Planning and Organizing PDF

Planning Meaning: Deciding in advance what to do& how to do it. It is one of the basic managerial functions. It involves 2 aspects: Setting of aims and objectives of the organization + Selecting and developing an appropriate course of action to achieve these...

Planning Meaning: Deciding in advance what to do& how to do it. It is one of the basic managerial functions. It involves 2 aspects: Setting of aims and objectives of the organization + Selecting and developing an appropriate course of action to achieve these objectives. Koontz and O‘Donnell – ―Planning is deciding in advance what to do, how to do, when to do, and who to do it. Planning bridges the gap from where we are to where we want to go. It makes it possible for things to occur which would not otherwise happen. Involves setting of objectives & developing an appropriate course of action to achieve these objectives Importance of Planning 1. Planning provides directions: By stating in advance how the work is to be done planning provides direction for action. If there was no planning, employees would be working in different directions and the organization would not be able to achieve its goals efficiently. 2. Planning reduces the risk of uncertainty: Planning is an activity which enables a manager to look ahead, anticipate change, consider the impact of change and develop appropriate responses. 3. Planning reduces wasteful activities: Planning serves as the basis of coordinating the activities and efforts of different departments and individuals whereby useless and redundant activities are mentioned. 4. Planning promotes innovative ideas: Planning is the first function of management. Managers get the opportunity to develop new ideas and new ideas can take the shape of concrete plans. 5. Planning facilities decision making: Under planning targets are laid down. The manager has to evaluate each alternative and select the most viable option. 6. Planning establishes standards for controlling: Planning provides the standards against which the actual performance can be measured and evaluated. Control is blind without planning. Thus, planning provides the basis for control. Limitations of Planning (A) Internal Limitations 1. Planning leads to rigidity: Planning discourages individual’s initiative &creativity. The managers do not make changes according to changing business environment. They stop taking or giving suggestions and new ideas. Thus, detailed planning may create a rigid framework in the organization. 2. Planning may not work in dynamic environment: Planning is based on anticipation of future happenings and since future is uncertain and dynamic therefore, the future anticipations are not always true. 3. Planning involves huge costs: When plans are drawn up, huge cost is involved in their formulation. 4. Planning is time consuming: Sometimes plans to be drawn up take so much of time that there is not much time left for their implementation. 5. Planning does not guarantee success: The success of an enterprise is possible only when plans are properly drawn and implement. Sometimes managers depend on previously tried successful plans, but it is not always true that a plan which has worked before will work effectively again. 6. Planning reduces creativity: In planning, work is to be done as per pre- determined plans. It is decided in advance what is to be done, how it is to be done and who is going to do it. Moreover, planning is done by top management which leads to reduction of creativity of other levels of management. (B) External Limitations They are those limitations of planning which arises due to external factors over which an organization has no control. 1. Changes in Government policies way leads to failure of planning. 2. Natural calamities such as flood, earthquake etc. also adversely affect the success of planning. 3. Changes in the strategies of competitors also leads to failure of planning many times. 4. Regular technological changes may affect planning. 5. Changes in the Economic and Social Conditions also reduces the effectiveness of planning. Planning Process 1. Setting Objectives: – Objectives specify what the organization wants to achieve. – Objectives can be set for the entire org. & stated to each dept. within the org. very clearly, to determine how all depts. would contribute towards overall objectives. -Then these have to percolate down to all employees at all levels so that they understand how their actions contribute to achieving objectives. – E.g. Objective could be to achieve sales, expansion of business etc. 2. Developing Premises: – Plans are made on the basis of some assumptions. – These assumptions, which provide the basis for planning, are called premises. – All managers involved in planning should be familiar w/ them, cuz plans are expected to operate & reach their destination subject to these. They can be: Internal premises: Cost of products, capital, machinery, profitability etc. External premises: Changes in technology, population growth, competition, govt. policies etc 3. Identifying Alternative Courses Of Action: – After setting the objectives, managers make a list of alternatives through which the org. can achieve its objectives as there can be many ways to achieve the objectives & managers must know all of them. – E.g. Sales could be increased through any of the following ways: By enhancing advertising expenditure Appointing salesmen for door-to-door sales By offering discounts By adding more product lines. 