MNGT 3100 Chapter 6
management by objectives (MBO)
(a.k.a. formal goal setting) a technique for integrating formal goal setting and planning by giving subordinates a voice and clarifying what they are expected to accomplish
long-range plans
(strategic) plans of 5 or more years
intermediate plans
(tactical) plans, usually cover from 1 to 5 years and parallel tactical plans
planning
-all organizations do this, but not in the same fashion -occurs within an environmental context -all goals require these to guide in their achievement -all goals are tied higher goals and these
board of directors
-establishes the corporate mission and strategy. -may engage in strategic planning
executing tactical plans
-evaluate each course of action in light of its goal -obtain and distribute information and resources -monitor horizontal and vertical communication and integration of activities -monitor ongoing activities for goal achievement
line management
-have formal authority and responsibility for management of the organization -help to formulate strategy by providing information -are responsible for executing the plans of top management
strengths of formal goal setting
-improved employee motivation -enhances communication -fosters more objective performance appraisals -focuses attention on appropriate goals and plans -helps identify managerial talent -provides a systematic management philosophy -facilitates control of the organization
major barriers
-inappropriate goals -improper reward system -dynamic and complex environment -reluctance to establish goals -resistance to change -constraints
executive committee
-is composed of top executives -meets regularly with the CEO to review strategic plans
weaknesses of formal goal setting
-poor implementation of the goal setting process -lack of top management support for goal setting -delegation of the goal setting process to lower levels -overemphasis on quantitative goals -too much paperwork and record keeping -managerial resistance to goal setting
purposes of goals
-provide guidance and a unified direction for people in the organization -strong affect on the quality of other aspects of planning -serve as a source of motivation for employees -provide a mechanism for evaluation and control of the organization
the organization's mission
-purpose -premises -values -directions
developing tactical plans
-recognize and understand overarching strategic plans and tactical goals -specify relevant resource and time issues -recognize and identify human resource commitments
criteria for effective goals
-specific and measurable -cover key result areas -challenging but realistic -defined time period -linked to rewards
the formal goal-setting process
-start the formal goal-setting program -establishment of organizational goals and plans -collaborative goal setting and planning -communicating organizational goals and plans (meeting, verifiable goals and clear plans, counseling, resources) -periodic review -evaluation
decision making
-the cornerstone of planning -the catalyst that drives the planning process -underlies every aspect of setting goals and formulating plans
contingency planning
-the determination of alternative courses of action to be taken if an intended plan of action is unexpectedly disrupted or rendered inappropriate -these plans help managers to cope with uncertainty and change
crisis management
-the set of procedures the organization uses in the even of a disaster or other unexpected calamity -difficult to anticipate
overcoming the barriers
-understanding the purposes of goals and planning -communication and participation -consistency, revision, and updating -effective reward system
contingency planning process
1. develop plan, considering contingency events 2. implement plan and formally identify contingency events 3. specify indicators for the contingency events and develop contingency plans for each possible event 4. successfully complete plan or contingency plan (for action point 3 and 4, monitor contingency event indicators and implement contingency plan if necessary
program and project
2 types of single-use plans
policy, standard operating procedure, rules and regulations
3 types of standing plans
contingency
Rhode Island's governor told 81% of the state of employees to stay home for 12 days without pay in order to save state millions of dollars. Unemployment in the state had increased 12.6%, which caused a budget deficit. This is an example of a __________ plan
strategic plan
a general plan outlining decisions of resource allocation, priorities, and action steps necessary to reach strategic goals.
tactical plan
a plan aimed at achieving tactical goals set by and for middle management
reaction plan
a plan designed to allow the company to react to an unforeseen circumstance.
long-range plan
a plan that covers many years, perhaps even decades
intermediate plan
a plan that is somewhat less tentative and subject to change than is a long-range plan. usually cover periods from one to five years and are especially important for middle and first-line managers. thus, the generally parallel tactical plans.
action plan
a plan that operationalizes any other kind of plan.
mission statement
a statement of the organization's fundamental purpose
who sets goals
all managers; managerial responsibility for goal setting should correspond to the manager's level in the organization
optimizing
allows managers to balance and reconcile inconsistent or conflicting goals (managers can pursue one goal and exclude all others or to seek a mid-range goal)
mission
an organization's _____ is a statement of its "fundamental, unique purpose that sets a business apart from other firms of its type and identifies the scope of the business's operations in product and market terms"
planning task force
created when the organization wants a special circumstance addressed
operational
developed by middle and lower-level managers, these plans have a short-term focus and a relatively narrow in scope. each one deals with a fairly small set of activities.
