Solution Manual for Management 9th Edition

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CHAPTER 6

MANAGERIAL PLANNING AND GOAL SETTING

CHAPTER OUTLINE
I. Does Goal Setting Fit Your Management Style?
II. Overview of Goals and Plans
A. Levels of Goals and Plans
B. Purposes of Goals and Plans
C. The Organizational Planning Process
III. Goals in Organizations
A. Organizational Mission
B. Goals and Plans
C. Aligning Goals with Strategy Maps
IV. Operational Planning
A. Criteria for Effective Goals
B. Management by Objectives
C. Single-Use and Standing Plans
V. Planning for a Turbulent Environment
A. Contingency Plans
B. Building Scenarios
C. Crisis Planning
VI. Planning for High Performance
A. Traditional Approaches to Planning
B. High-Performance Approaches to Planning

ANNOTATED LEARNING OBJECTIVES

After studying this chapter, students should be able to:

94
 Managerial Planning and Goal Setting • 95

1. Define goals and plans and explain the relationship between them.

A goal is a desired future state that the organization attempts to realize. A plan is a blueprint for
goal achievement and specifies the necessary resource allocations, schedules, tasks, and other
actions. The term planning usually incorporates both ideas and means determining the
organization’s goals and defining the means for achieving them.

2. Explain the concept of organizational mission and how it influences goal setting and
planning.

The overall planning process begins with a mission statement, which describes the organization’s
reasons for existence. The mission describes the organization’s values and aspirations. A well-
defined mission is the basis for development of all subsequent goals and plans. Without a clear
mission, goals and plans may be developed haphazardly and not take the organization in the
direction it needs to go. Because of mission statements, employees, customers, suppliers, and
stockholders know the company’s stated purpose and values.

3. Describe the types of goals an organization should have and how managers use strategy
maps to align goals.

Within the organization there are three levels of goals: strategic, tactical, and operational.

• Strategic goals are broad statements of where the organization wants to be in the future.
Strategic goals pertain to the organization as a whole and are the stated intentions of what the
organization wants to achieve.
• Tactical goals define the results that major divisions and departments within the organization
intend to achieve. Tactical goals apply to middle management and describe what major
subunits must do in order for the organization to achieve its overall goals.
• Operational goals describe specific results expected from departments, work groups, and
individuals. Operational goals are precise and measurable.

A strategy map is a visual representation of the key drivers of an organization’s success and
shows how specific goals and plans in each area are linked. Strategy maps provide a powerful
way for managers to see the cause-and-effect relationships among goals and plans. Managers
use the strategy map to align operational goals with tactical goals and to align tactical goals with
strategic goals.

4. Define the characteristics of effective goals.

Organizational goals at the strategic, tactical, and operational levels should: be specific and
measurable; cover key result areas; be challenging but realistic; include a defined time period;
and be linked to rewards

5. Describe the four essential steps in the management by objectives (MBO) process.

Management by objectives (MBO) is a method whereby managers and employees define goals
for every department, project, and person and use them to control subsequent performance. Four
major activities must occur in order for MBO to be successful.
96 • Chapter 6

• Setting goals. This is the most difficult step in MBO. A good goal should be concrete and
realistic, provide a specific target and time frame, and assign responsibility. Goals may be
quantitative or qualitative. Goals jointly derived by mutual agreement between employee
and supervisor create the strongest commitment to achieving goals.
• Developing action plans. An action plan defines the course of action needed to achieve the
stated goals. Action plans are made for both individuals and departments.
• Reviewing progress. A periodic progress review is important to ensure that action plans are
working. This periodic check-up allows managers and employees to determine if they are on
target or if corrective action is necessary. The point of MBO is to achieve goals. The action
plan can be changed whenever goals are not being met.
• Appraising overall performance. The final step in MBO is to determine if annual goals have
been achieved for both individuals and departments. Success or failure to achieve goals can
become part of the performance appraisal system, the designation of salary increases, and
other rewards. The appraisal of departmental and overall corporate performance shapes
goals for the coming year.

The MBO cycle repeats itself on an annual basis. The specific application of MBO must fit the
needs of each company.

