Nature of Planning:

Planning is a rational action mixed with a little of forethought. It is seen everywhere. In a business, planning is the primary of all managerial functions as it involves deciding of future course of action. Thus, planning logically precedes the execution of all managerial functions. Planning is the process of deciding in advance what is to be done, where, how and by whom it is to be done. Planning as process involves anticipation of future course of events and deciding the best course of action. Thus, it is basically a process of thinking before doing. All these elements speak about the futurity of an action. Koontz and ODonnell have defined planning in terms of future course of action. They state that planning is the selection from among alternatives for future courses of action for the enterprise as a whole and each department within it.

Objective:
Nature of Planning Significance of Planning Limitation of Planning Requirements of A Good Plan

The nature of planning can be highlighted by studying its characteristics. They are as follows: (a) Planning is a mental activity: Planning is not a simple process. It is an intellectual exercise and involves thinking and forethought on the part of the manager. (b) Planning is goal-oriented: Every plan specifies the goals to be attained in the future and the steps necessary to reach them. A manager cannot do any planning, unless the goals are known. (c) Planning is forward looking: Planning is in keeping with the adage, look before you leap. Thus planning means looking ahead. It is futuristic in nature since it is performed to accomplish some objectives in future. (d) Planning pervades all managerial activity: Planning is the basic function of managers at all levels, although the nature and scope of planning will vary at each level. (e) Planning is the primary function: Planning logically precedes the execution of all other managerial functions, since managerial activities in organizing; staffing, directing and controlling are designed to support the attainment of organizational goals. (f) Planning is based on facts: Planning is a conscious determination and projection of a course of action for the future. It is based on objectives, facts and considered forecasts. Thus planning is not a guess work. (g) Planning is flexible: Planning is a dynamic process capable of adjustments in accordance with the needs and requirements of the situations. Thus planning has to be flexible and cannot be rigid.

(h) Planning is essentially decision making: Planning is a choice activity as the planning process involves finding the alternatives and the selection of the best. Thus decision making is the cardinal part of planning.

Significance of Planning:
According to G.R. Terry, Planning is the foundation of most successful actions of all enterprises. An enterprise can achieve its objectives only through systematic planning on account of the increasing complexities of modern business. The importance and usefulness of planning can be understood with reference to the following benefits. a) Minimizes uncertainty: The future is generally uncertain and things are likely to change with the passage of time. Planning helps in minimizing the uncertainties of the future as itanticipates future events. b) Emphasis on objectives: The first step in planning is to fix the objectives. When the objectives are clearly fixed, the execution of plans will be facilitated towards these objectives. c) Promotes coordination: Planning helps to promote the coordinated effort on account of pre-determined goals. d) Facilitates control: Planning and control are inseparable in the sense that unplanned actions cannot be controlled. Control is nothing but making sure that activities conform to the plans. e) Improves competitive strength: Planning enables an enterprise to discover new opportunities, which give it a competitive edge. f) Economical operation: Since planning involves a lot of mental exercise, it helps in proper utilization of resources and elimination of unnecessary activities. This, in turn, leads to economy in operation g) Encourages innovation: Planning is basically the deciding function of management. Many new ideas come to the mind of a manager when he is planning. This creates an innovative and foresighted attitude among the managers. h) Tackling complexities of modern business: With modern business becoming more and more complex, planning helps in getting a clear idea about what is to be done, when it is to be done, where it is to be done and how it is to be done.

Limitations of Planning:
Although planning is a primary function of management and facilitates various other management functions, it has many barriers and limitations. Some of them are explained below: (a) Costly process: Planning is a costly process as time, energy and money are involved in gathering of facts and testing of various alternatives. (b) Rigidity: Planning restricts the individuals freedom, initiative and desire for creativity as it strictly adheres to -pre-determined -policies and programmes. (c) Limited scope: The scope of planning is said to be limited in the case of organizations with rapidly changing situations. (d) Influence of external factors: The effectiveness of planning is sometimes limited because of the external social, political, economical and technological factors which are beyond the control of the planners.
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(e) Non-availability of data: Planning needs reliable facts and figures. Planning loses its value unless reliable information is available. (f) Peoples resistance: Resistance to change hinders planning. Planners often feel frustrated in instituting new plans, because of the inability of people to accept them.

