UNIT-III

PLANNING

INTRODUCTION

Planning is important for socioeconomic development. it helps to conceive and achieve

results in an atmosphere and spirit of true democratic situation, where in different agencies at
various levels are involved in the policies of the government for welfare of its people.

Planning is an intellectual process of making decisions and it aims to achieve a

coordinated and consistent set of operations aimed at desired objectives for any work,
planning is very essential.

DEFINITION
Planning is a process of determining the objectives of administrative effort and
devising the means calculated to achieve them.
(Millet)
Planning is a process of setting formal guidelines and constraints for the behavior of

the firm.
(Assoff and Brundinharg)

Planning is the systematic development of action programs aimed at reaching agreed

business objectives by the process of analyzing, evaluating and selecting among the
opportunities which are foreseen
(Certo S.C. 2003).

IMPORTANT OF PLANNING

Planning is considered important because,

 It focuses attention on the objectives or goals of the organization and their
achievement.
 It leads to economy in operation through the selection of the best possible course of

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 action.
 It helps in controlling the activities by providing measures against which performance
can be evaluated.
 It helps in co-coordinating the operations of organizations since a well considered
plan embraces and unifies all the divisions in an organization.

PRICIPLES OF PLANNING

 Planning is must focuses on purposes. it should always be based on a clearly

defined objectives.
 Planning is a continuous and iterative process which includes series of steps, so
continuing and flexibility should be maintained in planning cycle.

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  Planning should be simple and there should be provision for proper analysis and
classification of actions.
 In planning there should be a good harmony with organization and environment.

 Planning is hierarchical in nature.

 Planning should cover entire organization with all its departments, sectors and
different levels of administration and it should be balanced.
 Planning must be precise in its objectives, scope and nature.

 In planning the provision should be made to use all available resources.

 Planning should be always documented

MISSION OR PURPOSES

 To render quality health care through effective team work.

 To train health professions to become competent, humane and ethical health care
providers, educators and leaders.
 To undertake relevant biomedical and health system researcher, which may serve as
basis for health policies?
 To develop a system of referral network and serve as center for complex health care
problem.
 To attain self sufficiency in resources.
 To be the role model for health care delivery in the country.

NATURE OF PLANNING

1. Planning is goal oriented: Every plan must contribute in some positive way towards
the accomplishment of group objectives.
2. Primacy of planning: Planning is the first of the managerial functions. It precedes all
other management functions.
3. Pervasiveness of planning: Planning is found at all levels of management.
4. Efficiency, economy and accuracy: Efficiency of plan is measured by its
contribution of the objectives as economically as possible. Planning also focus on
accurate forecast.
5. Co-ordination: Planning co-ordinates the what, who, how, where and why of
planning, without co-ordination of all activities, we cannot have united efforts.
6. Limiting factors A planner must recognize the limiting factors (Money, manpower
etc.) and formulate plans in the light of these critical factors.
7. Flexibility: The process of planning should be adaptable to changing environmental
conditions.
8. Planning is an intellectual process: The quality of planning will vary according to
the quality of the mind of the manager.
CHARACTERISTICS OF PLANNING

1. Planning is goal-oriented.
a. Planning is made to achieve desired objective of business.
b. The goals established should general acceptance otherwise individual efforts
& energies will go misguided and misdirected.
c. Planning identifies the action that would lead to desired goals quickly &
economically.
d. It provides sense of direction to various activities. E.g. Maruti Udhyog is
trying to capture once again Indian Car Market by launching diesel models.
2. Planning is looking ahead.
a. Planning is done for future.
b. It requires peeping in future, analyzing it and predicting it.
c. Thus planning is based on forecasting.
d. A plan is a synthesis of forecast.
e. It is a mental predisposition for things to happen in future.
3. Planning is an intellectual process.
a. Planning is a mental exercise involving creative thinking, sound judgement
and imagination.
b. It is not a mere guesswork but a rotational thinking.
c. A manager can prepare sound plans only if he has sound judgement, foresight
and imagination.
d. Planning is always based on goals, facts and considered estimates.
4. Planning involves choice & decision making.
a. Planning essentially involves choice among various alternatives.
b. Therefore, if there is only one possible course of action, there is no need
planning because there is no choice.
c. Thus, decision making is an integral part of planning.
d. A manager is surrounded by no. of alternatives. He has to pick the best
depending upon requirements & resources of the enterprises.
5. Planning is the primary function of management / Primacy of Planning.
a. Planning lays foundation for other functions of management.
b. It serves as a guide for organizing, staffing, directing and controlling.
 c. All the functions of management are performed within the framework of plans
laid out.
d. Therefore planning is the basic or fundamental function of management.
6. Planning is a Continuous Process.
a. Planning is a never ending function due to the dynamic business environment.
b. Plans are also prepared for specific period f time and at the end of that period,
plans are subjected to revaluation and review in the light of new requirements
and changing conditions.
c. Planning never comes into end till the enterprise exists issues, problems may
keep cropping up and they have to be tackled by planning effectively.
 7. Planning is all Pervasive.
a. It is required at all levels of management and in all departments of enterprise.
b. Of course, the scope of planning may differ from one level to another.
c. The top level may be more concerned about planning the organization as a
whole whereas the middle level may be more specific in departmental plans
and the lower level plans implementation of the same.
8. Planning is designed for efficiency.
a. Planning leads to accompishment of objectives at the minimum possible cost.
b. It avoids wastage of resources and ensures adequate and optimum utilization
of resources.
c. A plan is worthless or useless if it does not value the cost incurred on it.
d. Therefore planning must lead to saving of time, effort and money.
e. Planning leads to proper utilization of men, money, materials, methods and
machines.
9. Planning is Flexible.
a. Planning is done for the future.
b. Since future is unpredictable, planning must provide enough room to cope
with the changes in customer‟s demand, competition, govt. policies etc.
c. Under changed circumstances, the original plan of action must be revised and
updated to make it more practical.

