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Planning and communications

Session 5 Foundations of planning

This is the second part of the module which has four sessions:  foundations of planning  communication and information technology  crisis communications  human resource management

As the core of the planning and communications part, this session explains: What is planning? How do managers plan? Establishing goals and developing plans Contemporary issues in planning

5.1 What is planning? From the four major management functions, the first one is planning. The planning process involves defining organisation goals, establishing an overall strategy for achieving those goals, and developing plans for organisational work activities.

5.1.1 Organisation goals To define organisation goals, there is a reference model of SMART goals.

S Specific M Measurable A Achievable R Realistic T Time-bound

For example, a study has a goal of finding out the top three expectations of local citizens on the Formula E Racing event.

Specific – expectations of local citizens such as ticket price, racing schedule, entertainment Measurable – top three of the study results being identified based on scores Achievable – as long as the study team can access the local citizens Realistic – as Hong Kong has organised such event before, local citizens would have ideas about Time-bound – the study should be completed before the end of the event

5.1.2 Purposes of planning The purposes of a planning process are to:

 provide solid direction for subsequent actions and reduce uncertainty  minimise waste and redundancy by setting the standards for on-going controls

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The planning process is closely relating to the performance of the organisation. Formal planning is associated with higher profits and positive business reputations. The quality of planning and implementation affects the performance of the organisation rather than the documents made. However, it takes time to see the effect of quality planning.

5.2 How do managers plan? Managers start with reviewing organisation goals and then develop plans to achieve the goals.

5.2.1 Types of goals There are a number of different types of organisation goals.

Financial goals: relating to the expected financial performance e.g. profit increased by 4%

Strategic goals: relating to the performance of the firm in specific direction e.g. market leader

Stated goals: broadly-worded official statements e.g. achieve 20% market share in 2018

Hidden goals: relating to strategic direction that cannot be disclosed for the time being e.g. to acquire the third strongest market player in order to compete with the market leader

Examples of stated goals:

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5.2.2 Types of plans Plans are also found in different types and groups.

For the levels of plans, there are high-level strategic plans and detailed-level operational plans.

Strategic plans: the plan applies to the whole organisation the plan sets the direction to achieve the strategic goals the plan covers extended periods of time

Operational plans: the plan specifies the details of how the overall goals are to be achieved the plan is to be executed by operational managers the plan lasts for a short period of time

For the time frame, there are long term plans as well as short term plans.

Long term plans: the plan may be set for five years e.g. planning in 2017 for years 2018-2022 the plan cannot extend more than five years because of unpredictable

changes in technology, environment, and expectations

Short term plans: the plan may cover up to 18 months only e.g. major project timeline the plan is less violated by changing environment and requirements

For the specificity, there are directional plans and specific plans.

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Directional plans: the plan sets out general guidelines and provides focus for implementation

Specific plans: the plan is clearly defined and leaves no room for interpretation

For the frequency of use, there are single-use plans and standing plans.

Single-use plans: the plan is a one-time plan specifically designed to meet a unique need

Standing plans: the plan is an on-going plan that provides guidelines for activities performed repeatedly

Discussion Directional plans: 1. The ultimate goal is to increase the net profit by 3% within 9 months

2. The new market segment to be explored is aged people of 60 to 70 3. The pricing strategy is low cost differentiated 4. There requires support to the end-users

Specific plans: 1. The ultimate goal is to increase the net profit by 3% within 9 months 2. The new product should be sold at a price below $1,000 3. To reduce marketing cost, no advertisements will be issued 4. To reach target market segment, use discussion forums to encourage

mid-aged people to buy the products for their aged parents 5. To support the end-users, organise training sessions for them

State below the advantages: Directional plan Specific plan

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5.3 Establishing goals and developing plans There are ways to establish goals namely traditional goal setting, hierarchy of goals, management by objectives (MBO), and goal setting. After defining the goals, plans can be developed to achieve the goals.

5.3.1 Establishing goals Traditional goal setting is a top-down approach. Broad goals are set at the top of the organisation. Goals are then broken down into sub-goals for each organisational level. The reason for the top- down approach is that the top management knows best because they can see the “big picture” of the situation. Goals are intended to direct, guide, and constrain from the top to the lower levels of the organisation. However, goals may lose clarity and focus of lower level managers attempt to interpret and define the goals for their areas of responsibility.

The downside of traditional goal setting:

Discussion What is the problem from the top management? How can the problem be resolved? Problem:

Resolution:

Maintain the hierarchy of goals The means-ends chain relies on an integrated network of goals. Goals are not set at each level without co-ordinations. Goals at any level should put together to achieve an upper level goal. Therefore, achievement of lower level goals is the means and the higher level goals are the ends.

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Example of hierarchy of goals:

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 are:

• goal specificity • participate decision making • an explicit performance / evaluation period • feedback to management and employees

Steps in a typical MBO program 1. The organisation'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.

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Potential problems with MBO programs • It may not be effective in dynamic environments that require constant resetting of goals. • It may overstate on individual accomplishment troubling teamwork. • It may allow the MBO program to become an annual paperwork shuffle.

Resolution to these potential problems: • Top management should commit on the program. • Top management should involve in the setting and collaboration with employees. • Employees should be empowered.

5.3.2 Developing plans Plans should be developed according to goals. Moreover, contingency plan should be an important part of a formal plan for 'just in case'.

For example, if an outdoor wedding party is to be organised in summer, the most possible threat is raining. What can you do in terms of contingency? A tent house can be hired for just in case.

Should an organisation does not have successful plans for years, consider establishing a formal planning department. A group of planning specialists can help managers write their own organisational plans. Just like a new couple may hire wedding planner to organise the wedding party instead of doing by themselves.

5.4 Contemporary issues in planning There are criticisms of planning:

• planning may create rigidity and reduce flexibility • plans cannot be developed for dynamic environments • formal plans cannot replace intuition and creativity

Effective planning in dynamic environments: • understand that planning is an on-going process • change plans when conditions warrant • persistence in planning eventually pay off

References Robbins, S and Coulter, M (2007) Management, 9th Ed, Upper Saddle River, NJ: Pearson Education

International.

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