standing plan
developed for activities that recur regularly over a period of time
single-use plan
developed to carry out a course of action not likely to be repeated in the future
goals by area
different functional areas of the organization
communication and participation
everyone involved in the planning process should know what the overriding organizational strategy is, what the various functional strategies are, and how they are all to be integrated and coordinated.
planning staff
gather information, coordinate planning activities, and take a broader view than individual managers
purposes of goals
goal-setting practices strongly affect other aspects of planning. effective goal setting promotes good planning, and good planning facilitates future goal setting.
purposes of goals
goals can serve as a source of motivation for employees of the organization. goals that are specific and moderately difficult can motivate people to work harder, especially if attaining the goal is likely to result in rewards.
operational
goals made by people such as a restaurant manager, advertising director, and accounting manager
strategic
goals made by the President and CEO
tactical
goals made by the vice president
inappropriate goals
goals may be inappropriate if they are unattainable, and if they place too much emphasis on either quantitative or qualitative measures of success.
purposes of goals
goals provide an effective mechanism for evaluation and control. this means that performance can be assessed in the future in terms of how successfully today's goals are accomplished.
operational goals
goals set by and for lower-level managers. their concern is with shorter-term issues associated with the tactical goals.
tactical goals
goals set by and for middle managers. their focus is on how to operationalize actions necessary to achieve the strategic goals.
strategic goals
goals set by and for top management of the organization. they focus on broad, general issues.
consistency, revision, and updating
goals should be consistent both horizontally and vertically. because goal setting and planning are dynamic processes, they must also be revised and updated regularly.
effective reward systems
in general, people should be rewarded both for establishing effective goals and plans and for successfully achieving them.
constraints
includes a lack of resources, government restrictions, and strong competition
optimizing
involves balancing and reconciling possible conflicts among goals. because goals may conflict with one another, the manager must look for inconsistencies and decide whether to pursue one goal to the exclusion of another of to find a midrange target between the extremes.
goals by time frame
long-term intermediate-term short-term time frames and explicit time frames or open-ended
short-range plans
managers develop these plans which have a time frame of one year or less. these plans greatly affect the manager's day-to-day activities.
understand the purposes of goals and planning
managers should recognize their basic purposes, and that there are limits to the effectiveness of setting goals and making plans
chief executive officer (CEO)
may serve as president or board chair; has a major role in planning and implementing the strategy
horizontal consistency
means that goals should be consistent across the organization, from one department to the next
vertical consistency
means that goals should be consistent up and down the organization- strategic, tactical, and operational goals must agree with one another
short-range plans
operational action and contingency plans of 1 year or less
improper reward system
people may inadvertently be rewarded for poor goal-setting behavior or go unrewarded or even be punished for proper goal-setting behavior
resistance to change
planning involves changing something about the organization, and people tend to resist change
the time dimension of planning
planning must provide sufficient time to fulfill the managerial commitments involved
strategic
plans set by the board of directors and top management, generally have an extended time horizon, and address questions of scope, resource deployment, competitive advantage, and synergy.
dynamic and complex environment
rapid change, technological innovation, and intense competition can all increase the difficulty of an organization's accurately assessing future opportunities and threats
operational plans
short-term focus plans that are set by and for lower-level managers
program
single-use plan for a large set of activities. it might consist of identifying procedures for introducing a new product line, opening a new facility, or changing the organization's mission.
project
single-use plan of less scope and complexity than a program. may be a part of a broader program, or it may be a self-contained single-use plan.
reluctance to establish goals
some managers may be reluctant. the reason for this reluctance may be lack of confidence or fear of failure
standard operating procedure (SOP)
standing plan outlining steps to be followed in particular circumstances
policy
standing plan specifying the organization's general response to a designated problem or situation
rules and regulations
standing plans describing exactly how specific activities are to be carried out. rather than guiding decision making, rules and regulations actually take the place of decision making in various situations. (most specific of all standing plans)
levels of goals
strategic, tactical, operational
line managers
they identify, analyze, and recommend program alternatives, develop budgets and submit them for approval, and finally set the plans in motion.
tactical
typically involve upper and middle management and, compared with strategic plans, have a somewhat shorter time horizon and a more specific concrete focus. this, these plans are concerned more with actually getting things done than with deciding what to do.
action and reaction
what are the two types of short-term plans?
decision making and planning
what two things are critical parts of a manager's job?
