Planning

A process whereby managers select goals, choose actions (strategies) to attain those goals,
allocate responsibility for implementing actions to specific individuals or units, measure the
success of actions by comparing actual results against the goals, and revise plans accordingly.
Structured process for making important decisions
Provide direction for an organization
Informs everybody what the organization is trying to do, what its priorities are, where it is going, and how it is
going to get there
It is a process for marshalling resources and deciding who should do what—for allocating roles, responsibilities,
and money
Act as a control mechanism: By comparing actual results against the plan, managers can determine whether the
organization is attaining its goals and make adjustments if required
Main Steps in Planning
Planning is often called as primary management function because it establishes the basis for all the other things
managers do as they organize, lead, and control
Planning encompasses defining the organization’s objectives or goals, establishing an overall strategy for
achieving those goals, and developing a comprehensive hierarchy of plans to integrate and coordinate activities.
Concerned with ends (what is to be done) as well as with means (how it’s to be done)
Foundation for future activities
Planning is deciding in advance what is to be done; that is a plan is a projected course of action.
“If you fail to plan, you are planning to fail!”
What is a Plan??
A plan is a blueprint for goal achievement that specifies the necessary resource allocations, schedules, tasks, and
other actions
▪ What needs to be accomplished?
▪ When is the deadline?
▪ Where will this be done?
▪ Who will be responsible for it?
▪ How will it get done?
▪ How much time, energy, and resources are required to accomplish this goal?
How do you attract more female employees in the organisation?

How do you plan it and what are your strategies?

Nature of Planning
▪ Planning contributes to Objectives
Planning starts with the determination of objectives. We cannot think of planning in absence of objective. After
setting up of the objectives, planning decides the methods, procedures and steps to be taken for achievement of set
objectives. Planners also help and bring changes in the plan if things are not moving in the direction of objectives.

For example, if an organisation has the objective of manufacturing 1500 washing machines and in one month only
80 washing machines are manufactured, then changes are made in the plan to achieve the final objective.
▪ Planning is Primary function of Management:

Planning is the primary or first function to be performed by every manager. No other function can be executed by
the manager without performing planning function because objectives are set up in planning and other functions
depend on the objectives only.

For example, in organizing function, managers assign authority and responsibility to the employees and level of
authority and responsibility depends upon objectives of the company. Similarly, in staffing the employees are
appointed. The number and type of employees again depends on the objectives of the company. So planning
always proceeds and remains at no. 1 as compared to other functions.
▪ Pervasive

Planning is required at all levels of the management. It is not a function restricted to top level managers only but
planning is done by managers at every level. Formation of major plan and framing of overall policies is the task of
top level managers whereas departmental managers form plan for their respective departments. And lower level
managers make plans to support the overall objectives and to carry on day to day activities.
▪ Planning is futuristic/Forward looking:

Planning always means looking ahead or planning is a futuristic function. Planning is never done for the past. All
the managers try to make predictions and assumptions for future and these predictions are made on the basis of past
experiences of the manager and with the regular and intelligent scanning of the general environment.
▪ Planning is continuous

Planning is a never ending or continuous process because after making plans also one has to be in touch with the
changes in changing environment and in the selection of one best way.

So, after making plans also planners keep making changes in the plans according to the requirement of the
company. For example, if the plan is made during the boom period and during its execution there is depression
period then planners have to make changes according to the conditions prevailing.
▪ Planning involves decision making:

The planning function is needed only when different alternatives are available and we have to select most
suitable alternative. We cannot imagine planning in absence of choice because in planning function
managers evaluate various alternatives and select the most appropriate. But if there is one alternative
available then there is no requirement of planning.

For example, to import the technology if the licence is only with STC (State Trading Co-operation) then
companies have no choice but to import the technology through STC only. But if there is 4-5 import
agencies included in this task then the planners have to evaluate terms and conditions of all the agencies and
select the most suitable from the company’s point of view.
▪ Planning is a mental exercise
Planning is a mental process which requires higher thinking that is why it is kept separate from operational
activities by Taylor. In planning assumptions and predictions regarding future are made by scanning the
environment properly. This activity requires higher level of intelligence. Secondly, in planning various
alternatives are evaluated and the most suitable is selected which again requires higher level of intelligence.

So, it is right to call planning an intellectual process.

 Advantages of Planning
❖ Gives an organization a sense of direction

Without plans and goals, organizations merely react to daily occurrences without considering what will happen in
the long run.

❖Focuses attention on objectives and results

Plans keep the people who carry them out focused on the anticipated results. In addition, keeping sight of the goal
also motivates employees.
❖Establishes a basis for teamwork

Diverse groups cannot effectively cooperate in joint projects without an integrated plan. Examples are
numerous: Plumbers, carpenters, and electricians cannot build a house without blueprints. In addition, military
activities require the coordination of Army, Navy, and Air Force units.

