Management Chapter 7: Planning and Goal Setting

Chapter 7: Planning and Goal Setting

• Planning is the most fundamental management function.
• Without plans and goals, organizations and employees struggle.
• Good managers adapt plans to changing conditions.
• A goal is a desired future circumstance.
• A plan is a blueprint for achieving goals and specifies resource allocations, schedules, and tasks.
• Planning begins with a formal mission defining the organization's basic purpose, especially for external audiences.
• The mission serves as the basis for strategic (company-level) goals and plans.
• Strategic plans shape tactical (divisional) and operational (departmental) levels.
• Strategic goals and plans are top management's responsibility, reflecting organizational efficiency and effectiveness.
• Tactical goals and plans are middle management's responsibility, focusing on actions to support strategic plans.
• Operational goals and plans are frontline management's responsibility, focusing on tasks and processes to meet tactical and strategic goals.
• All levels of planning support each other.

7.2 The Organizational Planning Process

• Develop the Plan: Define mission, vision, and set goals.
• Translate the Plan: Define tactical and operational objectives; create maps.
• Plan Operations: Define operational goals and plans; select measures and targets; set stretch goals; deal with crisis planning.
• Execute the Plan: Use management by objectives, performance dashboards, single-use plans, and decentralized responsibility.
• Monitor and Learn: Hold planning and operational reviews.

Goal Setting in Organizations

• Planning starts with the organization's purpose or mission (its reason for existence).
• A well-defined mission is the basis for goals and plans.
• A mission statement is a broad definition of the organization's basic business scope and operations.

Strategic Goals & Plans

• Strategic goals (often called official goals) describe where the organization wants to be in the future.
• Strategic plans outline actions to achieve strategic goals—defining organizational activities and resource allocations.
• Strategic planning is typically long-term (2-5 years).

Tactical Goals & Plans

• Tactical goals are the results major divisions/departments strive for to achieve strategic goals.
• Tactical plans detail how departments implement the organization's strategic plan; these are shorter-term plans.

Operational Goals & Plans

• Operational goals are specific results expected from departments, work groups, and individuals.
• Operational plans detail action plans to achieve operational goals, supporting tactical plans; daily and weekly operations are emphasized.

Aligning Goals

• Effective organizational goals and plans must align and support each other consistently.
• Lower-level goals' achievement allows higher-level goals' achievement.

Aligning Goals with Strategy Map

• Strategy maps visually represent key drivers of success, showing how goals and plans connect causally.
• Strategy maps allow managers to see cause-and-effect relationships between goals and plans.
• Strategy maps help all employees understand their roles in achieving the organizational mission.

7.4 A Strategy Map for Aligning Goals

• This example strategy map shows how different goals (financial, customer service, internal business processes, and learning and growth) are interconnected.

Operational Planning

• Operational goals guide employees and resources toward specific outcomes.
• Effective goals need to be established; different approaches include MBO, single-use plans, and standing plans.

7.5 Characteristics of Effective Goal Setting

• Specific and measurable; linked to rewards; challenging but realistic; defined time period; cover key areas.

Criteria for Effective Goals

• Specific and measurable; defined time period; key result areas; key performance indicators; challenging and realistic; linked to rewards.

S.M.A.R.T. Goals

• Specific, measurable, attainable, relevant, and timely goals are important for effectiveness.

Management-by-Objectives (MBO)

• MBO is a system where managers and employees define goals for departments, projects, and individuals to monitor and evaluate subsequent performance.
• Steps in MBO include goal setting, developing action plans, reviewing progress, and appraising performance.

MBO Benefits

• Focuses efforts on goal accomplishment.
• Improves employee motivation.
• Aligns individual and departmental goals with overall company goals.
• Improves performance at all company levels.

MBO Problems

• Potential for people cutting corners or engaging in unethical behavior to meet targets.
• A focus on methods and processes (means) instead of outcomes (results) can be a problem in MBO.

Single-Use and Standing Plans

• Single-use plans are developed for one-time goals like programs or projects (e.g., building new headquarters or renovating an office).
• Standing plans are ongoing guidance for regularly occurring tasks (e.g., policies, rules, procedures).

Types of Single-Use and Standing Plans

• Specific examples of single-use plans: building new headquarters or converting paper files to digital formats.
• Examples of standing plans: policies like sexual harassment policies or procedures for handling employee grievances.

7.8 Major Types of Single-Use and Standing Plans

• Detailed descriptions of different types of single-use and standing plans—programs, projects, rules, policies, procedures.

Benefits and Limitations of Planning

• Benefits include a source of motivation, guiding resource allocation, and a guide to action.
• Limitations: a false sense of certainty, rigidity in a turbulent environment, and getting in the way of intuition and creativity.

Planning for a Turbulent Environment

• Contingency planning is for emergencies, setbacks, or unexpected events.
• Building scenarios is a forecasting technique to visualize future possibilities.
• Crisis planning is for handling unexpected and devastating events.

7.9 Essential Stages of Crisis Planning

• Prevention involves building relationships and detecting environmental signals.
• Preparation involves designating a crisis management team, creating a detailed plan, and establishing effective communications.

Essential Stages of Crisis Planning

• Crisis prevention involves activities to prevent crises.
• Critical elements of prevention include building trust with stakeholders and recognizing warning signs in the environment.
• Crisis preparation involves detailed planning for when a crisis occurs and includes designating a crisis management team, developing a crisis management plan, and establishing an effective communication system.

Crisis Management Team and Crisis Management Plan

• Crisis management teams are cross-functional groups of people to handle a crisis.
• A crisis management plan (CMP) is a detailed written plan specifying steps for handling various kinds of crises.

Innovative Approaches to Planning

• Decentralized planning involves empowering managers at different levels to develop their own dynamic goals and plans.

Set Stretch Goals for Excellence

• Stretch goals are ambitious, yet achievable goals that encourage innovation.
• BHAGs are big, hairy, audacious goals that inspire employees to think outside the box.

Use Performance Dashboards

• Dashboards track and display real-time key performance metrics, aligning and tracking goals enterprise-wide.

7-10 A Performance Dashboard for Planning

• This is an illustrated example of a performance dashboard that can be used to track project goals, financials, defects, etc.

Deploy Intelligence Teams

• Intelligence teams gather deep understanding of competitive issues and present insights.
• These teams are crucial during critical intelligence challenges.

Concluding Remarks

• Strategic planning offers a good starting point, but organizations need flexibility.
• Managers should adapt their plans to changing environments (new competitors, legislation, customer needs, and technologies).
• Encourage and allow creativity; develop contingency plans.