2 Fundamentals of Planning
After reading and studying this chapter, the student should be able to:
Discuss some of the more important points about planning.
Explain the steps involved in planning.
Explain how planning differs at top, middle, and supervisory management levels.
Explain how the hierarchy of objectives works.
Discuss some important guidelines in setting objectives.
Differentiate the various kinds of standing and single-use plans.
Draw a simple PERT chart.
Executive Planning: A Nonprofit Perspective
The profile at the beginning of this chapter focuses on Casi Callaway, Director of Mobile Baykeeper, an affiliate of Waterkeeper Alliance. Rather than address her organization’s issues one at a time, Casi took a more integrated, “big picture” approach to planning. First, she involved key stakeholders in her community by forming an advisory board. Then she tapped into the board members’ expertise and creative insightsby asking them to help her set objectives, establish priorities, and determine long-term strategies for achieving the goals. Because of this efficient planning, Casi and MBK have been able to make great strides in all key performance areas.
I.SOME IMPORTANT POINTS ABOUT PLANNING
A.Planning involves selecting future courses of action for your organization and deciding how to achieve the desired results.
B.Supervisors do planning as an ongoing part of their jobs.
C.Basic Steps Involved in Planning
Planning covers a wide variety of activities, but there are three basic planning steps.
1.Setting an objective, or goal—what one hopes to achieve
2.Identifying and assessing present and future conditions affecting the objective
3.Developing a systematic approach by which to achieve the objective—this becomes the plan.
Although not planning steps, three additional steps that must be taken in order to achieve step one.
4.Implementing the plan (organizing, leading, staffing)
5.Monitoring the plan’s implementation (controlling)
6.Evaluating the plan’s effectiveness (controlling)
D.Planning Is Most Closely Related to Controlling.
1.Planning is most closely related to the managerial function of controlling.
2. Steps in Controlling
a. Setting performance goals, or norms
b. Measuring performance
c. Comparing performance with goals
d. Analyzing results
e.Taking corrective action as needed
3.Because planning is such an integral part of controlling, planning and controlling are sometimes called the “Siamese twins” of management.
E.Many Managers Tend to Neglect Planning.
1.Poor planning often means that activities are disorganized and uncoordinated.
2.Proper planning may prevent many of the short-run crises that supervisors face.
F.Contingency Planning Anticipates Problems.
1.Contingency planning means thinking in advance about possible problems or changes that might arise and having anticipated solutions available.
2.Anticipating a crisis may prevent it from happening.
3.A variation of contingency planning is scenarioplanning, anticipating alternative future situations, and developing courses of action for each alternative.
a. Scenario planning has a long-term focus and is typically done at upper management levels.
b. It is a necessary tool for most managers.
II.PLANNING DIFFERS AT DIFFERENT MANAGEMENT LEVELS
A.Top managers are more involved in strategic planning, which has longer time horizons, affects the entire organization, and deals with its interface to its external environment.
B.Strategic plans include:
1.The mission, which defines the purpose the organization serves and identifies its services, products, and customers.
2.The objectives are the purposes, goals, and desired results for the organization and its parts.
3.Strategies are the activities by which the organization adapts in order to achieve its objectives.
C.Middle- and lower-level managers are more concerned with operational planning.
1.Operational planning consists of intermediate and short-term planning that facilitates achievement of the long-term strategic plans set at higher levels.
2.Supervisory managers plan for activities that are narrower in scope than those planned for at higher levels.
- All managers need to plan, regardless of their position in the hierarchy.
III.IMPORTANCE OF SETTING OBJECTIVES
A.What Are Objectives?
1.Objectives are the goals that provide the desired purposes and results for the organization and its parts.
2.There may a difference between anobjective and a goal, but in this text they will be used interchangeably.
B.Objectives served as a stimulus for motivation and effort; they provide something to strive for.
C.Hierarchy of Objectives
1.Objectives are first needed at the top-management level.
2.Once top management sets broad objectives, other levels of the organization reflect these in objectives of their own, thus creating a hierarchy of objectives.
3.The hierarchy of objectives is a network with broad goals at the top level of the organization and narrower goals for individual divisions, departments, or employees.
D.Unified Planning Through Objectives
1.Organization objectives give managers at lower levels guidance in developing their own plans and coordinating their own activities.
2.Unified planning means coordinating departments to ensure harmony rather than conflict or competition.
3.Other types of plans, such as policies, procedures, and rules, help in unified planning at lower levels.
E.Guidelines for Setting Objectives
1.Objectives tell employees what they must do for their performance to be acceptable.
2.Guidelines for setting performance objectives
a.Select key performance areas for objectives
b.Be specific, if possible
c.Set challenging objectives
d.Keep objective areas in balance
e.Objectives should be measurable
f.Involve subordinates in setting objectives
g.Follow up on results
IV.TYPES OF PLANS
A.Standing plans, or repeat-use plans, are plans that are used repeatedly over a period of time.