❖Helps anticipate problems and cope with change

When management plans, it can help forecast future problems and make any necessary changes up front to avoid
them. Planning for potential problems helps to minimize mistakes and reduce the “surprises” that inevitably
occur.
❖Provides guidelines for decision making

Decisions are future-oriented. If management doesn’t have any plans for the future, they will have few guidelines
for making current decisions. If a company knows that it wants to introduce a new product three years in the
future, its management must be mindful of the decisions they make now. Plans help both managers and employees
keep their eyes on the big picture.

❖Serves as a prerequisite to employing all other management functions.

Planning is primary, because without knowing what an organization wants to accomplish, management can’t
intelligently undertake any of the other basic managerial activities: organizing, staffing, leading, and/or
controlling.
What are our hopes and dreams for the company?
What problem are we solving for the greater good?
Who and what are we inspiring to change?
 What do we do?
Whom do we serve?
How do we serve them?
Strategic Plans
Strategic plans define the framework of the organization’s vision and how the organization intends to make
its vision a reality.
•It is the determination of the long-term objectives of an enterprise, the action plan to be adopted and the
resources to be mobilized to achieve these goals.
•Since it is planning the direction of the company’s progress, it is done by the top management of an
organization.
•It essentially focuses on planning for the coming years to take the organization from where it stands today to
where it intends to be.
•The strategic plan must be forward looking, effective and flexible, with a focus on accommodating future
growth.
•These plans provide the framework and direction for lower level planning.
Tactical Plans
Tactical plans describe the tactics that the managers plan to adopt to achieve the objectives set in the strategic
plan.
•Tactical plans span a short time frame (usually less than 3 years) and are usually developed by middle level
managers.
•It details specific means or action plans to implement the strategic plan by units within each division.
•Tactical plans entail detailing resource and work allocation among the subunits within each division.
Operational Plans
Operational plans are short-term (less than a year) plans developed to create specific action steps that support the
strategic and tactical plans.
•They are usually developed by the manager to fulfill his or her job responsibilities.
•They are developed by supervisors, team leaders, and facilitators to support tactical plans.
•They govern the day-to-day operations of an organization.
Operational plans can be −
•Standing plans − Drawn to cover issues that managers face repeatedly, e.g. policies, procedures, rules.
•Ongoing plans − Prepared for single or exceptional situations or problems and are normally discarded or replaced
after one use, e.g. programs, projects, and budgets
Levels of Planning
Levels of Planning
Planning is performed at multiple levels within an organization. Planning starts at the top of an organization with
a strategic plan.

Strategic plan: A plan that outlines the major goals of an organization and the organization wide
strategies for attaining those goals.
▪Corporate-level strategy is concerned with deciding which industries a firm should compete in and how the
firm should enter or exit industries
▪Business-level strategy is concerned with deciding how the firm should compete in the industries in which it
has elected to participate
▪Operating strategy is concerned with the actions that should be taken at the level of individual functions, such
as production, logistic, R&D, and sales, to support business-level strategy
Types of Plans
Breadth
Strategic plans are those that apply to an entire organization and encompass the organization’s overall
goals
Tactical plans (sometimes referred to as operational plans) specify the details of how the overall goals
are to be achieved.

Time Frame
The number of years used to define short-term and long-term plans has declined considerably due to
environmental uncertainty. Long term used to mean anything over seven years.
Long-term plans are defined as plans with a time frame beyond three years.
Short-term plans cover one year or less
Specificity
Specific plans are plans that are clearly defined and leave no room for interpretation. For example, a
manager who wants to increase his work unit’s output by 8 percent over the next 12 months might
establish specific procedures, budget allocations, and work schedules to reach that goal.

However, when uncertainty is high and managers must be flexible in order to respond to unexpected
changes, they’d likely use directional plans, flexible plans that set general guidelines.
Directional plans provide focus but don’t lock managers into specific goals or courses of action.
Frequency of Use
A single-use plan is a one-time plan specifically designed to meet the needs of a unique situation. For instance,
when Dell began developing a pocket-sized device for getting on the Internet, managers used a single-use plan to
guide their decisions