COMPONENTS OF PLANNING

 Objectives
Objectives are basic plans which determine goals or end results of the projected
action of an enterprise. By setting goals, objectives provide the foundation upon which
structure of plan can be built.
 Policies
Policies are written statements or oral understanding. Realization of objectives is
made easy with the help of policies, policies provide standing solutions to problem.
 Procedures
Procedures indicate the specific manner in which a certain activity is to be
performed.
 Programme
Programmes are necessary for both repetitive (routine planning)and non-
repetitive (creative planning) course of action.
 Budget
Budgets are plans continuing statements of expected results in numerical items.
Hierarchy of Organizational Plans

Purpose or Mission
Objectives Strategies
Policies: Major or minor

Procedure

Rules

Programs: Major or Minor & Supporting

Budgets: Numberized or dollarized programs

Hierarchy of organizational plans

The planning process cannot be effective unless the types of plans are properly
understood. It is easy to see that a major program, such as one to build and equip a new
factory, is a plan. But a number of other courses of future action are also plans. In fact plan
can encompass any course of future action, which clearly shows that plans are varied. They
are classified and illustrated as a hierarchy.

1. Purpose or Missions
The mission or purpose identifies the basic function or task of an enterprise or agency
or of any part of it every kind of organized operation has, or at least should have if it is to
meaningful, purposes of mission.
In every social system, enterprises have a basic function or task, which is assigned to
them by society.
 The purpose of a business is generally the production or distribution of goods or
services.
  The purpose of the courts is the interpretation of law and their application.
 The purpose of a university is teaching, research, consultancy and training.
While a business may have a social purpose of producing and distributing goods and
services, it can accomplish this by fulfilling a mission of producing certain lines of products.
Hallmark, which has expanded its business beyond greeting cards, defines its mission
as “The social expression business.
2. Objectives
Objectives or goals are the ends towards which activity is aimed and every organization
strives hard to achieve them. They represent not only the end point of planning of
management i.e. organizing; staffing, leading and controlling are aimed. While enterprise
objectives are the basic plan of the firm, departments also have its own objectives. its goals
naturally contribute to the attainment of a business might be to make a certain profit by
producing a given a line of home entertainment equipments, while the goal of manufacturing
department might be to produce the required number of color television sets of given design.

3. Strategies
The term strategies usually has a competitive implication, managers increasingly use it
to reflect broad area of an enterprise operation.
The term strategies can be explained as
 General programs of action and development of resources to attain comprehensive
objectives.
 The program of objectives of an organization and their changes, with a focus on
resources used to attain these objectives and policies governing the acquisition used
and disposition of these resources.
 The determination of the basic long term objectives of an enterprise, the adoption of
courses of action and allocation of resources necessary to achieve these goals.
A firm also has to decide on its growth goals and its desired profitability. A strategy
might include such major policies as marketing directly rather than through distributors or
concentrating on proprietary products or having a full line of autos, a general motors decided
to have many years ago.
The purpose of strategies then is to determine and communicate, through a system of
major objectives and policies, a picture of the kind of enterprise that is envisaged. Strategies
however do not attempt to outline exactly how the enterprise is to accomplish its objectives.

4. Policies
Policies are also plans in that they are general statements or understanding that guide
or channel thinking in decision making. Not all policies are statements; they are often merely
implied from the actions of managers. The president of a company may strictly follow
perhaps for convenience rather than a policy the practice of promoting from within, the
practice may be interpreted as policy and carefully followed by subordinates.
 Policies can be defined an area within which a decision is to be made and ensure that
the decision will be consistent with and contribute to an objective.
Policies ordinarily exist in all levels of the organization, ranging from major company
policies through major department policies to minor policies applicable to the smallest
segment of the organization. They may be related to functions or merely to project.

5. Procedure
Procedures are plans that establish a required method of handling future activities.
They are guides to action, rather than to thinking and they detail exact manner in which
certain activities must be accomplished. They are chronological sequence of required action.
 Procedures often cut across department lines. e.g. in a manufacturing company, the
procedure for handling orders will almost certainly involves the sales department, the finance
department, the accounting department, the production department and the traffic department.
Company policy may grant employees vacation, procedures established to implement
this policy will provide for scheduling vacations to avoiding disruption of work, setting
methods rates of vacation pay, maintaining records to assure each employee of a vacation and
spelling out the means for applying for a vacation.

