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History of Habitat for Humanity

Habitat for Humanity International was founded in 1976 in Americus, Georgia, USA by Linda and
Millard Fuller.

The idea was sparked by Koinonia Farm, a small, interracial, Christian farming community founded in 1942 outside of
Americus, by farmer and biblical scholar Clarence Jordan. The Fullers first visited Koinonia in 1965, having recently left a
successful business in Montgomery, to begin a new life of Christian service.

At Koinonia, Jordan and Fuller developed the concept of "partnership housing" - where those in need of adequate shelter
would work side by side with volunteers to build simple, decent houses.

The houses would be built with no profit added and no interest charged. Building would be financed by a revolving 'Fund for
Humanity'. The fund's money would come from the new homeowners' house payments, donations and no-interest loans
provided by supporters and money earned by fund-raising activities. The monies in the Fund for Humanity would be used to
build more houses.

In 1973, the Fullers decided to apply the Fund for Humanity concept in developing countries. The Fuller family moved to Mbandaka,
Zaire (now the Democratic Republic of Congo). The Fullers' goal was to offer affordable yet adequate shelter to 2,000 people. After
three years of hard work to launch a successful house-building program, the Fullers returned to the USA.

In September 1976, Millard and Linda called together a group of supporters to discuss the future of their dream. Habitat for
Humanity International (HFHI) as an organisation was born at this meeting. The eight years that followed proved that the vision was
workable. Faith, hard work and direction set HFHI on its successful course.

In 1984 Habitat's most famous volunteer, former U.S. President Jimmy Carter, along with his wife, Rosalyn, participated in
their first Habitat build project. Their personal involvement in Habitat's ministry brought the organisation global visibility and
sparked interest in Habitat's work across the U.S.A. nation and the world.

Habitat for Humanity New Zealand (HFHNZ) was founded in 1992, with the formation of the first New Zealand affiliate in the Franklin
area (now a part of the Auckland affilate). In early 1998 an HFHNZ national office was established, which is currently located in
Penrose, Auckland.
Answers to Case Application 1 Questions
Building a Future
1. What role do you think goals would play in planning for the wise use of this gift? List some goals you think might be important. (Make sure
these goals have the characteristics of well-written goals.)
Goals play a substantial role in an organizations planning for situations requiring coordination of resources. Habitat for Humanitys goal to
effectively use the $100 million gift should follow the SMART format introduced by Drucker. In addition to being written, have students suggest
ways that the goal can meet the qualities of S (specific), M (measurable), A (attainable), R (relevant), and T (time bound).
2. What types of plans would be needed in wisely using this gift? (For instance, long-term or short-term, or both?) Explain why you think these
plans would be important.
Planning involves defining the organizations goals, establishing an overall strategy for achieving those goals, and developing a comprehensive
set of plans to integrate and coordinate organizational work. Determining how and where the $100 million gift should be allocated requires
careful planning in both the long-term and short-term. Have students think of short term plans involved for the initial allocation of some of the
gift and then long-term plans to not only evaluate what has been allocated, but how the remaining funds should be used. In addressing the
importance of these plans, have students think of the possible outcomes for the plan if they decided to invest a percentage of the gift (and the
investment results in a significant return; or the investment results in a substantial loss).
3. What contingency factors might affect the planning Habitat executives have to do for the wise use of this gift? How might those contingency
factors affect the planning?
A gift of this size will ultimately be managed by the top executives at Habitat for Humanity. Therefore, at the top organizational level, the
planning will be strategic in nature. As smaller pieces of the gift are passed down through the organization for allocation, lower-level managers
will be engaged in operational planning. Second, environmental uncertainty will affect the planning process in that natural disasters, greater need
for housing, or a myriad of other unexpected occurrences could cause the executives to rethink how the gift is used. And third, the time frame for
the use of this gift is important. Students might think in terms of a five-year plan, but shorter and longer plans are also possible if properly
supported by the students.

4. What planning challenges do you think Habitat executives face with getting the most use out of this gift? How should they cope with those
challenges?
A plan involving such a large amount of money would be quite challenging. Very likely, not all the executives will agree on specifically how the
money should be utilized. Reaching consensus on the actual use of the gift could be a difficult process. In addition, once agreed, others (the
media, Habitat employees, volunteers, and even needy families benefitting from Habitat homes) may view the use of the gift in a negative fashion
in other words, executives might face some scrutiny. Students should be able to identify the importance of effective communication throughout
the organization once the plans and goals are set. Getting buy-in from others will facilitate the plans acceptance by constituents.

