Chapter 7: Managerial Planning and Goal Setting

Single-Use Plans

Developed to achieve set of goals that are not likely to be repeated in the future

Step 3 of Organizational Planning Process

Managers periodically review plans to learn from results and shift plans as needed

Standing Plans

Ongoing plans that provide guidance for tasks or situations that occur repeatedly within the organization Typically include both programs and projects E.g. Organizational policies, rules, and procedures

Defined Time Period

Operational goals should specify the date on which goal attainment will be measured

Mission

Organization's reason for existing Describes the organization's values, aspirations, and reason for being Basis for development of all subsequent goals and plans

Strategy Map

Visual representation of the key drivers of an organization's success Shows how specific goals and plans in each area are linked Provides managers a way to see the cause-and-effect relationships among goals and plans

Operational Planning

Specifies plans for department managers, supervisors, and employees Schedules serve as an important component; Define precise time frames for the completion of each operational goal Must be coordinated with the budget

Develop Action Plans

Define the course of action needed to achieve the stated goals; made for both individuals and groups Action plans can be changed whenever goals are not being met

Step 2 of Organizational Planning Process

Translating the plan into action; includes defining tactical plans and objectives, developing strategy map, selecting the measures and targets, and identifying stretch goals and crisis plans

Four Major Activities that Make MBO Successful

1. Set goals 2. Develop action plans 3. Review progress 4. Appraise overall performance

Crisis Management Team

Cross-functional group of people who are designated to swing into action if a crisis occurs

Tactical Plans

Designed to help execute major strategic plans and to accomplish a specific part of the company's strategy Typically have a shorter time horizon Middle managers take the broad strategic plan and identify specific tactical plans

Challenging and Realistic

Unrealistic goals set employees for failure and lead to decrease in employee morale; Easy goals do not motivate employees

Set Goals

"What are we trying to accomplish?" Goals should be jointly derived Mutual agreements create strongest commitment to achieving goals All team members may participate in setting goals

Disadvantages of Goals and Plans

1) Can create a false sense of certainty 2) May cause rigidity in turbulent environment 3) Can get in the way of intuition and creativity

Two Essential Stages of Crisis Planning

1) Crisis Prevention 2) Crisis Preparation

Three Stages of Crisis Preparation

1) Designating a crisis management team and spokesperson 2) Creating a detailed crisis management plan 3) Setting up an effective communication system

Four Key Areas that Contribute to Long-Term Success

1) Learning and Growth Goals 2) Internal Process Goals 3) Customer Service Goals 4) Financial Goals

Advantages of Goals and Plans

1) Provides a source of motivation and commitment 2) Guide resource allocation 3) A guide to action 4) Sets a standard of performance

Criteria for Effective Goals

1. specific and measurable 2. defined time period 3. cover all key result areas 4. choice and clarity 5. challenging but realistic 6. linked to reward

Intelligence Team

A cross-functional group of managers and employees who work together to gain a deep understanding of a specific competitive issue and offer insight and recommendations for planning.

Crisis Management Plan (CMP)

A detailed written plan that specifies the steps to be taken, and by whom, if a crisis occurs

Management by Objectives (MBO)

A system whereby managers and employees define goals for every department, project, and person and use them to monitor subsequent performance Cycle repeats itself annually Corporate goals are more likely to be achieved when they focus on manager and employee efforts Helps employees see their contribution to the business through their job and performance

Strategic Goals

Also called official goals Broad statements that describe where the organization wants to be in the future Pertain to organization as a whole rather than specific departments

Decentralized Planning

An approach where top executives or planning experts work with managers in major divisions or departments to develop their own goals and plans.

Operational Plans

Developed at the lower levels of the organization to specify action steps toward achieving operational goals Serves as the department manager's tool for daily and weekly operations Goals are stated in quantitative terms and the plan describes how these goals will be achieved

Step 1 of Organizational Planning Process

Begins with the managers' development of the overall plan for the organization by clearly defining mission and strategic goals

Mission Statement

Broadly stated definition of purpose that distinguishes the organization from others of a similar type Can enhance employee motivation and organizational performance Content focuses on the market and customers and identifies desired fields of endeavor Some describe company characteristics (corporate values, product quality, location of facilities, and attitude toward employees)

Strategic Plans

Define the action steps by which the company intends to attain strategic goals Serves as the blueprint that defines the organizational activities and resource allocations required for meeting targets Tends to be long-term and may define organizational action steps 2-5 years in the future Aims to turn organizational goals into realities within a certain time period

Crisis Planning

Enables organizations to cope with unexpected events that are sudden and devastating that they have the potential to destroy the organization

Appraise Overall Performance

Evaluate whether goals are being achieved Appraisal of departmental and overall corporate performance shapes the goals for next year

Tactical Goals

Formulated after strategic goals Results that major divisions and departments want to achieve These apply to middle management and describe what major sub-units must do for the organization to achieve its overall goals

Cover Key Areas

Goals cannot be set for every aspect

Choice and Clarity

Goals should be carefully chosen, clear, and direct goals can be more powerfully focused on organizational attention, energy, and resources

Linked to Rewards

Impact of goals depend on the extent to which incentives are based on goal achievement

Scenario Building

Involves looking at current trends and discontinuities and visualizing future possibilities Thinking about what could be; events that cause most damage are those that no one thought of Calls for a broad base of managers mentally rehearsing different scenarios based on anticipated varied changes that could affect the organization

Operational Goals

Results expected from departments, work groups, and individuals Precise and measurable

Review Progress

Reviews can occur informally Reviews allow managers and employees too see whether they are on target or whether corrective action is needed

Performance Dashboards

Serves as a way for executives to keep track of key performance metrics

Specific and Measurable

When possible, operational goals should be expressed in quantitative terms Not all goals can be expressed in numerical terms, but vague goals have little motivating power for employees By necessity, goals are qualitative as well as quantitative It is important that goals be precisely defined and allow for measurable progress

Plan

a blueprint for goal achievement and specifies the necessary resource allocations, schedule, tasks, and other actions specifies today's means

Organizational Performance

an outcome of how well the designated organizational goals are aligned

Big Hairy Audacious Goal (BHAG)

any goal that is so big, inspiring, and outside the prevailing paradigm that it hits people in the gut and shifts their thinking

Contingency Plans

define company responses to be taken in the case of emergencies, setbacks, or unexpected conditions

Formal Mission

defines the basic purpose of the organization, especially for external audiences

Goal

desired future state that the organization attempts to realize defines the purpose of the organization

Internal Process Goals

enable the organization to meet goals for customer service and satisfaction, be a leader in quality and reliability, and provide innovative solutions to emerging customer needs

Strategic Goals

established and planned by top managers should reflect a commitment to organizational efficiency and effectiveness company level

Operational Plan

identifies specific procedures or processes needed at lower levels of the organization developed by the front-line managers and supervisors departmental level

Crisis Preparation

includes all the detailed planning to handle a crisis when it occurs 3 Stages

Planning

incorporate the goal and the plan determines the organizational goals and defines the means for achieving them

Crisis Prevention

involves activities that managers undertake to try to prevent crises from occurring and to detect warning signs of potential crises

Stretch Goals

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

Learning and Growth Goals

serve as a foundation to help achieve goal for excellent internal business processes

Contingency Planning

the process of preparing alternative courses of action that may be used if the primary plans don't achieve the organization's objectives

Tactical Goals

the responsibility of middle managers (heads of major divisions or functional units) formulate plans that will focus on the major actions the division must take to take part in the strategic plan divisional level