6. Explain the difference between single-use plans and standing plans.

Single-use plans are developed to achieve a set of goals that are not likely to be repeated in the
future. Single-use plans typically include both programs and projects. A program is a plan for
attaining an important, one-time organizational goal. A project is also designed to achieve a
one-time goal, but generally is short-term and has narrow objectives.

Standing plans are ongoing plans that are used to provide guidance for tasks performed
repeatedly within the organization. Standing plans generally pertain to such matters as employee
illness, absences, smoking, discipline, hiring, and dismissal.

7. Describe and explain the importance of contingency planning, scenario building, and crisis
management planning.

Contingency plans define company responses to be taken in the case of emergencies, setbacks, or
unexpected conditions. Contingency planning enables managers to respond quickly to be
somewhat proactive, even in an uncertain and dynamic environment, rather than simply being
buffeted about by events.

Scenario building involves looking at current trends and discontinuities and visualizing future
possibilities. Managers use historical data to develop reasonable expectations for the future and
to mentally rehearse different potential future scenarios based on anticipating varied changes that
could affect their organizations.

Some crises are inevitable no matter how well prepared an organization is. When a crisis hits, a
rapid response is crucial. The team should be able to immediately implement the crisis
management plan, so training and practice are important. At this point it becomes critical for the
organization to speak with one voice so that employees, customers, and the public do not get
 Managerial Planning and Goal Setting • 97

conflicting stories about what happened and what the organization is doing about it. After
ensuring the physical safety of people, the next focus should be on responding to the emotional
needs of employees, customers, and the public. Organizations should also strive to give people a
sense of security and belonging.

8. Summarize the guidelines for high-performance planning in a fast-changing environment.

There are six guidelines for high-performance planning in a fast-changing environment.

• Start with a strong mission. Without a strong mission and vision to guide employee thinking
and behavior, the resources of a fast-moving company can quickly become uncoordinated,
with employees pursuing radically different plans and activities.
• Set stretch goals for excellence. Stretch goals get people to think in new ways that can lead
to bold, innovative breakthroughs.
• Embrace event-driven planning. Event driven planning is a continuous, sequential process
that allows for flexibility to adapt to market forces or other shifts in the environment, rather
than being tied to a plan that no longer works.
• Use performance dashboards. Performance dashboards help executives keep track of key
performance metrics, and help all employees track progress toward goals, see when things
are falling short, and find innovative ways to get back on course toward reaching specified
targets.
• Organize temporary task forces. A planning task force is a temporary group of managers and
employees who take responsibility for developing a strategic plan.
• Planning still starts and stops at the top. Even though planning is decentralized, top
managers must show support and commitment to the planning process and accept
responsibility when planning and goal setting are ineffective.

LECTURE OUTLINE
I. DOES GOAL SETTING FIT YOUR MANAGEMENT STYLE?

Most organizations have goal setting and review systems that new managers use. Not everyone
thrives under a disciplined goal-setting system, but setting goals and assessing results are tools
that can enhance a new manager’s impact. This exercise helps students determine the extent to
which they have already adopted the disciplined use of goals in their lives and in their work.

II. OVERVIEW OF GOALS AND PLANS Exhibit 6.1

A goal is defined as a desired future state that the organization attempts to realize. Goals are
important because they define the purpose of an organization. A plan is a blueprint for goal
achievement and specifies the necessary resource allocations, schedules, tasks, and other actions.
Goals specify future ends; plans specify today’s means. The word planning usually incorporates
both ideas; it means determining the organization’s goals and defining the means for achieving
them.
98 • Chapter 6

A. Levels of Goals and Plans

1. Top managers are responsible for establishing strategic goals and plans that reflect a
commitment to both organizational efficiency and effectiveness. Tactical goals and
plans are the responsibility of middle managers. Operational plans identify the
specific procedures or processes needed at lower levels of the organization. Front-
line managers and supervisors develop operational plans that focus on specific tasks
and processes and that help to meet tactical and strategic goals. Planning at each
level supports the other levels.

Discussion Question #5: A new business venture must develop a comprehensive business plan to
borrow money to get started. Companies such as FedEx, Nike, and Rolm Corporation say they
did not follow the original plan closely. Does that mean that developing the plan was a waste of
time for these eventually successful companies?

