Session: 04 POM Planning

Using Plans to Achieve Goals

Planning is a crucial activity, for it designs the map that lays the groundwork for the other functions. The plan itself
specifies what should be done, by whom, where, when, and how. All businesses — from the smallest restaurant to
the largest multinational corporation — need to develop plans for achieving success. But before an organization
can plan a course of action, it must first determine what it wants to achieve. Objectives, the end results desired by
the organization, are derived from the organization's mission statement and goals. The mission statement explains
what the organization stands for and why it exists. A strong mission statement symbolizes legitimacy to external
audiences, such as investors, customers, and suppliers. Likewise, a strong mission statement allows employees to
identify with the overall purpose of the organization and commit to preserving it.

The mission statement is the basis for all goals and plans outlined throughout the organization. Therefore,
managers must use effective planning and goal-setting techniques to ensure that internal policies, roles,
performances, structures, products, and expenditures are in line with the mission of the organization.

Criteria for effective goals

To make sure that goal setting benefits the organization, managers must adopt certain characteristics and
guidelines. The following describes these criteria:

 Goals must be specific and measurable. When possible, use quantitative terms, such as increasing profits by
two percent or decreasing student enrollment by one percent, to express goals.
 Goals should cover key result areas. Because goals cannot be set for every aspect of employee or
organizational performance, managers should identify a few key result areas. These key areas are those
activities that contribute most to company performance — for example, customer relations or sales.
 Goals should be challenging but not too difficult. When goals are unrealistic, they set employees up for
failure and lead to low employee morale. However, if goals are too easy, employees may not feel motivated.
Managers must be sure that goals are determined based on existing resources and are not beyond the
team's time, equipment, and financial resources.
 Goals should specify the time period over which they will be achieved. Deadlines give team members
something to work toward and help ensure continued progress. At the same time, managers should set
short-term deadlines along the way so that their subordinates are not overwhelmed by one big, seemingly
un-accomplishable goal. It would be more appropriate to provide a short term goal such as, “Establish a
customer database by June 30.”
 Goals should be linked to rewards. People who attain goals should be rewarded with something meaningful
and related to the goal. Not only will employees feel that their efforts are valued, but they will also have
something tangible to motivate them in the future

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Q1: What is meant by Management by Objectives? Describe the process of Management by Objective?

A: Management by Objectives (MBO) is a process of agreeing upon objectives within an organization so that
management and employees agree to the objectives and understand what they are in the organization.
The term "management by objectives" was first popularized by Peter Drucker in his 1954 book 'The Practice of
Management'.
The essence of MBO is participative goal setting, choosing course of actions and decision making. An important
part of the MBO is the measurement and the comparison of the employee’s actual performance with the
standards set. Ideally, when employees themselves have been involved with the goal setting and the choosing the
course of action to be followed by them, they are more likely to fulfill their responsibilities.

The principle behind Management by Objectives (MBO) is basically for employees to have clarity of the roles and
responsibilities expected of them. They then understand the objectives they must do and the overall achievement
of the organization. They also help with the personal goals of each employee.

THE PROCESS OF MANAGEMENT BY OBJECTIVES

1. Setting Preliminary Objectives at the top:-- The goals set by the superior are preliminary, based on an analysis
and judgment as to what can and should be accomplished by the organization within a certain period. This requires
taking into account the company’s strengths and weakness in light of the value of available opportunities and
threats. These goals must be regarded as tentative and subject to modification while the entire chain of verifiable
objectives is worked out by subordinates.
2. Clarifying Organizational Roles: - The relationship between expected results and the responsibility for attaining
them often needs to be clarified. Analysis of an organization’s structure often reveals that the responsibility is
vague and that reorganization is needed. Ideally, each sub-goal should be one particular person’s clear
responsibility.
3. Setting Subordinate’s Objectives:- After making sure that subordinate managers have been informed of
pertinent general objectives, strategies and planning premises, the superior can then proceed to work with
subordinates in setting their objectives. Superior must be patient counselors, helping their subordinates develop
consistent and supportive objectives and being careful not to set goals that are impossible to achieve. The
superior’s judgment and final approval must be based on what is reasonably attainable, what is fully supportive of
upper-level objectives, what is consistent with the goals of other managers in other functions, and what is
consistent with the longer-run objectives of the department of the company. One of the major advantages of
carefully setting up a network of verifiable goals is tying in the need of capital, materials and human resources at
the same time. By relating these resources to the goals themselves, superiors can better see the most effective
and economical way of allocating them.
4. Recycling Objectives:- Setting objectives is not only a joint process but also an interactive one. Objectives can
hardly be set by starting at the top and dividing them up among subordinates. Nor should they be started from the
bottom. A degree of recycling is required. Top management may have some idea of what their subordinate’s
objectives should be-but they will almost certainly change these preconceived goals as the contributions of the
subordinates come into focus.

Q2: Write a note on Strategy describing the various levels and strategic planning process?

Q3: Write a note on SWOT Analysis and its usefulness as tool for analysis?
The SWOT analysis is an extremely useful tool for understanding and decision-making for all sorts of situations in
business and organizations. SWOT is an acronym for Strengths, Weaknesses, Opportunities, and Threats. The
SWOT analysis provides a good framework for reviewing strategy, position and direction of a company or a
business proposition, or any other idea. The SWOT analysis enables companies to identify the positive and
negative influencing factors inside and outside of a company or organization. The key role of SWOT is to help
develop a full awareness of all factors that may affect strategic planning and decision making, a goal that can be
applied to almost any aspect of industry.

SWOT is meant to act primarily as an assessment technique, though its lengthy record of success among many
businesses makes it an invaluable tool in project management. SWOT is meant to be used during the proposal
stage of strategic planning. It acts as a precursor to any sort of company action, which makes it appropriate for the
following moments:

* Exploring avenues for new initiatives

* Making decisions about execution strategies for a new policy
* Identifying possible areas for change in a program
* Refining and redirecting efforts in a mid-plan

The SWOT analysis is an excellent tool in organizing information and presenting solutions, identifying roadblocks
and emphasizing opportunities for a business.
Q4: Write a note on BCG Portfolio Matrix and its usefulness as tool for allocating resources?
A