Standing plans are ongoing plans that provide guidance for activities performed repeatedly. For example, when
you register for classes for the upcoming semester, you’re using a standardized registration plan at your college or
university. The dates change, but the process works the same way semester after semester.
APPROACHES TO SETTING GOALS
▪ Traditional Goal Setting
-Goals set by top managers and flow down
- Assumes that top manager’s know what is best because they see the ‘big picture’
- Top management defines organisational goals in broad terms and managers at
different levels use that set goals
- Turning broad strategic goals into departmental, team, individual goals can be
difficult and frustrating process- Do you agree to this?
▪ Clarity may be at stake as the goals may make their own way down from the top of
the organisation to lower levels
▪ Apply own interpretations and biases as managers define it to be more specific to
their respective departments
MANAGEMENT BY OBJECTIVES (MBO)
▪This approach was proposed by Peter Drucker in the 1960s
▪It is a process of setting mutually agreed upon goals and using those goals to
evaluate employee performance
▪It contain four elements
- Goal specificity
- Participative decision making
- An explicit time period
- Performance feedback
▪ Instead of using goals to make sure employees are doing what they are supposed to
be doing, MBO focuses on employees working to accomplish goals
▪ Is MBO relevant for today’s organisations??
▪ If it is reviewed as a way of goal setting, then yes.
PROCESS OF MBO
Criticisms of Planning

Any thoughts??
Barriers/Limitations of Planning
▪ Inability to plan or inadequate planning
▪ Inferior information
▪ Planning may create rigidity
-Formal plans may lock organisation into specific goals to be achieved in specific time
frames with an assumption that environment may not change
- If the assumption is faulty, managers who follow the plan may face trouble
- Staying ‘on course’ when the environment is changing can be a recipe for disaster
▪ Plan can be developed for a dynamic environment
▪ Focusing on present at the expense of future
▪Planning focuses on manager’s attention on today’s competition not on tomorrow’s
survival
▪ Formal planning reinforces success which may lead to failure
▪ Just planning isn’t enough
What do you think about decision making??
My Sales reps need new computers
How do you solve this?
There is low morale among employees
How do you fix it?
Management by Exception

Any Idea about it??

Management by Exception
▪Management by exception (MBE) is a management strategy in which managers will only step in when
there are significant deviations from planned outcomes.

▪These can be either operational or financial outcomes.

▪Assuming that businesses recruit competent people, they are quite capable of getting on with their jobs
without intervention from management. By focusing on strategic business goals and plans, managers
are able to enhance the value of their contribution to the business. However, when performance isn’t
up to expectation, managers should step in. These are the “exceptions” where management action is
needed to ensure the company meets its targets.
▪It is a system of identification and communication that signals the manager as to when and where his
attention is needed.

▪The main object of this system is to enable the manager to identify and isolate the problems that call
for decision and action, and avoid or ignore or pay less attention to less critical problems which better
be handled by his subordinates.
How Management by Exception works

Management by exception consists of four steps:

1.Setting the objectives and defining what the norm should be

2.Assessing performance to see whether performance is on track
3.Analyzing work or records to determine where performance deviates from objectives
4.Investigating and solving the exceptions to the norm
Advantages of Management by Exception
▪Best use of management time: The most obvious advantage of management by exception is the way
it impacts on how managers use their time. Why monitor, analyze and micromanage things that are
going smoothly? When things are going well, employees can make their own decisions, leaving
managers free to focus on decision-making that’s related to problem areas.

▪Rapid response: If your monitoring systems are responsive and up to date, management by exception
spots any problems in good time. If automated systems alert you to problems immediately, all the
better. There isn’t time for the deviation to have a compounded effect.

▪Motivates staff to perform: Most people like being able to get on with their work with minimal
management intervention. It allows them to make decisions, try new things that produce better
outcomes, and helps them to “own” their task areas.
Disadvantages of Management by Exception
▪It’s only as good as the system: All four steps of the system must be carefully handled. For instance, if you
decided that a 6 percent deviation is significant, but in reality, a 4 percent deviation will have grave
consequences, you’ll miss your chance to intervene before the damage is done.

▪Needs detailed monitoring: Without automated monitoring systems, there’s going to be a lot of manual data
collection and reporting. That costs time, and time costs money.

▪Managers must be problem solvers first and foremost: Problem-solving abilities are essential for good
management, but sometimes, the manager may not have all the answers. Frontline staff may already know
what to do, but because they must consult their managers about deviations, management by exception can even
delay problem-solving.

▪It’s reactive: If you adopt management by exception in its purest form, you are only reacting to problems.
What about pro-actively working to prevent them from occurring in the first place?
Decision Making Process
1. Define the problem.
2. Identify limiting factors.
3. Develop potential alternatives.
4. Analyze the alternatives.
5. Select the best alternative.
6. Implement the decision.
7. Establish a control and evaluation system.
Define the problem
▪ The decision-making process begins when a manager identifies the real problem
▪ The accurate definition of the problem affects all the steps that follow; if the problem is inaccurately
defined, every step in the decision making process will be based on an incorrect starting point.
▪ One way that a manager can help determine the true problem in a situation is by identifying the
problem separately from its symptoms.
▪ The most obviously troubling situations found in an organization can usually be identified as
symptoms of underlying problems.
▪ These symptoms all indicate that something is wrong with an organization, but they don’t identify
root causes.
▪A successful manager doesn’t just attack symptoms; he works to uncover the factors that cause these
symptoms.
Identify limiting factors

