Management Chapter 7

Plan or goal? I'll train the dogs myself. That way, I can have them ready for placement more quickly

Plan This statement tells you what actions (training dogs himself) Dave will take to make his program more effective.

SMART means that effective goals are: Measurable.

You can measure the outcomes of a good goal. When you measure how much of a goal you have attained, you get feedback on your work. For example, compare the goal "I want to be skinny" with "I want to lose 10 pounds by the end of the month." How can you measure skinny? But by measuring the pounds you have lost so far, you know exactly how close you are to meeting your goal.

Goals and Plans: An example of how these levels of goals align for a cardiologist when working with a patient might be as follows

Strategic goal: Improve cardiac patient's quality and length of life. Tactical goals: Prevent and treat cardiac conditions. Operational goals: Encourage exercise and healthy living, schedule checkups, and prescribe therapy as needed.

To energize employees and inspire excellence, an organization may set Strategic or stretch goals , which are reasonable yet highly ambitious.

Stretch goals are ambitious objectives, attainable only through imagination and innovation. Strategic goals describe any end result desired for the organization as a whole.

Goal

desired future circumstance or condition that the organization attempts to realize

Planning

determining organizational goals and a means for achieving them

Crisis Planning

preparing organization, managers, and employees to cope with catastrophic events that could destroy the firm

Mission:

reason for organization's existence

What Drucker says about objectives/goals:

"Any business enterprise must build a true team and weld individual efforts into a common effort. Each member of the enterprise contributes something different, but they must all pull in the same direction, and their contributions must fit together..."

Icebreaker: Benjamin Franklin

"Failing to plan is planning to fail"

Align Goals Using a Strategy Map:

-Effectively designed organizational goals are aligned -Aligned goals are consistent and mutually supportive so that the achievement of goals at lower levels permits the attainment of higher-level goals

MBO Benefits

-focuses manager and employee efforts on activities that will lead to goal attainment -can improve performance at all company levels -improves employee motivation -aligns individual and departmental goals with company goals

The organizational planning process.

1. Develop the Plan 2. Translate the Plan 3. Plan Operations 4. Execute the Plan 5. Monitor and Learn

SMART means that effective goals are: Result-oriented.

A good goal contains only one outcome or accomplishment. If you combine two or more outcomes in one goal, it will be difficult to decide where to focus your attention. For example, "To increase produce sales by 3% and to achieve a 5% market share" is a less effective goal than "To increase produce sales by 3%."

SMART means that effective goals are: Specific.

A good goal defines exactly what you expect to accomplish. When your goals are specific, the behaviors required to accomplish them are clear. Many people say that they want to recycle to save the environment, but a better goal would be "Place every used bottle or can in a recycling container within five minutes of finishing its contents."

A pool of twelve contingent call center workers who work at home will be hired and trained before April 15 Setting a goal Developing a plan Reviewing progress Appraising Performance

A: Developing an action plan A pool of twelve contingent call center workers who work at home will be hired and trained before April 15. These employees can be activated anytime hold times threaten to exceed 90 seconds. Explanation The four main steps of MBO are setting goals, developing action plans, reviewing progress, and appraising performance. The manager sets a goal of a maximum hold time of 90 seconds, develops a plan involving standby call center workers, measures progress in terms of workers hired and customer hold times, and appraises the performance of the plan against the goal at the end of construction season.

Coalition management example:

At Nike, for example, the issue of manufacturing in Bangladesh created a conflict between the head of the production department, who had a goal of keeping manufacturing costs as low as possible, and Nike's head of sustainable business, who was worried about poor labor and safety practices in the Bangladeshi factories. Rather than letting the conflict escalate, the two formed a committee made up of people from both sides of the debate. Committee members visited the Bangladeshi factories to see the conditions firsthand; the investigation enabled them to reach agreement and make an informed decision about manufacturing in Bangladesh. The group eventually decided that Nike would withdraw from a potentially dangerous factory.