6. Rules
Rules spell out specific required actions or non actions, allowing no discretion. They
are usually the simplest type of plan.
Rules are different from policies or procedures. It is unlike procedures in that they
guide action without specifying a time sequence. In fact a procedure might be looked upon as
a sequence of rules. A rule however may or may not be part of a procedure but a procedure
governing the handling of orders may incorporate the rules that all orders must be confirmed
the day that are received. This rule allows no deviation from a stated course of action. It does
not interfere with the rest of the procedure in any way, for handling orders. It is comparable
to a rule stating that all fractions of weight of over half an ounce are to be counted as a full
ounce or that receiving inspection must count or weight all materials against the purchase
order.

7. Programs
Programs refer to set of clear instructions in a clear and logical sequence to perform a
particular task. They explain how to carry out a given course of action. They are ordinarily
supported by budgets. The programs may be as major as an airlines program for acquiring a
$400 million fleet of jets or implementation of the 10 th five year plan (2002-07) by the
government of India. Or they may be as minor as a program formulated by a single
supervisor to improve the morale of workers in a parts manufacturing department of a farm
machinery company.
All the programs call for coordination and timing as the failure of any part of this
network of support plans means delay for the major programs.

8. Budgets
A budget is a statement of expected results expressed in numbers. In fact, the
operating budget, expressed in terms of revenues and expresses, is often called a profit plan.
A budget may be expressed either in financial terms or in terms of labor hours, unit of
products, machine hours or any other numerically measurable parameters. It may be an
expense budget, it may be capital expenditure budget or it may cash budget.
Although a budget usually implements a program, it may in itself be a program. One
company in extreme financial straits installed an elaborate budgetary control program
designed not only to control expenditure but also to install costs consciousness in
management. One of the major advantages of budgeting is that it makes people plan, because
budget is in form of numbers, it forces precision in planning.
 Budget varies considerably in accuracy, detail and purpose. Some budget vary
according to organizations levels of input, these are flexible budget. government agencies
often develops program budget.

Steps in planning process

Comparing alternatives to light
of goals sought
Being aware of opportunity Which alternative will give us the
best chance of meeting our goals at
The market Competition
the lowest cost and highest profit
What customers want Over
strengths Our weakness
Choosing an alternative
Selecting the course of action we
will pursue
Setting objectives/goals
Where we want to be and what
we want to accomplish and
when
Formulating supporting plan Such as: plan to buy equipments, buy materials, hire
develop a new product

Considering planning

In what environment internal or

external will our plans operate
Numbrizing plans by making budgets
Identifying alternatives
Develop such budget as: Volume and price of sales, operating expenses for plans, expenditure for pla
What are the most promising
alternatives to accomplishing
our objectives

Source: Koontz, H. and Weihrich, H

1. Being aware of opportunities

It provide actual planning and is there for not strictly a part of planning process, an
awareness of opportunities in the external environment as well as within the organizations is
the real starting point for planning. All managers should know where they stand in the light
of their strengths and weakness. Planning requires realistic diagnosis of the opportunity
situation.
2. Establishing objectives
Establish objective for the entire enterprise and then for each subordinate work unit.
This is to done for long term as well as long term range. Objectives specify the expected
results and indicate the end points of what is to be done. Where the primary emphasis is to be
placed, what is to be accomplished by network of strategies, policies, procedures, rules,
budgets and programmes.

3. Developing premises
Developing premises, certain assumptions about the future on the basis of which the
plan will be ultimately formulated. Planning premises can be classified as under
a) Internal and external premises
Premises may exist within and outside the company. Important premises are
skill of the labor force, other resources and abilities of the organization in the form of
machines, money and methods. External premises include population growth, political
stability, sociological factors and government policies.
b) Tangible and intangible premises
Tangible premises are those which can be quantitatively measured. Population
growth, capital and resources all are tangible premises whose quantitative measurement is
possible.
Political stability, sociologic factors, attitudes, philosophies and behaviour of the
owners of the organization all are intangible premises whose quantitative measurement is not
possible.
c) Controllable and non controllable premises
Because of the presence of uncontrollable factors, there is need for the
organization to revise the plans periodically in accordance with current developments.
Some of the examples of uncontrollable factors are strikes, wars, natural
calamities, emergency, legislation etc. Controllable factors are those which can be controlled
and normally cannot upset well thought out calculations of the organization regarding the
plan. Eg. Are skill of the labour force, attitude and behavior of owners.

4. Determining alternative courses

There is seldom a plan for which reasonable alternatives do not exist and quite often an
alternative that is not obvious proves to be the best. The planner must usually make a
preliminary examination to discover the most fruitful possibilities.
5. Evaluating alternative courses
After seeking out alternative course and examining their strong and weak points. The
next step is evaluating the alternatives by weighing them in the light of premises and goals.
At this step in the planning process that operations research an mathematical as well as
computing techniques have their primary application to the field of management.

6. Selecting course
This is the point at which the plan is adopted the real point of decision making. An
analysis and evaluation of alternative course will disclose that two or more are advisable and
the manager may decide to follow several courses rather the one best course.
7. Formulating derivative plans
Once the plan has been formulated its broad goals must be translated into day to day
operations of the organization. Middle and lower level managers must draw - up the
appropriate plans, programmes and budgets for their subunits. There are described as
derivative plan.