1.A policy provides consistency among decision makers—it is a guide to decision making.
a.Policies help implement organizational objectives established by higher management.
b.Managers then create policies within their departments.
b.These may be written or may be implied or based on past practices.
c.Policies are relatively permanent, but should not be inflexible.
2.A rule is a policy that is invariably enforced.
a.Like policies, rules provide guidance, but rules are stronger than policies—the guidance given by rules is final and definite.
b.Too many rules can lead to inflexibility, over-management, and loss of individualism.
3.A procedure outlines the steps to be performed when a particular course of action is taken.
B.Single-use plans are developed to accomplish a specific purpose and then discarded after use.
1.A program is a large-scale plan composed of a mix of objectives, policies, rules, and projects.
2.A project is a distinct part of a program.
3.A budget is a forecast of expected financial performance over time.
4.A schedule is a plan of activities to be performed and their timing.
5.Gantt chart and PERT networks are two scheduling approaches.
a.The Gantt chart identifies work stages or activities and scheduled completion dates.
b.Activities are plotted on the vertical axis, and scheduled completion dates on the horizontal.
c.Program Evaluation and Review Technique (PERT) shows relationships among a network of activities and events to determine the completion time of a project.
d.PERT is typically used on highly complex, one-time projects.
e.The critical path is the series of activities in a PERT network that comprise the longest route, in terms of time, to complete the job.
V.CHAPTER REVIEW
The PowerPoint slides correlated with the Lecture Outline above are available on the Instructors CD-ROM and on the product support website.
PowerPoint Slide 2-1Chapter 2 Title
PowerPoint Slide 2-2Learning Objectives
PowerPoint Slide 2-3The Three Planning Steps (Text Exhibit 2-1)
PowerPoint Slide 2-4Achieving Objectives or Goals
PowerPoint Slide 2-5Management:Planning and Controlling
PowerPoint Slide 2-6The Nonplanner’s Cycle (Text Exhibit 2-2)
PowerPoint Slide 2-7Contingency Planning Anticipates Problems
PowerPoint Slide 2-8Questions for Good Contingency Planners
PowerPoint Slide 2-9Strategic Planning
PowerPoint Slide 2-10Strategic and Operational Planning
PowerPoint Slide 2-11Planning at Three Management Levels (Text Exhibit 2-4)
PowerPoint Slide 2-12Importance of Setting Objectives
PowerPoint Slide 2-13Hierarchy of Objectives for Computronix (Text Exhibit 2-5)
PowerPoint Slide 2-14Unified Planning through Objectives
PowerPoint Slide 2-15Guidelines for Setting Objectives
PowerPoint Slide 2-16Types of Plans
PowerPoint Slide 2-17Examples of Policies (Text Exhibit 2-6)
PowerPoint Slide 2-18Rules and Procedures
PowerPoint Slide 2-19Types of Plans (cont’d)
PowerPoint Slide 2-20Example of Gantt Chart Showing Activities Needed in Production Start-Up (Text Exhibit 2-7)
PowerPoint Slide 2-21Program Evaluation and Review Technique
PowerPoint Slide 2-22PERT Network for Completing Machine Overhaul (Text Exhibit 2-8)
PowerPoint Slide 2-23Important Terms
1.What are the three basic steps in planning? Why do supervisors tend to slight the planning function?
The three steps of planning are: (1) setting an objective, or goal; (2) identifying and assessing present and future conditions affecting the goal; and (3) developing a systematic approach by which to achieve the goal.
Supervisors tend to slight the planning function since thinking is often more difficult than doing. Therefore, it becomes tempting to forgo thinking about the future in order to get busy performing a task or solving present work problems.
2.How does planning differ among top, intermediate, and supervisory management levels?
Top managers are more involved with strategic planning, which has longer time horizons, affects the entire organization, and deals with the organization’s interface with its external environments. Middle and supervisory level managers are more concerned with operational planning. This consists of intermediate and short term planning that facilitates achievement of the long-term strategic plans set at higher levels.
3.What are some guidelines for setting performance objectives?
In setting objectives, supervisors may use the following guidelines:
(1)Select key performance areas for objectives.
(2)Be specific in defining objectives.
(3)Set challenging, yet attainable objectives.
(4)Keep objective areas in balance.
(5)Objectives should be measurable.
(6)Involve subordinates in setting objectives.
(7)Follow up on results.
4.What is meant by a hierarchy of objectives? Explain.
A hierarchy of objectives is a network with broad goals at the top level of the organization and narrower goals for individual divisions, departments, or employees. A hierarchy of objectives reflects the fact that, once top management determines broad objectives, other organizational levels reflect these with objectives of their own. Thus, when one level attains its own objectives, it helps accomplish the objectives of the next higher level, and so forth.
5.What is the difference between a policy, a rule, and a procedure?
A policy is a guide to decision-making, a general statement of what is needed to achieve an objective. A rule is a policy that is invariably enforced. They are stronger than policies, and the guidance given is final and definite. Procedures outline the steps to be performed when taking a particular course of action.
6.What is a Gantt chart? How does it differ from a PERT chart?