NOTES________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________

B. Purposes of Goals and Plans

1. Planning positively affects a company’s performance. Developing explicit goals and

plans at each level is important because of the messages they send to both external
and internal audiences and because of the organizational benefits they provide.

a. Legitimacy. An organization’s mission describes what the organization stands for

and its reason for existence. It symbolizes legitimacy to external and internal
audiences such as investors, customers, and suppliers.

b. Source of motivation and commitment. Goals and plans facilitate employees’

identification with the organization and help motivate them by reducing
uncertainty and clarifying what they should accomplish.

c. Resource allocation. Goals help managers decide where to allocate resources,

such as employees, money, and equipment.

d. Guides to action. Goals and plans provide a sense of direction by focusing

attention on specific targets and directing employee efforts toward important
outcomes.

e. Rationale for decisions. Through goal setting and planning, managers learn what
the organization is trying to accomplish and they can then make decisions that
align with the plan.

f. Standard of performance. Because goals define desired outcomes for the

organization, they also serve as performance criteria.
 Managerial Planning and Goal Setting • 99

C. The Organizational Planning Process Exhibit 6.2

A. The overall planning process prevents managers from thinking merely in terms of
day-to-day activities. The planning process includes five steps: 1) develop the plan;
2) translate the plan into action; 3) lay out operational factors needed to achieve
goals; 4) execute the plan; and 5) monitor and review plans to learn from results and
shift plans as needed.

III. GOALS IN ORGANIZATIONS

A. Organizational Mission

1. At the top of the goal hierarchy is the mission—the organization’s reason for
existence—that describes the organization’s values, aspirations, and reason for being.
The formal mission statement is a broadly stated definition of purpose that
distinguishes the organization from others of a similar type. The content often
focuses on the market and customers and identifies desired fields of endeavor. Some
mission statements describe company characteristics such as corporate values,
product quality, location of facilities, and attitude toward employees.

B. Goals and Plans Exhibit 6.3

1. Strategic goals are broad statements describing where the organization wants to be in
the future. Sometimes called official goals, they pertain to the entire organization
rather than to specific divisions or departments. Strategic plans define the action
steps by which the company intends to attain strategic goals. A strategic plan is a
blueprint that defines organizational activities and resource allocations. Strategic
planning tends to be long-term.

2. Tactical goals are the results that major divisions and departments within the
organization intend to achieve. Tactical goals apply to middle management and
describe what major subunits must do in order for the organization to achieve
strategic goals. Tactical plans define what major departments and organizational
subunits will do to implement the organization’s strategic plan. They tend to be for a
shorter time period.

3. Operational goals are the specific results expected from departments, work groups,
and individuals. Operational plans are developed at the lower levels of the
organization to specify action plans toward achieving operational goals and to support
tactical plans.

C. Aligning Goals with Strategy Maps Exhibit 6.4

1. Effectively designed organizational goals are aligned into a hierarchy in which the
achievement of goals at lower levels permits the attainment of higher-level goals.
Operational goals lead to the achievement of tactical goals, which lead to the
attainment of strategic goals. Organizational performance is an outcome of how well
100 • Chapter 6

these interdependent elements are aligned, so that individuals, teams, departments,

and so forth are working in concert to attain specific goals that ultimately help the
organization fulfill its mission.

2. Strategy maps are visual representations of the key drivers of an organization’s

success and show how specific goals and plans in each area are linked. They provide
a powerful way for managers to see the cause-and-effect relationships among goals
and plans.

Discussion Question #3: One of the benefits of a strategy map is that goals and how they are
linked can be clearly communicated to everyone in the organization. Does a minimum wage
maintenance worker in a hospital really need to understand any goals beyond keeping the place
clean? Discuss.

NOTES________________________________________________________________________
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______________________________________________________________________________

IV. OPERATIONAL PLANNING Exhibit 6.5

A. Criteria for Effective Goals

1. Specific and measurable. When possible, goals should be expressed in quantitative

terms. Vague goals tend not to motivate employees.

2. Cover key result areas. Key result areas are those items that contribute most to
company performance. Key result areas should include both internal and external
customers.