▪Managers need to have the ideal resources — information, time, personnel, equipment, and
supplies — and identify any limiting factors.
▪Realistically, managers operate in an environment that normally doesn’t provide ideal
resources.
▪For example, they may lack the proper budget or may not have the most accurate
information or any extra time
▪ So, they must choose to satisfice —to make the best decision possible with the information,
resources, and time available.
Develop potential alternatives
▪Successful problem solving requires thorough examination of the challenge, and a quick answer may not result in a permanent
solution.
▪A manager should think through and investigate several alternative solutions to a single problem before making a quick
decision.
▪One of the best known methods for developing alternatives is through brainstorming, where a group works together to generate
ideas and alternative solutions

❖Concentrate on the problem at hand

❖Entertain all ideas
❖Refrain from allowing members to evaluate others’ ideas on the spot
❖Delphi technique
❖Groups provide a broader perspective
Analyze the alternatives
▪The purpose of this step is to decide the relative merits of each idea
▪Managers must identify the advantages and disadvantages of each alternative solution before making a
final decision.
▪What are the ways to analyse alternatives???
Determine the pros and cons of each alternative.
Perform a cost-benefit analysis for each alternative.
Weight each factor important in the decision, ranking each alternative relative to its ability to meet
each factor, and then multiply by a probability factor to provide a final value for each alternative.
Feasibility — Can it be done?
Effectiveness — How well does it resolve the problem situation?
Consequences — What will be its costs (financial and nonfinancial) to the organization
Select the best alternative

The best alternative is the one that produces the most advantages and the fewest serious disadvantages
Implement the decision

Managers are paid to make decisions, but they are also paid to get results from these decisions
Positive results must follow decisions.
Everyone involved with the decision must know his or her role in ensuring a successful outcome.
To make certain that employees understand their roles, managers must thoughtfully devise programs,
procedures, rules, or policies to help aid them in the problem-solving process.
Establish a control and evaluation system
▪An evaluation system should provide feedback on how well the decision is being implemented, what the results
are, and what adjustments are necessary to get the results that were intended when the solution was chosen.

▪Was the wrong alternative selected? If so, one of the other alternatives generated in the decision-making
process may be a wiser choice.

▪ Was the correct alternative selected, but implemented improperly? If so, a manager should focus attention
solely on the implementation step to ensure that the chosen alternative is implemented successfully.

▪ Was the original problem identified incorrectly? If so, the decision- making process needs to begin again,
starting with a revised identification step.

▪Has the implemented alternative been given enough time to be successful? If not, a manager should give the
process more time and re-evaluate at a later date.
Types of Decisions
Programmed and Non-Programmed Decisions
Programmed decisions are repetitive in nature.

Such decisions deal with simple, common, frequently occurring problems that have established
procedures.

These decisions are taken based on the existing policy, rule or procedure of the organization.

For example: making purchase orders, sanctioning of different types of leave, increments in salary, etc.
Managers in dealing with such issues of routine nature, follow the established procedures.
Non-programmed decisions are not routine in nature.

They are related to exceptional situations for which there are no established procedure.

For example- Issues relating to declining market share, increasing competition, etc. fall in this
category.

These problems have to be handled in a different way. Many of the decisions that managers at top
levels make are non-programmed decisions.
2. Operational and Strategic Decisions:
Operational or tactical decisions relate to the present issues or problems.
The main purpose is to achieve high degree of efficiency.
Better working conditions, effective supervision, prudent use of existing resources, better
maintenance of the equipment, etc. fall in this category.
While, expanding the scale of operations, entering new markets, changing the product mix,
shifting the manufacturing facility, striking alliances with other companies, etc. are strategic
in nature.
Usually, routine decisions are taken by managers at the lower levels, while strategic decisions are
taken by top level managers.

The focus in the operational decisions is on the short-run or immediate present, while it is on the long-
rum in the case of strategic decisions.
3. Organizational and Personal Decisions:
Decisions taken by managers in the ordinary course of business in their capacity as managers are
organizational decisions.

For example: decisions regarding introducing a new incentive system, transferring an employee,
reallocation or redeployment of employees etc. are taken by managers to achieve certain objectives.

On the other hand, managers do take some decisions which are purely personal in nature. However,
their impact may affect the organization also.

For example: the manager’s decision to quit the organization, though personal in nature, may create
some problems for the organization
4. Individual and Group Decisions:
Individual decisions are taken where the problem is of routine nature, whereas important and strategic
decisions which have a bearing on many aspects of the organization are generally taken by a group.

Group decision making is preferred these days because it contributes for better coordination among the
people concerned with the implementation the decision.