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Answers to Case Application 2 Questions
Icelandic Volcano, 1; Global Commerce, 0
1. Could a company even plan for this type of situation? If yes, how? If not, why not?
This situation epitomizes the importance of understanding environmental uncertainty. A company may not be able to plan specifically for a
volcano eruption that interrupts air traffic; however, a companys plans should remain flexible in the event of sudden, unexpected obstacles.
Students should be able to explain how a firm develops specific plans, but builds in a degree of flexibility to those plans.
2. Would goals be useful in this type of situation? What types of goals might a manufacturing company like BMW have in such a situation?
How about a global airline? How about a small flower grower in Kenya?
Goals are important in situations of this type especially short-term goals. An organizations quick response to the volcanic eruption will lessen
the negative impact of the delays on shipping, communication, travel, etc. All three situations (BMW, global airline, and Kenyan flower grower)
would set both strategic and financial goals. Specific strategic goals would assist each organization with how it adapts to the air traffic delays,
while financial goals would attempt to lessen the financial hit each organization suffers.
3. What types of plans could companies use in this type of situation? Explain why you think these plans would be important.
A sudden, unexpected event such as a volcanic eruption would create a need for several different kinds of plans. Though long-term plans would
be in place, some flexibility in those plans would probably be necessary. Students should be able to identify the importance of short-term plans in
handling the situation. Again, flexibility would be key. Additionally, students may point to operational plans to provide specifics on certain
areas of an organization and directional plans that ensure flexibility during the crisis.