Benefits of Planning example:

For example, executives' strategic goal of rebuilding Cadillac in the image of BMW and other luxury auto brands means allocating more resources to building and marketing the company's brand identity and creating a luxury dealership experience for car shoppers. Goals and plans are a guide to action. Planning focuses attention on specific targets and directs employee efforts toward important outcomes. It helps managers and other employees know what actions they need to take to achieve goals. Goals and plans set a standard of performance. Because planning and goal setting define desired outcomes, they also establish performance criteria so that managers can measure whether things are on- or off-track. Goals and plans provide a standard of assessment.

Strategic Plans example:

For example, one part of Volkswagen's strategic plan announced in 2019 is to cut 7,000 administrative jobs over a five-year period and use the cost savings to hire people specializing in new technology for electric cars.

Plan or goal? Any veteran who asks me for a dog will have one within one month of the request.

Goal This statement tells you what Dave will accomplish (every veteran who asks will get a dog) and places it in a specific time frame (within one month).

Performance Management:

Managers use operational goals to direct employees and resources ● Planning approaches: ○ Management by objectives (MBO) - developed by Peter Drucker ○ Single use plans ○ Standing plans

Goals and Plans: For a health care organization, the goal levels might look like the following, starting with a mission statement that provides meaning and direction for goals at lower levels.

Mission: Contribute to community health and well-being by providing the best care to every patient. Strategic goal: Put patients' needs above all else. Tactical goals: Improve quality of care; reduce costs; promote wellness. Operational goals: Provide empathy training; invest in innovations; create care paths; implement electronic health records; cut supply costs; provide healthy lifestyle programs.

Strategic Tactical or Operational? We will reduce our environmental footprint and continually seek out renewable resources to use in our products.

The statement, "We will reduce our environmental footprint and continually seek out renewable resources to use in our products" is a strategic goal.

Strategic Tactical or Operational? We will reduce our marketing budget by $10,000

The statement, "We will reduce our marketing budget by $10,000" is a tactical goal.

To sell 2% more air conditioners and 5% more refrigerators in 2014 Not Specific Not Measurable Not Result-Oriented Not Time-Bound

This goal is not result-oriented. While the goal would be fine if it were either "To sell 2% more air conditioners in 2014" or "To sell 5% more refrigerators in 2014," trying to combine both goals into one will divide your attention and make it more difficult to reach either goal.

To increase Ford SUV sales in Dubai by 300% Not Specific Not Measurable Not Result-Oriented Not Time-Bound

This goal is not time-bound. To make this goal effective, you would have to know how long you had to sell those Fords. Six months? A year? Two years?

Characteristics of effective goals:

are specific and measurable, have a defined time period, cover key result areas, are challenging but realistic, are linked to rewards

Plan

blueprint for goal achievement specifying the necessary resource

Coalition management:

building an alliance of people who support managers and influence efforts toward achieving goals ● Modify goals by time or location ● Address conflicts with debate and dialogue ● Break down barriers and promote cross-silo cooperation

Strategic Plans:

define the action steps by which the company intends to attain strategic goals Blueprint that defines organizational activities and resource allocations.

Tactical plans:

define what major departments and organizational subunits will do to implement the organizations strategic plan

Operational Plans:

developed at the lower levels of the organization to specify action plans toward achieving operational goals and to support tactical plans ○ Schedules are an important component

Contingency Plans

identifies important factors in the environment and defines a range of alternative responses to be taken in the case of emergencies, setbacks, or unexpected conditions

Management by Means (MBM):

new systemic approach that focuses on attention on the methods and processes used to achieve goals idea that when managers pursue their activities in the right way, positive outcomes will result.

Strategic goals:

official goals; broad statements describing where the organization wants to be in the future, long term

Standing plans:

ongoing plans that provide guidance for tasks or situations that occur repeatedly within the organization ○ Include organizational policies, rules, and procedures

Single-use plans:

plans developed to achieve objectives that are not likely to be repeated in the future

Management by Objectives (MBO):

system whereby managers and employees define goals for every department, project, and person and use them to monitor subsequent performance

Tactical goals:

the results that major divisions and departments within the organization intend to achieve

Key performance indicators (KPIs):

tool used to assess what is important to an organization and how well the organization is progressing toward achieving its strategic goal

Strategy Maps:

visual representations of the key drivers of an organization's success ○ Show how specific goals and plans in each area are linked

Mission statement includes:

