Planning

Chapter 3- Planning

The Need to Plan

·         Everything is constantly changing. Whether the manager will be able to control or be controlled by these changes will depend on how he ash planned for them.

 Example:

           The manager cannot expect his organization to maintain its portion of the market if he merely sits back and hope the status quo will maintain itself. He will surely find his completion meeting changing demands of the market and subsequently obtaining a greater share and finally edging him out of the market .

          Even if the manager if the manager is totally satisfied with the operation of his organization, some planning will still be necessary to keep it in its present state.

·         Another argument is that planning by its very nature helps to achieve goals. Critically appraising the present position of a firm, setting objectives, and determining the course of action to achieve objectives set are of themselves positive forces towards good management.

·         In addition, most managers recognize that planning provides for effective utilization of resources – men, machines, materials, and methods. The best use is made of what is available.

·         Planning can help a manager attain confident leadership. By planning, a manager will most likely be able to cope successfully with his problems, rather than allow them to overwhelm him. Without planning, the activities of the manager may well become confused and ineffective.

·         Finally, the proper use of planning function provides the manager better sense of direction and enables him to exercise a greater degree of control over the future.

Planning Defined

          Planning is the process of setting objectives to be accomplished by an organization during a future time period and deciding on methods of reaching them.

          This function is not concentrated among the top level managers only. Every manager performs planning. It is true however that top level managers spend more time planning then middle and low level managers. Also the top level manager’s plan extends further into the future than planning by lower level managers.

         In planning, the manager bridge the gap between where the organization is at the moment and where it wants it to go. In advance, it answers the who, what, when, where, why and how of future actions.   

          Planning is a never ending activity. The manager must examine plans regularly and if necessary modify them in view of new situations and variables. Planning is just as important when things are going well as when difficulties and problems abound. 

Kinds of Planning

Two Basic Types of Planning

1.       Strategic Planning – the type that is generally reserved for top level-managers since it involves the determination of overall direction – the direction the organization should be going.

Issues of Concern:

-          purpose of the organization

-          the major social, political, and technological influences which might seriously affect the business.

2.       Tactical Planning – the type generally reserved for the middle and lower level- managers.

Issues of Concern:

-          how to get where the organization wants to go

-          determining the tasks to be done

-          establishing responsibilities and accountability

-          setting quantitative measures for each task

-          implementing the planned actions

-          exercising controls.

Three Major Activities of Planning Function

1.       The manager must critically appraise the present position of his organization.

2.       The manager must set objectives.

3.       The manager must develop a set of plans to achieve these objectives.

A.      Appraising the Present

          Just like every person, every organization should have a regular health check up.

          In planning the present position of an organization, the manager should foresee problems situations before they develop, recognize current problems which need attention, and discover profit opportunities for hid organization.

           In assessing the present, the manager should look at his organization as a system or an interrelated set of interacting components (internal and external). To design an effective plan,  it is necessary to obtain necessary all available pertinent facts, face the facts, and in the plan include the action that the facts dictate.

          After the complete appraisal, the Manager should have three clear concepts in mind:

1.       know where his organization stands and its relative position among the competition

2.       problem areas and potential problem areas should be more clearly defined

3.       profit opportunities should present themselves.

B.      Setting Objectives

          Objectives  are clear cut and carefully considered statements designed to give an organization and its members direction and purpose.

Kinds of Objectives

a.        Organizational Objectives – deal with the general direction and purposes of the organization.

b.       Managerial Objectives – identify the goals of particular departments or organizational segment.

c.        Individual Objectives- personalized objectives which outline what individuals in the group are trying to accomplish.

All these three objectives should blend together and should not be in conflict.

Who Formulates the Objectives?

          Top managers must decide top objectives and interpret, refine, and express them in terms understandable to management members.

         The managers down line should work out objectives in keeping these objectives of top management.

          The objectives must be in writing. Most importantly, members of the organization must be made aware of them and must be committed to them.

Characteristics of Effective Objectives:

1.       Specific

2.       Practical

3.       Quantifiable and Measurable

Setting Objectives:

          The process of setting objectives is the most difficult part of the manager’s job. It requires clear thinking. only by setting clearly defined  objectives can the manager really measure the progress he and his organization are making.

          The managerial objectives he sets normally fall into one of four categories:

1.       Profitability: this can be expressed in terms of profits, return on investments, or earnings per share. Example. to increase ROI to 18 % after taxes by April 15, 2011.

2.       Customer Service:  this can be expressed in very explicit terms. Example: to reduce the number of customer complaints by 40% by December 31, 2012.

3.       Employee-Management Needs and Well Being:  This may be quantitatively expressed in terms of number of grievances, training, etc. Example: to conduct a 20-hour training program on human relations for 150 employees by March 31, 2012 at a cost not to exceed P2,500.00 per participant.

4.       Social Responsibility: this may be expressed in types of activities, number of days of service or financial contributions. Example: to hire minorities by May 1, 2012.

Developing the Plan

          After setting objectives, the manager must develop a series of plans to meet them. such plans may be growth, profit, user or personnel-management plans and may be long-range or short range.

Key Steps in Developing the Plan:

1.       Come up with a clear and concise statement of objectives or problems.

2.       Classify the objectives or problems according to importance.

3.       Consider all the facts related to the objectives or problems.

4.       Develop alternative courses of action from which to choose.

5.       Evaluate the advantages and disadvantages of each course of action.

6.       Select the best alternative. Cost, adaptability, efficiency, custom and personal preference are given top priority in making the final choice.

7.       Follow-up to compare actual with expected results.

8.       Determine whether the plan has proved satisfactory or whether change or a new plan is needed.

          The steps above are definitely logical and effective but they are only half the story.

          For plans to provide maximum contribution to the management, they should meet certain stipulations. Among the most important are:

1.       Make the plan easy to understand. It should be clearly illustrated and should provide pertinent examples.

2.       Feature full coverage of needed activities required to attain the objectives.

3.       Reduce the plan to a simple series of actions.

4.       Keep the planned efforts on schedule, assigning of time periods gives vitality and practical meaning to a plan.

5.       Coordinate the separate activities within the plan.

6.       Keep the plan flexible to permit adjustment. It should not be so rigid that individual initiative is stifled.

7.       Insure acceptance of the plan by all concerned or affected by it. Point out its advantages to each of the adopters.

8.       Fulfill a recognized need which is within the capability of the management team.

9.       Show clearly the respective responsibility and authority required for each group or individual, as well as the relationships among the participants in the plan.