PRINCIPALS OF PLANNING

Objectives 1. A definition of planning and an understanding of the purposes of planning 2. steps of the planning process 3. relationship between planning and organizational objectives

General Characteristics of Planning Defining Planning, is the process of determining how the organization can get where it wants to go, and what it will do to accomplish its objectives. Purposes of Planning Planning: Advantages and Potential Disadvantages Primacy of Planning

Success is not accident but direct result of careful planning. C.W. Roney indicates that organizational planning has two purposes; protective and affirmative. Protective purpose of planning is to minimize risk by reducing the uncertainties surrounding business conditions and clarifying the consequences of related management actions. Affirmative purpose is to increase the degree of organizational success. Success is not accident but direct result of careful planning.

Advantages and Potential Disadvantages First, It helps managers to be future-oriented. They are forced to look beyond their everyday problems. Second, Sound planning program enhances decision coordination. The planning function pushes managers to coordinate their decisions. Third, planning emphasizes organizational objectives. Objectives are the start point for managers to focus on. Successful organizations have an established plan, a formal statement that outlines the objectives the organization is attempting to achieve. Planning does not eliminate risk but help managers identify and deal with organizational problems. If planning function is not well executed, planning can have several disadvantages, overemphasized planning program can take up too much managerial time. Managers must strike an appropriate balance between time spent on planning and time spent on organizing, etc.

Primacy of Planning, it precedes

Steps in the Planning Process

Organizational Objectives: Planning’s Foundation Managers start planning by stating or formulating organizational objectives. Only when they have clear view of org. objectives can they appropriately carry out subsequent planning efforts. 1- Definition of Organizational Objectives Organizational objectives are the targets toward which the open management system (input, process and output) is directed. It reflects the purpose of the organization.

Definition of Organizational Objectives Organizations exists for varios purposes and thus have varios types of objectives. The primary purpose is usually to make profit. Some companies, however, assume if they focus on objectives as producing a quality product at a competitive price, profits will be inevitable. In 1956, an article suggests that org. objectives for businesses can be summarized in three points; 1. Profit is the motivating force for managers 2. Service to customers justifies the existence of the business 3. Managers have social responsibilities

Organizational Objectives: Planning’s Foundation

Areas for Organizational Objectives 1. Market standing 2. Innovation 3. Productivity 4. Physical and financial resources 5. Profitability 6. Managerial performance and development 7. Worker performance and attitude 8. Public Responsibility

Working with Organizational Objectives Appropriate objectives are fundamental to the success of any organization. Managers should approach the development, use and modification of organizational objectives with utmost seriousness. An organization should set three types of objectives: 1. Short-term, targets to be accomplish in one year or less. 2. Intermediate-term, one to five years. 3. Long-term, five to seven years.

Developing a hierarchy of Objectives In practice organizational objectives must be broken down into sub-objectives so that individuals at different levels and sections organization know what they must do to help reach overall organizational objective. The overall organizational objective and the sub- objectives assigned to the various people or units of the organization are referred to as a hierarchy of objectives. An organizational objective is attained only after the subobjectives have been reached.

Working with Organizational Objectives

Planning Skill and Your Career The previous section discusses the role of objectives in the planning process. Understanding the importance of objectives will help you further develop your planning skill. As you think about your academic career thus far, describe the role of your own objectives in determining your course grade. Do you have objectives regarding your course grade? Now think about your career in the future. Do you think that employers will find your planning skills attractive? Thinking longer term, how do you think your planning skills will influence your career progress?

Management by Objectives (MBO) The MBO strategy: is management approach based exclusively on management objectives. Popularized by Peter Drucker; parts 1. All individuals are assigned a specialized set of objectives 2. Performance reviews are conducted periodically 3. Rewards are given to individuals The MBO process: 1. Review organizational objectives 2. Set worker objectives 3. Monitor progress 4. Evaluate performance 5. Give rewards

Management by Objectives (MBO)

Management by Objectives (MBO) Factors Necessary for a Successful MBO Program 1) Top management must be committed and set appropriate objectives 2) Managers and subordinates must develop and agree on individual’s goals 3) Employee performance should be evaluated against established objectives 4) Management must follow through on employee performance evaluations

Management by Objectives (MBO) MBO Programs: Advantages and Disadvantages Advantages: 1) Continually emphasize how to achieve organizational goals 2) Secures employee commitment to attaining goals Disadvantages: 1) Development of objectives can be time consuming 2) Increase the volume of paperwork in an organization Most managers find MBO programs beneficial

Planning and the Chief Executive Final Responsibility As planners, chief executives ask: 1. In what direction should the organization be going? 2. In what direction is the organization going now? 3. Should something be done to change this direction? 4. Is the organization continuing in an appropriate direction?

The Planner Qualifications of Planners Primary qualifications: 1) Considerable practical experience within organization 2) Know how all parts of the organization function and interrelate 3) Define trends and determine how organization reacts to trends 4) Ability to work well with others

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