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Management: Canadian Edition
Management: Canadian Edition
to Accompany Chapter 8 of
Management
Canadian Edition
Schermerhorn Wright
Planning
The process of setting objectives and determining how
to best accomplish them.
Objectives
Identify the specific results or desired outcomes that
one intends to achieve.
Plan
A statement of action steps to be taken in order to
accomplish the objectives.
Management - Chapter 8 3
Study Question 1: How do managers plan?
Management - Chapter 8 4
Figure 8.1 The roles of planning and
controlling in the management process.
Management - Chapter 8 5
Study Question 1: How do managers plan?
Benefits of planning:
Improves focus and flexibility.
Improves action orientation.
Improves coordination.
Improves time management.
Improves control.
Management - Chapter 8 7
Study Question 2: What types of plans do
managers use?
Short-range and long-range plans
Short-range plans = 1 year or less
Intermediate-range plans = 1 to 2 years
Long-range plans = 3 or more years
People vary in their capability to deal
effectively with different time horizons.
Higher management levels focus on longer
time horizons.
Management - Chapter 8 8
Study Question 2: What types of plans do
managers use?
Strategic and operational plans
Strategic plans set broad, comprehensive, and
longer-term action directions for the entire
organization.
Operational plans define what needs to be done in
specific areas to implement strategic plans.
Production plans
Financial plans
Facilities plans
Marketing plans
Human resource plans
Management - Chapter 8 9
Study Question 2: What types of plans do
managers use?
Policies and procedures
Standing plans
Policies and procedures that are designed for repeated
use.
Policy
Broad guidelines for making decisions and taking
action in specific circumstances.
Rules or procedures
Plans that describe exactly what actions are to be
taken in specific situations.
Management - Chapter 8 10
Study Question 2: What types of plans do
managers use?
Budgets and project schedules
Single-use plans
Only used once to meet the needs and objectives of a well-
defined situation in a timely manner.
Budgets
Single-use plans that commit resources to activities, projects, or
programs.
Fixed, flexible, and zero-based budgets.
Projects
One-time activities that have clear beginning and end points.
Project management and project schedules.
Management - Chapter 8 11
Study Question 3: What are the useful
planning tools and techniques?
Forecasting
Making assumptions about what will happen in the
future.
Qualitative forecasting uses expert opinions.
Quantitative forecasting uses mathematical and
statistical analysis.
All forecasts rely on human judgment.
Planning involves deciding on how to deal with the
implications of a forecast.
Management - Chapter 8 12
Study Question 3: What are the useful
planning tools and techniques?
Contingency planning
Identifying alternative courses of action that
can be implemented to meet the needs of
changing circumstances.
Contingency plans anticipate changing
conditions.
Contingency plans contain trigger points.
Management - Chapter 8 13
Study Question 3: What are the useful
planning tools and techniques?
Scenario planning
A long-term version of contingency planning.
Identifying alternative future scenarios.
Plans made for each future scenario.
Increases organizations flexibility and
preparation for future shocks.
Management - Chapter 8 14
Study Question 3: What are the useful
planning tools and techniques?
Benchmarking
Use of external comparisons to better evaluate
current performance and identify possible
actions for the future.
Adopting best practices of other organizations
that achieve superior performance.
Management - Chapter 8 15
Study Question 3: What are the useful
planning tools and techniques?
Use of staff planners
Management - Chapter 8 16
Study Question 3: What are the useful
planning tools and techniques?
Management - Chapter 8 17
Figure 8.3 How participation and
involvement help build commitments to plans.
Management - Chapter 8 18
Study Question 4: What is the
control process?
Controlling
The process of measuring performance and taking
action to ensure desired results.
Has a positive and necessary role in the management
process.
Ensures that the right things happen, in the right way, at
the right time.
Organizational learning and after-action review.
Management - Chapter 8 19
Study Question 4: What is the
control process?
Steps in the control process:
Step 1 establish objectives and standards.
Step 2 measure actual performance.
Step 3 compare results with objectives and
standards.
Step 4 take corrective action as needed.
Management - Chapter 8 20
Figure 8.4 Four steps in the control
process.
Management - Chapter 8 21
Study Question 4: What is the
control process?
Step 1 establishing objectives and
standards
Output standards
Measure performance results in terms of quantity,
quality, cost, or time.
Input standards
Measure effort in terms of amount of work
expended in task performance.
Management - Chapter 8 22
Study Question 4: What is the
control process?
Step 2 measuring actual performance
Goal is accurate measurement of actual performance
results and/or performance efforts.
Must identify significant differences between actual
results and original plan.
Effective control requires measurement.
Management - Chapter 8 23
Study Question 4: What is the
control process?
Step 3 comparing results with objectives
and standards
Need for action reflects the difference between
desired performance and actual performance
Comparison methods:
Historical comparison
Relative comparison
Engineering comparison
Management - Chapter 8 24
Study Question 4: What is the
control process?
Step 4 taking corrective action
Taking action when a discrepancy exists
between desired and actual performance.
