Principles of Management - Module 5: Planning and the Manager's Role

What are some pitfalls of planning?

1) In situations with rapidly changing variables, following a plan may not be possible, let alone effective since they tend to create rigidity by locking an organization into specific goals. 2) Planning can make people complacent; intuition and creativity cannot be replaced by formal planning. 3) Planning can cause an overemphasis on the short-term instead of the future. 4) And if the plan is successful, people may be reluctant to alter it later on, even if the situation it was designed to solve has changed dramatically.

What are the five steps managers should follow when setting goals?

1) Review the organizations mission/purpose. 2) Evaluate available resources. 3) Determine the goals individually or with input from others. 4) Write down the goals and communicate them to all who need to know. (This forces people to think them through and the written goals become visible evidence of the importance of working towards something.) 5) Review results and whether or not goals are being kept. If needed change should be implemented.

What are the 8 steps of settings goals in an MBO system?

1) The organizations's overall objectives and strategies are formulated. 2) Major objectives are allocated among divisional and departmental units. 3) Unit managers collaboratively set specific objectives for their units with their managers. 4) Action plans, defining how objectives are to be achieved, are specified and agreed upon by manager and employees. 6) The action plans are implemented. 7) Progress toward objectives is periodically reviewed and feedback is provided. 8) Successful achievement of objectives is reinforced by performance-based rewards.

What are four reasons why managers plan?

1) To provides direction (to managers and non-managers alike) 2) To reduce uncertainty 3) To minimize waste and redundancy 4) To establish the goals and plans used in controlling.

What are the characteristics of a wellwritten goal?

1) Written in terms of outcomes rather than actions 2) Measurable and quantifiable 3) Clear as to a time frame 4 Challenging yet attainable 5) Written down 6) Communicated to all necessary organizational members.

What is environmental scanning?

A manager's analysis of the external environment which involves screening information to detect emerging trends. One of the fastest-growing forms of environmental scanning is *competitive intelligence,* which is gathering information abut competitors that allows managers to anticipate competitor actions rather than just react to them. (Who are the competitors? What are they doing? How will their actions affect us?)

What is Management by Objectives? (MBO)

A process of setting mutually agreed upon goals and using those goals to evaluate employee performance. Progress towards goals is periodically reviewed and rewards are allocated on the basis of that progress. The four elements of this approach include: goal specificity, participative decision making, an explicit time period, and performance feedback.

What is a mean-ends chain?

An integrated network of goals in which the accomplishment of goals at one level serves as the means for achieving the goals or ends at the next level. When the goals achieved at lower-levels become the means to reach the goals (ends) at the next level.

What is traditional goal setting?

Broad goals are set by the top managers and then flow down through the organization and become subgoals for each organizational level. This approach assumes that top management knows best because they can see the "big picture." However, often goals lose clarity and focus as lower-level managers attempt to interpret and define the goals for their areas of responsibility.

What are the four types of goals?

Financial, strategic ,stated, or real.

What is the differece between financial goals and strategic goals?

Financial: Those goals related to the financial performance of an organization. And Strategic: Those goals related to all other areas of an organizations performance.

How does planning affect organizational performance?

Formal planning is associated with positive financial performance. It is more important to plan well and implement plans than to plan a lot. The external environment plays a big role in why company's that plan still don't perform.

How does the degree of environmental uncertainty affect the choice of plans?

If environmental uncertainty is high, plans should be specific but flexible. (i.e. plans should have some specificity but should not be set in stone.) Managers should also be prepared to abandon their plans if necessary.

Which are the three contingency factors that affect the choice of plans?

Organizational level, degree of environmental uncertainty, and length of future commitments.

What are the different types of plans?

Organizational plans are categorized by their Breadth: whether they are strategic or operational plans. Time frame: whether they are short or long-term plans. Specificity: whether they are specific or directional plans. and Frequency of use: whether they are single-use or standing plans. Strategic plans are usually long term, directional, and single use. Operational plans are usually short term, specific, and standing.

In the non-traditional approach, who does the planning?

Plans are developed by organizational members at various levels and in the various work units to meet their specific needs. Work teams set their own daily schedules and track their progress against those schedules. In a dynamic environment, this approach is superior because there is little time for plans to flow down all the levels.

How does the comitment concept affect the choice of plans?

Plans should extend far enough to meet those commitments made when the plans were developed. Planning for too long or too short a time is ineffective and inefficient.

What is the difference between short term and long term plans?

Short term plans cover one year or less. Long term plans are those with a time frame beyond three years. Plans in between are called intermediate plans.

What is the difference between single-use plans and standing plans?

Single-use plans are one-time plans specifically designed to meet the need of a unique situation and is created in response to non-programmed decisions that managers make. Standing Plans are ongoing plans that provide guidance for actives performed repeatedly and that are created in response to programmed decisions that managers make.

What is the difference between specific plans and directional plans?

Specific plans are clearly defined and leave no room for interpretation or misunderstanding. Directional plans are flexible and set out general guidelines. They provide focus but don't lock managers into specific goals or courses of action.

What is the difference between real and stated goals?

Stated goals are broadly worded official statements of the organization (intended for public consumption and for the benefit of the various stakeholders to which the company responds) that may be irrelevant to its real goals. Real goals are goals that an organization actually pursues, as defined by the actions of its members. Goals guide management decisions and form the criteria against which work results are measured.

What is the difference between Strategic plans and Operational plans?

Strategic plans apply to the entire organization and establish the organization's overall goals. They also seek to position the organization in terms of its environment. Operational plans encompass a particular operational area of the organization/specify details.

What is planning?

The primary management function which includes defining the organizations goals (objectives/desired outcomes/targets), establishing strategies for achieving those goals, and developing plans (documents that outline how goals are going to be met, resources allocated, and activities scheduled) to integrate and coordinate work activities. In formal planning, specific goals for a specific period are defined, written, and shared to reduce ambiguity and create a common understanding of what needs to be done.

How does organizational level affect a manager's type of planning?

Top level managers will typically do strategic planning while lower-level managers will do operational planing.

In the traditional approach, who does the planning?

Top-level managers who are assisted by a formal planning department, which is a group of planning specialists whose sole responsibility is helping to write organizational plans. In this approach, plans are handed down from one level to the next, which is often ineffective.

What are the two approaches to setting goals?

Traditional goal-setting and management by objectives.