3. Challenging but realistic. The best quality programs start with extremely ambitious
goals that challenge employees to meet high standards. When goals are unrealistic,
they set employees up for failure and lead to decreasing employee morale. If goals
are too easy, employees may not feel motivated. Stretch goals are extremely
ambitious but realistic goals that challenge employees to meet high standards.

4. Defined time period. Goals should specify the time period over which they will be
achieved. A time period is a deadline on which goal attainment will be measured.

5. Linked to rewards. The impact of goals depends on the extent to which salary
increases, promotions, and other rewards are based on goal achievement. People who
attain goals should be rewarded.

B. Management by Objectives Exhibit 6.6, Exhibit 6.7

1. Management by objectives (MBO) is a method whereby managers and employees

define objectives for every department, project, and person and use them to monitor
 Managerial Planning and Goal Setting • 101

subsequent performance. Four major activities must occur in order for MBO to be
successful.

a. Set goals. Setting goals is the most difficult step in MBO and should involve
employees at all levels. A good goal should be concrete and realistic, provide a
specific target and time frame, and assign responsibility. Mutual agreement
between employee and supervisor creates the strongest commitment to achieving
goals.

b. Develop action plans. An action plan defines the course of action needed to
achieve the stated goals. Action plans are made for both individuals and
departments.

c. Review progress. A periodic progress review is important to ensure action plans

are working. This review allows managers and employees to see if they are on
target and if corrective action is necessary.

d. Appraise overall performance. The final step in MBO is to evaluate whether

annual goals have been achieved for both individuals and departments. Success
or failure to achieve goals can be part of the performance appraisal system and the
designation of salary increases and other rewards.

2. The benefits of the MBO process can be many. Corporate goals are more likely to be
achieved when they focus on manager and employee efforts. Problems with MBO
occur when the company faces rapid change. The environment and internal activities
must have some stability for performance to be measured against goals.

C. Single-Use and Standing Plans Exhibit 6.8

1. Single-use plans are developed to achieve objectives that are not likely to be repeated
in the future. Single-use plans include both programs and projects.

2. Standing plans are used to provide guidance for tasks performed repeatedly within
the organization. The primary standing plans are organizational policies, rules, and
procedures. Many companies are discovering a need to develop standing plans
regarding the use of email.

V. PLANNING FOR A TURBULENT ENVIRONMENT

A. Contingency Planning

1. Contingency plans define company responses to be taken in case of emergencies or

setbacks. Contingency plans cover such situations as catastrophic decreases in sales
or prices, and loss of important managers.
102 • Chapter 6

Discussion Question #7: Assume Southern University decides to (1) raise its admission
standards and (2) initiate a business fair to which local townspeople will be invited. What types
of plans might it use to carry out these two activities?

NOTES________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________

B. Building Scenarios

1. Scenario building involves looking at trends and discontinuities and imagining

possible alternative futures to build a framework within which unexpected future
events can be managed.

2. With scenario building, a broad base of managers mentally rehearses different

scenarios based on anticipating varied changes that could impact the organization.
Scenarios are like stories that offer alternative vivid pictures of what the future will
look like and how managers will respond. Typically, two to five scenarios are
developed for each set of factors, ranging from the most optimistic to the most
pessimistic view.

C. Crisis Planning Exhibit 6.9

1. Crisis Prevention

a. Although unexpected events and disasters will happen, managers should do

everything they can to prevent crises. A critical part of the prevention stage is
building trusting relationships with key stakeholders such as employees,
customers, suppliers, governments, unions, and the community. By developing
favorable relationships, managers can often prevent crises from happening and
respond more effectively to those that cannot be avoided. Good communication
helps managers identify problems early so they do not turn into major issues.

2. Crisis Preparation

a. Preparation includes designating a crisis management team and spokesperson,

creating a detailed crisis management plan, and setting up an effective
communications system. Some companies are setting up crisis management
offices, with high-level leaders who report direction to the CEO.

b. The crisis management team is a cross-functional group of people who are

designated to swing into action if a crisis occurs. They are closely involved in
creating the crisis management plan they will implement if a crisis occurs. A
spokesperson should be designated.

c. The crisis management plan is a detailed written plan that specifies the steps to be
taken, and by whom, if a crisis occurs. The plan should include the steps for
dealing with various types of crises, such as natural disasters like fires or
 Managerial Planning and Goal Setting • 103

earthquakes, normal accidents like economic crises or industrial accidents, and

abnormal events such as product tampering or acts of terrorism. The plan should
be a living, changing document that is regularly reviewed, practiced, and updated
as needed.

d. A command center serves as a place for the crisis management team to meet,
gather data and monitor incoming information, and disseminate information to the
media.