4. Evaluating Alternative Courses Of Action – Positive & negative aspects of each &every proposal need to be evaluated to determine their feasibility and consequences in the light of each objective to be achieved. – E.g. In financial plans, risk-return trade-off are imp. Riskier the investment, higher the returns it is likely to give. To evaluate such proposals, detailed calc. of earnings, taxes, earnings per share etc. should be done. 5. Selecting the Best Alternative – Real point of decision-making→ Best plan has to be adopted and implemented. – The ideal plan = most feasible, profitable and with least negative consequences. – Most plans may not be subjected to mathematical analysis. In such cases, subjectivity & manager ‘s experience, judgment and intuition are important to select the most viable alternative. – Sometimes a combination of plans may be selected instead of one best course. 6. Implementing the Plan – Concerned with putting the plan into action. – For implementing the plans, managers start organizing & assembling resources for it. – E.g. If there is a plan to ↑ production, then more labour, more machinery will be reqd. This step would also involve organizing for more labour and purchase of machinery. 7. Follow Up Action – This involves monitoring the plans and ensuring that activities are performed according to the schedule. – Whenever there are deviations from plans, immediate action has to be taken to bring implementation according to the plan or make changes in the plan. TYPES OF PLAN Plan A Plan is a specific action proposed to help the organization achieve its objectives. It is a document that outlines how goals are going to be met. The importance of developing plans is evident from the fact that there may be more than one means of reaching a particular goal. So with the help of logical plans, objectives of an organization could be achieved easily. SINGLE USE PLAN A Single use plan in a business refers to plan developed for a one-time project or event that has one specific objective. It applies to activities that do not reoccur or repeat. It is specifically designed to achieve a particular goal. Such plan is developed to meet the needs of a unique situation. The length of a single use plan differs greatly depending on the project in question, as a single event plan may only last one day while a single project may last one week or months. For example, an outline for an advertising campaign. After the campaign runs its course, the short term plan will lose its relevance except as a guide for creating future plans. Types of Single Use Plan 1. Programme: A programme is a single use plan containing detailed statements about project outlining the objectives, policies, procedures, rules, tasks, physical and human resources required to implement any course of action. 2. Budget: A budget is a statement of expected result expressed in numerical terms for a definite period of time in the future. STANDING PLANS Standing plans are used over and over again because they focus on organizational situations that occur repeatedly. They are usually made once and retain their value over a period of years while undergoing revisions and updates. That is why they are also called repeated use plans. For example, Businessman plans to establish a new business Entrepreneur drafts business plan before opening the doors to their business, and they can use their plan to guide their efforts for years into the future. Types of Standing Plans 1. Objectives: Objectives are defined as ends for the achievement of which an organization goes on working. They may be designed as the desired future position that the management would like to reach. The first and foremost step of the planning process is setting organizational objectives. Examples increasing sales by 10%, Getting 20% return on Investment etc. Objectives should be clear and achievable. 2. Strategy: Strategies refer to those plans which an organization prepares to face various situations, threats and opportunities. When the managers of an organization prepare a new strategy for the business it is called internal strategy and when some strategies are prepared to respond to the strategies of the competitors, then such strategies are called external strategies. Examples, selection of the medium of advertisement, selection of the channel of distribution etc. 3. Policy: Policies refers to the general guidelines which brings uniformity in decision-making for achievement of organizational objectives. They provide directions to the managers of an organization. They are flexible as they may be changed as per requirement. Example, selling goods on cash basis only, reserving some post for women in the organization. 4. Procedure: Procedures are those plans which determine the sequential steps to carry out some work/activity. They indicate which work is to be done in which sequence/way. They help in the performance of work. Procedures are guides to action. Example: Process adopted in the Selection of Employees. 