The Gantt chart is a visual progress report that identifies work stages and scheduled completion dates. This chart is a helpful planning tool, but it does not show how the various activities in a job depend on one another as the PERT chart does.
7.What is contingency planning? Explain.
Contingency planning is thinking in advance about possible problems or changes that might arise and having anticipated solutions available. The proper anticipation of a crisis may prevent it from happening.
8.Distinguish between objectives and strategies.
Objectives are the purposes, goals, and desired results for the organization and its parts. Strategies are the activities by which the organization adapts to its environment in order to achieve its objectives.
SKILL BUILDER 2-1“Testing Your Planning Skills”
Works with SCANS competencies: Interpersonal Skill, Resources
This Skill Builder is a group exercise extending the example of Computronix’s Dixon Division. The premise is that the manager has been named to be chairperson of the annual blood drive. The groups must develop objectives and an operating plan for the blood drive.
1.Make a list of what you consider the key planning issues that should be identified by the committee at this initial planning meeting.
At this meeting, some basic goals must be set. How many units should be targeted? What percent participation should be expected? Other planning issues: When will the blood drive occur? How will it be scheduled to attract the most donors and conflict least with oncoming operations? What facility arrangements will be needed? Where? Who will be responsible for each part of the program? How can the committee overcome resistance from employees to donating blood and attract the most donors? How should donations be scheduled? Which blood service to use? How to publicize the event?
2.Of the items on your list, which two or three do you believe are the most crucial? Why?
The most critical items will be attracting donors and overcoming resistance and fear. Other elements can be worked around, but you have to have donors.
3.Identify major problems that could prevent accomplishment of your objective. What contingency planning could be done to avert them or minimize their impact?
Numerous things can and will go wrong. As Murphy’s Law says: “If it can go wrong, it will.” However, most things can be handled with a little foresight. If you are going to use the company cafeteria, make certain that food service schedules can be accommodated. If the president is to give a pep talk, check with his or her assistant to make certain there isn’t a scheduling conflict. But most important, have some procedures for getting donors to the blood drive. Set up an e-mail reminder system, have supervisors give employees time off to come, phone the unit if donors do not come at their scheduled time, and so on.
4.To help in your preparation for the planning meeting, identify six to ten steps that you feel will be needed to achieve a successful blood drive. These steps might be such things as:
(a)Determine a date.
(b)Identify a location.
(c)Secure commitment from Red Cross, etc.
Draw a PERT chart that shows the sequence and relationship of the activities identified. (You need not be concerned with the length of time needed for each activity.)
Students’ answers will vary.
5.Compare your responses to questions 1, 2, 3, and 4 with those of other students. To what extent do they agree with you?
There will be various opinions among students. Look for responses in common.
SKILL BUILDER 2-2“Determining Priorities: Put Savings First”
Works with SCANS competencies: Interpersonal Skill, Information, Resources
This is another group activity, this one focusing on a high school principle. The principle has 12 teachers, five coaches, an assistant, and an assistant principal reporting in the reporting hierarchy. A list of activities is given, and students are asked to establish priorities.
1.Indicate how you would classify these in priority: MI (most important), RI (relatively important), or RU (relatively unimportant). Be prepared to defend your choices.
Students should recognize that “MI” activities are critical to the job; therefore, they are the most important. “RI” activities are important, but less so than “MI”s.“RU” activities are routine and/or relatively unimportant. An efficient supervisor will spend a greater percentage of his or her time performing “MI” activities.
While students may rate each of these activities differently, activity “C”Cfilling in as a substitute teacherCwould have to be a high priority. The mission of a high school is to educate students. Homecoming plans can waitCteaching is a core activity.
2.What additional information about the principal’s activities may have helped you establish your priority listings? How would this information have helped?
Knowing the principal’susual priorities would help, because then you would know which is most important.
3.Meet with groups of three to five other students to compare your choices of priorities. Discuss these and be prepared to report your results to the class.
Students will follow these instructions.
CASE 2-1 “Island Shades”
1.Are there additional key performance areas that Terry could identify for action? Is her goal realistic?
Students’ answers will vary widely on this question, especially in their opinions of how realistic her goal is. Students should recognize that Terry has done a good job of analyzing her operational planning. However, she could set clearer objectives, such as how she will distinguish her business from other similar businesses. She also needs to strategize how she will promote and grow her business. Although Terry has been working with her budgets and schedules, she probably has further work to do on policies and procedures for her suppliers, employees, and customers.
2.Do you agree with Terry’s view that Island Shades will be successful? Why or why not?
Students’ answers will vary but should demonstrate a thoughtful answer using critical thinking skills.
3.Would you recommend any changes or modifications to her goal or plan?
Terry’s plan to open both a bricks-and-mortar operation along with an online operation simultaneously could be seen as smart or overly ambitious. Similarly, some may feel that she is trying to appeal to too broad of a customer base, while others may feel that she will attract more business by being so broadly diversified. A significant gap in her plan is marketing and promotions, which need to be addressed.
CHAPTER NOTES1Chapter2