4. What lessons about planning can managers learn from this crisis?
Students should grasp the importance of flexibility with the planning process. Environmental uncertainty is the expectation and not the
exception, therefore, rigid adherence to any plan could create challenges for managers. The ability to quickly adapt to a crisis is also critical as it
enables managers to assess a situation and work with his or her team to overcome the obstacles.
Chapter 8 Foundations of Planning
In this chapter, we begin our study of the first of the management functions: planning. Planning is important because it establishes what an
organization is doing. Well look at how managers set goals as well as how they establish plans. Focus on the following learning outcomes as you
read and study this chapter.
LEARNING OUTCOMES
8.1 Define the nature and purposes of planning.
8.2 Classify the types of goals organizations might have and the plans they use.
8.3 Compare and contrast approaches to goal setting and planning.
8.4 Discuss contemporary issues in planning.
A MANAGERS DILEMMA
Your students may be familiar with the adage, If you fail to plan, you plan to fail. Chapter 8 examines skills needed for effectiveness in the first
of the four management functionsplanning. After learning about the purposes of planning, students will discover how managers at different
levels of an organization develop plans and empower employees to participate in the planning process.
A Managers Dilemma tells the story of Lou Policastro, executive vice president of Geodis Wilson. Geodis Wilson manages logistics for the
World Food Program (WFP). After the massive earthquake struck Haiti on January 12, 2010, the WPF had an urgent need to move hundreds of
tons of emergency supplies to the island. Policastro oversaw the logistics operation that moved a substantial amount of supplies and food within
just four days.
Students are asked to imagine themselves in Mr. Policastros position as he plans for additional aid efforts to Haiti. What types of plans might be
needed? Why would knowledge and understanding of the many facets of planning be important for Policastros success?
CHAPTER OUTLINE
INTRODUCTION
Planning is one of the four functions of management. Fundamental information about managerial planning is presented in this chapter; the text
discusses the nature and purposes of planning, strategies for effective planning, and contemporary planning issues.
1. THE WHAT AND WHY OF PLANNING
A. What is Planning? Planning involves defining the organizations goals, establishing an overall strategy for achieving these goals, and
developing plans for organizational work activities. The term planning as used in this chapter refers to formal planning.
B. Why Do Managers Plan? Planning serves a number of significant purposes.
1. Planning gives direction to managers and nonmanagers of an organization.
2. Planning reduces uncertainty.
3. Planning minimizes waste and redundancy.
4. Planning establishes goals or standards used in controlling.
C. Planning and Performance. Although organizations that use formal planning do not always outperform those that do not plan, most studies
show positive relationships between planning and performance.
1. Effective planning and implementation play a greater part in high performance than does the amount of planning done.
2. Studies have shown that when formal planning has not led to higher performance, the external environment is often the reason.
2. GOALS AND PLANS
Planning is often called the primary management function because it establishes the basis for all other functions. Planning involves two important
elements: goals and plans.
A. Types of Goals
1. Goals (often called objectives) are desired outcomes for individuals, groups, or entire organizations.
2. Types of goals
a. Financial goals versus strategic goals
b. Stated goals versus real goals
1) Stated goals are official statements of what an organization says and what it wants its various stakeholders to believe its goals are.
2) Real goals are those that an organization actually pursues, as defined by the actions of its members.
B. Types of Plans
1. Plans are documents that outline how goals are going to be met.
2. Plans can be described by their breadth, time frame, specificity, and frequency of use (see Exhibit 8-1).
a. Breadth: Strategic versus operational plans. Strategic plans (long-term plans) are plans that apply to the entire organization, establish the
organizations overall goals, and seek to position the organization in terms of its environment. Operational plans (short-term plans) are plans that
specify the details of how the overall goals are to be achieved.
b. Time frame: Short-term versus long-term plans. Short-term plans are plans that cover one year or less. Long-term plans are plans with a time
frame beyond three years.
c. Specificity: Specific versus directional plans. Specific plans are plans that are clearly defined and leave no room for interpretation. Directional
plans are flexible plans that set out general guidelines.
d. Frequency of use: Single-use versus standing plans. A single-use plan is a one-time plan specifically designed to meet the needs of a unique
situation. Standing plans are ongoing plans that provide guidance for activities performed repeatedly.
3. SETTING GOALS AND DEVELOPING PLANS
A. Approaches to Setting Goals. Goals can be established through the process of traditional goal setting or through MBO (management by
objectives).
1. Traditional goal setting is an approach to setting goals in which goals are set at the top level of the organization and then broken into subgoals
for each level of the organization.
a. Traditional goal setting assumes that top managers know what is best because of their ability to see the big picture. Employees are to work to
meet the goals for their particular area of responsibility.
b. This traditional approach requires that goals must be made more specific as they flow down to lower levels in the organization. In striving to
achieve specificity, however, objectives sometimes lose clarity and unity with goals set at a higher level in the organization (see Exhibit 8-2).
c. When the hierarchy of organizational goals is clearly defined, it forms an integrated means-end chainan 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.
d. Management by objectives (MBO) is a process of setting mutually agreed-upon goals and using those goals to evaluate employee performance.
Exhibit 8-3 list the steps in a typical MBO program.
e. Studies of actual MBO programs confirm that MBO can increase employee performance and organiza-tional productivity. However, top
management commitment and involvement are important contributions to the success of an MBO program.
2. Characteristics of Well-Written Goals (See Exhibit 8-4):
1 Written in terms of outcomes
2. Measurable and quantifiable
3. Clear as to a time frame
4. Challenging yet attainable
5. Written down
6. Communicated to all organizational members