5. Rule: Rules are specific statement that tell what is to be done and whatnot to be done in a specified situation. They help in indicating which points are to be kept in mind while performing task/work. Rules are rigid which ensure discipline in the organization. Example: ‘No smoking in the office premises. Violation of rules may invite penalty. 6. Method: Methods are standardized ways or manners in which a particular task has to be performed. There may be many ways/methods of completing a task but that method/way must be selected by which work can be done early at the minimum possible cost. Methods are flexible. Example, various methods of training are adopted by an organization to train its employees like apprenticeship training, vestibule training etc.  Difference between single use plan and standing plan: Basis of Single use plans Standing Plans Difference A standing plan in a business refers to plans A single use plans in a business refers developed for using over and over again because 1. Meaning to plans developed for a one-time project they focus on organizational situations that occur or event that has same objective. repeatedly. Single use plans is developed to carry Standing plans however is developed for activities 2. Objective out a course of action that is not likely to that occur regularly over a period of time. be repeated in future time. Single use plans generally encompass a Standing plans generally encompass a wider scope 3. Scope narrow scope targeting a specific project involving more than one department or business or event. function. Standing plans are relatively stable and used over Single use plans are discarded when the 4. Stability and over again with necessary modifications or situation, project or event is occurred. updating. Budget for Annual General Meeting of Recruitment and selection procedure for a particular 5. Example Shareholders. post in a company. Organizing Meaning of Organizing once the objectives and plans are laid down, management has to identify and establish productive relationships between various activities and resources for implementing plans. In general words organising refers to arranging everything in orderly form and making the most efficient use of resources. The aim of organizing is to enable people to work together for a common purpose. ‘Organizing is the process of identifying and grouping the work to be performed, defining and delegating responsibility and authority and establishing relationships for the purpose of enabling people to work most effectively together in accomplishing objectives.’ Steps Involved in the Process of Organizing 1. Identification & Division Of Work: – The total work to be done should be divided into specific jobs as according to predetermined plans. – Job = a set of related tasks that can be performed by an individual. It should have specific and definite tasks to be performed. As far as possible, it should define expected results along with the job. – Division of work → specialization of efforts and skills + avoids duplication of work. – Management must ensure that all the activities required to achieve organizational objectives are identified. 2. Departmentalization: – Grouping similar and related jobs into larger units called departments, divisions or sections and placing them under a department head. It facilitates specialization. – The departments are linked together and are interdependent. – Aims at achieving co-ordination and facilitate unity of action. Departmentation can be done on the basis of: Functions: marketing, personnel, finance etc. Products: Textiles, chemical, power division etc. Territories: Western, northern, central, eastern etc. 3. Assignment Of Duties: – Define the work of different job positions and allocate work accordingly. – Once departments are formed, the dept is placed under the charge of an individual. – Jobs are assigned to an individual best suited to perform it. – Qualifications, experience, ability and aptitudes of people should be matched with duties. – E.g. activities of finance should be assigned to persons having qualifications and experience in finance e.g. C.A‘s. 4. Establishing Reporting Relationships: – Granting requisite authority to enable employees to perform the job satisfactorily. – Superior subordinate relations between different people and job positions created, so that everybody knows from whom he is to take orders and to whom he can issue orders. – Creates management hierarchy = a chain of command from the top manager to the individual at the lowest level. – This helps in coordination. Importance of Organizing 1. Benefits of specialization: In organizing every individual is assigned apart of total work and not the whole task. This division of work into smaller units and repetitive performance leads to specialization. Thus, organizing promotes specialization which in turn leads to efficient & speedy performance of tasks. 2. Clarity in working relationship: It helps in creating well defined jobs and also clarifying the limits of authority and responsibility of each job. The superior- subordinate relationship is clearly defined in organizing. 