Planning as a Functions

By Dr. Dinesh Kumar

 Reference Books

• Principle and Practice of Management and Business

Communication
• Authors: Anupam Karmakar & Bidisha Datta
• Published by Pearson Publication

• Management Principle and Organizational Behaviour

• Author: L.M Prasad
• Published by Sultan Chand & Sons
 Planning and Planning Process

• When defeat comes accept it as a signal that your plans are not sound, rebuild
those plans and set sail once more towards your coveted goal….Napoleon Hill
• Planning is deciding the best alternative to perform different managerial
operations for achieving predetermined goals…Henri Fayol
• Planning is an important managerial function.
• Plan is like a jigsaw puzzle.
• To bridge the gap between were we are to where we want to be.
• Following observations:
• “Failure to plan is planning to fail”
• “Planning is out line a future course of action in order to achieve an
objective
• “Planning is looking ahead”
• “Planning is getting ready to do something tomorrow”
• “Plan is trap laid down to capture the future”
• A good planning is half job done.
• Purpose/ Importance of Planning- Org. fails not because of
lack of resources but because of failure to Plan.
• To achieve objectives- ask the following question before
yourself:
• The saying that “when a man doesn’t know what harbour
he is making for no wind is the right wind”
• What to do?
• How to do?
• When to do?
• Who is to do?
• What are the resources?
 Purpose/ Importance of Planning…contd.