3. Steps in Goals Setting


1. Review the organizations mission (the purpose of the organization).
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. Make changes as needed.
B. Developing Plans
The process of developing plans is influenced by three contingency factors and by the particular planning approach used by the organization.
1. Contingency Factors in Planning:
a. Managers level in the organization (see Exhibit 8-5). Operational planning usually dominates the planning activities of lower-level managers.
As managers move up through the levels of the organization, their planning becomes more strategy oriented.
b. Degree of environmental uncertainty. The greater the environmental uncertainty, the more directional plans should be, with emphasis placed on
the short term.
1) When uncertainty is high, plans should be specific, but flexible.
2) Managers must be prepared to rework and amend plans, or even to abandon their plans if necessary.
c. Length of future commitments
1) According to the commitment concept, plans should extend far enough to meet those commitments made today.
2) Planning for too long or for too short a time period is inefficient and ineffective.
C. Approaches to Planning
1. In the traditional approach, planning was done entirely by top-level managers who were often assisted by a formal planning department.
2. Another approach to planning is to involve more members of the organization in the planning process. In this approach, plans are not handed
down from one level to the next, but are developed by organizational members at various levels to meet their specific needs.
4. CONTEMPORARY ISSUES IN PLANNING
The concluding section of Chapter 8 examines how managers can plan effectively in dynamic environments as well as addressing the concept of
environmental scanning.
A. How Can Managers Plan Effectively in Dynamic Environments?
1. The external environment is continually changing. Dynamic environments are more the norm than the exception.
2. Managers should develop plans that are specific, but flexible. Planning is an ongoing process and maintaining flexibility is important. Even
though the environment is highly uncertain, its critical to continue formal planning. Persistence in planning contributes to significant
performance improvement. In addition, a flatter hierarchy allows lower organizational levels to set goals and develop plans.
B. How Can Managers Use Environmental Scanning?
1. A managers analysis of the external environment may be improved by environmental scanning, which involves screening information to
detect emerging trends. Competitive intelligence is the process of gathering information about competitors that allows managers to anticipate
competitors actions.
2. Competitive intelligence is not corporate espionage much competitor-related information is publicly available. Purchasing access to
databases as well as searches on the internet can provide key information.
3. Global information can be garnered through subscriptions to news services.
4. Managers should ensure that information gathering is legal and ethical. The theft of proprietary materials or trade secrets is illegal, and
delineated by the Economic Espionage Act.

Answers to Review and Discussion Questions


1. Explain what studies have shown about the relationship between planning and performance. It should be noted that one cannot say that
organizations that formally plan always outperform those that dont plan. However, studies have indicated that formal planning is often
associated with positive financial results. Generally, performance is also higher in those organizations where planning is present. And, when
higher performance is not the result of formal planning, often the reason is due to something in the external environment. Finally, studies indicate
that at least four years of formal planning are necessary before performance is affected.
2. Discuss the contingency factors that affect planning. The first contingency factor is a managers level in the organization. Typically, lower-
level managers are operational planners, while upper-level managers are strategic planners. Second, with environmental uncertainty, plans
should be specific, but flexible. And third, the length of future commitments can greatly affect planning.

3. Describe how managers can effectively plan in todays dynamic environment. Environmental uncertainty is a constant. Therefore, managers
should develop plans that are specific yet remain flexible. If managers recognize that planning is an ongoing process, then when a dynamic
environment is encountered, managers can adapt readily. Another way to assist with planning is to craft an organizational hierarchy that is
relatively flat. Allowing lower level managers to set goals and develop plans is an effective way to deal with a dynamic environment.
4. Will planning become more or less important to managers in the future? Why?
Planning will become more important to managers in the future because of the uncertainty in an increasingly dynamic environment. Changes
constantly occur in both the general and specific environments of organizations, and many of these changes take place rapidly. Planning helps
managers cope with the uncertainty by forcing managers to look ahead, anticipate change, consider the impact of the change, and develop
appropriate responses.
5. If planning is so crucial, why do some managers choose not to do it? What would you tell these managers?
Managers may choose not to devote time to planning because they do not know how to plan or feel that they do not have the necessary time.
Others may say that planning is a waste of time, that the future is going to happen whether or not they plan. However, these reasons do not
discount the importance of planning. Every manager should engage in planning.
6. Explain how planning involves decisions today that will have an impact later.
As managers plan, they make decisions that influence how activities are organized, how employees are managed, and what control mechanisms
are implemented. As managers look to the future by planning, the decisions they make as they plan will have an impact on their other managerial
activities.
7. How might planning in a not-for-profit organization such as the American Cancer Society differ from planning in a for-profit organization such
as Coca-Cola?
The process of planning is similar, but the content of the plans will differ. The types of objectives that are established and the plans that are
formulated will be influenced by the fact that a not-for-profit organization does not have profit as its major objective. However, a not-for-profit
organization must devote efforts and resources to planning how to raise funds and to recruit volunteers to achieve its mission.
8. What types of planning do you do in your personal life? Describe these plans in terms of being (a) strategic or operational plans, (b) short or
long term plans, and (c) specific or directional plans.
Students responses to this question will, of course, vary. Students may mention their planning to meet educational and career goals. Encourage
your students to think about their everyday lives and the types of daily, weekly, monthly, and yearly planning they do.
9. The late Peter Drucker, an eminent management author, coined the SMART format for setting goals back in 1954: S (specific), M
(measurable), A (attainable), R (relevant), and T (time bound). Are these still relevant today? Discuss.
Of all of the material presented in this chapter, most students will readily recall this acronym for goal setting. These qualities from Drucker have
remained basically unaltered and have been cited in numerous texts and studies. As a part of student discussion, try to find other application for
Druckers work in this area beyond the management of employees. What about for school children? Volunteers working for a community
program?
10. Many companies have a goal of becoming more environmentally sustainable. One of the most important steps they can take is controlling
paper waste. Choose a companyany type, any size. Imagine that youve been put in charge of creating a program to control paper waste for the
company. Set goals and develop plans. Prepare a report for your boss (that is, your professor), outlining these goals and plans.
It should also be stressed to students that plans must be accepted by top management and as well as employees at lower levels if it is to be
effectively implemented. Have students discuss the difficulty of implementing a plan such as this across levels. How could students increase
buy-in of the plan? How would such a plan be ultimately evaluated to determine its success? Using criteria discussed in the previous question,
have students check that their goals match the SMART format.

