1. Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin Management A Practical Introduction Third Edition Angelo Kinicki & Brian K. Williams

2. Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 2 Chapter 5: Planning The Foundation of Successful Management  Planning & Uncertainty  Fundamentals of Planning  The Planning/Control Cycle  Management by Objectives  Project Planning

3. Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 3 5.1 Planning & Uncertainty HOW CAN PLANNING HELP MANAGERS DEAL WITH UNCERTAINTY?  Planning can be defined as setting goals and deciding how to achieve them  Planning also involves coping with uncertainty by formulating future courses of action to achieve specified results  Planning is used together with strategic management and evolves from the company’s mission and vision  Planning covers strategic planning (done by top managers, tactical planning (done by middle managers), and operational planning (done by first-line managers)

4. Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 4 5.1 Planning & Uncertainty Figure 5.1: Planning and Strategic Management

5. Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 5 5.1 Planning & Uncertainty WHY NOT PLAN? Managers need to be cautious when planning for two reasons: 1. Planning requires managers to set aside their regular responsibilities to develop plans 2. Managers need to be flexible enough to react to new events because there may not always be enough time to plan

6. Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 6 5.1 Planning & Uncertainty HOW DOES PLANNING HELP? There are four main benefits of planning: 1. Organizations can use plans to check their progress toward their goals 2. Plans define the responsibilities of a firm’s departments and coordinates their activities 3. Planning requires managers to consider what may happen in the future 4. Planning for unpleasant contingencies helps managers deal with uncertainty

7. Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 7 5.1 Planning & Uncertainty There are three types of uncertainty: 1. When the environment is considered unpredictable there is state uncertainty 2. When the effects of environmental changes are unpredictable there is effect uncertainty 3. When the consequences of a decision are uncertain there is response uncertainty

8. Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 8 5.1 Planning & Uncertainty Raymond E. Miles and Charles C. Snow suggested that firms will adopt one of four strategies to respond to uncertainty: 1. defenders are expert at producing and selling narrowly defined products or services 2. prospectors focus on developing new products or services and in seeking out new markets, rather than waiting for things to happen 3. analyzers let other organizations take the risk of product development and marketing and then imitate what seems to work best 4. reactors make adjustments only when finally forced to by environmental pressures

9. Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 9 5.1 Planning & Uncertainty Miles and Snow also argued that firms continuously make decisions about three kinds of business problems: 1. entrepreneurial - selecting and making adjustments of products and markets 2. engineering - producing and delivering the products 3. administrative - establishing roles, relationships, and organizational processes

10. Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 10 5.2 Fundamentals Of Planning WHAT IS INVOLVED WITH PLANNING?  Planning translates an organization’s mission (purpose or reason for being) into objectives  The mission statement answers the question “what is our reason for being?”  The vision statement answers the question “what do we want to become?”  Planning begins with the mission statement

11. Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 11 5.2 Fundamentals Of Planning Figure 5.2: Making Plans

12. Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 12 5.2 Fundamentals Of Planning Having clearly defined mission and vision statements allows three things to happen: 1. strategic planning by top management where long- term goals are determined and available resources are identified 2. tactical planning by middle management where contributions their departments or similar work units can make are determined 3. operational planning by first-line managers where how specific tasks will be accomplished using available resources is determined

13. Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 13 5.2 Fundamentals Of Planning Figure 5.3: Three Levels of Management, Three Types of Planning

14. Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 14 5.2 Fundamentals Of Planning  The purpose of planning is to set goals and then formulate action plans  Specific commitments to achieve a measurable result within a stated period of time are known as goals or objectives  Goals are put in a means-end chain where the achievement of low-level goals is the means to achieve high-level goals or ends  Strategic goals focus on objectives for the organization as a whole, while tactical goals focus on the actions needed to achieve strategic goals, and operational goals are concerned with short-term matters associated with realizing tactical goals

15. Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 15 5.2 Fundamentals Of Planning  Once goals are set, the firm makes an action plan which defines the course of action needed to achieve stated goals  An operating plan defines how the firm will conduct business based on the action plan - it identifies clear targets such as revenues, cash flow, and market share  Plans developed for activities that occur repeatedly over a period of time are called standing plans  Standing plans consist of policies (a standing plan that outlines the general response to a designated problem or situation), procedures (a standing plan that outlines the response to a particular problem or circumstance), and rules (a standing plan that designates specific required action)

16. Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 16 5.2 Fundamentals Of Planning WHAT ARE SMART GOALS? Good goals are SMART:  they should be stated in specific terms  they should be measurable or quantifiable  they should be challenging but attainable  they should be results-oriented and support the organization’s vision  they should specify target dates by which they should be accomplished

17. Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 17 5.3 The Planning/Control Cycle WHY HAVE PLANNING AND CONTROL?  Once an organization has a plan, it needs to make sure it stays on track  The planning/control cycle has two planning steps, and two control steps:  planning steps: make the plan, and carry out the plan  control steps: control the direction by comparing results with the plan, and control the direction by taking corrective actions

18. Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 18 Chapter 5: Planning Figure 5.5: The Planning/Control Cycle

19. Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 19 5.4 Promoting Goal Setting: Management By Objectives HOW CAN MANAGERS PROMOTE GOAL SETTING?  Management by Objectives (MBO) is a four step system designed to motivate employees to achieve goals 1. Managers and employees jointly set objectives for the employee 2. Managers develop action plans 3. Managers and employees periodically review the employee’s performance 4. The manager makes a performance appraisal and rewards the employee according to the results

20. Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 20 5.4 Promoting Goal Setting: Management By Objectives If MBO is to be successful, three things must occur: 1. Top management must be committed 2. It must be applied organization-wide 3. Objectives must cascade

21. Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 21 5.5 Project Planning WHAT IS PROJECT PLANNING?  The preparation of single-use plans or projects is called project planning  Project management involves achieving a set of goals through planning, scheduling, and maintaining progress of the activities that comprise the project  Project planning reduces the risk of uncertainty and speeds up the process of getting things done

22. Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 22 5.5 Project Planning All projects go through a life cycle: 1. In the definition stage, the problem is stated, assumptions and risks are identified, goals and objectives are determined, and the budget and schedule are set 2. In the planning stage, facilities and equipment are identified, people and their duties are selected, and the schedule is considered 3. During the execution stage, the management style and control tools are established 4. Closing occurs when the client accepts the project

23. Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 23 5.5 Project Planning Figure 5.6: The Project Life Cycle