○ Reason the organization exists ○ How they differ from their competitors ○ May include statement of their values Provides basis for development of all subsequent goals and plans

Limitations of Planning:

● Can create too much pressure ● Can create a false sense of certainty ● May cause rigidity in a turbulent environment ● Can get in the way of intuition and creativity

Operational goals:

results expected from departments, work groups, and individuals

Key performance indicators (KPIs) example:

Airbnb managers recently began linking employee bonuses to goals of guest safety as well as other nonfinancial measures, including increasing the gender and racial diversity of its employees and reducing the company's carbon footprint. The company wants to factor in these metrics to ensure that Airbnb meets critical goals that serve all stakeholders.

MBO Process: 2. Develop action plans.

An action plan defines the course of action needed to achieve the stated goals. Action plans are made for both individuals and departments.

Scenario Building

An approach where managers look at trends and discontinuities and imagine possible alternative futures to build a framework within which unexpected future events can be managed.

On September 30, the manager reports that call center hold times for the summer construction season averaged 42 seconds, with 30 percent of all calls not being put on hold at all but 2 percent of calls exceeding 90 seconds of hold time. The plan is rated mostly successful. Setting a goal Developing a plan Reviewing progress Appraising Performance

Appraising performance On September 30, the manager reports that call center hold times for the summer construction season averaged 42 seconds, with 30 percent of all calls not being put on hold at all but 2 percent of calls exceeding 90 seconds of hold time. The plan is rated mostly successful. Explanation The four main steps of MBO are setting goals, developing action plans, reviewing progress, and appraising performance. The manager sets a goal of a maximum hold time of 90 seconds, develops a plan involving standby call center workers, measures progress in terms of workers hired and customer hold times, and appraises the performance of the plan against the goal at the end of construction season.

Remember This

Benefits of planning and goal setting include serving as a source of motivation, determining resource allocation, providing a guide to action, and setting a standard for performance measurement. Limitations of planning and goal setting include the potential to create too much pressure to achieve targets, induce a false sense of certainty, create rigidity that hinders response to a turbulent environment, and get in the way of creativity and intuition. Excessively high goals led some bankers in Wells Fargo's foreign exchange business to overcharge hundreds of companies for currency trades.

Last winter, a guest at a nearby motel fell through the ice and was not rescued in time. The motel's name was included in news coverage of the death, resulting in negative publicity. Also, since the incident, the motel has not been able to rent out the room where the dead guest stayed. What should Dave and Betsy do with this information? Set a stretch goal that no guests will fall through the ice or suffer any other misadventure. Set aside a rainy-day fund in case an incident causes Kozy Korner to suffer bad publicity and occupancy rates fall. Ignore the possibility that a guest could have an accident since it is the guest's responsibility to stay safe outside the bed-and-breakfast's premises. Develop a crisis plan that includes a notification system, so anyone using the lake can notify Kozy Korner of an emergency, and a supply of rescue equipment like ropes.

Develop a crisis plan that includes a notification system, so anyone using the lake can notify Kozy Korner of an emergency, and a supply of rescue equipment like ropes.

Management by Objectives (MBO) example:

For example, one of the critical tasks at technology companies like Mozilla, maker of the Firefox Web browser, is fixing bugs, but the work is tedious, and most programmers prefer designing new features to fixing bugs in current ones. To motivate people throughout the company, top leaders at Mozilla used MBO-type thinking. They gave employees two specific and challenging goals: to close 40 high-priority bugs on the browser between February 2017 and the next beta release of Firefox in September, and to bring Mozilla's performance within 20 percent of Chrome's score on a browser benchmarking service. The goals worked! By late August, Mozilla's programmers had closed nearly 400 bugs and were close to the goal of closing the performance gap with rival Chrome.

Although they are assigned specific territories, sales people at Gibson & Associates contact clients outside of their territories. They are hoping to make additional sales which will increase their chances to meet their goals. One reason that might explain this behavior is that goals and plans

Goals and plans can create too much pressure. If goals are seen as overly ambitious or unattainable, employees may resort to dysfunctional or unethical actions in order to meet their targets. Calling clients outside of their assigned territories is one way that sales people may try to boost their numbers in order to meet their goals. Goals that provide a source of motivation do not cause employees to act unethically. Goals may get in the way of intuition and creativity when by too much routine planning.