Ethics Dilemma
Students are asked to assess the ethical concerns of a company protecting its employees at the expense of public protection. This exercise could
be a short written assignment or serve as a group activity in class. Obviously, students may have their opinion on the matter, but should be able
to provide support for their stance on the issue.

Skills Exercise: Developing Your Goal Setting Skills


Students are provided with eight suggestions for effectively setting goals. They are then asked to determine goals for five years from the present.
In addition, they are to set personal and academic goals to be achieved by the end of the current college term. Ensure that students goals are
specific, achievable, and measurable.

Working Together: Team Exercise


In groups of three to four individuals, students tackle planning and goal setting for a public school system moving to a four-day week. Students
should be able to clearly identify strategic and operational plans. Goals associated with the plans should be specific, achievable, and measurable.
My Turn to be a Manager
Practice setting goals for various aspects of your personal life, such as academics, career preparation, family, hobbies, and so forth. Set at least
two short-term goals and at least two long-term goals for each area.
For the goals that you have set, write out plans for achieving those goals. Think in terms of what you will have to do to accomplish each one.
For instance, if one of your academic goals is to improve your grade-point average, what will you have to do to reach it?
Write a personal mission statement. Although this may sound simple to do, its not going to be simple or easy. Our hope is that it will be
something that youll want to keep, use, and revise when necessary...that it will be something that helps you be the you youd like to be and helps
you live the life youd like to live. Start by doing some research on personal mission statements. There are some wonderful Web resources that
can guide you. Good luck!
Interview three managers about the types of planning they do. Ask them for suggestions on how to be a better planner. Write a report that
describes and compares your findings.
Choose two companies, preferably in different industries. Research the companies Web sites and find examples of goals that they have stated.
(Hint: A companys annual report is often a good place to start.) Evaluate these goals. Are they well written? Rewrite those that dont exhibit the
characteristics of well-written goals so that they do.
Steves and Marys suggested readings: Atul Gawande, The Checklist Manifesto: How to Get Things Right (Metropolitan Books, 2009); Peter
F. Drucker, Management: Tasks, Responsibilities, Practices (Harper Business, 1974); Peter F. Drucker, The Executive in Action: Managing for
Results (Harper Business, 1967); and Peter F. Drucker, The Practice of Management (HarperCollins, 1954).
What does it take to be a good planner? Do some research on this issue. As part of your research, talk to professors and other professionals.
Make a bulleted list of suggestions. Be sure to cite your sources.
In your own words, write down three things you learned in this chapter about being a good manager.
Self-knowledge can be a powerful learning tool. Go to mymanagementlab.com and complete these self-assessment exercises: Whats My
Attitude Toward Achievement? What Are My Course Performance Goals? What Time of Day Am I Most Productive? and How Good Am I at
Personal Planning? Using the results of your assessments, identify personal strengths and weaknesses. What will you do to reinforce your
strengths and improve your weaknesses?

