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Objectives. 1. A definition of planning and an understanding of the purposes of planning 2. Insights into how the major steps of the planning process are related 3. An understanding of the relationship between planning and organizational objectives
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Objectives 1. A definition of planning and an understanding of the purposes of planning 2. Insights into how the major steps of the planning process are related 3. An understanding of the relationship between planning and organizational objectives 4. A knowledge of the areas in which managers should set organizational objectives
General Characteristics of Planning • This part is an Introducing to Planning and includes: • Defining Planning • Purposes of Planning • Planning: Advantages and Potential Disadvantages • Primacy of Planning
Defining Planning • 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. • is the systematic development of action programs aimed at reaching agreed-upon business objectives by the process of analyzing, evaluating, and selecting among the opportunities which are foreseen. • Planning is a critical management activity regardless of the organization type.
Purposes of Planning • The fundamental purpose of planning: is to help the organization reach its objectives. • Organizational planning has two purposes: • Protective purpose: 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. • Another purpose of planning: is to establish a coordinated effort within the organization.
Steps in the Planning Process • The planning process is dynamic, where effective planners should continuously revisit the planning process. • State organizational objectives • List alternative ways of reaching objectives • Develop premises (assumptions) on which to base each alternative • Choose the best alternative for reaching objectives (by evaluating the assumptions) • Develop (strategic “long” & tactical “short”) plans to pursue the chosen alternative • Put the plans into action
Organizational Objectives: Planning’s Foundation • Having a clear view of organizational objectives is the foundation for carrying out the steps of the planning process
Defining Organizational Objectives • Organizational Objectives: are the targets toward which the open management system is directed • Organizational Purpose: is what the organization exist to do, given a particular group of customers and customer needs. It flows from the organization mission. • Properly developed org objectives reflect the org purpose.
Defining Organizational Objectives • Profit cannot be the goal. It must be a by-product… • Summary of organizational objectives for businesses: 1. Profit is the motivating force for managers 2. Service to customers justifies the existence of the business 3. Managers have social responsibilities
Areas for Organizational Objectives • If managers focus on profit only (single-objective), they will take actions that will make money today with little regard for how profit will be made tomorrow. This endangers the management system.
Areas for Organizational Objectives • Key areas to set management system objectives: 1. Market standing (compared to competitors) 2. Innovation 3. Productivity 4. Physical and financial resources 5. Profitability 6. Managerial performance and development 7. Worker performance and attitude 8. Public Responsibility • An Organization should have objectives in all eight areas to maximize its probability of success.
Working with Organizational Objectives An organization should set three types of objectives: 1. Short-term (for how long?) 2. Intermediate-term 3. Long-term • The Principle of the Objective: states that before managers initiate any action, they should clearly determine, understand, and state organizational objectives
Working with Organizational Objectives Developing a Hierarchy of Objectives: • Organizational objectives must be broken down into subobjectives, so that individuals at different levels and sections of the organization know what they must do to help reach the overall org objective. • Hierarchy of Objectives: the overall organizational objective and subobjectives assigned to various people or units of the organization. • Suboptimization: is a condition where subojectives are conflicting or not directly aimed at accomplishing the overall org objectives. • Managers should avoid it by understanding how different parts of org are related to have a related subobjectives. • Managers can solve it by choosing which subobjective would be better to obtain the org overall objective.
Working with Organizational Objectives • Guidelines for Establishing Quality Objectives 1. Let those responsible for attaining objectives have voice in setting them (Why?) 2. State objectives as specifically as possible (why?) 3. Relate objectives to specific actions whenever necessary 4. Pinpoint expected results 5. Set goals high enough that employees have to strive to meet them, but not so high that employees give up trying to meet them (why?) 6. Specify when goals are expected to be achieved (how?) 7. Set objectives only in relation to other organizational objectives (why?) 8. State objectives clearly and simply
