GN

UNIT-2

PLANNING, ORGANISING AND CONTROL

CONTENTS

  • Planning process
  • Types of plans: Strategic, Tactical, and Operational
  • Management by Objective (MBO)
  • Management by Exception (MBE)
  • Organisational Design
  • Delegation
  • Centralisation and Decentralisation
  • Types of Organisational Structures: Simple, Functional, Matrix, Boundaryless, Team, and Virtual
  • Controlling: Concept and Types of Control

MEANING OF PLANNING

  • Definition: Planning is a fundamental management function involving the formulation of detailed strategies to achieve specific goals or objectives.
    • It plays a crucial role in the success of individuals, teams, organizations, and nations.

PLANNING PROCESS

  1. Set Objectives: Define clear, achievable goals.
  2. Assess Resources: Determine the resources available for achieving the objectives.
  3. Analyze the Current Situation: Evaluate current conditions and environment.
  4. Develop Assumptions and Forecasts: Predict future conditions and identify assumptions that may impact planning.
  5. Identify Alternatives: Generate a list of possible strategies and actions.
  6. Evaluate Alternatives: Assess the pros and cons of each alternative.
  7. Select the Best Alternative: Choose the most suitable option based on evaluation.
  8. Create Action Plans: Develop detailed plans outlining the steps to achieve the chosen alternative.
  9. Implement the Plans: Execute the action plans effectively.
  10. Monitor and Control: Regularly track progress and make necessary adjustments.

TYPES OF PLANS

  1. Strategic Plans: Long-term plans outlining the overall direction and major goals of the organization.
  2. Tactical Plans: Mid-term plans specifying actions needed to achieve strategic objectives. Typically developed by middle management.
  3. Operational Plans: Short-term, detailed plans guiding daily operations and activities.
  4. Contingency Plans: Plans developed to address potential future scenarios or unexpected events.
  5. Single-Use Plans: Plans created for unique, non-recurring situations or projects (e.g., launching a new product).
  6. Standing Plans: Ongoing plans that provide guidance for activities performed repeatedly, such as policies, procedures, and rules.
  7. Project Plans: Define objectives, scope, resources, timelines, and deliverables for specific projects.

PERT AND CPM

  • PERT (Program Evaluation and Review Technique)
    • Focus: Uncertainty and risk management in projects, particularly in research and development.
    • Time Estimates: Utilizes three time estimates (optimistic, pessimistic, most likely) for tasks.
    • Nature: Probabilistic; addresses uncertainty in task durations by calculating probabilities of project completion.
  • CPM (Critical Path Method)
    • Focus: Time and cost optimization in projects, often seen in construction and engineering.
    • Time Estimates: Uses a single, fixed time estimate for tasks.
    • Nature: Deterministic; assumes fixed task durations and focuses on the critical path.
  • Key Similarities:
    • Both methods involve creating a network diagram to visualize project tasks and their dependencies.
    • Both methods help identify the critical path, necessary for project planning, scheduling, and control.
    • PERT is preferable for projects with unpredictable timelines while CPM suits predictable task durations.

MANAGEMENT BY OBJECTIVES (MBO)

  • Definition: A strategic management model aimed at improving organizational performance by defining objectives agreed upon by management and employees.
  • Benefits of MBO:
    1. Enhanced Communication: Promotes clarity between management and employees.
    2. Increased Motivation: Employees feel motivated with a clear understanding of their roles in organizational goals.
    3. Better Alignment: Ensures individual objectives align with organizational goals.
    4. Accountability: Clearly defines responsibilities and expectations.
    5. Improved Performance: Regular evaluations enhance performance monitoring and improvement.
  • Implementation Steps:
    1. Define Organizational Goals.
    2. Set Individual Goals with management's collaboration.
    3. Develop Action Plans for individual goals.
    4. Implement Plans and monitor regularly.
    5. Review and Appraise Performance periodically based on goal achievement.
  • Example: In a sales department, set a quarterly sales target for each salesperson, agree on strategies, and monitor progress.

MANAGEMENT BY EXCEPTION (MBE)

  • Definition: A strategy where managers focus on significant deviations from expected performance or standards.
  • Key Aspects of MBE:
    1. Setting Standards: Establishing clear performance benchmarks.
    2. Monitoring Performance: Regular tracking of actual performance against standards.
    3. Identifying Deviations: Detecting significant performance divergences.
    4. Focusing on Exceptions: Concentrating on critical issues instead of routine tasks.
    5. Taking Corrective Action: Implementing measures to address significant deviations.
  • Benefits:
    1. Efficient Use of Management Time.
    2. Prompt Problem-Solving by focusing on exceptions.
    3. Employee Empowerment by delegating routine tasks.
    4. Improved Decision-Making through targeted focus on critical issues.
  • Implementation Steps:
    1. Establish clear performance standards.
    2. Monitor and measure performance regularly.
    3. Identify significant deviations and analyze their causes.
    4. Take corrective action and review standards periodically.
  • Example: In manufacturing, monitor production quality against standards and address significant defects promptly.