Answers to Case Application 1 Questions


Building a Future
1. What role do you think goals would play in planning for the wise use of this gift? List some goals you think might be important. (Make sure
these goals have the characteristics of well-written goals.)
Goals play a substantial role in an organizations planning for situations requiring coordination of resources. Habitat for Humanitys goal to
effectively use the $100 million gift should follow the SMART format introduced by Drucker. In addition to being written, have students suggest
ways that the goal can meet the qualities of S (specific), M (measurable), A (attainable), R (relevant), and T (time bound).
2. What types of plans would be needed in wisely using this gift? (For instance, long-term or short-term, or both?) Explain why you think these
plans would be important.
Planning involves defining the organizations goals, establishing an overall strategy for achieving those goals, and developing a comprehensive
set of plans to integrate and coordinate organizational work. Determining how and where the $100 million gift should be allocated requires
careful planning in both the long-term and short-term. Have students think of short term plans involved for the initial allocation of some of the
gift and then long-term plans to not only evaluate what has been allocated, but how the remaining funds should be used. In addressing the
importance of these plans, have students think of the possible outcomes for the plan if they decided to invest a percentage of the gift (and the
investment results in a significant return; or the investment results in a substantial loss).
3. What contingency factors might affect the planning Habitat executives have to do for the wise use of this gift? How might those contingency
factors affect the planning?
A gift of this size will ultimately be managed by the top executives at Habitat for Humanity. Therefore, at the top organizational level, the
planning will be strategic in nature. As smaller pieces of the gift are passed down through the organization for allocation, lower-level managers
will be engaged in operational planning. Second, environmental uncertainty will affect the planning process in that natural disasters, greater need
for housing, or a myriad of other unexpected occurrences could cause the executives to rethink how the gift is used. And third, the time frame for
the use of this gift is important. Students might think in terms of a five-year plan, but shorter and longer plans are also possible if properly
supported by the students.

4. What planning challenges do you think Habitat executives face with getting the most use out of this gift? How should they cope with those
challenges?
A plan involving such a large amount of money would be quite challenging. Very likely, not all the executives will agree on specifically how the
money should be utilized. Reaching consensus on the actual use of the gift could be a difficult process. In addition, once agreed, others (the
media, Habitat employees, volunteers, and even needy families benefitting from Habitat homes) may view the use of the gift in a negative fashion
in other words, executives might face some scrutiny. Students should be able to identify the importance of effective communication throughout
the organization once the plans and goals are set. Getting buy-in from others will facilitate the plans acceptance by constituents.

Answers to Case Application 2 Questions


Icelandic Volcano, 1; Global Commerce, 0
1. Could a company even plan for this type of situation? If yes, how? If not, why not?
This situation epitomizes the importance of understanding environmental uncertainty. A company may not be able to plan specifically for a
volcano eruption that interrupts air traffic; however, a companys plans should remain flexible in the event of sudden, unexpected obstacles.
Students should be able to explain how a firm develops specific plans, but builds in a degree of flexibility to those plans.
2. Would goals be useful in this type of situation? What types of goals might a manufacturing company like BMW have in such a situation?
How about a global airline? How about a small flower grower in Kenya?
Goals are important in situations of this type especially short-term goals. An organizations quick response to the volcanic eruption will lessen
the negative impact of the delays on shipping, communication, travel, etc. All three situations (BMW, global airline, and Kenyan flower grower)
would set both strategic and financial goals. Specific strategic goals would assist each organization with how it adapts to the air traffic delays,
while financial goals would attempt to lessen the financial hit each organization suffers.
3. What types of plans could companies use in this type of situation? Explain why you think these plans would be important.
A sudden, unexpected event such as a volcanic eruption would create a need for several different kinds of plans. Though long-term plans would
be in place, some flexibility in those plans would probably be necessary. Students should be able to identify the importance of short-term plans in
handling the situation. Again, flexibility would be key. Additionally, students may point to operational plans to provide specifics on certain
areas of an organization and directional plans that ensure flexibility during the crisis.

4. What lessons about planning can managers learn from this crisis?
Students should grasp the importance of flexibility with the planning process. Environmental uncertainty is the expectation and not the
exception, therefore, rigid adherence to any plan could create challenges for managers. The ability to quickly adapt to a crisis is also critical as it
enables managers to assess a situation and work with his or her team to overcome the obstacles.

Chapter 7 Managers as Decision Makers


Chapter 9 Strategic Management