• To make things happen

• A proactive step to face the challenges of the future and satisfy
stakeholders.
• Identifies and reduces/ offsets future uncertainties- cope with change
• Org. fails to change extinct like species. e.g. Gramophone
• Expectation of stake holders / employees are changing.
• Life cycle of product shortening.
• Traces new opportunities
• Increases team spirit
• To control the events
• Planning and control – Siamese twins of mgt.
• Plan provide mechanism and control decide whether mechanism is
taking place in the right direction with right speed with optimum
resources as per plan.
 Principles of Planning
• Systematic planning- essential for success and survival of the org.
• Org. fail not because they don’t plan but they don’t plan effectively. Hence, following steps
may be taken to guard against the failure of planning:
• Take time to plan:
• Plng. in haste with incorrect information, unsound assumptions and inadequate analysis of the
environment leads to failure.
• Take time, ask probing questions, arrange sequences, collect resources and develop plan.
• Planning can be done top to down/ bottom to top
• Choice of method depends upon org. culture, leadership style and urgency.
• Involve and communicate all concerned:
• Sub-system of the org. are interrelated- involvement of all people.
• Reduce gap between plan and action by concerned people.
• Plans must be flexible and dynamic
• If environment is not changing, Mgt. will be bed of roses
• Rigidity in plan- reduces success
• Hence, in a dynamic environment- adequate flexibility to be incorporated.
• Evaluate and Revise
• Incorporation of flexibility like a pilot- always checks the direction, height etc.
• Flexibility may be limited e.g. plan for a petroleum refinery
 Features/ Characteristics of Planning
• Primacy
• Basic and fundamental function of Mgt. process but not an independent process
• Goal Oriented functions
• Strategic goals
• Tactical goals
• Operational goals
• Intellectual process
• Forward looking process
• Continuous process
• Continuous and never ending activity- one plan begets another plan.
• Plng. gets used up where tomorrow becomes today and call for further plng.
• Flexibility
• Future can not be moulded to conform the plan- Hence mould the plan.
• Unity
• Unity among different persons involved in plan.
• Vision, Mission and objectives provide common focus.
• Precision/ clarity
• To be framed in intelligible and meaningful terms by pinpointing the expected result.
• Realistic rather than dream.
• Pervasiveness
 Planning process/ Steps in Planning
STEP 1 Vision and mission formulation
STEP 2 Framing the overall goal for the organization
STEP 3 Collecting data
STEP 4 Developing planning premises
STEP 5 Determining alternative courses of action
STEP 6 Comparative study of the alternative courses
STEP 7 Selection of the best course of action
STEP 8 Preparation of derivative plans
STEP 9 Involving employees/workers
STEP 10 Implementation of plan
STEP 11 Follow-up
 Planning process/ Steps in Planning
• Vision and Mission formulation
• Vision- an activity of forming an idealized image of the company’s future position.
• Mission formulation states the purpose of the organization’s existence.
• Vision and mission- decided after examining internal/external opportunities
• SWOT (Strengths, Weaknesses, Opportunities and Threats)
• STEER (Socio-cultural, technological, economic, ecological and regulatory factors) and
• PEST (Political, Economic, Social, and Technological analysis)
• Framing goals
• Expression of goals in quantitative term like production, profit, productivity, market
share, social responsibility, employee share etc.
• Time frame- what to achieve, when, how to achieve.
• Collecting Data
• Internal environment- Policies/ structure/ mission/ HR/ Materials etc.
• External environment- Micro and macro environment
• Establish Planning premises/ assumption
• Assumption to be made to create basic framework.
• Without assumption- fighting a battle without a clear assessment of SWOT of enemy.
• Assessment of premises – both tangible and intangible.
• Internal premises: includes like sales forecasts, organizational resources, skill, attitudes and
belief of the people.
• External premise: environment like tech. changes, Govt. policies, demographic changes, socio-
cultural society, availability of raw material/ other resources etc.
• Decide the Planning period
• Long term/ Medium term/ short term
• Develop alternatives and select the right course of action
• Preparation of Derivative plans
• Plan to be broken into parts – operational unit wise/ department wise. e.g. 10000 meters of
cloth to be knitted- specific plans & role be assigned to production, marketing, HR, finance etc.
• Involving employees/ workers
• Implementation of Plan
 Vision and Mission
Vision Mission
Where the organization aspires to go. Defines the organizations, its obejctives and how it
will achieve these objectives.
Abstract idea of how the organization intends Defines Business goals and the values it will embrace
to impact the society. to achive them.
Viosn is a first statement and provides a Mission is the next statement and works as guiding
destination for the organization. light how to get the destination
Bigger picture and future oriented. Focus on the present and near future.
How your company is building towards in the All thing the company is doing to reach to the goal.
future.
Defines end games Provides Road map.
Comprised three parts: Why we exist, What how you do it
you do, and why you do it.
Google: “To provide access to the world's Vison cum Mission _BOB- To be top ranking National
information in one click” Bank of International Standards committed to
augmenting stake holders’ value through care ,
concern and competence.
 Limitation of Planning
• Costly and time consuming
• Unlimited time is consumed in forecasting and evaluating.
• Dependencies on forecast
• Forecast may be faulty due to limited / wrong data.
• Forecast may change due to dynamic environment.
• Inflexibility
• Reduces individual initiative causing delay/ wastage of resources.
• Influence of External factors
• Difficult to predict future.
• Influence of planner’s intentions/ attitudes
• Personal interest takes over organizational interest
• Resistance to change
• Dynamism of Business environment
• Not formulating correct plans
• Unreliability of collected data
• Lack of expertise of planner
• Lack of commitment / delegation of authority of persons involved in it.
 Ways to reduce limitations/ overcoming of barriers