8. Numberizing plans by budgetin

After decisions are made and plans are set, the final step in giving them meaning
and to numberize them by converting them to budget. If done well, budget become a means
of adding together the various plans and also set important standards against which planning
progress can be measured.

TYPES OF PLANNING
Planning may be classified as,
 Directional planning
It is often called policy planning and is concerned with the broad general direction of
the programme.
Eg:state level planning at directorate or secretarial of states or union.(centre).
 Administrative planning
It is concerned with the overall implementation of the policies developed and with the
mobilization and coordination of the personnel and material available in the
administrative unit for the effectuation of the service.
Eg:Medical superintendent of major hospital are responsible for administrative
planning.
 Operational planning
It is concerned with the actual delivery of the service to the community.
Operational or short range planning is undertaken by middle or supervisory level
personnel.it involves,
 Planning for a few months to a financial year.
 Planning for details budgeting and short range goods and achieved with in given
period.
 Extensional aspect of long range plan.
Eg:Nursing personnel of all level are planning to deliver proper service to the community
either in hospital or community.
 Strategic planning
Usually strategic and long range planning is undertaken by the top level, which
involves,
 →Detail analysis of strength,weakness,oppournities and threats (SWOT)of
organization both internal or external environment.
 →Developing philosophy and formulation of policies and objectives.
 →Allocation of resources on the basis of priority
 →Evaluation of activities to increase efficiency.
 →Providing proper direction to avoid duplication of services.
Forms of Planning

1.Strategic planning
It involves deciding what the major goals of the entire organization will be and
what policies will guide the organizations in its pursuit of these goals. The organization relies
heavily on external information i.e. estimates of costs, technological developments.

2.Tactical planning
It involves deciding specifically how the resource of the organization will be used
to help an organization to achieve its strategic goals.

Distinction between strategic and tactical planning

Strategic planning Tactical planning

It decides the majority goals and It decides the detailed use of resources for
policies of allocation of resources to achieving each goal
achieve these goals
It is done at higher levels of It is done at lower levels of management.
management
It is long term It is short term.
It is generally based on long term It is generally based on the past performance
forecast about technology, political of the organization.
environment etc.
It is less detailed because it is not It is more detailed because it is less involved
involved with the day to day with the day to day operations of the
operations of the organization. organizations.

PLANNING PROCESS

Planning is a process of analyzing and understanding a system, formulating it‟s goals

and objectives, assessing it‟s capabilities, designing alternative courses of action or plans
for the purpose of achieving the goals and objectives ,evaluate the effectiveness of plan,
choosing the preferred plan,intiating the necessary action for it‟s implementation and
monitoring the system to ensure the implementation of the plan and it‟s desired effect on
the system.
 Planning cycle may be considered in eight steps,
1. Assessing the planning environment.
2. Data collection and data analysis for bringing out the problems and potentials of
the area.
3. Strategy formulation and setting realistic targets for the plan.
4. Participatory plan formulation.
5. Plan authentication and linking the plan with the plan at the near higher level.
6. Task adoption and plan implementation.
7. Mid term appraisal and making corrections.
8. Evaluation and replanning.
 Assessing planning environment

Evaluation e and replanning

Data collection and data analysis

Mid term appraisal and making correction

Strategy formulation target setting

Participatory plan formulation

Task adoption and plan implementa ti-on

Plan authenticati-on

ADVANTAGES OF PLANNING
 Planning leads to more effective and faster achievements of any organization.

 Planning gives strength to the business or service for its continuous growth and
steady prosperity.
 Planning secures and ensures unity of purpose, direction and effort by focusing
attention on objectives. it avoids duplication of services.
 Planning has unique contribution towards the efficiency of other managerial
functions.
 Planning provides the basis for control in an organization.

 Planning serves as an integral part of other administrative functions. it ensures

order and control and determines appropriateness and flasibility of actions in
 terms of cost effectiveness and quality control.

DISADVANTAGES OF PLANNING
 It depends up on facts and information ,reliable information is not possible.

 Planning may lead to internal inflexibilities and procedural rigidities.

 It is a time consuming and expensive process.

 2. PROGRAM EVALUATION AND REVIEW TECHNIQUE (PERT)

Meaning
The program evaluation & review technique (PERT) was developed by the Special
Projects Office of the U.S. Navy and applied to the planning &control of the Polaris Weapon
system in 1958. It worked then, it still works; and it has been widely applied as a controlling
process in business & industry.

Definition
“PERT is a network system model for planning and control under uncertain conditions.
It involves identifying the key activities in a project, sequencing the activities In a flow
diagram, and assigning the duration of each phase of the work.”

PERT recognizes that certain tasks must be completed before the total project can be
completed and furthermore ,that subtasks must be completed before others can be started.
The key events are identified, labeled or numbered and labeled on the flow chart. The
activities that cause the progress from one event to another are indicated by arrows, with
the direction of the arrow showing the direction of the work flow.