Types of Planning:
Planning is of several kinds depending upon their nature. The various types of plans are as follows: (a) Financial and non-financial planning: Financial planning relates to the monetary aspect of the concern. On the other hand, non-financial planning relates to the physical resources of the concern. (b) Formal and informal planning: A planning in black and white is known as formal planning. Informal planning is only thinking about it and nothing more. (c) Short-range and long-range planning: Short -term planning relates to a period of less than one year. It is to accomplish objectives in the near future. Medium-term planning covers a period of over one year but less than three years. A planning between three to five years is known as long-term planning. (d) Standing and ad hoc planning: Standing plans are permanent in nature and are meant to be used over and over again. They ensure quick decision and action whenever need arises. On the other hand, ad hoc plans are generally for specific matters and are prepared only when some need arises. (e) Administrative and operational planning: Planning is generally done at various levels of management like top level, middle level, and lower level. An administrative planning associate with middle level managers and provides guidelines to operational planning. On the other hand, operational planning associates with lower levels of management and deals with actual execution of operations.

Decision making:
It can be regarded as the mental processes (cognitive process) resulting in the selection of a course of action among several alternatives. Every decision making process produces a final choice. The output can be an action or an opinion of choice.

Overview:
Human performance in decision making terms has been the subject of active research from several perspectives. From a psychological perspective, it is necessary to examine individual decisions in the context of a set of needs, preferences an individual has and values they seek. From a cognitive perspective, the decision making process must be regarded as a continuous process integrated in the interaction with the environment. From a normative perspective, the analysis of individual decisions is concerned with the logic of decision making and rationality and the invariant choice it leads to. Logical decision making is an important part of all science-based professions, where specialists apply their knowledge in a given area to making informed decisions. For example, medical decision making often involves making a diagnosis and selecting an appropriate treatment. Some research using naturalistic methods shows,
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however, that in situations with higher time pressure, higher stakes, or increased ambiguities, experts use intuitive decision making rather than structured approaches, following a recognition primed decision approach to fit a set of indicators into the expert's experience and immediately arrive at a satisfactory course of action without weighing alternatives. A major part of decision making involves the analysis of a finite set of alternatives described in terms of some evaluative criteria. These criteria may be benefit or cost in nature. Then the problem might be to rank these alternatives in terms of how attractive they are to the decision maker(s) when all the criteria are considered simultaneously. Another goal might be to just find the best alternative or to determine the relative total priority of each alternative (for instance, if alternatives represent projects competing for funds) when all the criteria are considered simultaneously. Solving such problems is the focus of multi-criteria decision analysis (MCDA) also known as multi-criteria decision making (MCDM). This area of decision making, although it is very old and has attracted the interest of many researchers and practitioners, is still highly debated as there are many MCDA / MCDM methods which may yield very different results when they are applied on exactly the same data. This leads to the formulation of a decision making paradox.

Decision Making
Objectives must first be established Objectives must be classified and placed in order of importance Alternative actions must be developed The alternative must be evaluated against all the objectives The alternative that is able to achieve all the objectives is the tentative decision The tentative decision is evaluated for more possible consequences

Management by objectives:
It is a process of agreeing upon objectives within an organization so that management and employees agree to the objectives and understand what they are in the organization. The essence of MBO is participative goal setting, choosing course of actions and decision making. An important part of the MBO is the measurement and the comparison of the employees actual performance with the standards set. Ideally, when employees themselves have been involved with the goal setting and choosing the course of action to be followed by them, they are more likely to fulfill their responsibilities.

Features and Advantages:

The principle behind Management by Objectives (MBO) is basically for employees to have clarity of the roles and responsibilities expected of them. They then understand the objectives they must do and the overall achievement of the organization. They also help with the personal goals of each employee. Some of the important features and advantages of MBO are: 1. Motivation Involving employees in the whole process of goal setting and increasing employee empowerment increases employee job satisfaction and commitment. 2. Better communication and Coordination Frequent reviews and interactions between superiors and subordinates helps to maintain harmonious relationships within the enterprise and also solve many problems faced during the period. 3. Clarity of goals
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4. Subordinates have a higher commitment to objectives that they set themselves than those imposed on them by their managers. 5. Managers can ensure that objectives of the subordinates are linked to the organizations objectives.

Limitations:
There are several limitations to the assumptive base underlying the impact of managing by objectives, including: a) It over-emphasizes the setting of goals over the working of a plan as a driver of outcomes. b) It underemphasizes the importance of the environment or context in which the goals are set. c) Companies evaluated their employees by comparing them with the "ideal" employee. Trait appraisal only looks at what employees should be, not at what they should do.