• Set realistic and achievable goals

• Communicate the assumptions
• Data on which plans are formulated to all the people and departments concerned;
• Where wants to go and how wants to go?
• What are the resources you are providing and what challenges likely to be faced?
• Motivate people- to participate in the planning programme so as to ensure the right commitment;
• Ensure proper coordination
• Between the short-term and long-term plans. They should not be viewed as mutually exclusive;
• Between departments.
• Collection of reliable data
• Encourage creativity in planning
• Creativity helps in identifying the best alternatives
• Pay attention to the resources position of the organization
• Ensure the availability of resources as and when required.
 Types of Plans
• A good plan is like a road map: it shows the final destination and usually the
best way to get there.—H. Stanley Judd
• Strategic Planning
• Fulfilling the overall goals, the prime objectives of the organization.
• Goals decided by the top management.
• Needs a high degree of skill, a lot of data and its interpretations.
• Depth of knowledge of internal and external environment /SWOT analysis.
• Decodes direction, strategy, resource allocation and all vital information.
• ABCD model
• Component
• Where we are /Where we want to be
• How will we do it /How are we doing it
• Tactical Planning
• Devised to take the strategic plan through.
 Strategic and Tactical Plan
Strategic Plan
 Deals with heavyweight issues
concerning the organization
 Generally developed by upper-level
managers
 Emphasizes on analyzing the future
 More difficult to gather facts since it
concerns the uncertain future
 Strategic plans are usually briefly stated
 They are long-term plans
 Strategic plan lead
 Strategic plans is the super set
Tactical Plan
 Deals with issues of lighter weight and
relatively lesser importance
 Generally developed by middle- and
lower-level managers
 Emphasizes on dealing with the daily or
near-term affairs
 Easier to gather data since it pertains
to overall working of the organization
 Tactical plans need to be described
elaborately since it concerns with the
operational issues
 They are short-term plans
 Tactical plans follow
 Tactical plan is a subset of strategic
plan
• Operational Plans
• Single use plans: Solve issues which are non-repetitive /Tailored fit
• Programme
• Terry and Frankin define programme as “ a comprehensive plan that includes future use
of different resources in an integrated pattern and establishes a sequence of required
and time schedules for each in order to achieve stated objectives’.
• Broad term which includes goals, policies, procedures, rules and steps to be taken in
putting a plan into action.
• Programme includes- objectives, policies, procedures, methods, standard and budgets.
• Project- subset of programmes to attain a standalone single use.
• Budget- allocation of financial resources, evaluate performance and formulate
plans.
• Standing plans: Keep on repeating time and again.
• Policies
• Koontz and O'Donnell- a general statement of understanding which the thinking and
action in decision making.
• Provides the framework within which mangers operate.
• Guidelines for action- may be clear and explicit.
 • Procedures
• Manner in which specific activity is to be carried out
• Method
• Subset of procedure
• Steps to be followed e.g. how to calculate cost and margin.
• Rules
• Rule is a plan- A prescribed course of action that explicitly states what is to
be done under a given circumstances.
• Contingency plans
• Plan B/ Back up Plan/ Worst case scenerio
• Derivative plans- Supportive plans to make the basic plan successful.
• Master plans- comprehensive plan deals with all level of planning.
• As per tenure of the Bank
• Long term plan- more than 5 years but uncertainties now 3 to 5 years
• Medium term plan- 2 to 5 years- but uncertainties now 1-3 years
 Management by Objectives

• Management Guru Peter Drucker- introduced MBO.

• Every manager should have clear the objectives to pursue.
• Objectives are KRA.
• Systematic effort to be achieved for all the KRAS.
• George Odirone- substantial research work-
• George defined- “MBO is a process whereby the superior and subordinate managers of an
organisation jointly identify the common goals, define each individual’s major areas of
responsibility in terms of the results expected of him, and use these resources as guides for
operating the unit and assessing the contribution of each of its members”.
• Used as a mgt. tool:
• Integrate org. goal with individual goal.
• Motivational techniques- driven towards the achievement of goal.
• To apprise the performance of managers involved in the process.
• To control the activities.
• Example- strategy of Warren Buffet
 MBO…contd.

• Decide and Define Objectives/ KRAs

• Corrective measures, if necessary, as revealed by the review.
• Objectives are end point to be achieved.
• Objectives- tangible (profit) or intangible (worker morale, social responsibility).
• Quantitative or qualitative.
• Objectives have hierarchy- broader to pin pointed.
• Short term and long terms.
• Objectives some times may be in conflict with each other.
• Process of MBO
• Establishment of goals for the whole organization,
• Preparation of specific goals by subordinates within the framework given by top
mgt.,
• Joint discussion- to reach an agreement,
• joint review of progress at regular intervals- progress of the predetermined goals, &
• Corrective measures, if required
• Advantages of MBO
• Consistency in performance
• Reduction in possibility of cross working by departments
• Clarity about the objectives
• Mgt. to plan in a systematic way
• Facilitates objective performance appraisal
• Democratic and participative setup
• Why MBO fails- MBO not a panacea for all
• Lack of top management support
• Lack of understanding philosophy behind MBO
• Used as a control mechanism
• Difficulty in setting realistic and meaningful objectives
• Lack of relevant skills- interpersonal interaction
• Lack of Individual motivation
• Poor integration with other system