Discussion Question #6: How do you think planning in today’s organizations compares to
planning 25 years ago? Do you think planning becomes more important or less important in a
world where everything is changing fast and crises are a regular part of organizational life?
Why?

NOTES________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________

VI. PLANNING FOR HIGH PERFORMANCE

A. Traditional Approaches to Planning

1. Traditionally, corporate planning has been done by top executives, by consulting

firms, or by central planning departments. A central planning department is a
group of planning specialists who report directly to the CEO or president. This top-
down planning approach was popular in the 1970s. Central planning departments
may be out of touch with the constantly changing realities faced by front-line
managers and employees, leaving them with a plan that no longer fits the
environment or customer needs.

B. High-Performance Approaches to Planning Exhibit 6.10

1. A new approach to planning is to involve everyone in the organization and sometimes

outside stakeholders as well, in the planning process. Decentralized planning means
that planning experts work with managers in major divisions or departments to
develop their own goals and plans. This enables managers throughout the company
to come up with their own creative solutions to problems and become more
committed to following through on plans. Planning comes alive when employees are
involved in setting goals and determining the means to reach them. There are six
guidelines for planning in the new workplace.

a. Set stretch goals for excellence. Stretch goals get people to think in new ways
that can lead to bold, innovative breakthroughs.

b. Use performance dashboards. Performance dashboards help executives keep

track of key performance metrics, and help all employees track progress toward
104 • Chapter 6

goals, see when things are falling short, and find innovative ways to get back on
course toward reaching specified targets.

c. Deploy Intelligence Teams. An intelligence team is a cross-functional group of

managers and employees, usually led by a competitive intelligence professional,
who work together to gain a deep understanding of specific business issue, with
the aim of presenting insights, possibilities and recommendations about goals and
plans related to that issue. Intelligence teams are useful when the organization
confronts a major intelligence challenge.

Discussion Question #10: Come up with a BHAG for some aspect of your own life. How do you
determine whether it makes sense to pursue a big hairy audacious goal?

NOTES________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________

Suggested Answers to End-of-Chapter Discussion Questions

1. Write a brief mission statement for a local business with which you are familiar. How might
having a clear, written mission statement benefit a small organization?

Student responses may vary; however, every small business should have a mission statement.
An example of a mission statement might be:

The purpose of this business is to create a quality product and service to its customer
mix. The creation of customer satisfaction is relevant and the generation of a
satisfactory return of profit is essential. There is a social responsibility of this
business to its stakeholders and a commitment to manage its internal and external
environments as well as possible.

A clearly written mission statement provides the purpose and direction for the small business to
be competitive. Each goal, strategy, and planning application should reflect and build upon the
mission statement.

2. What strategic plans could the college or university at which you are taking this management
course adopt to compete for students in the marketplace? Would these plans depend on the
school’s goals?

Yes, strategies will depend on the school’s goals. For example, if a university adopted a goal of
increasing the number of merit scholars who enroll each year from 50 to 60, then strategies could
be to send letters to merit scholars, schedule visits of university representatives at the schools, or
offer scholarships to entice the students to attend the university. If the goal is simply to increase
the number of students, administrators could determine what attracts students to the university
 Managerial Planning and Goal Setting • 105

and attempt to adopt strategies related to them. The strategies might include the implementation
of highly visible programs such as changing tuition rates, building additional dormitories, or
striving to field a winning football team.

3. One of the benefits of a strategy map is that goals and how they are linked can be clearly
communicated to everyone in the organization. Does a minimum wage maintenance worker
in a hospital really need to understand any goals beyond keeping the place clean? Discuss.