Program Evaluation & Review Technique includes:

1. The finished product or service desired
2. The total time & budget needed to complete the project or program.
3. The starting date & completion date.
4. The sequence of steps or activities that will be required to accomplish the project
or program.
5. The estimated time & cost of each step or activity.
Steps for accomplishing the project are:
a) The optimistic time: This occasionally happens when everything goes right.
b) The most likely time: It represents the most accurate forecast based on normal
developments.
c) The pessimistic time: This is estimated on maximum potential difficulties.
Calculation of the “critical path”, the sequence of the events that would take the greatest
amount of time to complete the project or program by the planned completion date. The
 reason this is the critical path because it will leave the least slack time.

PERT also deals with the problem of uncertainty with respect to time by estimating the
time variances associated with the expected time of completion of the subtasks. Three
projected times are determined.

►Optimistic time (to), which estimates the completion time without complication.
►The most likely time (tm), which estimated the completion time with normal problems.
►Pessimistic time (tp), which estimates the completion time given numerous problems.

The expected time (te) = to+4(tm)+tp

6
 2 6
9

1
3
5 8 10

4 7

PERT model indicate that ,subtask 1 must be completed before 2,3 and 4 can be
done.2,3 and 4 before 5, 5 before 6 and 7.6and 7 before 8,6 before 9,8and 9 before 10.
If the optimistic time is 2 weeks, the most likely time 4 weeks, and the pessimistic
time 6 weeks, the expected time is,
te=2weeks+4(4 weeks)+6 weeks = 24 weeks = 4 weeks
6 6

USES
Why should nurse managers use the PERT system for controlling?
1. It forces planning and shows how pieces fit together.
2. It does this for all nursing line managers involved.
3. It establishes a system for periodic evaluation & control at critical points in the
program.
4. It reveals problems & is forward- looking.
 5. PERT is generally used for complicated & extensive projects or programs.
6. Many records are used to control expenses and otherwise conserve the budget.
These include personnel staffing reports, overtime reports, monthly financial reports and
others. All these reports should be available to nurse managers to help them monitor,
evaluate, and adjust the use of people and money as a part of the controlling process.

Modern and Philips enlist the advantages of PERT:

1) It encourages logical discipline in planning, scheduling and control of project.
2) It encourages more long range & detailed project planning
3) It provides a standard method of documenting and communicating project plans,
schedules, and time and cost- performance.
4) It identifies the most critical elements in the plan, thus focusing management attention
.i.e. most constraining on the schedule.
5) It illustrates the effects technical procedural changes on overall schedules.
3. GANTT CHARTS

Early in this century Henry L. Gantt developed the Gantt Chart as a means of
controlling production. It depicted a series of events essential to the completion of a project
or program . It is usually used for production activities.
Figure shows a modified Gantt chart that could be applied to a manager nursing
administration program or project. The 5 major activities that the nurse administrator has
identified are segments of a total program or project.
It could be applied to a project such as implementing a modality of primary nursing or
implementing case management.
These are possible nursing actions for a project:
1. Gather data
2. Analyze data
3. Develop a plan
4. Implement the plan.
5. Evaluation, feedback, and modification

Figure is an only an example .Application of these controlling process by nurse managers

would be specific to the project or program, and the time elements for the various activities
would vary with each. Also these 5 major activities with estimated completion times. The
nurse manager‟s goal is to complete each activity or phase on or before the projected date.

Gantt chart are highly developed schedules that allow one to visualize multiple tasks
that have to be done. A Gantt chart is a grid with colums labeled tasks.
Assigning responsibility ,and time frame which may be
minuts,hours,days,weeks,monhs,years or decades, depending on the longevity of the project.
A line is drawn through the time frame which a task is in process. An „x‟ is put at the point
where that task is completed.
A person is told on Monday that a report is due Friday at 4 pm.The person needs to
collect information ,type the report on the computer, revise the report and submit it. The
person will use 3 days to collect the information and 1 day to type or word process it,
incubates the ideas over night, do any revision needed Friday morning and submit the report
Friday afternoon.

Task Responsible Mon Tue Wed Thu Fri

Collect ME _ _ _
information
Type ME X
report
Revise ME X
report
Submit ME X
report
 4. Management by objectives

Crucial to management process is planning (which involves decisions about a course of

action: what needs to be done, which sources are available, and who will take the necessary
action).

The management process also involves evaluation, (through a mechanism of checks and
balances), to ensure control over long range and short range plans.

Definition: Objectives may be used as a basis upon which a formal evaluation is made in the
management system known as management by objectives (MBO).
The purpose of using goals or objectives is to
 Set out clearly what direction your work should take and what specific
accomplishments (outcomes) are expected within a given period of
time.
 In other words the objectives serve first as a guide to the planning of
your work and later as a guide to evaluating your work.
 Problem solving is done to deal with a specific problem or situation.
 Setting goals is done to plan future work.

The essentials of this approach (MBO) are quite simple:

 thorough collection of data and definition of the needs of the work situation
 Set meaningful goals written in the form of objectives, and
 Evaluating how well the objectives have been met.

Thoughts:
 MBO is both a philosophy and a method of management encompassing planning and
evaluation.
 Introduced by Peter Drucker in 1954, MBO was designed to improve employee
morale and productivity.
 It incorporates the assessments of both the employee and the organisation.