Line and staff Authority:

In many organizations, managers use authority by dividing it into line authority, staff authority and functional authority. These kinds of authority differ according to the kinds of power on which they are based. Line Authority: Managers with line authority are those people in the organization who are directly responsible for achieving organizational goals. Line authority is represented by the standard chain of command starting with the board of directors and extending down activities of the organization that are carried out. Line authority is based primarily on legitimate power. Since line activities are identified in terms of the companys goals, the activities classified as line will differ in each organization. For example, managers at a manufacturing company may limit line functions to production and sales, while managers at a department store, in which buying is a key element will consider the purchasing department as well as the sales department as line activities. When an organization is small, all positions may be line roles. At Nordstrom, associates are given considerable line authority. Staff Authority: Staff authority belongs to those individuals or groups in an organization who provide services and advice to line mangers. The concept of staff includes all elements of the organization that are not classified as line. Advisory staffs have been used by decision makers from emperors and kings to dictators and parliaments over the course of recorded history. Staff provides managers with varied types of expert help and advice. Staff authority is based primarily on expert power. Staff offers line managers planning advice through research, analysis and options development. Staff can also assist in policy implementation, monitoring and control in legal and financial matters; and in the design and operation of data processing systems. As managers expand organizations over time, staff roles are often added to supplement line activities. For example, partners at many law firms are adding staff members to run
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the business side of the firm. The presence of these specialists frees lawyers to practice law, their line function. Functional Authority: The role of staff members to provide advice and service to line members implies that staff lacks independent formal authority. In reality, staff departments, especially those responsible for audit functions, may have formal authority over line members within the limits of their function. The right to control activities of other departments as they relate to specific staff responsibilities is known as functional authority. The finance manager of Division A reports through the chain of command to the General Manager of Division A, but is also responsible to the vice president for finance at the corporate level. This dotted line relationship indicates the functional authority of specialized staff in relation to line managers. Functional authority is common in organizations. It is necessary in carrying out many organizational activities, both to provide or a degree of uniformly and to allow unhindered application of expertise. Thus, it is based on both legitimate and expert power. The skills required managing functional authority relationships and the problem arising from those relationships are similar to the skills required to manage dual-boss relationships in matrix organizations.

Decentralization:
It is the process of dispersing decision-making governance closer to the people and/or citizen. It includes the dispersal of administration or governance in sectors or areas like engineering, management science, political science, political economy, sociology and economics. Decentralization is also possible in the dispersal of population and employment. Law, science and technological advancements lead to highly decentralized human endeavors. A central theme in decentralization is the difference between a hierarchy, based on: Authority: two players in an unequal-power relationship; and An interface: a lateral relationship between two players of roughly equal power. The more decentralized a system is, the more it relies on lateral relationships, and the less it can rely on command or force. In most branches of engineering and economics, decentralization is narrowly defined as the study of markets and interfaces between parts of a system. This is most highly developed as general systems theory and neoclassical political economy.

Span of Management:
It is also known as span of control, is a very important concept of organizing function of management. It refers to the number of subordinates that can be handled effectively by a superior in an organization. It signifies how the relations are planned between superior and subordinates in an organization. Span of management is generally categorized under two heads- Narrow span and Wide span. Narrow Span of management means a single manager or supervisor oversees few subordinates. This gives rise to a tall organizational structure. While, a wide span of management means a single manager or supervisor oversees a large number of subordinates. This gives rise to a flat organizational structure. There is an inverse relation between the span of management and the number of hierarchical
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levels in an organization, i.e., narrow the span of management, greater the number of levels in an organization. Narrow span of management is more costly compared to wide span of management as there are larger number of superiors/ managers and thus there is greater communication issues too between various management levels. The less geographically scattered the subordinates are, the better it is to have a wide span of management as it would be feasible for managers to be in touch with the subordinates and to explain them how to efficiently perform the tasks. In case of narrow span of management, there are comparatively more growth opportunities for a subordinate as the number of levels are more. The more efficient and organized the managers are in performing their tasks, the better it is to have wide span of management for such organization. The less capable, motivated and confident the employees are, the better it is to have a narrow span of management so that the managers can spend time with them and supervise them well. The more standardized is the nature of tasks ,i.e., if same task can be performed using same inputs, the better it is to have a wide span of management as more number of subordinates can be supervised by a single superior. There is more flexibility, quick decision making, effective communication between top level and low level management, and improved customer interaction in case of wide span of management. Technological advancement such as mobile phones, mails, etc. makes it feasible for superiors to widen their span of management as there is more effective communication.