Lecture 3—Goal Setting and Planning

Goal: desired future sate that an organization attempts to realize

Plan: blueprint for goal achievement and specifies the necessary resource allocations, schedules, tasks,
etc. (final product)

Planning: incorporates both ideas; determining organization goals and defining the means for achieving
them (process to allow to understand yourself, company more) (force you to think)

Levels of Goals and Plans

The mission is the basis for the strategic (company) level of goals and plans, which in turn shapes the
tactical (divisional) level and the operational (departmental) level.

Top managers are typically responsible for strategic goals. Tactical goals are the responsibility of middle
managers, operational plans identify the specific procedures needed by front-line managers and supervisors
to develop.

Levels of Goals and Plans

Determining Vision and Mission—Blue Print of a company is defined by:

vision--a “general statement” of its intended direction that evokes emotional feelings in organizational
members; a very broad terms what the business should be or, simply “who are we?”
 we are first class research university

mission--more specific and shorter-term that “serves to communicate who we are, what we do, and where
we’re headed” or, simply “what we do?”
 preserve knowledge, create knowledge
Organization Planning Process

Goal-Setting in Organizations

Strategic Goals
 official goals or broad statements describing where the organization wants to be in the future
 tactical goals are the results that major division and departments within the organization
intends to achieve
 operational goals are precise and measurable

Strategic Plans
 strategic plans define action steps by which the company intends to attain strategic goals
 tactical plans are designed to help execute major strategic plans
 operational plans are developed at lower levels of the organization
 Characteristics of effective goals (SMART)

Specific and measurable

 goals should be expressed in quantitative terms
 goals should be precisely defined and allows for measurable progress
Defined time period
 goals should have specific dates on which goal attainment will be measured Cover
key result areas
 a few carefully chosen, clear, and direct goals can focus organizational attention, energy and
resources
Challenging but realistic
 when goals are unrealistic, they set employees up for failure and lead to a decrease in
employee morale
 if goals are too easy, employees may not feel motivated
Linked to rewards
 employees pay attention to what gets noticed and rewarded in the organization
 “The Practice of Management” by Peter F. Drucker, 1954

Management by Objectives (MBO)

 A system in which specific performance objectives are jointly determined by subordinates and
their supervisors, progress toward objectives is periodically reviewed, and rewards are allocated
on the basis of that progress.
 Links individual and unit performance objectives at all levels with overall organizational
objectives.
 Focuses operational efforts on organizationally important results.
 Motivates rather than controls.

Four activities for successful MBO

(i) Set goals—effective goals at all levels—goal specificity

(ii) Develop action plans—for departments and individuals—participative decision making

(iii) Review progress—periodic reviews and checkups to revise action plans if necessary—explicit
performance period

(iv) Appraise overall performance—analyze whether goals have been met and recognize
success/failure—effective feedback
 Operational Planning

Single-Use Plans
 Developed to achieve a set of goals that are not likely to be repeated in the future
 Example—Building a new headquarters, renovating the office, converting all paper files to digital

Standing Plans
 Ongoing plans that provide guidance for tasks or situations that occur repeatedly within the
organization
 Example—Internet usage policies, no eating rule, procedures for issuing refunds

Benefits and Limitations of Planning

Planning and goal-setting is beneficial to a company’s performance but planning can also hurt the
organizational performance in some ways

Benefits
- provides a source of motivation and commitment
 planning can reduce uncertainty for employees and clarify what they should accomplish
guides resource allocation
 planning helps managers decide where they need to allocate resources acts
as a guide to action
 planning focuses attention on specific targets and directs employees efforts toward important
outcomes

- sets a standard of performance

 planning establishes performance criteria so managers can measure whether things are on or off
track

Limitations
- can create a false sense of certainty
 all planning in based on assumptions, managers can’t know what the future holds may
- cause rigidity in a turbulent environment
 planning can lock the organization into specific goals and plans which may no longer be
appropriate
- can get in the way of intuition and creativity
 too much routine planning can hamper creativity and intuitive
 Planning for a Turbulent Environment

Contingency Planning
 company responses to be taken in the case of emergencies, setbacks, or unexpected conditions.
 identify important factors in the environment, such as possible economic downturns, declining markets,
increases in cost of supplies, new technological developments, or safety accidents.
 Example:
 if it rains tomorrow, we won’t go hiking, we will play video games instead; if iPhone X does not
sell, we will roll out the Airpods and Homepods right away

Scenario Planning — we have launched iPhone X now, three things will happen
 looking at current trends and discontinuities and visualizing future possibilities.
 Devising strategies to manage future events
 it sells as expected, then, we will probably keep it running and leave all the other plans in the vault
for a while
 it does not sell at all, then, we will probably roll out the new Airpods and Homepods right away
 it’s sales go through the roof, then, we will ask our suppliers to stock up and increase their
capacity for the next several quarters

Crisis Planning — can we plan for crisis?

 Crisis prevention
 managers try to prevent crises from occurring
 building open, trusting relationships with key stakeholders such as employees, customers, suppliers,
governments, unions, and the community.
 Crisis preparation
 includes all the detailed planning to handle a crisis when it occurs
 Three preparation steps:
(1) designating a crisis management team and spokesperson
(2) creating a detailed crisis management plan
(3) setting up an effective communications system.

Page 2 of 4; Lecture 03 Planning

Page 3 of 4; Lecture 03 Planning
Page 4 of 4; Lecture 03 Planning