Chapter 8 – Planning and Controlling
HOW AND WHY MANAGERS PLAN
Importance of Planning
The process of setting objectives and determining how to best accomplish them.
Creates a solid platform for the four management functions
The Planning Process
Plan: A statement of action steps to be taken in order to accomplish the objectives.
Systematic planning process:
• Define Your Objectives: Objectives identify the specific results or desired
outcomes that one intends to achieve.
• Determine where you stand vis-à-vis objectives: Evaluate current
accomplishments relative to what you want to actually achieve. Allows you to
know where you stand in reaching objectives
• Develop premises regarding future conditions: Try and anticipate future
results and generate alternative scenarios for what may happen (outline
what will help and hurt your progress to achieving your goal)
• Analyze and choose among action alternatives: list and evaluate actions to be
taken, choose the one that will accomplish your objective
• Implement the plan and evaluate results: take action and measure your
progress toward your objectives
Benefits of Planning
Improves focus and flexibility: a company with focus knows what it does best and
knows the needs of the customers, and flexibility allows for it to handle change and
adapt to the change
Improves action orientation: allows for companies to stay ahead of the competition.
Makes us more result, change, advantage, and priority oriented
Improves coordination: createsmaeans-end chain where lower-level objectives
accomplish higher goals
Improves time management: proper allocation of time and most important priorities
Improves control: makes it easier to measure performance results and take action to
improve things immediately
• Rational comprehensive planning (RCP)
Disadvantage: unrealistic, only for simple problems
• Incrementalism (“muddle through”)
Advantage: looks at decision making as it generally occurs, quickly
and with imperfect information
www.notesolution.com Disadvantage: focuses on only near future, fails to take advantage of
TYPES OF PLANS USED BY MANAGERS
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
Top management is more likely to be involved in long-range plans, whereas lower
management levels focus on short-range plans to help achieve long term objectives
Strategic and Operational Plans
Strategic Plan: sets broad, comprehensive, and longer-term action directions for the
entire organizationD . escribes what and where the organization wants to be in the
Operational Plans: is what needs to be done in specific area to implement strategic
plans. This includes: production (IT and methods), financial (financial support),
facilities (work layouts), marketing (selling and distribution of product), HR
(recruitment, selection and placement)
Policies and Procedures (standing plans)
Policy: A standing plan that communicates broad guidelines for decisions and action.
Example: HR policies address hiring, termination, appraisals, pay, discipline
Procedure:Plans that describe exactly what actions are to be taken in specific
situations.Example: employee handbooks offer procedures of what to do when there
is a harassment complaint
Budgets and Projects (single-use plan)
Budget:Single-use plans that commit resources to activities, projects, or programs.
Fixed (specific amount to be spent for a specific purpose), flexible (allocation of
resources are based on the various levels of activity), and zero-based budgets
(allocates resources as if each budget is brand new – last year’s marketing
percentage was 10%, does not mean it will be the same this year, so a new budget is
ProjectsOne-time activities that have clear beginning and end points.
Project management: making sure that activities required to be completed are
competed on time with budget and meeting the objectives
Project schedules: what needs to be done/when it needs to be done/what resources
are used/task objectives
PLANNING TOOLS AND TECHNIQUES
Making assumptions about what will happen in the future.
www.notesolution.com 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.
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 (pre-selected alternative plans)
A long-term version of contingency planning.
Identifying alternative future scenarios.
Plans made for each future scenario.
Increases organization’s flexibility and preparation for future shocks.
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
(find out what they are doing well)
Best practises refers to things that lead to superior performance (a way for
companies to learn from “excellent” companies)
Use of Staff Planners
Employed to help coordinate planning for the organization as a whole or for one of its
Possible communication gaps between staff planners and line management (unless
everyone works closely together the final plan may be inadequate and people may
lack in commitment to implement the plan no matter how good the plan is)
Participation and Involvement
Participatory planning requires that the planning process include people who will be
affected by the plans and/or will help implement them.
Benefits of participation and involvement:
• Promotes creativity in planning.
• Increases available information.
• Fosters understanding, acceptance, and commitment to the final plan.
THE CONTROL PROCESS
Importance of Controlling
Controlling: The process of measuring performance and taking action to ensure
www.notesolution.com Has a positive and necessary role in the management process (makes sure that plans
Ensures that the right things happen, in the right way, at the right time.
Organizational learning (learning from experience) and after-action review (lessons
learned in completed tasks)
Steps in the Control Process
Step 1 - establish 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
Step 2 — measure actual performance.
• Goal measurement of actual results and the efforts
• The difference between what was done and what was the original plan
Step 3 — compare results with objectives and standards
• Compare objectives with results (need for action = desired performance –
Historical comparison: past performance as basis to evaluate pres