3. Effective Administration: It provides a clear description of jobs and related duties which helps to avoid confusion and duplication. Clarity in working relationships enables proper execution of work which results ineffective administration. 4. Optimum utilization of resources: The proper assignment of jobs avoids overlapping/duplication of work. This helps in preventing confusion and minimizing the wastage of resources and efforts. 5. Adoption to Change: A properly designed organizational structure is flexible which facilitates adjustment to changes in workload caused by change in external environment related to technology, products, resources and markets. 6. Development of Personnel: Sound organization encourages initiative and relative thinking on part of the employees. When managers delegate their authority, it reduces their workload so they can focus on more important issues related to growth & innovation. This also develops the subordinates’ ability and helps him to realize his full potential. 7. Expansion and growth: It helps in growth & diversification of an enterprise by adding more job positions, departments, products lines, new geographical territories etc. Meaning of Organizational Structure It seeks to establish relations among all the persons working in the organization. Under the organizational structure, various posts are created to perform different activities for the attainment of the objectives of the enterprise. Relations among persons working on different posts are determined. The structure provides a basis or framework for managers and other employers for performing their functions. The organization structure can be defined as the frame work within which managerial and operating tasks are performed. Relation between Span of Management and Organization structure: Span of management refers to the number of subordinates that can be effectively managed by a superior. The Span of management to a large extent gives shape to the organization structure. This determines the levels of management in the structure. Arrow span of management results in tall structure whereas wider span of management results in flat structure. (A) Functional Structure: In functional structure activities are grouped and departments are created on the basis of specific functions to be performed. For example, all the jobs related to production are grouped under production department, sales departments etc. Suitability (1) Large organizations producing one line of product. (2) Organizations which require high degree of functional specialization with diversified activities. Advantage 1. Specialization: Better decision of labour takes place which results in specialization of functions and its consequent benefits. 2. Coordination is established: All the persons working within a departmental are specialists of their respective jobs. It makes the co-ordination easier at departmental level. 3. Helps in increasing managerial efficiency: Managers of one department are performing same type of function again and again which makes them specialized and improves their efficiency. 4. Minimizes cost: It leads to minimum duplication of effort which results in economies of scale and thus lowers cost. Disadvantages 1. Ignorance of organizational objectives: Each departmental head works according to his own wishes. They always give more weight to their departmental objectives. Hence overall organizational objectives suffer. 2. Difficulty in Inter-departmental Coordination: All departmental heads work as per their own wishes which leads to coordination within the department easier but it makes inter-departmental coordination difficult. 3. Hurdle in complete development – because each employee specializes only in a small part of the whole job. (B) DIVISIONAL ORGANIZATION STRUCTURE Dividing the whole enterprise according to the major products to be manufactured (like metal, plastic, cosmetics etc.) is known as divisional organization structure. Suitability: This structure is suitable in organizations producing multi product or different lines of products requiring product specialization. Also growing companies which intend to add more lines of products in future adopt this structure. Advantages 1. Quick decision-making: Divisional manager can take any decision regarding his division independently which makes decisions quick and effective. 2. Divisional results can be assessed: Division results (profit/loss) can be assessed easily. On this basis any unprofitable division can be closed. 3. Growth and Expansion: It facilitates growth and expansion as new divisions can be added without disturbing existing departments. Disadvantages 1. Conflicts among different divisions on allocation of resources. 2. Duplicity of Functions: Entire set of functions is required for all divisions. It gives rise to duplicity of efforts among divisions & increases cost. 3. Selfish Attitude: Every division tries to display better performance and sometimes even at the cost of other divisions. This shows their selfish attitude. FORMAL ORGANISATION – Refers to the org. structure that is designed by the management to accomplish organizational objectives. – It specifies clearly the boundaries of authority & responsibility and there is a systematic coordination among the various activities to achieve organizational goals. – Louis Allen – System of well-defined jobs, each bearing a definite measure of authority, responsibility & accountability.. Features 1. It is deliberately created by the top management. 