PLANNING & GOAL SETTING

F U N D A M E N TA L S
OF PLANNING
INTENDED L E A R N I N G O U T C O M E S

1. A definition of planning and an understanding of the purposes of planning

2. Classify the types of goals organizations might have and the plans they use
3. Insights into how the major steps of the planning process are related
4. Define the characteristics of effective goals
5. An appreciation for the potential of a management-by-objectives (MBO) program
6.Identify innovative planning approaches that managers use in a fast-changing
environment.
P l a n n i n g is t h e m a n a g e m e n t f u n c t i o n t h a t
involves setting goals, e s t a b l i s h i n g
s t r a t e g i e s for a c h i e v i n g t h o s e g o a l s , and
d e v e l o p i n g p l a n s to i n t e g r a t e a n d c o o r d i n a t e
work activities

Planning is considered to be the most fundamental function of a

Manager.
Planning establishes the means to achieve the future.
A goal is a desired future circumstance or condition that the
organization attempts to realize.
A plan is a blueprint for goal achievement and specifies the
necessary resource allocations, schedules, tasks, and other
actions.
Planning usually incorporates both ideas; it means determining the
organization’s goals and defining the means for achieving them.
 P U R PO S E OF P L A N N I N G
C . W. Roney indicates that organizational planning has
two purposes: protective a n d affirmative.

T h e protective purpose of planning is to minimize risk

by reducing the uncertainties surrounding business
conditions and clarifying the consequences of related
m a n a g e m e n t actions.

T h e affirmative purpose is to increase the degree of

organizational success.
TYPES / LEVELS O F
G OA LS AND PLANS
 M I S S I O N - T h e mission is the basis for the strategic (company) level of goals and plans, which
in turn shapes the tactical (divisional) level and the operational (departmental) level.

A broad higher-level mission provides the framework for establishing m o re specific

goals for top managers,

OPERATIONAL TACTICAL GOALS STRATEGIC

GOALS GOALS
The intermediate, short-
Short-term goals that are term goals (1 to 5 years) of The firm's highest level
addressed to first- line a firm which are designed managers set strategic
managers and usually apply to stimulate the actions goals which deal with
to specific work operations necessary for achieving the such general topics as the
that lead to the production strategic goals Firm's growth, new
of goods or services markets or new goods and
services
 TYPES OF PLANS

OPERATIONAL TACTICAL PLANS STRATEGIC

PLANS PLANS
A division manager will
Operational plans identify formulate tactical plans Plans that apply to the
the specific pro- cedures or that focus on the major entire organization and
processes needed at lower actions that establish the
lev- the division must take to organization’s overall
els of the organization, fulfill its part in goals.
such as individual the strategic plan set by
departments and top management.
employees.
 THE
O R G A N I S AT I O N A L
PLANNING
P RO C E S S
The process begins when managers develop the overall
plan for the organization by clearly defining mission
and strategic (company-level) goals.

Second, they translate the plan into action, which includes

defining tactical objectives and plans, developing a
strategy map to align goals, formulating contingency and
scenario plans, and identifying intelligence teams to
analyze major competitive issues.

Third, managers lay out the operational factors needed to

achieve goals. This involves devising operational goals and
plans, selecting the measures and targets that will be used to
determine if things are on track, and identifying stretch
goals and crisis plans that might need to be put into action.
Tools for executing the plan include management-by-
objectives (MBO), performance dashboards, single-use
plans, and decentralized responsibility.

Finally, managers periodically review plans to learn from

results and shift plans as needed, starting a new planning cycle.
C H A R AC T R I S T I C S
OF E F F EC T I V E
G OA L S
KEY
PERFORMANCE
I N D I C AT O RS
Key performance indicators (KPIs) assess what is
important to the organization and how well the
organization is progressing towards attaining its strategic
goal, so that managers can establish lower- level goals that
drive performance toward the
overall strategic objective.
I N N OVAT I V E
PLANNING
A P P ROAC H E S
CONTINGENCY PLANNING SCENARIO BUILDING
Contingency plans define company responses to be Scenarios are like stories that
taken in the case of emergencies, offer alternative vivid pictures of what the
setbacks, or unexpected conditions. future will be like and how managers will
respond.
To develop contingency plans, manager
identify important factors in the environment, Typically, two to five scenarios are developed for
such as possible economic downturns, each set of factors, ranging
declining markets, increases in cost of from the most optimistic to the most
supplies, new technological developments, or pessimistic view.
safety accidents.
Some of the top events that managers might need
CRISIS PLANNING scenario plans for include extreme
weather, loss of IT systems, loss of key
Enables managers to cope with unexpected events that are so
employees, loss of access to offices or plants,
sudden and devastating that they have the
failure of communications systems, etc.
potential to destroy the organization if they aren’t
prepared with a quick and appropriate response.
CRISIS
PLANNING
CRISIS PLANNING
C R I S I S P R E PA R AT I O N

Three steps in the preparation stage are:

(1) designating a crisis management team and spokesperson,
(2) creating a detailed crisis management plan, and
(3) setting up an effective communications system.

The crisis management team, for example, is a cross-functional group of people who are
designated to swing into action if a crisis occurs. The organization should also designate a
spokesperson to be the voice of the company during the crisis.