Chapter 8 - Planning and Goal Setting PDF

What is Planning? • Planning: management function that involves setting goals, establishing strategies for achieving those goals, and developing plans to integrate and coordinate work activities • Formal planning – Specific, time-oriented goals – Goals written and shared Copyright © 2018 Pearson Ed...

What is Planning? • Planning: management function that involves setting goals, establishing strategies for achieving those goals, and developing plans to integrate and coordinate work activities • Formal planning – Specific, time-oriented goals – Goals written and shared Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Why Do Managers Plan? • Provides direction • Reduces uncertainty • Minimizes waste and redundancy • Establishes the goals and standards for controlling Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Planning and Performance • Formal planning is associated with positive financial results • Quality of planning/implementation more important than the extent of it • External factors can reduce the impact of planning on performance • Planning-performance relationship seems to be influenced by the planning time frame Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Goals and Plans • Goals (objectives): desired outcomes or targets • Plans: documents that outline how goals are going to be met (They usually include resource allocations, schedules, and other necessary actions to accomplish the goals. As managers plan, they develop both goals and plans). Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Types of Goals We can classify most company’s goals as either: 1-Financial goals: related to the financial performance of the organization 2-Strategic goals: related to all other areas of an organization’s performance • Stated goals: official statements of what an organization says, and what it wants its various stakeholders to believe, its goals are • Real goals: goals that an organization actually pursues, as defined by the actions of its members Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Exhibit 8-1 Types of Plans Exhibit 8-1 shows the most popular ways to describe organizational plans. Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Strategic and Operational Plans • Strategic plans (broad): plans that apply to the entire organization and establish the organization’s overall goals • Operational plans (narrow): plans that encompass a particular operational area of the organization Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Long-term and Short-term Plans • Long-term plans: plans with a time frame beyond three years • Short-term plans: plans covering one year or less Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Specific and Directional Plans • Specific plans: plans that are clearly defined and leave no room for interpretation • Directional plans: plans that are flexible and set out general guidelines Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Single-use and Standing Plans • Single use: a one-time plan specifically designed to meet the needs of a unique situation • Standing: ongoing plans that provide guidance for activities performed repeatedly Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Approaches to Setting Goals • Traditional goal-setting: an approach to setting goals in which top managers set goals that then flow down through the organization and become subgoals for each organizational area For example: achieving “sufficient” profits or increasing “market leadership”—these ambiguous goals have to be made more specific as they ow down through the organization Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Exhibit 8-2 The Downside of Traditional Goal-Setting Clarity is lost as the goals make their way down from the top of the organization to lower levels Exhibit 8-2 illustrates what can happen as the goals make their way down from the top of the organization to lower levels. Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Means-Ends Chain and MBO • Means-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 (Higher-level goals (or ends) are linked to lower-level goals, which serve as the means for their accomplishment) • Management by objectives (MBO): a process of setting mutually agreed upon goals and using those goals to evaluate employee performance (objectives that are agreed to by both management and employees) Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Exhibit 8-3 Steps in MBO Step Step 1: The organization’s overall objectives and strategies are formulated. Step 2: Major objectives are allocated among divisional and departmental units. Step 3: Unit managers collaboratively set specific objectives for their units with their managers. Step 4: Specific objectives are collaboratively set with all department members. Step 5: Action plans, defining how objectives are to be achieved, are specified and agreed upon by managers and employees. Step 6: The action plans are implemented. Step 7: Progress toward objectives is periodically reviewed, and feedback is provided. Step 8: Successful achievement of objectives is reinforced by performance-based rewards. Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Exhibit 8-4 Well-Written Goals Characteristics Written in terms of outcomes rather than actions Measurable and quantifiable Clear as to a time frame Challenging yet attainable Written down Communicated to all necessary organizational members Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Steps in Goal-Setting 1. Review the organization’s mission, or 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. 5. Review results and whether goals are being met. Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Developing Plans • Contingency factors in planning: – Organizational level (when Higher-level goals (or ends) are linked to lower-level goals) – Degree of environmental uncertainty – Length of future commitments Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Exhibit 8-5 Planning and Organizational Level Exhibit 8-5 shows the relationship between a manager’s level in the organization and the type of planning done. Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Environmental Uncertainty • When uncertainty is high, plans should be specific, but flexible. • Managers must be prepared to change or amend plans as they’re implemented. At times, they may even have to give up! Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Length of Future Commitments • Commitment concept: plans should extend far enough to meet those commitments made when the plans were developed (The appeal is that it focuses on employees working to accomplish goals they’ve had a hand in setting) Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Approaches to Planning • Formal planning department: a group of planning specialists whose sole responsibility is helping to write organizational plans Copyright © 2018 Pearson Education, Ltd. All Rights Reserved How Can Managers Plan Effectively in Dynamic Environments? • Develop plans that are specific but flexible • Keep planning even when the environment is uncertain • Allow lower organizational levels to set goals and develop plans (make the organizational hierarchy flatter) Copyright © 2018 Pearson Education, Ltd. All Rights Reserved How Can Managers Use Environmental Scanning? • Environmental scanning: screening information to detect emerging trends • Competitor intelligence: gathering information about competitors that allows managers to anticipate competitors’ actions rather than merely react to them Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Digital Tools • Business intelligence: data that managers can use to make more effective strategic decisions (Business intelligence (BI) leverages software and services to transform data into actionable insights that inform an organization’s business decisions). • Digital tools: technology, systems, or software that allow the user to collect, visualize, understand, or analyze data Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Three Prevalent Digital Tools 1- Data visualization tools (interactive dashboards) 2- Cloud computing: refers to storing and accessing data on the Internet rather than on a computer’s hard drive or a company’s network 3- Internet of things (IoT): allows everyday “things” to generate and store and share data across the Internet Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Review Learning Objective 8.1 • Define the nature and purposes of planning. – Planning involves defining the organization’s goals, establishing an overall strategy for achieving those goals, and developing plans for organizational work activities. – The four purposes of planning include providing direction, reducing uncertainty, minimizing waste and redundancy, and establishing the goals or standards used in controlling. Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Review Learning Objective 8.2 • Classify the types of goals organizations might have and the plans they use. – Goals are desired outcomes. Plans are documents that outline how goals will be met.  Strategic/financial  Stated/real  Long-term/short-term  Specific/directional  Single-use/standing Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Review Learning Objective 8.3 • Compare and contrast approaches to goalsetting and planning. – – – – Traditional goal-setting and MBO Six characteristics of well-written goals Five steps of goal-setting Contingency factors Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Review Learning Objective 8.4 • Discuss contemporary issues in planning. – Planning in dynamic environments – Environmental scanning  Competitive intelligence – Digital tools Copyright © 2018 Pearson Education, Ltd. All Rights Reserved