A strategy map helps the minimum wage maintenance worker understand how the process goal
of keeping the place clean contributes to achieving goals for customer service and satisfaction,
and how achieving customer service and satisfaction goals contribute to achieving financial goals
that help the company optimize its value to all stakeholders, including the minimum wage
maintenance worker. Research supports the notion that employees work harder and find more
meaning in their work when they understand how their jobs fit into the bigger picture of the
organization’s goals.

4. US Airways has more customer complaints due to late flights and mishandled baggage than
any other major carrier. If you were an operations manager at US Airways, how might you
use MBO to solve these problems? Could scenario planning be useful for airline managers
who want planes to run on time? Discuss.

The first step would be to create goals for improving on time departure and baggage handling
accuracy. These goals should be created jointly between myself and the employees. Employees
who participate fully in the development of goals for the upcoming period are much more likely
to be committed to achieving them. Goals should be measurable, not be open-ended, and should
include a specific deadline for achievement. Goal achievement should be tied to rewards such as
salary increases, individual awards, promotions, etc. The attainment of goals and setting of new
goals should be directed toward continuous improvement, with the understanding on everyone’s
part that there may, at times, be valid reasons why employees do not achieve their goals.

Managers should be able to substantiate their position on goal achievement with documented
evidence of performance, which should be presented to the employee(s) if a disagreement over
goal achievement arises. If that cannot be done, then the manager should accept a reasonable
argument from the employee(s) about performance and do a better job of documenting
performance during the next goal cycle.

5. A new business venture must develop a comprehensive business plan to borrow money to get
started. Companies such as Federal Express, Nike, and Rolm Corporation say they did not
follow the original plan very closely. Does that mean developing the plan was a waste of
time for these eventually successful companies?

No, it was not a waste of time for these companies. Developing a business plan also helps a
company consider all aspects of the business. For example, an inventor may come up with a neat
new product and not consider where or how to market it. He may not consider financing either.
Developing a business plan helps the company devise options not previously considered. Even if
the plan is not followed exactly, it provides many other benefits.
106 • Chapter 6

6. How do you think planning in today’s organizations compares to planning 25 years ago? Do
you think planning becomes more important or less important in a world where everything is
changing fast and crises are a regular part of organizational life? Why?

Planning is much more difficult in today’s organizations than it was 25 years ago due to
increased economic and political uncertainty as a result of globalization, an ever-increasing rate
of technological change, and increased competition in many industries. On the other hand,
greater ease of communication among business components, along with increased ability to track
internal and external activities, resulting from technological advances also make it easier to
anticipate and plan for future events that it was 25 years ago.

Planning becomes more important in a world where everything changes quickly and crises are a
regular part of organizational life due to rapidly changing environmental conditions. There is a
greater need for flexibility and adaptability to meet each situation. Managers must become even
more proactive in anticipating these changing conditions in the marketplace. Planning is
important for the firm to recognize changing conditions and restructure the organization to create
more effective strategies to remain competitive.

7. Assume Southern University decides to: (1) raise its admission standards, and (2) initiate a
business fair to which local townspeople will be invited. What types of plans might it use to
carry out these two activities?

Raising admission standards would require a standing plan to provide guidance for admissions
performed repeatedly over the next several semesters. Within the concept of a standing plan, the
university may use policies, procedures, or rules to enforce the new admission standards. A
policy would define admission standards, in general, and procedures would describe how to
admit students under the new policy. Specific rules might also be established for specifying
exactly what action to take in specific admission situations.

Initiating a business fair would probably require a single-use plan. The single-use plan develops
a set of objectives that will not be repeated in the future. The business fair would probably be
considered a project, for which participants would develop a set of short-term objectives and
plans to achieve the one-time goal.

8. Why would an organization want to use an intelligence team?

An intelligence team is a cross-functional group of managers and employees, usually led by a

competitive intelligence professional, who work together to gain a deep understanding of
specific business issue, with the aim of presenting insights, possibilities and recommendations
about goals and plans related to that issue. Intelligence teams are useful when the organization
confronts a major intelligence challenge.

9. Some people say an organization could never be “prepared” for a disaster such as the
massacre at Virginia Tech, which left 33 people dead. If so, then what’s the point of crisis
planning?