 MBO is an excellent method to appraise the performance of RN in a manner that

promotes individual growth and excellence in nursing.
 MBO is a management system in which each member of the organisation effectively
participates and involves himself. (This system gives full scope to the individual
 strength and responsibility).
 It creates self control and motivates the manager into action before somebody tells
him to do something.

MBO is popularised in USA by George Odiorne.

According to him, MBO is a system where in the superior and the subordinate
managers of an organisation jointly identify its common goals, define each individuals major
area of responsibility in terms of the result expected of him and use these measures guides for
operating the unit and assessing the contributions of each of its members.
Prof. Reddin defines MBO as, “the establishment of effective standards for
managerial positions and the periodic conversion of those into measurable time bound
objectives linked vertically and horizontally and with future planning.
Features of MBO:
1. An attempt is made by the management to integrate the goals of an organisation and
individuals. This will lead to effective management.
2. MBO tries to combine the long range goals of organisation with short range goals.
3. Management tries to relate the organisation goals with society goals.
4. It pays consistent attention to refining, modifying and improving the goals and
changing the approaches to achieve the goals on the basis of experience.
5. It increases the organisational capability of achieving the goals at all levels.
6. MBO‟s emphasis is not only on goals but also on effective performance.
7. A high degree of motivation and satisfaction is available to employees through MBO.
(Recognises the participation of employees in goal setting process).
8. Encourages a climate of trust, goodwill and a will to perform.

Key concepts:
 MBO results in better organisational planning.

 MBO provides a mechanism for establishing measurable goals through an

organisation.
 MBO emphasizes self control rather than managerial control of employee behaviour
and stresses team work.
 Employees establish individual standards of performance and expected outcomes
based on organisational goals.
 Goals are formulated at all levels: organisational, departmental, unit and individual.

 MBO is a three step process:

 writing clear, concise, measurable objectives;
 developing a plan to meet the objectives and
 evaluating the plan at predetermined times and taking corrective action if
necessary.

Aims of MBO:
 To identify goals, aims, objectives of the organisation.

 To attempt to achieve the defined goals by giving individual managers, supervisors

and other sub goals or targets related to major goals.
 To make assessment of the degree of achievement of goals or target set.
  To give advice if requested or if it seems necessary, to the subordinates to help keep
him on right track. (A fair degree of security should be given and the subordinates
should not be left in ignorance of his performance).

Leadership and management styles:

 MBO provides a foundation for participative management. (Subordinate are also
involved in goal setting).
 MBO can be used with either an authoritarian or participative mgmt style. (When
individuals and work groups set their own objectives, the result is usually a greater
degree of acceptance of the objectives and a high level of motivation to meet the
goals).
 The participative style also encourages self direction and professional growth,
employee development and achievement.
  The manager is responsible for employee development through setting standards of
quality performance, providing well timed feedback and giving sufficient rewards.
 A department does not work at cross purpose with another department. (In other
words each department‟s objectives are consistent with the objectives of the whole
organisation).
 The manager focuses on employee‟s measurable objectives rather than on their
personal characteristics.

Steps in MBO:
 Employee or supervisor meet and agree on the principles, duties and responsibilities
of employee‟s job.
 The employee sets short term goals and target dates in cooperation with the manager
or supervisor.
 Both parties agree upon the criteria that will be used for measuring and evaluating the
accomplishment of goals.
 Regularly more than once in a year, the employee and supervisor meet to discuss the
progress.
 The manager‟s role is supportive assisting the employee to reach goals by
coaching/counselling.
 During appraisal process, the manager determines whether the goals have been met by
the employee.
 The entire focus is on outcome/results and not upon the personal traits.

Process of MBO:
The MBO process is characterised by the balance of objectives of the organisation and
individual. The process of MBO is given below:
1. Defining organisational objectives: initially, organisational objectives are framed by
the top level employees of an organisation. Then it moves downwards. The definition
of organisational objectives states why the business is started and exists. First, long
term objectives are framed. Short term objectives are framed taking into account the
feasibility of achieving the long term objectives.
2. Goals of each section: objectives of each section, department or division are framed
on the basis of overall objectives of the organisation. Period within which these
objectives should be achieved is also fixed. (Goals or objectives are expressed in a
 meaningful manner).
3. Fixing key result areas: eg, profitability, market standing, innovation etc., fixed
based on organisational objectives and arranged on a priority basis. It indicates the
strength of the organisation.
4. Setting subordinate objectives or targets: the objectives of each subordinate or
individual are fixed. There should be a free and frank discussion between the superior
and his subordinates. Subordinates are induced to set standards themselves by giving
an opportunity.