SMART means that effective goals are: Attainable.

Good goals are hard to reach, but not impossible. If a goal is too easy, you will not have to work hard to attain it, and your overall performance will not improve. If a goal is too hard, you will be discouraged from attempting to reach it. One way of making sure that goals are attainable is to break larger, difficult goals into smaller, more easily accomplished subgoals.

Remember This

Planning starts with the organization's purpose or reason for existence, which is called its mission. A mission statement is a broadly stated definition of the organization's basic business scope and operations that distinguishes it from similar types of organizations. Goals are socially constructed, meaning they are defined by an individual or group. Because organizations perform many activities and pursue many goals simultaneously to accomplish an overall mission, goal conflict is a common problem for many companies. Effective approaches to use when goals are in conflict or when managers disagree over which goals to pursue include building a coalition, addressing conflict with debate and dialogue, promoting collaboration, modifying goals, and manager departures. Coalitional management involves building an alliance of people who support a manager's goals and influencing other people to accept and work toward those goals Facebook's data security chief left the company because of conflicts with other executives regarding how much information to share publicly about how nation states misused the social media platform prior to the 2018 midterm elections. Goals and plans need to be in alignment so that they are consistent and mutually supportive. A strategy map is a visual representation of the key drivers of an organization's success, showing the cause-and-effect relationship among goals and plans.

Benefits of Planning:

Provide a source of motivation and commitment ● Guide resource allocation ● Are a guide to action (behavior) ● Set a standard of performance

MBO Process: 1. Set goals

Setting goals involves employees at all levels and looks beyond day-to-day activities to answer the question, "What are we trying to accomplish?" Managers heed the criteria associated with effective goals (described in the previous section) and make sure to assign responsibility for goal accomplishment. However, goals should be derived jointly. Mutual agreement between employee and supervisor creates the strongest commitment to achieving goals. In the case of teams, all team members may participate in setting goals.

Mission statement example:

The State Farm mission is to help people manage the risks of everyday life, recover from the unexpected, and realize their dreams. We are people who make it our business to be like a good neighbor; who built a premier company by selling and keeping promises through our marketing partnership; who bring diverse talents and experiences to our work of serving the State Farm customer. Our success is built on a foundation of shared values—quality service and relationships, mutual trust, integrity, and financial strength. Our vision for the future is to be the customer's first and best choice in the products and services we provide. We will continue to be the leader in the insurance industry and we will become a leader in the financial services arena. Our customers' needs will determine our path. Our values will guide us.

MBO Process: 4. Appraise overall performance

The final step in MBO is to evaluate whether goals have been achieved for both individuals and departments. Success or failure to achieve goals can become part of the performance appraisal system and the awarding of salary increases and other rewards. The appraisal of departmental and overall corporate performance shapes goals for the next year. The MBO cycle repeats itself annually.

Strategic Tactical or Operational? We will increase production by 10 percent per week to meet holiday demand.

The statement, "We will increase production by 10 percent per week to meet holiday demand" is an operational goal.

Remember This

A goal is a desired future circumstance or condition that the organization wants to realize. Planning is the act of determining goals and defining the means of achieving them. A plan is a blueprint specifying the resource allocations, schedules, and other actions necessary for attaining goals. Planning helps managers think about the future rather than thinking merely in terms of day-to-day activities. Goals begin with broad strategic goals, followed by more specific tactical goals, and then operational goals. Strategic goals are broad statements of where the organization wants to be in the future and pertain to the organization as a whole rather than to specific divisions or departments. Volkswagen announced a strategic goal to build 22 million electric vehicles through 2028. Strategic plans are the action steps by which an organization intends to attain its strategic goals. The outcomes that major divisions and departments must achieve for the organization to reach its overall goals are called tactical goals. Tactical plans are designed to help execute major strategic plans and to accomplish a specific part of the company's strategy. Operational goals are specific, measurable results that are expected from departments, work groups, and individuals. Operational plans specify the action steps toward achieving operational goals and support tactical activities.

