MNGT 3100 Chapter 6

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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?


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