5. Matching resources with objectives: The objectives are framed on the basis of
availability of resources. If certain resources (technical personnel or raw material) are
 not adequately available, the objectives of an organisation are changed accordingly.
So there is a need for matching resources with objectives. Next the available resources
should be properly allocated and utilized.
6. Periodic review meetings: the superior and the subordinates should hold meetings
periodically in which they discuss the progress in the accomplishment of objectives.
The fixed standards may be changed in the light of the progress. But the basic
conditions do not change.
7. Appraising of activities:
 At the end of the fixed period for achieving the objectives, there should be a
discussion between the superior and subordinates. (The discussion is related
with subordinates performance against the specific standards).
 The superior should take corrective action. The superior should identify the
reasons for failure of achieving the objectives.
 The problems faced by the subordinates should be identified and steps should
be taken to tackle such problems.
8. Reappraisal of objectives: an organization is living in a dynamic world. (There are a
lot of changes with in a short period). The survival and growth of a modern business
organisation largely depends upon putting up with the changing conditions. So the top
level executive should review the organisation‟s objective to frame the objectives
according to the changing situation.

MBO Process Cycle

Advantages :
 MBO is a well known approach to plan and evaluate the work done in organizations.

 It is usually described as a tool for managers.

 MBO can be used by any individual or group at any level of organisation.

 It can be used as a total system of management throughout the organisation including

financial management. (but this requires a real commitment to the purposes and
philosophy of MBO that does not always occur).
 If it has been used as a total management system at all levels within the organization,
 the objectives should actually be set before individual departments are
even organized.
 The objectives set at various levels throughout the organisation, and
 then determine how work should be organized and what work has the
highest priority.
 They serve as a planning guide and encourage goal directed behaviour rather than
random activity. (They can also help people avoid getting so caught up in the daily
routine that they lose sight of their long term goals).
 It helps the managers to understand their role in the total organisation.

 Systematic evaluation of performance is made with the help of MBO. (MBO gives the
criteria of performance. It helps to take corrective action).
 Delegation of authority is easily done with the help of MBO. (The responsibility of a
worker is fixed through MBO).
 Decision is taken by the management very quickly. (The reason is that each worker
knows the purpose of taking a decision and does not oppose the decision).
 The practice of MBO helps the manager attend to job enrichment. (MBO motivates
the workers by job enrichment and makes the job meaningful).
 It can direct attention and energy where they are most needed and in this way, help
people to set priorities and be more productive.
 The mutually agreed upon objectives become a means for communicating expected
standards of work and help each staff member sort out what needs to be done. (Well
written objectives can clearly communicate what everyone is expected to
accomplish).

Disadvantages:
 Depending on the way in which it is used, MBO can be either a useful management
 system or just another imposition on the staff‟s time and energy
 MBO can be a meaningless exercise if the objectives are not used after they are
written. (The quality of the objectives usually deteriorates under such circumstances,
leading to further illusionment and eventual abandonment of the system).
 The objectives will become an overly demanding and rigid standard, appearing to
staff as a punishment rather than as a guide.
 When MBO is used in an authoritarian manner, it becomes an additional set of
controls over employees and is quickly perceived as such.
 The objectives may become a source of unrealistic demands, especially if goals are
set higher and higher each year.
  They may also become a threat when used as an evaluative tool without initial
discussion and acceptance by the employee.
 MBO can be rigid and confining and can result in unfair evaluations.

 The program can also become an empty, time consuming routine (if the objectives are
not meaningful or if people do not take them seriously and use them).

Problems and limitations of MBO:

1. Considerable training required.
2. Costly and good monitoring system is needed.
3. Wrong targets may be selected.
4. An individual may accept target i.e., difficult to achieve.
5. Less attention to valuable parts.
6. People may feel guilty, less flexible.
7. Changing objectives quickly could be difficult.
8. MBO fails to explain the philosophy; most of the executives do not know how MBO
works, what is MBO and why is MBO necessary and how participants can benefit by
MBO.
9. MBO is time consuming process. Much time is needed by senior people for framing
the MBO. It leads to heavy expenditure. Sometimes managers are frustrated over
MBO. MBO requires heavy paper work.
10. MBO emphasises only on short term objectives and does not consider long term
objectives.
11. The status of subordinates is necessary for proper objectives setting. But this is not
possible in the process of MBO.
12. The objectives are set without considering the available resources.

Guidelines for setting effective objectives:

1. Objectives are framed only by the participants who are responsible for implementing
them.
2. All the objectives should support the overall objectives of the organisation.
3. Objectives should be simple and clearly defined.
4. Objectives should be specific and time bound.
5. Objectives should be attainable ones.
 6. Objectives should result in the motivation of workers.
7. A periodic review of objectives is necessary for proper implementation.
8. Objectives should have the characteristics of innovation.
9. The number of objective for each management member should be a reasonable one.
Four or five objectives is a reasonable number.
10. Objectives should be ranked on the basis of their importance.

Application to nursing:
 Most health care organisations operate under some form of MBO because it provides
an effective and consistent method of performance evaluation.
 a procedure, a technique, and a method for nurse managers who seek ways to
challenge themselves and their staff to see and contribute to the overall mission of the
 organization. MBO is energizing and demanding. It is work. It is accountability made
real.
 MBO is adaptable to the nursing service setting. Managers responsible for nursing
service units can take from the strategies of the MBO system the elements of
formulation of goals and objectives, development of action plans, and
implementation necessary to increase the accountability; and the output of the work
rendered.
 Nurses should be aware of their organizational mission, purpose and goals and their
departmental and unit goals when developing their own objectives.
 MBO places great emphasis on the attributes of values clarification and
accountability.
 In determining plans and aspirations, the nurse manager develops a written list of
objectives and priorities and time frames for accomplishing the objectives. In this list,
objectives should be realistically stated and should encourage personal and
professional growth by promoting increased self awareness, accountability,
satisfaction and productivity.

