Management Planning Concepts Quiz

Foundations of Planning

• Planning is a primary managerial activity involving defining organizational goals, establishing strategies to achieve those goals, and developing plans for organizational work activities.
• Formal planning involves specific goals within a specific time period, documented and shared with organizational members.
• Planning provides direction, reduces uncertainty, minimizes waste and redundancy, and sets standards for controlling.
• Formal planning is associated with higher profits, returns on assets, and positive financial results.
• The quality of planning and implementation greatly influences performance, more than just the extent of the planning itself. External factors can lessen the impact of planning on performance. Formal planning needs extended use before it affects performance outcomes.

Learning Outcomes 7.1 - The What And Why Of Planning

• Defining planning
• Describing the purposes of planning
• Explaining how studies show the relationship between planning and performance

Learning Outcomes 7.2 - Goals And Plans

• Defining goals and plans
• Describing the types of organizational goals
• Describing different types of plans

Learning Outcomes 7.3 - Setting Goals and Developing Plans

• Discussing how traditional goal setting and MBO (Management by Objectives) work
• Describing well-written goals and how to set goals
• Discussing factors impacting planning
• Describing various planning approaches

Learning Outcomes 7.4 - Contemporary Issues in Planning

• Explaining criticisms of planning
• Describing how managers can effectively plan in today's dynamic environment

What is Planning?

• A primary managerial activity encompassing defining organizational goals, establishing an overarching strategy, and developing plans for work activities.
• Formal planning involves specific goals within a set timeframe, documented and shared with members.

Why Do Managers Plan?

• To provide direction
• To reduce uncertainty
• To minimize waste and redundancy
• To establish standards for controlling

The Relationship Between Planning and Performance

• Formal planning is linked to higher profits, returns on assets, and positive financial results.
• The quality of planning and implementation is a more significant factor affecting performance than the extent of planning alone.
• External factors can diminish the impact of planning on performance.
• Formal planning takes time to produce significant performance improvements.

Elements of Planning

• Goals (or Objectives): Desired outcomes for individuals, groups, or entire organizations. They provide direction and evaluation criteria.
• Plans: Documents outlining how goals will be achieved, outlining resource allocation and establishing schedules for activities.

Types of Goals

• Financial Goals: Related to the expected internal financial performance of the organization.
• Strategic Goals: Related to organizational performance relative to external factors (like competitors).
• Stated Goals vs. Real Goals: Stated goals are official statements for public consumption, often different from the actual goals.

Types of Plans (Exhibit 7-1)

• By Breadth: Strategic (overall organization) vs. Operational (specific details)
• By Time Frame: Long-term (beyond 3 years) vs. Short-term (one year or less)
• By Specificity: Directional (general guidelines) vs. Specific (clearly defined)
• By Frequency of Use: Single-use (one-time event) vs. Standing (ongoing activity)

Types of Plans (detailed)

• Strategic Plans: Apply to the entire organization, establishing overall goals and the organization's position in its environment, covering extended periods
• Operational Plans: Specify how overall goals are achieved, covering a short time period.
• Long-Term Plans: Time frames extending beyond three years
• Short-Term Plans: Time frames of one year or less
• Specific Plans: Clearly defined, leaving no room for interpretation
• Directional Plans: Flexible, setting general guidelines, allowing for discretion in implementation
• Single-Use Plans: One-time plans to meet a unique situation
• Standing Plans: Ongoing plans guiding repeatedly performed activities

Traditional Goal Setting

• Broad organizational goals, broken down into sub-goals at various levels
• Assumes top management has the best understanding of the "big picture"
• Goals are intended to direct, guide, and constrain from above, potentially lacking clarity at lower levels.

Management by Objectives (MBO)

• Employees and managers jointly determine specific performance goals
• Progress toward goals is periodically reviewed
• Rewards are allocated based on progress toward established goals
• Key elements: goal specificity, participative decision-making, an explicit timeframe, and feedback

Steps in a Typical MBO Program (Exhibit 7-3)

• Establishing organizational objectives and strategies
• Allocating objectives across organizational units.
• Collaboratively setting specific objectives with unit managers
• Collaboratively setting objectives at the department level.
• Defining action plans for achieving objectives
• Implementing action plans
• Periodically reviewing progress and providing feedback
• Reinforcing achievement with performance-based rewards.

Does MBO Work?

• Top management commitment and involvement are important. MBO programs might not be as effective in rapidly changing environments that need frequent adjustment. An excessive focus on individual performance might hinder teamwork. MBO can become an annual paperwork routine rather than a truly effective process.

Well-Written Goals (Exhibit 7-4)

• Expressed in terms of outcomes, not actions. The ends are emphasized, not the means.
• Measurable (quantifiable, specifying how to measure and how much is expected).
• Clear as to timeframe (specifies when measurement of accomplishment will occur)
• Challenging yet attainable (not overly ambitious or overly simple).
• Written down to focus, define, and make them visible.
• Communicated to relevant organizational members.

Steps in Goal Setting

• Reviewing the organization's mission statement.
• Evaluating available resources to ensure they support the mission.
• Determining specific, measurable, and timely goals individually or with others, ensuring alignment with the mission.
• Writing down, communicating, and sharing these goals to ensure clarity and shared understanding.
• Reviewing results and making any necessary adjustments to the mission, resources, or goals.

Approaches to Planning

• Establishing a formal planning department (a team of specialists to assist with writing plans, never the sole responsibility)
• Involving organizational members in planning (plans developed across units, coordinated)

Criticisms of Planning

• Rigidity and inflexibility.
• Inability to adapt to dynamic environments.
• Replacing intuition and creativity with formal plans.
• Focusing attention on present competition, rather than future survival.
• Reinforcing present success and risk of creating future failure.

Effective Planning in Dynamic Environments

• Develop specific, yet flexible plans
• Understand planning as an ongoing process (adjust plans as conditions change)
• Change plans when necessary
• Flatten organizational hierarchy to promote broad planning competence and skills. (make planning team-based)

Terms to Know (vocabulary)

• planning, goals, plans, stated goals, real goals, framing, strategic plans, operational plans, long-term plans, short-term plans, specific plans, directional plans, single-use plans, standing plans, traditional goal setting, means-ends chain, Management by objectives (MBO), mission, commitment concept, formal planning department.