2. It is based on rules and procedures which are in written form. 3. It is impersonal i.e. does not takes into consideration emotional aspect. 4. It clearly defines the authority and responsibility of every individual. 5. It is created to achieve organizational objectives. Advantages 1. Easier to fix responsibility since mutual relationships are clearly defined. 2. No overlapping of work – because things move according to a definite plan. 3. Unity of command through an established chain of command. 4. Easy to achieve objectives – because coordination and optimum use of human and material resources. 5. Stability in the organization – because behaviour of employees can be fairly predicted since there are specific rules to guide them. Disadvantages 1. The Work is based on rules which causes unnecessary delays. 2. Lack of initiative: The employees have to do what they are told to do and they have no opportunity of thinking. 3. Limited in scope: It is difficult to understand all human relationships in an enterprise as it places more emphasis on structure and work. INFORMAL ORGANISATION An informal organization is that organization which is not established deliberately but comes into existence because of common interests, tastes and religious and communal relations. The main purpose of this organization, structure is getting psychological satisfaction. For example, employees with similar interest in sports, films, religion etc. may form their own informal groups. Features 1. It originates from within the formal organization as a result of personal interaction among employees. 2. It has no written rules and procedures. 3. It does not have fixed lines of communication. 4. It is not deliberately created by the management. 5. It is personal means the feelings of individuals are kept in mind. Advantages 1. Speed: Prescribed lines of communication are not followed which leads to faster spread of information. 2. Fulfilment of social needs – enhances job satisfaction which gives them a sense of belongingness in the organization. 3. Quick solution of the problems – because the subordinates can speak without hesitation before the officers, it helps the officers to understand the problems of their subordinates. Disadvantages 1. It creates rumours: All the persons in an informal organization talk careless and sometimes a wrong thing is conveyed to the other persons. 2. It resists change and lays stress on adopting the old techniques. 3. Priority to group interests: Pressurizes members to conform to group expectations. Difference between Formal Informal Organisation Basis Formal Organisation Informal Organisation It refers to the structure of well- It refers to the network of social 1. Meaning defined authority and relationships which develops responsibility. automatically. 2. Nature Rigid and stable Flexible and unstable Arises by virtues of positions in 3. Authority Arises out of personal qualities. management. 4. Adherence to Violations of rules may lead to No such penalties and punishments. rules penalties and punishments. 5. Flow to Takes place through the scalar Not through a planned route, it can Communication Chain. take plane in any direction. 6. Purpose To achieve planned To satisfy social and cultural needs  organizational objectives. and fulfil common interests. Emerges spontaneously as a result Deliberately planned and created 7. Formation/ origin of social interaction among by management. employees. Well defined structure of tasks No clear-cut structure because of 8. Structure and relationships. complex network of relationships. Authority flows from top to bottom Authority flows vertically as well as 9. Flow of Authority i.e. downwards. horizontally. 10. Independent. Depends on formal structure. Interdependence Delegation of Authority Meaning: It means the granting of authority to subordinates to operate within the prescribed limits. The manager who delegates authority holds his subordinates responsible for proper performance of the assigned tasks. To make sure that his subordinates perform all the works effectively and efficiently in expected manner the manager creates accountability. Process/Elements of Delegation 1. Authority: The power of taking decisions in order to guide the activities of others. Authority is that power which influences the conduct of others. 