Chapter 6: Basic Elements of Planning and Decision Making

Goals

critical to organizational effectiveness

Why Goals are important

• Provide guidance and unified direction for people in organization - Effective goal setting → Good planning → goal setting - Source of motivation (Goal that are specific and moderately difficult can motivate people to work harder) - Good for evaluation and control (Performance can be assessed in the future in terms of how successfully today’s goals are accomplished)

Goal levels

Mission, Strategic, Tactical, Operational

Mission

statement of how it’s purpose differentiates from other companies

Strategic

set by and for top management for organizations for broad/general issues, General plan outlining resource allocation decisions, have extended time horizon, addresses questions of scope, resource deployment, competitive advantage and synergy

Tactical

set by and for middle management for organizations for how to achieve goals, Specific parts of a strategic plan, compared with strategic plans, shorter time horizon and more specific/concrete focus, actually getting things done and deciding what to do!

Operational

set by and for lower management for organizations for shorter-term issues associated with tactical goal

Goal time frames

Long-term, Intermediate-term, short-term

Long-term

≤10 years | Operational lvl

Intermediate-term

~5 years

Short-term

1 year (even weeks or days), action or reaction

Optimizing

balancing and reconciling possible conflicts among

Organizational Planning Types

Strategic, Tactical, Operational

Responsibilities for Planning

Planning Staff, Planning Task Force, Board of DIrectors, Chief Executive Officer (CEO), Executive committee, Line management

Planning Staff

can reduce individual manage workload by helping coordinate planning activities of individual manage

Planning Task Force

help develop plans, comprised of line managers with special interest in the relevant area of planning, may have staff from planning staff

Board of DIrectors

establish corporate mission and strategy | active role in planning process

Chief Executive Officer (CEO)

president/Chair of board of directors, Major role in planning process and responsible for strategy implementation

Executive committee

made up of top executives, provide CEO input on proposals that affect their own units and review strategic plans that develop from this input

"Line management

people w/ formal authority and responsibility for org management, value source for insider info

• They identify, analyze and recommend program alts, develops budget and submits them for approval for middle and lower management

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Contingency planning

determination of alternate paths to take if an intended plan is disrupted or no appropriate

Crisis management

set of procedures the org uses in event of disaster

"Ongoing Planning Process

1st Develop plan, considering contingency events
2nd Implement plan and formally identify contigency events
3rd Specify indicators for contingency events and develop contigency plans for each possible event
4th

Successfully complete (contigency) plan

• Monitor Contigency event indicators and implement contingency plan if needed in steps 3 and 4

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"Tactical Planning

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Strategy

Focuses on resource, environment, and mission

Tactical

people and action

"Developing Tactical Plans

1) Tactical planning must address a number of tactical goals derived/come from a broader strategic goal
2) Tactics must specify resources and time frame
3) Tactics use human resources

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"Executing Tactical Plans

1) Manager needs to evaluate every possible course of action in light of the goal
2) Make sure each decision maker has info and resources needed for the job
a) Vertical + Horizontal communication and activity integration must be present to minimize conflict and inconsistent activities
3) Monitor ongoing activities derived from plan to ensure results

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"Operational Planning

derived from tactical plans, aimed to achieve operational goals, narrowly focused and short time horizons
Different types-

• Single-use plan
• Program
• Project
• Standing plan
• Policy
• Standard operating procedure (SOP)
• Rules and regulations

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Single-use plan

Developed to carry out a course of action not likely to be repeated in the future

Program

Single-use plan for a large set of activities

Project

Single-use plan of less scope and complexity than a program

Standing plan

Developed for activities that recur regularly over a period of time

Policy

Standing plan specifying the organization’s general response to a designated problem or situation

Standard operating procedure (SOP)

Standing plan outlining steps to be followed in particular circumstances, more specific than policy

Rules and regulations

Standing plans describing exactly how specific activities are to be carried out

Barriers to Goal Setting and Planning

Inappropiate Goals, Improper reward system, dynamic and complex environment, reluctance to establish goals, resistance to change, constraints

"Inappropriate goals

Unattainable
unethical
too much emphasis on quantitative or qualitative measure of success
excluding other goals

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"Improper reward system

rewarded for bad behavior
punished for good behavior

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"Dynamic and complex environment

Rapid Change
Technological innovation
intense competition

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"Reluctance to establish goals

For themselves and others
from lack of confidence and fear of failure

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"Resistance to change

close mindedness

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"Constraints

lack of resources
govt restrictions
strong competition

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"Understanding the purposes of goals and planning

limits to the effectiveness of setting goals and making plans
→ Wont solve all company problems not solid doesnt ensure success

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Communication and participation

People responsible for achieving goals and implementing plans must have a voice

"Consistency, revision, and updating

Goals must be consistent horizontally and vertically
→ Horizontally goals should be consistent all across org
→ Vertically goals should agree with one another

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Effective reward system

Rewarded for establishing goals and plans + achieving them

Management by Objectives (MBO)

managing goal setting and planning process concurrently

Nature and Purpose of Formal goal setting

give subordinates a voice in the goal-setting and planning processes and to clarify for them exactly what they are expected to accomplish in a given time span

"Formal Goal Setting Process

1) Starting the formal goal setting program
2) Establishment of organizational goals and plans
3) Collaborative goal settings and planning
4) Communicating org goals and plans thru meetings, vertifiable goals and clear plans, counseling, and resources
5) Periodic review
6) Evaluation