The crisis management plan is a detailed written plan that specifies the steps to be taken, and by
whom, if a crisis occurs. The plan should include the steps for dealing with various types of
 Managerial Planning and Goal Setting • 107

crises, such as natural disasters like fires or earthquakes, normal accidents like economic crises
or industrial accidents, and abnormal events such as product tampering or acts of terrorism. The
plan should be a living, changing document that is regularly reviewed, practiced, and updated as
needed.

A carefully thought-out and coordinated plan can be used to respond to any disaster. In addition,
crisis planning reduces the incidence of trouble, much like putting a good lock on a door reduces
burglaries.

10. Come up with a BHAG for some aspect of your own life. How do you determine whether it
makes sense to pursue a big hair audacious goal?

Stretch goals are extremely ambitious but realistic goals that challenge employees to meet high
standards. Stretch goals get people to think in new ways because they are so far beyond the
current levels that people don’t know how to reach them. A big hairy audacious goal is a goal
that is so big, inspiring, and outside the prevailing paradigm that it creates a shift in people’s
thinking. In determining whether it makes sense to pursue a BHAG, the primary considerations
would be the need to cause people to think in new ways that can lead to bold, innovative
breakthroughs.

Teaching Note for Experiential Exercise

Business School Ranking

This exercise enables students to brainstorm about how to improve their own business schools.
Students should develop ten-point plans to improve their schools, then meet in small groups of
three or four to share ideas and select the most helpful action steps that will be part of a final
action plan that could be recommended to the deans of their schools.

Teaching Note for Ethical Dilemma

Inspire Learning Corp.

1. Donate the $1,000 to Central High, and consider the $10,000 bonus a good return on your
gift.

This option will give the appearance of paying Central High to purchase the company’s product
in order to get the bonus. It is unethical if not illegal, and should absolutely not be undertaken.

2. Accept the fact you didn’t quite make your sales goal this year. Figure out ways to work
smarter next year to increase the odds of achieving your target.

There is no reason Marge should accept defeat in achieving her sales goal without trying to do
something. There may be some other way for Central High to get the $1,000 it needs to
purchase the software without Marge donating it, so she should aggressively investigate other
ethical ways for that to happen.
108 • Chapter 6

3. Don’t make the donation, but investigate whether any other ways were available to help
Central High raise the funds that would allow them to purchase the much-needed
educational software.

This is the best option. Although time is short, she may be able to uncover some other ethical
means for Central High to come up with the funds they need. If she can figure something out,
the school will get its much-needed software, and Marge will make her sales goal and get the
bonus. The key is in helping the school find a way to raise the money legitimately rather than
donating the money herself.

Case for Critical Analysis

Nielsen Media Research

1. Where do you think the problems lie at Nielsen? For example, are they primarily with the
company’s strategic goals and plans, tactical goals and plans, or operational goals and
plans? With alignment of goals and plans?

Nielsen’s problems may be primarily with strategic goals and plans, and with operational goals.
Apparently, Nielsen failed to anticipate dramatic increases in the amount of data the company
would be processing, something a proper strategic planning process might have foreseen.
Operational goals are not being met when clients fail to receive ratings information in a timely
manner. There is also some suggestion of failure in the alignment of goals and plans, because
there is a strategic goal to improve the timeliness of ratings information feedback to clients, but
the current operational goals do not appear to be supporting that strategic goal.

2. Do you think developing a strategy map would be a good idea for Nielsen? Why or why not?

Strategy maps are visual representations of the key drivers of an organization’s success and show
how specific goals and plans in each area are linked. They provide a powerful way for managers
to see the cause-and-effect relationships among goals and plans. As such, a strategy map might
be helpful in clarifying the links between plans and goals at the various levels for all Nielsen
employees.

3. If you were David Calhoun, what kind of planning processes might you implement right now
to fix this problem?

Given the high-pressure environment in which Nielsen is operating, a high-performance planning

process may be most appropriate. One such process is to involve everyone in the organization
and sometimes outside stakeholders as well, in decentralized planning. Decentralized planning
means that planning experts work with managers in major divisions or departments to develop
their own goals and plans. This enables managers throughout the company to come up with their
own creative solutions to problems and become more committed to following through on plans.
Planning comes alive when employees are involved in setting goals and determining the means
to reach them.