MBO Process: 3. Review progress.

A periodic progress review is important to ensure that action plans are working. KPIs often provide the data for the review. These reviews can occur informally between managers and subordinates, and the organization may wish to conduct three-, six-, or nine-month reviews during the year. Such periodic checkups allow managers and employees to see whether they are on target or whether corrective action is needed. Managers and employees should not be locked into predefined behavior and must be willing to take whatever steps are necessary to produce meaningful results. The point of MBO is to achieve goals. The action plan can be changed whenever goals are not being met.

Stretch Goals

A reasonable yet highly ambitious and compelling goals that energize people and inspire excellence

The CEO of your company is thinking about changing the name of the company, and she wants to create a strategy map as part of the process. What can you tell her is an advantage of strategy mapping? A strategy map will make sure that annual goals are aligned with long-term goals. A strategy map will ensure that the CEO's goals are not challenged. A strategy map will help managers see how the different goals in the company are related. A strategy map will help employees to understand and accept the purpose of the company.

A strategy map helps managers see how the different goals of the company are linked together. It does not align long- and short-term goals, ensure that goals are not challenged, or tell employees the purpose of the company.

Strategic goal example:

An example of a strategic goal is Volkswagen's decision to focus more on designing and building electric cars. Volkswagen CEO Herbert Diess announced that VW, which in 2019 sold only a small number of electric cars, has set a goal to build 22 million electric vehicles through 2028. In connection with the announcement, Diess also said VW has a goal of being carbon neutral by 2050, in part by switching its factories to run on renewable energy.

Based on data on how long people wait before hanging up, the manager decides the maximum time on hold should be 90 seconds. Setting a goal Developing a plan Reviewing progress Appraising Performance

B: Setting a goal Based on data on how long people wait before hanging up, the manager decides the maximum time on hold should be 90 seconds. Explanation The four main steps of MBO are setting goals, developing action plans, reviewing progress, and appraising performance. The manager sets a goal of a maximum hold time of 90 seconds, develops a plan involving standby call center workers, measures progress in terms of workers hired and customer hold times, and appraises the performance of the plan against the goal at the end of construction season.

On April 1, the manager sees that nine contingent call center workers have been hired and completed training. On June 30, call center data show 5 percent of calls are on hold for more than 90 seconds. Setting a goal Developing a plan Reviewing progress Appraising Performance

C: Reviewing progress On April 1, the manager sees that nine contingent call center workers have been hired and completed training. On June 30, call center data show 5 percent of calls are on hold for more than 90 seconds. Explanation The four main steps of MBO are setting goals, developing action plans, reviewing progress, and appraising performance. The manager sets a goal of a maximum hold time of 90 seconds, develops a plan involving standby call center workers, measures progress in terms of workers hired and customer hold times, and appraises the performance of the plan against the goal at the end of construction season.

SMART means that effective goals are: Time-bound.

Good goals specify precisely when you will meet them. Doing so provides you with a deadline for your actions. For example, it is easy to say "I want to be a millionaire," but you are more likely to accomplish that goal if you say "I will have a million dollars in a bank account by January 1, 2020."

Mission example:

IKEA, for example, has a well-defined mission to "create a better everyday life for the many people" (in contrast to the affluent few) by "offering a wide-range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them." Another example comes from Henry Schein, a global provider of products and services for medical and dental practitioners, which has a mission to "provide innovative, integrated health care products and services; and to be trusted advisors and consultants to our customers—enabling them to deliver the best quality patient care and enhance their practice management efficiency and profitability."

Remember This

Managers formulate goals that are specific and measurable, cover key result areas, are challenging but realistic, have a defined time period, and are linked to rewards. At Airbnb, managers recently began linking employee bonuses to goals of guest safety and other nonfinancial measures. Key performance indicators (KPIs) are measures that reflect how well lower-level goals are helping the organization progress toward attaining its strategic goal. Types of performance management systems include management by objectives, single-use plans, and standing plans. Management by objectives (MBO) is a method whereby managers and employees define goals for every department, project, and person and use them to monitor subsequent performance. MBO includes the steps of setting goals, developing action plans, reviewing progress, and appraising performance. A recent approach that focuses people on the methods and processes used to attain results, rather than on the results themselves, is called management by means (MBM). Single-use plans are plans that are developed to achieve a set of goals that are unlikely to be repeated in the future. Standing plans are ongoing plans that are used to provide guidance for tasks that occur repeatedly in the organization. Examples of standing plans include the NFL's personal conduct policy and Disney's no-smoking policy at all the company's theme parks.

