plans ongoing plans that provide guidance for activities performed repeatedly

The most popular ways to describe organizational plans are breadth (strategic versus operational), time frame (short term versus long term), specificity (directional versus specific), and frequency of use (single use versus standing).

Strategic plans are plans that apply to the entire organization and establish the organization’s overall goals. Plans that encompass a particular operational area of the organization are called operational plans. These two types of plans differ because strategic plans are broad while operational plans are narrow.

Exhibit 8-1 Types of Plans (8.2)

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As Exhibit 8-1 shows, these types of plans aren’t independent. That is, strategic plans are usually long-term, directional, and single use, whereas operational plans are usually short-term, specific, and standing.

Exhibit 8-2 The Downside of Traditional Goal-Setting

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A problem with traditional goal-setting is that when top managers define the organization’s goals in broad terms—such as achieving “sufficient” profits or increasing “market leadership”—these ambiguous goals have to be made more specific as they flow down through the organization. Managers at each level define the goals and apply their own interpretations and biases as they make them more specific. However, what often happens is that clarity is lost as the goals make their way down from the top of the organization to lower levels. Exhibit 8-2 illustrates what can happen.

Exhibit 8-3 Steps in Management by Objectives (MBO) MBO: a process of setting mutually agreed upon goals and using those goals to evaluate employee performance.

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Exhibit 8-3 lists the steps in a typical MBO program.

Management By Objectives (MBO)

Key elements of MBO:

goal specificity and time frame

participative decision making

an explicit performance/evaluation period

feedback…control measures are in effect

Primary advantage:

Motivation - Increased employee and organizational productivity

Steps in Goal-Setting (8.3)

Review the organization’s mission statement. Do goals reflect organization’s purpose and what organizational members think is important (the mission and vision statements)?

Evaluate available resources Are resources sufficient to accomplish the mission? SWOT?

Determine goals individually or with others. Methodology in setting goals?

Are goals specific, measurable, and timely? Goals in writing and communicated? Is everybody on the same page and sympatico with the leaders?

Review results and whether goals are being met…meeting the standard? What changes are needed in mission, resources, or goals?

Managers should follow five steps when setting goals.

Review the organization’s mission, or purpose. A mission is a broad statement of an organization’s purpose that provides an overall guide to what organizational members think is important. Managers should review the mission before writing goals because goals should reflect that mission.

Evaluate available resources. You don’t want to set goals that are impossible to achieve given your available resources. Even though goals should be challenging, they should be realistic. After all, if the resources you have to work with won’t allow you to achieve a goal no matter how hard you try or how much effort is exerted, you shouldn’t set that goal

Determine the goals individually or with input from others. The goals reflect desired outcomes and should be congruent with the organizational mission and goals in other organizational areas. These goals should be measurable, specific, and include a time frame for accomplishment.

Exhibit 8-4 Well-Written Goals

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Managers should be able to write well-written goals. What makes a “well-written” goal?” Exhibit 8-4 lists the characteristics.

Contingency Factors in Planning

Length

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of future commitments

Commitment Concept: Current plans affecting future commitments must be sufficiently long-term in order to meet those commitments.

Three contingency factors affect the choice of plans: organizational level, degree of environmental uncertainty, and length of future commitments.

Exhibit 8-5 Planning and Organizational Level

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Exhibit 8-5 shows the relationship between a manager’s level in the organization and the type of planning done. For the most part, lower-level managers do operational planning while upper-level managers do strategic planning.