Chapter 8: Planning Processes and Techniques
Foundations of Planning and Management
Definition of Planning: Planning is the process of setting performance objectives and determining how best to accomplish them. At its core, planning involves deciding exactly what needs to be accomplished and how best to go about it.
The Management Process Framework:
Management involves four primary functions: planning, organizing, leading, and controlling the use of resources to achieve performance objectives.
Planning: Sets direction by deciding where you want to go and how best to get there.
Organizing: Creates structures by allocating and arranging resources to accomplish tasks.
Leading: Inspires effort by guiding and motivating others to achieve high performance levels.
Controlling: Ensures results by measuring performance and taking corrective action when needed.
Real-World Context and Uncertainty:
Unforeseen events demand adaptive planning. For example, on May 7, 2017, dry spring conditions, record temperatures, and strong winds triggered a massive wildfire in Fort McMurray, Alberta, evacuating nearly residents. Coordinated response efforts among firefighters, military personnel, and volunteers prevented any fatalities despite extensive property destruction.
The World Economic Forum in Davos, Switzerland, identified five major global risks: extreme weather events, climate change, cyber-attacks, rising unemployment/underemployment, and growing income disparities. The sudden onset of the December 2019 global health pandemic further highlighted the need for organizational agility.
Industrial corporate planning example: Eaton Corporation emphasizes making hard decisions before forced by events and anticipating future market demands before they explicitly manifest.
The Formal Planning Process
Five Basic Steps in Planning:
Define Your Objectives: Identify desired outcomes or results in very specific ways. Objectives must be clear enough to determine when they have been reached or how far off target performance stands.
Determine Where You Stand Vis-à-Vis Objectives: Evaluate current accomplishments relative to target results. Identify organizational strengths that assist progress and weaknesses that hinder it.
Develop Premises Regarding Future Conditions: Anticipate future events by generating alternative scenarios. Identify factors that may help or hinder reaching objectives under each scenario.
Analyze Alternatives and Make a Plan: List and evaluate possible actions. Choose the alternative most likely to accomplish objectives and outline specific action steps.
Implement the Plan and Evaluate Results: Take action, measure progress toward objectives, execute required steps, evaluate outcomes, and take corrective action or revise plans as needed.
Key Planning Terminology:
Objectives / Goals: Specific results or desired outcomes to be achieved.
Stretch Goals: Performance targets that require extraordinary effort and stretching beyond typical limits to achieve (a concept championed by former GE CEO Jack Welch).
Plan: A concrete, realistic statement of intended action steps to accomplish objectives and goals. Plans alone do not deliver results; implemented plans do.
Ongoing Nature of Planning: Planning is not an isolated event conducted in quiet rooms at scheduled times; it is a continuous process executed in dynamic, distraction-filled work settings.
Core Benefits of Planning
External and Internal Organizational Pressures:
External Pressures: Changing social norms, evolving ethical expectations, government regulations, global economic uncertainties, rapid technological changes, and high resource costs.
Internal Pressures: Desires for operating efficiency, new organizational structures/technologies, alternative work arrangements, workforce diversity, and work-life balance.
Four Primary Benefits:
Improves Focus and Flexibility:
Focus: An organization with focus knows what it does best, understands customer needs, and knows how to serve them. Focused individuals understand their career and life goals.
Flexibility: An organization with flexibility adapts to shifting circumstances without losing direction, operating with a future orientation rather than dwelling on the past.
Improves Action Orientation:
Helps managers avoid the complacency trap (the error of being carried along passively by the flow of events).
Keeps the future visible as a target.
Stephen R. Covey highlighted four orientations developed through planning:
Results oriented: Establishes a performance-focused direction.
Priority oriented: Ensures crucial tasks receive primary attention.
Advantage oriented: Maximizes resource utilization.
Change oriented: Anticipates problems and opportunities proactively.
Improves Coordination and Control:
Coordination: Integrates simultaneous tasks across individuals, groups, and subsystems to advance organizational goals.
Control: Sets performance standards and objectives, making measurement and correction straightforward. Example: McDonald's canceled a costly IT upgrade, absorbing a loss when the system failed to deliver direct customer benefits, redirecting resources to higher-impact projects.
Improves Time Management:
Executive time pressure examples: Daniel Vasella (former CEO of Novartis AG across countries) managed tight calendar schedules by prioritizing liked tasks; Kathleen Murphy (President of Fidelity Personal Investing) schedules meetings in -minute increments across -hour workdays and uses flight time for deep thinking; Lewis Platt (former Chairman of Hewlett-Packard) practiced ruthless prioritization.