Writing objectives:

Most of your objectives will be congruent with the goals of the system in which you
are working. But when changes are needed, your objectives may be deliberately in conflict
with some of your team‟s organisational goals.
The time set for completing the objectives depends on the nature of the work being planned,
the proportion of the work day set aside to work on the objectives. And other factors that will
affect the speed with which the work can be done. Common time frames used in most health
care organizations are one month, three months, six months and one year.
When objectives are used as a part of a formal system of management, they are
written not only for individual employees but also for larger work groups, including
committees, departments and the organisations as a whole.
Examples of individual and group level objectives:

Level
individual staff nurse
Nursing team
Nursing supervisors
Home health agency
Objective
complete a course in infection control in the home health care
setting.
review all cases for the past 6 months in which occurrence of
infection is documented.
update all policies and procedures r/t infection control.
reduce incidence of infection in current agency caseload.

congruence between these different levels of objectives is sometimes difficult to achieve.

Individual objectives:
If your organisation uses MBO, you may be given a set of objectives, asked to write
your own objectives, or asked to write them with your immediate supervisor.
The first method increases motivation and encourages self management.
The second is non participative, discourages self management, reduces motivation, and
primarily be a means of control.
Whether or not you have an employer who uses MBO, you can develop your own objectives
to guide career planning and professional growth.
The following is an example.
Imagine that you have begin working in a new position in a critical care unit. For the
first few weeks, your primary objectives would be to learn the new job and become acquinted
with the people with whom you are working and the organization in which now you are
working.
At the end of 3 months, you feel more comfortable with the work that you are doing
and have also become familiar with the informal ways of working within this particular
organisation. At this point you can either go along with the routines of the job and accept
whatever changes in assignment are made for you or you can decide on the direction you
would like to see your career take and set objectives for yourself that will take you in that
direction.
If you decide to set your own course, there are several Q‟s to ask yourself:
1. How can I improve my practice?
2. What do I want to gain from this position?
3. What do I want to be doing a year from now?
4. What do I want to be doing five years from now?

The specific objectives that you write will depend on your answers to these questions,
your overall goals, and your current position.
Both short term and long term objectives are helpful.
For eg., you may want to learn how to assemble, use, and adjust the new respirator that is
going to be used on your unit within the next month. This would be short term objective.
You may also want a protocol for the use of the new respirator by the end of the month,
implement full use of the respirator in 3 months, and complete an evaluation of its
effectiveness in 6 mts or a year.
Long term goals may need to be broken down into steps.
For eg., a year from now you may want to have completed a course to become a critical
specialist in critical area.
You can develop a timeline to follow in working toward this long term objective as follows.
 1 month: obtain information about courses and programs available.
  3 months: complete application to selected program.

 6 months: begin course in critical care nursing.

 1 year: complete first course.

It may take more than one year to complete your LT objective or goal to complete an entire
clinical specialist program.
The short term objectives serves as check points on your way to your long term objective.

Work group objectives:

As the leader or manager of a variety of working groups, you will also find objectives
useful as guides for planning and evaluating the work of these groups.
The criteria for writing objectives are the same but their scope and content will differ. The
following objectives wd be appropriate for a task force or committee:
  1 month: Invite a speaker on home care services to the next meeting.

 3 months: select a method for surveying the availability of home care services
in the community.
 6 months: survey the availability of home care services in the community.

 1 year: prepare a report on the availability of home care services in the

community.

It is also important for the health care teams to develop a set of objectives, b/c they can
very easily become immersed in their daily routines and lose sight of future goals or
directions for improvement and change.
The following list is one example:
1. Increase the no of complete discharge plans.
2. Invite people from other agencies to client oriented conferences.
3. Plan, organize and initiate a support group for families of developmentally
disabled children.
4. Design a new crash cart system to decrease current response time.
5. Revise outpatient chemotherapy procedures to decrease waiting time and
increase patient comfort.

Implementing objectives:
Once the objectives and timeframes have been determined, the next step is to
carry out the work indicated. The objective itself defines the general action and the
expected outcome but does not tell you exactly how to go about carrying out the
action.
For eg., the health care team objective of including people from other agencies in
client oriented conferences tells you that people should be invited but it does not tell
you exactly which people, how many people, how to extend the invitation.
Evaluating outcomes:
Evaluation of accomplishments is based on the degree to which this outcome was
met.
This outcome may/ may not have been very specifically described in the objective.
For eg, one of the health care team objectives was to increase the number of completed
discharge plans. If 25% of the discharge plans were completed before setting this goal,
then an outcome of 50% now completed would indicate that the objective had been
met. However if the objective stated that all (100%) of the discharge plans would be
complete, then a 50% completion rate would not have fulfilled the objective.
The degree to which the individual or work group has control over all of the factors
that affect the fulfilment of the objective is a source of concern.