Notes on Planning and Organization Structures

Types of Planning and Key Characteristics

  • Comprehensiveness, Specificity, Frequency describe organizational plans
    • Comprehensiveness: coverage scope; strategic plans cover the entire organization, operational plans cover a specific area
    • Specificity: detailed, clearly defined plans and objectives
    • Frequency: how often a plan is used
  • Types of Plans
    • Strategic Plans: broad, organization-wide goals; responsibility of CEO/president/general manager
    • Operational Plans (Unit/Area Plans): narrow scope, cover a specific unit or area
    • Long-Term Plans: exceed 33 years; must be understood across the organization
    • Short-Term Plans: 11 year or less; lead toward long-term goals; responsibility of the unit/department head
    • Specific Plans: clearly stated, with no room for interpretation; clear language

Definition and Nature of Planning

  • Planning is a major function of management

  • It involves setting goals, establishing strategies, and developing action plans

  • Nature of Planning

    • Primary Function: foundation for future management functions
    • Goal-Oriented: plans arise from objectives that guide planning
    • Continuous Process: ongoing adaptation to changes
    • Flexible: selects best alternatives and allows for future adjustments
    • Managerial Functions: applicable at all levels and departments; choosing future course of action

Importance of Planning

  • Provides direction for the organization and its human resources
  • Reduces uncertainty
  • Minimizes inefficiencies
  • Establishes goals and standards

Decision-Making and Planning Steps

  • Decision-Making is a process that begins with problem identification and ends with evaluating the outcome

  • Decision-Making steps (Robbins & Coulter, 2009)

    • Step 1: Identify the problem
    • Step 2: Identify the decision criteria

  • Types of Plans related to decision-making

    • Single-Use Plans: used once; apply to the entire organization
    • Standing Plans: ongoing; guidance for repeated activities
    • Directional Plans: flexible guidelines linked to strategic plans

  • Steps of Planning (Schermerhorn, 2008)

    1. Define goals/objectives and desired outcomes
    2. Determine current standing (strengths/weaknesses)
    3. Develop premises about future conditions; generate alternative scenarios
    4. Analyze and choose among action alternatives; implement; evaluate; revise as needed

  • Five Questions (Bateman & Snell, 2008) about strategic direction

    • Where will we be active?
    • How will we get there?
    • How will we win in the marketplace?
    • How fast will we move and in what sequence will we change?
    • How will we obtain financial returns?

  • Planning Techniques and Tools

    • Forecasting: quantitative or qualitative predictions of future trends
    • Contingency Planning: plan for unexpected events; trigger points activate plans
    • Scenario Planning: consider multiple external/internal future scenarios; test strategies
    • Benchmarking: compare with best practices in other organizations
    • Participatory Planning: involve employees to boost creativity, acceptance, and commitment

  • Decision-Making Process (summary)

    • Problem identification → Criteria for decision → Generate alternatives → Evaluate alternatives using criteria → Choose best alternative → Implement → Evaluate effectiveness

  • Organizational Thinking: Levels and Plans

    • Frontline/Operational Planning: lower levels; routine tasks and processes
    • Middle-Level/Tactical Planning: translate strategic goals into unit-level plans
    • Strategic Planning: long-term, organization-wide direction

Nature of Organizations: Differentiation and Integration

  • Differentiation (division of labor and specialization)
    • More tasks are divided among units with specialized skills
    • Larger organizations tend to have more units and specialization
  • Integration and Coordination
    • Integration: collaboration among different units to achieve overall goals
    • Coordination: linking activities across units; formal mechanisms can enhance collaboration
    • Higher differentiation increases the need for integration

Types of Decisions and Conditions

  • Structured (Programmed) Decisions: repetitive, routine problems
  • Unstructured (Non-programmed) Decisions: new, unique problems needing custom solutions
  • Decision-Making Conditions
    • Certainty: outcomes are known and predictable
    • Risk/Uncertainty: outcomes are unclear; reliance on estimates, experience, or limited data

Organizational Structures: Vertical, Horizontal, Network

  • Structure defines tasks, reporting relationships, and communication pathways
  • Vertical Structure: clarifies authority, responsibilities, and reporting relationships
    • Private owners have strong authority; boards and CEOs govern corporations
  • Horizontal Structure: cross-functional teams; broader collaboration across departments
  • Network Structure: collection of independent organizations working together to deliver a product/service
  • Departmentalization approaches
    • Functional: based on specialized activities (marketing, production, finance, HR)
    • Divisional: based on product, customer, or geographic area
    • Matrix: hybrid of functional and divisional reporting

Line and Staff Departments; Formal vs Informal Organizations

  • Line Departments: directly contribute to delivering goods/services (production, sales)
  • Staff Departments: support line departments (legal, PR, research)
  • Formal Organizations: hierarchical, clear reporting; advantages include systematic work and efficient coordination; disadvantages include delays due to chain of command and limited attention to human factors
  • Informal Organizations: social groups and relationships; advantages include fast communication and attention to social needs; disadvantages include rumors and lack of formal processes

Delegation: Concepts, Elements, and Steps

  • Delegation
    • Definition: assigning new or additional tasks to subordinates; giving the right to make decisions and act
  • Elements of Delegation
    • Authority: right to act and decide
    • Responsibility: obligation to perform and complete tasks
    • Accountability: liability to explain and justify results
  • Steps in Delegation
    1. Define the goal clearly
    2. Select the person to receive the task
    3. Assign responsibility and explain expected results
    4. Ask for the plan of approach from the assigned person
    5. Grant the necessary authority to act
  • Integration of Work Units: collaboration and coordination across units; stronger integration is needed with higher differentiation

Planning at Different Levels in the Firm

  • Integration of strategic, tactical, and operational planning
    • Align long-term goals with medium-term actions and day-to-day activities
  • Planning cascade
    • Organization Goals → Organization Objectives → Department Objectives → Individual Objectives
  • Practical implication: ensure coherence from top-level strategy to individual tasks