Management by exception
Giving attention to situations showing the greatest
need for action.
Types of exceptions
Problem situation
Opportunity situation
Management - Chapter 8 25
Study Question 4: What is the
control process?
Feedforward controls
Employed before a work activity begins.
Ensures that:
Objectives are clear.
Proper directions are established.
Right resources are available.
Focuses on quality of resources.
Management - Chapter 8 26
Study Question 4: What is the
control process?
Concurrent controls
Focus on what happens during work process.
Monitor ongoing operations to make sure they
are being done according to plan.
Can reduce waste in unacceptable finished
products or services.
Management - Chapter 8 27
Study Question 4: What is the
control process?
Feedback controls
Management - Chapter 8 28
Figure 8.5 The role of feedforward,
concurrent, and feedback controls in
organizations.
Management - Chapter 8 29
Study Question 4: What is the
control process?
Internal and external control
Internal control
Allows motivated individuals and groups to exercise
self-discipline in fulfilling job expectations.
External control
Occurs through personal supervision and the use of
formal administrative systems.
Management - Chapter 8 30
Study Question 5: What are the common
organizational controls?
Management by Objectives (MBO)
A structured process of regular communication.
Supervisor/team leader and workers jointly set
performance objectives.
Supervisor/team leader and workers jointly
review results.
Management - Chapter 8 31
Figure 8.6 Management by objectives as
an integrated planning and control framework.
Management - Chapter 8 32
Study Question 5: What are the common
organizational controls?
MBO involves a formal agreement specifying
Workers performance objectives for a specific time
period.
Plans through which performance objectives will be
accomplished.
Standards for measuring accomplishment of
performance objectives .
Procedures for reviewing performance results.
Management - Chapter 8 33
Study Question 5: What are the common
organizational controls?
The MBO process:
Supervisor and workers jointly set objectives,
establish standards, and choose actions.
Workers act individually to perform tasks;
supervisors act individually to provide
necessary support.
Supervisor and workers jointly review results,
discuss implications, and renew the MBO
cycle.
Management - Chapter 8 34
Study Question 5: What are the common
organizational controls?
Types of MBO performance objectives
Improvement
Personal development
Maintenance
Criteria for effective performance objectives
Specific
Time defined
Challenging
Measurable
Management - Chapter 8 35
Study Question 5: What are the common
organizational controls?
Pitfalls to avoid in using MBO
Tying MBO to pay.
Focusing too much attention on easily
quantifiable objectives.
Requiring excessive paperwork.
Having managers tell workers their objectives.
Management - Chapter 8 36
Study Question 5: What are the common
organizational controls?
Advantages of MBO
Focuses workers on most important tasks and
objectives.
Focuses supervisors efforts on important areas
of support.
Contributes to relationship building.
Gives workers a structured opportunity to
participate in decision making.
Management - Chapter 8 37
Study Question 5: What are the common
organizational controls?
Employee discipline systems
through reprimand.
Management - Chapter 8 38
Study Question 5: What are the common
organizational controls?
To be effective, reprimands should
Be immediate.
Be directed toward actions, not personality.
Be consistently applied.
Be informative.
Occur in a supportive setting.
Support realistic rules.
Management - Chapter 8 39
Study Question 5: What are the common
organizational controls?
Employee discipline systems
Progressive discipline ties reprimands to the
severity and frequency of the employees
infractions.
Progressive discipline seeks to achieve
compliance with the least extreme reprimand
possible.
Management - Chapter 8 40
Study Question 5: What are the common
organizational controls?
Important financial aspects of organizational
performance
Liquidity
The ability to generate cash to pay bills.
Leverage
The ability to earn more in returns than the cost of debt.
Asset management
The ability to use resources efficiently and operate at minimum
cost.
Profitability
The ability to earn revenues greater than costs.
Management - Chapter 8 41
Study Question 5: What are the common
organizational controls?
Break-even analysis
Determination of the point at which sales
revenues are sufficient to cover costs.
Break-Even Point = Fixed Costs / (Price
Variable Costs)
Used in evaluating:
New products
New program initiatives
Management - Chapter 8 42
Figure 8.7 Graphical approach to break-
even analysis.
Management - Chapter 8 43
Study Question 5: What are the common
organizational controls?
Purchasing control
A productivity tool
Trends in purchasing control:
Leveraging buying power
Committing to a small number of suppliers
Working together in supplier-purchaser partnerships
Management - Chapter 8 44
Study Question 5: What are the common
organizational controls?
Inventory control
Goal is to ensure that inventory is just the right
size to meet performance needs, thus
minimizing the cost.
Methods of inventory control:
Economic order quantity
Just-in-time scheduling
Management - Chapter 8 45
Study Question 5: What are the common
organizational controls?
Statistical quality control
Quality control involves checking processes,
materials, products, and services to ensure that
they meet high standards.
Statistical quality control involves:
Taking samples of work.
Measuring quality in the samples.
Determining the acceptability of results.
Management - Chapter 8 46
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