Managerial Planning and Goal Setting Managerial Planning and Goal Setting

Learning Outcomes Define goals and plans and explain their relationship. Explain the concept of organizational mission and how it influences goal setting and planning. Describe the types of goals an organization should have and how managers can use strategy maps to align goals. Define the characteristics of effective managerial goals. Describe the four essential steps in the management by objectives process. Explain the difference between single-use plans and standing plans. Describe and explain the importance of contingency planning, scenario building, and crisis planning in today’s environment. Summarize the guidelines for high-performance planning in a fast-changing environment.

Overview of Goals and Plans A goal is a desired future state that an organization attempts to realize. A plan is a blueprint for goal achievement. There are different levels of planning and goals in an organization. Goals at each level of the organization guide the organization towards its future.

Levels of Goals/Plans and their Importance

Organizational Mission The mission statement is the reason the organization exists. Top of the goal hierarchy Describes the values, aspirations and reason for being A well-defined mission is the basis for all other goals Mission statements outline the stated purpose and values to stakeholders.

“In the coming years, millennials will not buy what you are selling; they will buy what you are standing for.” Roy Spencer, CEO of GSD&M Idea City

The Organizational Planning Process

Benefits of Goals and Plans Legitimacy Source of motivation and commitment Resource allocation Guides to action Rationale for decisions Standards of performance

Discussion Question A new business venture must develop a comprehensive business plan to borrow money to get started. Companies such as FedEx, Nike, say they did not follow the original plan closely. Does that mean that developing the plan was a waste of time for these eventually successful companies?

Quote on Planning “In preparing for a battle, I have always found plans are useless; but planning is indispensable.” Dwight Eisenhower, Former U.S. President

Types of Goals and Plans Strategic Goals – official goals, broad statements about the organization Define the action steps the company intends to attain The blueprint that defines activities Tactical Goals – help execute major strategic plans Specific part of the company’s strategy Plans of the divisions and departments Operational Goals – results expected from departments, work groups, and individuals Lower levels of the organization Specific action steps

Aligning Goals with Strategy Maps Goals should be consistent and mutually supportive. The achievement of goals at low levels permits the attainment of high-level goals. Individuals, teams, and departments should be working in concert.

Strategy Map for Aligning Goals Goals should be consistent and mutually supportive

Discussion Question One of the benefits of a strategy map is that goals and how they are linked can be clearly communicated to everyone in the organization. Does a minimum-wage cleaning lady working for a hospital really need to understand any goals beyond keeping the place clean?

Operational Planning Operational goals should direct employees and resources toward outcomes. It is important to establish effective goals Management by objective Single-use plans Standing plans

Characteristics of Effective Goal-Setting

Management by Objectives Defined by management scholar Peter Drucker in his 1954 book, The Practice of Management Process of defining goals and monitoring progress.

Model of the MBO Process

MBO Benefits and Problems

Single-Use and Standing Plans

Planning for a Turbulent Environment Contingency Planning – plans for emergencies, setbacks or unexpected conditions (positive and negative) Building Scenarios – visualizing future possibilities Crisis Planning – preparing to cope with unexpected events (mostly negative)

Essential Stages of Crisis Planning

Planning for High Performance Traditional Approach: Done by top executives (top down) Central planning departments Planning specialist High-Performance Approach: Decentralized planning Managers plan throughout the organization Now involves line-managers and employees Dynamic plans for fast-changing needs Stretch Goals and Big Hairy Audacious Goals (BHAG) are big and inspiring