ORGANIZATIONAL DESIGN

  • Definition: The management function of developing an organizational structure and allocating resources to meet objectives. Visual representations (org charts) illustrate the chain of command.
  • Importance of Organizing in Management:
    1. Efficiency in resource utilization.
    2. Clarity in roles and responsibilities.
    3. Adaptability to environmental changes.
    4. Supports growth and scalability of the organization.
  • Principles of Organization:
    1. Identification of Activities: Detailing tasks and classifying them.
    2. Departmentalization: Forming departments based on various criteria (functions, products, geography, etc.).
    3. Assignment of Duties: Defining roles and allocating resources.
    4. Establishing Relationships: Setting up hierarchy and determining the span of control.
    5. Coordination: Aligning activities and establishing communication channels.
    6. Authority and Responsibility: Delegation of authority while maintaining accountability.
    7. Formalization: Developing policies and maintaining documentation.

TYPES OF ORGANIZATIONAL STRUCTURES

  1. SIMPLE / FLAT STRUCTURE:

    • Characteristics: Low stratification, minimal hierarchy, owner/top manager decision-making.
    • Advantages: Quick decision-making and direct communication.
    • Disadvantages: Limited specialization, over-reliance on central figure.

  2. FUNCTIONAL STRUCTURE:

    • Characteristics: Organized by departments based on functions (e.g., marketing, HR).
    • Advantages: Specialization, efficiency, clear career paths.
    • Disadvantages: Siloed departments may hinder communication and responsiveness.

  3. LINE AND STAFF STRUCTURE:

    • Characteristics: Combines direct authority with specialized advisory roles.
    • Advantages: Clear hierarchy, increased expertise.
    • Disadvantages: Potential for conflicts between line and staff, can slow decision-making.

  4. MATRIX STRUCTURE:

    • Characteristics: Employees report to two managers for functional and project roles.
    • Advantages: Enhanced collaboration, flexibility.
    • Disadvantages: Confusion over authority; potential conflicts.

  5. BOUNDARYLESS STRUCTURE:

    • Characteristics: Removes traditional boundaries, employs technology for a flexible environment.
    • Advantages: Greater adaptability, innovation, enhanced communication.
    • Disadvantages: Challenges in management/control; role ambiguity.

  6. TEAM STRUCTURE:

    • Characteristics: Organized around teams instead of departments.
    • Advantages: Flexibility, improved collaboration and morale.
    • Disadvantages: May lead to unclear authority, struggles with alignment.

  7. VIRTUAL STRUCTURE:

    • Characteristics: Operates through digital communication and remote collaboration.
    • Advantages: Flexibility, cost savings, access to global talent.
    • Disadvantages: Dependence on technology; challenges in maintaining culture and cohesion.

CONTROLLING

  • Definition: A fundamental function ensuring activities are performed as planned by comparing actual performance against standards and taking corrective actions.
  • Importance: Helps organizations achieve objectives, optimizes resource utilization, and enhances overall efficiency.

CONCEPT OF CONTROLLING

  • Steps in the Controlling Process:
    1. Setting performance standards.
    2. Measuring actual performance.
    3. Comparing performance against standards.
    4. Identifying deviations.
    5. Implementing corrective actions.
  • Nature: Continuous process allowing for ongoing assessment and future planning.

TYPES OF CONTROL

  1. Feedforward Control (Predictive Control)

    • Occurs before activities begin; prevents issues by anticipating problems.
    • Example: Setting quality standards before production.

  2. Concurrent Control (Real-Time Control)

    • Takes place during the operation; involves monitoring ongoing activities for compliance.
    • Example: Supervising production line quality.

  3. Feedback Control (Post-Action Control)

    • Implemented after activities are completed; evaluates results to improve future practices.
    • Example: Reviewing monthly sales reports for analysis.

OTHER RELEVANT CLASSIFICATIONS OF CONTROL

  • Direct vs Indirect Control: Direct involves hands-on monitoring; indirect uses automated systems.
  • Physical, Financial, and Non-Financial Controls: Physical controls manage tangible items; financial controls manage costs and budgets; non-financial controls focus on elements like employee satisfaction.
  • Strategic, Operational, Preventive, Corrective Controls: Strategic guides overall direction; operational monitors daily activities; preventive aims to avoid errors; corrective addresses issues identified.
  • Behavioral and Output Controls: Behavioral focuses on process monitoring; output centers on results.

REFERENCES

  1. Stoner, Freeman, Gilbert Jr. (2014). Management (6th edition), New Delhi: Prentice Hall India.
  2. Essentials of Management, Harold Koontz, Heinz Weihrich, Mark V. Cannice, Graw Hill 8e, 11/e, 2020.