Personal Time Management Skills
Practical Personal Guidelines:
DO say "No" to requests that divert focus from core priorities.
DON'T get bogged down in non-urgent details that can be addressed later or delegated.
DO maintain a screening system for phone calls, emails, and meeting requests.
DON'T allow drop-in visitors or text messages to consume productivity.
DO prioritize tasks based on importance and urgency.
DON'T become calendar-bound by letting external parties control your schedule.
DO execute high-priority, urgent tasks first.
Time Management Checkup Framework:
List 1: Prioritization:
A (Top Priority): Must do immediately.
B (High Priority): Should do soon.
C (Low Priority): Might do if time permits.
D (No Priority): Should be dropped entirely.
List 2: Time Wasters:
Controllable: Distractions within personal power to prevent.
Uncontrollable: External interruptions beyond personal control.
Digital Age Impact: Survey data reveals of managers report an increased decision volume due to the digital age, while report having less time to make decisions.
Types of Plans Used by Managers
Time Horizons in Planning:
Short-Term Plans: Typically cover a time frame of or less.
Long-Term Plans: Traditionally look into the future. Dynamic market environments make long-term plans less fixed and subject to continuous revision.
Sprint Plans: Short-cycle planning blocks (e.g., planning sprints in tech startups) designed to accelerate decision-making and operational velocity.
Elliot Jaques's Time Horizon Research:
Most individuals work comfortably within a timeline.
A smaller group functions effectively within a timeline.
Very few individuals possess the conceptual capacity to manage a planning horizon.
Strategic vs. Tactical Plans:
Strategic Plans: Top-level, long-term plans setting broad action directions and resource allocation frameworks for the entire organization or major division. Driven by the organizational vision (clarifying purpose and future aspirations).
Tactical Plans: Middle and lower-level plans designed to implement strategic plans. Frequently structured as functional plans indicating how specific operational units contribute to overall strategy:
Production plans: Work methods and technology.
Financial plans: Capital investments and cash flow management.
Facilities plans: Physical workspace and plant layouts.
Logistics plans: Suppliers and raw material acquisition.
Marketing plans: Sales, distribution, and promotional strategies.
Human resource plans: Workforce acquisition, training, and retention.
Operational Plans:
Operational plans specify short-term tasks needed to support strategic and tactical goals.
Standing Plans:
Policy: Communicates broad guidelines for decision-making and action in specific circumstances (e.g., Judith Nitsch establishing strict sexual harassment policies in her engineering firm).
Procedure / Standard Operating Procedures (SOPs): Defines precise rules and steps to be taken in specific situations.
Survey Data on Office Romance Policies:
prohibit relationships between supervisors and direct subordinates.
prohibit relationships between employees in the same department.
prohibit relationships between employees sharing a common supervisor.
maintain no restrictions on office romances.
Emerging trend: "Love contracts" requiring employees to pledge that romantic relationships will not interfere with work obligations.
Single-Use Plans:
Budgets: Allocate resources to specific activities, projects, or timeframes.
Financial budgets: Project cash flows and expenditures.
Operating budgets: Plot anticipated revenues against expenses.
Nonmonetary budgets: Allocate physical resources like labor-hours, space, or equipment.
Fixed budgets: Allocate a static resource amount for a specific purpose (e.g., for equipment purchases).
Flexible budgets: Allow resource allocations to vary dynamically with activity levels.
Rollover Budget Problem: The flaw of automatically carrying forward previous budgets with incremental adjustments without critical evaluation (e.g., Campbell Soup Company finding of its marketing budget was committed to obsolete product promotions).
Zero-Based Budgeting (ZBB): Treats every new budget cycle as completely new. Past allocations are not automatically renewed; all old and new budget requests compete equally for funds.
Planning Tools and Techniques
Forecasting:
The process of predicting future events. Serves as a planning aid rather than a substitute.
Qualitative Forecasting: Uses expert opinion and panel insights.
Quantitative Forecasting: Employs mathematical models, statistical analyses, historical trends, and survey data.
Historical Pitfalls: Music agents suggesting Elvis Presley stick to truck driving; Portland Trail Blazers drafting Sam Bowie over Michael Jordan in ; Edmonton Oilers drafting Mark Messier overall in the round in .
Contingency Planning:
Identifying alternative courses of action to activate if changing circumstances render original plans inadequate.
Relies on predefined trigger points that signal exactly when to switch to backup plans.
Example: BP's response during the Deepwater Horizon oil spill in the Gulf of Mexico was heavily criticized for lacking pre-engineered, rapidly deployable containment contingencies.