2. Responsibility: It is the obligation of a subordinate to properly perform the assigned duty. When a superior issues orders, it becomes the responsibility of the subordinate to carry it out. 3. Accountability: When a superior assign some work to a subordinate, he is answerable to his superior for its success or failure. Principle of Absoluteness of Accountability: Authority can be delegated but responsibility/accountability cannot be delegated by a manager. The authority granted to a subordinate can be taken back and re-delegated to another person. The manager cannot escape from the responsibility for any default or mistake on the part of his subordinates. For example, If the chief executive asks marketing manager to achieve a sales target of sale of 100 units/day. The marketing manager delegates this task to deputy sales manager, who fails to achieve the target. Then marketing manager will be answerable for the work performance of his subordinates. Thus, accountability is always of the person who delegates authority. Process of Delegation of Authority Difference between Authority, Responsibility and Accountability Basis Authority Responsibility Accountability  Accountability for the obligation to perform 1. Meaning Right to command outcome of the assigned an assigned task. task. Arises from formal Arises from delegated 2. Origin Arises from responsibility. position. authority. Upward- from Downward- from Upward- from subordinate 3. Flow subordinate to superior to subordinate. to superior. superior. Can be withdrawn 4. Cannot be withdrawn Cannot be withdrawn once anytime by giving Withdrawal once created. created. notice. Importance of the Delegation of Authority 1. Reduction of Executives’ work load: It reduces the work load of officers. They can thus utilize their time in more important and creative works instead of works of daily routine. 2. Employee development: Employees get more opportunities to utilize their talent which allows them to develop those skills which will enable them to perform complex tasks. 3. Quick and better decision are possible: The subordinate is granted sufficient authority so they need not to go to their superiors for taking decisions concerning the routine matters. 4. High Morale of subordinates: Because of delegation of authority to the subordinates they get an opportunity to display their efficiency and capacity. 5. Better coordination: The elements of delegation – authority, responsibility and accountability help to define the powers, duties and answer ability related to various job positions which results in developing and maintaining effective coordination. Decentralization Decentralisation of authority means dispersal of authority to take decisions throughout the organization, up to the lower levels. It implies reservation of some authority with the top-level management and transferring rest of the authority to the lower levels of the organization. This empowers lower levels to take decisions regarding problems faced by them without having to go to the upper levels. According to Allen,‘ Decentralisation refers to systematic efforts to delegate to the lowest level, all authority except the one which can be exercised at central points.‟ Centralization = authority retained at top level and Decentralization = Systematic delegation of authority at all levels and in all departments of a firm. Firm needs to balance the two. In case of a decentralized firm, Top level retains authority for: o Policies and decisions w.r.t the whole firm o Overall control and coordination Middle and lower levels have authority to take decisions w.r.t tasks allocated to them Centralization and Decentralization: represents the pattern of authority among managers at different levels. Centralization of authority means concentration of power of decision making in a few hands. In such an organization very, little authority is delegated to managers at middle and lower levels. No organization can be completely centralized or decentralized. They exist together and there is a need for a balance between the two. As the organization grows in size, there is tendency to move towards decentralization. Thus, every organization is characterized by both. Importance of Decentralization 1. Develops initiative amongst subordinates: It helps to promote confidence because the subordinates are given freedom to take their own decisions. 2. Quick and better decisions: The burden of managerial decisions does not lie in the hands of few individuals but gets divided among various persons which helps them to take better and quick decisions. 3. Relieves the top executives from excess workload: The daily managerial works are assigned to the subordinates which leaves enough time with the superiors which they can utilize in developing new strategies. 4. Managerial Development: It means giving authority to the subordinates up to the lower level to take decisions regarding their work. In this way the opportunity to take decisions helps in the development of the organization. 5. Better Control: It makes it possible to evaluate performance at each level which results in complete control over all the activities. Difference between – Delegation and Decentralization Basis Delegation Decentralization 1. Nature It is a compulsory act. It is an optional policy. 2. Freedom Less freedom to take decisions due More freedom of action due to less of action to more control by the superiors. control by the top management. It is a process of sharing tasks and It is the result of policy decisions taken 3. Status authority. by top management. Wide- It includes extension of Narrow- as it is confined to a superior 4. Scope delegation to all the levels of and his immediate and subordinate. management. 5. Purpose To reduce the burden of manager. To increase the role and the autonomy  of lower level of management. https://www.youtube.com/watch?v=50zBtcoScxw