When families were quarantined together during the coronavirus pandemic, they often faced conflicts that they did not have before. One teenager, Sameera, in London, says, "I do become frustrated when I'm asked to do things when I'm trying to work. I feel as if they don't understand the amount of work I have to do. Ideally I would like them to not disturb till I have completed all my work as otherwise being disturbed multiple times discourages me and takes me a lot longer to complete my work." Sameera has the goal of getting her work done, while her parents have the goal of getting work done around the house. Which of the following conflict resolution techniques would be most effective in this situation? Address conflicts with debate and dialogue Manager departures Coalitional management Modify goals by time or location

Modify goals by time or location The best way to resolve this conflict is to modify goals by time or location. Both Sameera's goal and her parent's goal are important, but if they worked together, they could change the goals slightly so that both could be accomplished effectively. It doesn't make sense to debate the goals because both are important, and it doesn't make sense to try and use coalitional management because both parties see their goals as important, and that is unlikely to change. Finally, because this is a family unit during a time of crisis, it is unlikely that one or the other of them would depart the home.

Plan or goal: I can get dogs from the pound. There are so many abandoned animals; it will be quicker, less expensive, and easier than trying to get dogs from breeders.

Plan This statement tells you what actions (getting dogs from the pound) Dave will take to make his program more effective.

Limitations of Planning example:

Recall from Chapter 5 the example of Wells Fargo retail bank employees opening fake bank and credit card accounts and forcing customers into unnecessary fee-generating products in an attempt to meet the excessively high sales goals set by top management. Several bankers in Wells Fargo's foreign exchange business were also found to have overcharged hundreds of companies for currency trades to meet high goals. Goals can create a false sense of certainty. Having a plan can give managers a false sense that they know what the future will be like. However, all planning is based on assumptions, and managers can't know with certainty what the future holds for their industry or for their competitors, suppliers, and customers. Goals and plans may cause rigidity in a turbulent environment. A related problem is that planning can lock the organization into specific goals, plans, and time frames, which may no longer be appropriate as circumstances change. Managing under conditions of change and uncertainty requires a degree of flexibility. Managers who believe in "staying the course" will often stick with a faulty plan even when conditions change dramatically. Goals and plans can get in the way of intuition and creativity. Success often comes from creativity and intuition, which can be hampered by too much routine planning. For example, during the process of setting goals in the MBO process described previously, employees might play it safe to ensure they can achieve the objectives rather than offer creative ideas. Similarly, managers sometimes squelch creative ideas from employees that do not fit with predetermined action plans

As a manager, you have been asked to work with your employees to develop goals. What can you expect from this process? Check all that apply. When deciding whether goals and plans will be beneficial, managers should consider whether the environment is more stable or more dynamic. The advantages of setting goals and making plans always outweigh the disadvantages for every organization in any environment. A benefit of plans is that they lock the organization into a course of action it can stick to, even if the environment changes. One of the drawbacks of plans is that they can create a false sense of security.

When deciding whether goals and plans will be beneficial, managers should consider whether the environment is more stable or more dynamic. One of the drawbacks of plans is that they can create a false sense of security.

As the Board of Governors of the American Red Cross considers planning, one option is to make strategic plans and then direct managers to align tactical and operational plans accordingly. Another option is to have planning specialists help managers across the organization make their own plans. Why might this organization's executives opt for the latter approach? Check all that apply. When managers come up with their own plans, they are likely to be more committed to following through on them. The environment is a dynamic one, and department and frontline managers can come up with more responsive plans than can central leadership. Senior leadership will have more control over the organization's direction. Resources will be better coordinated across the organization in support of the overall strategy.

When managers come up with their own plans, they are likely to be more committed to following through on them. The environment is a dynamic one, and department and frontline managers can come up with more responsive plans than can central leadership.