Scenario Planning:
A long-term extension of contingency planning involving the identification of multiple comprehensive future states (e.g., best-case and worst-case scenarios) and formulating strategy for each.
Pioneered by Royal Dutch Shell (under leadership such as former CEO Jeroen van der Veer) to prepare for post-oil energy landscapes, climate change, and sustainability requirements.
Benchmarking:
The evaluation of internal or external performance using comparative metrics to identify opportunities for improvement.
Focuses on discovering best practices (methods that reliably produce superior performance).
Internal Benchmarking: Sharing top performance strategies across internal divisions.
External Benchmarking: Analyzing market leaders and competitors. Examples:
Xerox benchmarking L.L. Bean (warehousing/distribution), Ford (plant layouts), and American Express (billing/collections).
Ford benchmarking the BMW 3-series.
Zara serving as the global fast-fashion benchmark.
Poverty Action Lab Study: MIT development economist Abhijit Banerjee evaluated anti-poverty strategies in India with Seva Mandir. Testing tutor additions against baseline rural schools yielded no performance gain. Conversely, implementing date/time-stamped camera verification for teacher attendance reduced absenteeism by and yielded significantly higher student achievement.
Staff Planning:
Utilizing dedicated planning experts to assist line managers with technical tools and process execution.
Risk: Communication gaps between staff planners and operational managers can yield plans lacking operational realism or employee commitment.
Implementing Plans to Achieve Results
SMART Goal Setting:
Jim Kilts (former CEO of Gillette) notable principle: "In business, words are words, promises are promises, but only performance is reality."
Example of Goal Leadership: Oprah Winfrey establishing the Oprah Winfrey Leadership Academy for Girls in South Africa (praised by Nelson Mandela; later navigating crisis management with transparency and structural reform).
Five Characteristics of Great Goals:
Specific: Clear targeted results and key outcomes.
Measurable: Clear verification of success or failure without ambiguity.
Attainable: Includes a realistic stretch factor without becoming impossible.
Relevant: Aligned directly with critical business results rather than trivial effort.
Timely: Tied to explicit completion dates and schedules.
Verifiable Work Activities: Used when exact numerical output measurement is difficult; measures task completion as an indicator of performance (e.g., holding weekly team meetings to improve team communication).
Goal Management and Learning Goals:
Unrealistic stretch goals tied to severe pressure or incentives can lead to ethical failure. Examples:
Canadian bank cross-selling/up-selling scandal, pushing unnecessary high-cost accounts onto customers.
US Department of Veterans Affairs cover-up, where managers falsified waitlists to claim performance bonuses, leaving over veterans without care and causing at least deaths.
Gary Latham and Gerard Seijts distinction:
Outcome Goals: Target final performance results.
Learning Goals: Target knowledge and skill acquisition necessary to achieve performance. Assigning outcome stretch goals without providing learning resources creates burnout, stress, and unethical behavior.
Goal Alignment and Hierarchy of Objectives:
Hierarchy of Objectives: A structured chain where lower-level targets directly support the achievement of higher-level strategic goals in a means-end fashion.
Sample Corporate Hierarchy:
Mission and Purpose: Serve the world as the number-one supplier of recyclable food containers.
Top Management Objective (Firm): Deliver error-free products meeting customer requirements of the time.
Senior Management Objective (Manufacturing Division): on-time production of error-free products.
Middle Management Objective (Plant): Increase error-free product acceptance rate by .
Lower Management Objective (Shift Supervisor): Assess machine operator skills and train for error-free production.
Joint Alignment Tasks (Management by Objectives - MBO):
Jointly Plan: Agree on performance objectives, set measurement standards, and select target action plans.
Individually Act: Member performs tasks independently while leader provides necessary resources and support.
Jointly Control: Review cumulative performance results, analyze implications, and renew the goal cycle.
Participatory Planning:
Inclusion of employees affected by plans across all steps of the planning process.
Promotes creativity, expands information sources, increases understanding, and builds deep execution commitment.
Resilience in Execution:
The capacity to adapt positively to unexpected adversity or plan failure.
Resilient individuals view adversity as a challenge rather than a threat, displaying optimism, facing fears directly, and recovering quickly from workplace stressors.
Practical Scenarios and Case Incident Details
Paternity Leave Policy Case Study Details:
Standard Canadian statutory allowance: Up to of parental leave at of salary, capped at a maximum of .
Utilization rate: Approximately eligible fathers outside Quebec utilize Employment Insurance parental benefits, driven primarily by career security concerns.