Management Concepts & Organisational Behaviour - Planning
STEPS IN PLANNING
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Though there may be a few variations in the exact procedure adopted by different organizations in planning, the following are the broad steps:
STEPS IN
PLANNING
Though there may be a few variations in the exact procedure adopted by different organizations in planning, the following are the broad steps:
Planning begins with decisions about what the organization wants to achieve during a specified period. The goals of an organization and various subunits have to be decided and spelt out in clear terms. It is always desirable to express the goals in quantitative terms for all the key areas of the business like production, profit, productivity, market share, employee relations, social responsibilities, etc. For instance, instead of saying that the objective of business is to achieve a fair rate of return on the investment, it may be given a quantitive expression, say, 10 or 15 percent return on the investment. The time frame in which the objectives have to be achieved must also be specified. Besides, adequate attention has to be paid to the resources required to achieve the objectives. Thus what to achieve, when, how and with what resources are a few important questions that should be answered at this stage.
Since goal setting is the essential first step in planning, managers who fail to set meaningful goals cannot make effective plans. If Telco is able to retain its dominance in the Heavy Commercial Vehicle (HCV) segment, it is because all the employees of the organization know clearly that the primary objective is retaining the leadership in the industry. For instance, SAIL’s corporate mission “Infrastructuring India” explains basic purpose and board objectives of the company to a larger extent. The mission of the organization, the corporate values, experience, polices provide adequate guidance to the managers in goal setting.
Planning premises, in simple, are the assumptions about the various elements of the environment. Planning assumptions or premises provide the basic framework in which plans operate. Appropriate assumptions have to be made on various aspects of the environment – both internal and external to the organization. Otherwise, it will be like fighting a battle without a clear assessment of the enemy’s strengths and weaknesses.
i. Internal premises: Important internal premises include sales forecasts and policies of the organization. Each one of these elements is a critical success factor. For instance, the accuracy of the sales forecast influences the procurement of resources, production scheduling and the marketing strategies to be pursued to achieve the objectives. Similarly, however effective the objectives are, it is the people who have to perform and achieve. If their attitude is not positive, nothing moves.
External premises: Important external premises relate to all those factors in the environment outside the organization. They include issues related to technology, general economic conditions, government policies and attitude towards business, demographic trends, socio-cultural changes in the society, political stability, degree of competition in the market, availability of various resources and so on.
It is evident that some of these factors are tangible while others are intangible. For example, material and human resources availability, etc. are tangible factors which can be stated in quantitative terms. On the other hand factors like political stability, attitudes of the people, certain other sociological factors are intangible, in that they cannot be
measured quantitatively. Effective premising – the making of appropriate assumptions, helps the organization to identify the favourable and unfavourable elements in the environment. Though accurate premising is difficult, anticipating future situations, problems and opportunities would undoubtedly help the managers in reducing the risk, though not completely eliminating it.
How far in the future should a plan be made is another pertinent question in the process of planning. Businesses vary in their planning periods. In some cases plans are made for a short period, varying from a few months to a year, while in some other cases, they are made to cover a longer period, to cover a period of more than a year. The period may extend up to 5-10 years and even beyond. Companies normally plan for a period that can be reasonably anticipated. The lead time involved in the development and commercialization of a product and time required to recover the capital investment (pay-back period) influence the choice of the length of the plan. Again, in the same organization, different plan periods may exist for different purposes. This gives raise to the two important concepts – operational planning and strategic planning. While operational plans focus on the short-term, strategic plans focus on the long-term.
The next logical step in planning involves the development of various alternative courses of action, evaluating these alternatives and choosing the most suitable alternative. Objectives may be achieved by different courses of action (alternatives). For example, technical know-how may be developed by in-house research, collaboration with a foreign company or by tying up with a research laboratory. Similarly, an organization can grow by expanding its scale of operations or through acquisitions and mergers. Technical feasibility, economic viability and the impact on the society are the general thumb rules to select the course of action. The alternative courses are evaluated in the light of the premises and the overall goals of the organization.
The plan finalized after a thorough analysis of various alternatives suggests the proposed course of action. To make it operational, it has to be split into departmental plans. Plans for the various operational units within the departments have to be formulated. The plans thus developed for the various levels down the organization are called derivative plans. For instance, production and marketing of 10,000 units of a product and achieving a return of 10 percent on the investment may be the enterprise’s plan relevant for the whole organization. Its effective execution is possible only when specific plans are finalized for the various departments like production, marketing, finance, personnel and so on with clear-cut objectives to be pursued by these departments.
Success of the plan is measured by the results and the ease with which it is implemented. Therefore, provision for adequate follow-up to determine compliance should be included in the planning work. To make sure that the plan is contributing for the results, its review at regular intervals is essential. Such a review helps in taking corrective action, when the plan is in force.
Though there may be a few variations in the exact procedure adopted by different organizations in planning, the following are the broad steps:
Setting of goals
Planning begins with decisions about what the organization wants to achieve during a specified period. The goals of an organization and various subunits have to be decided and spelt out in clear terms. It is always desirable to express the goals in quantitative terms for all the key areas of the business like production, profit, productivity, market share, employee relations, social responsibilities, etc. For instance, instead of saying that the objective of business is to achieve a fair rate of return on the investment, it may be given a quantitive expression, say, 10 or 15 percent return on the investment. The time frame in which the objectives have to be achieved must also be specified. Besides, adequate attention has to be paid to the resources required to achieve the objectives. Thus what to achieve, when, how and with what resources are a few important questions that should be answered at this stage.
Since goal setting is the essential first step in planning, managers who fail to set meaningful goals cannot make effective plans. If Telco is able to retain its dominance in the Heavy Commercial Vehicle (HCV) segment, it is because all the employees of the organization know clearly that the primary objective is retaining the leadership in the industry. For instance, SAIL’s corporate mission “Infrastructuring India” explains basic purpose and board objectives of the company to a larger extent. The mission of the organization, the corporate values, experience, polices provide adequate guidance to the managers in goal setting.
Outlining Planning premises
Planning premises, in simple, are the assumptions about the various elements of the environment. Planning assumptions or premises provide the basic framework in which plans operate. Appropriate assumptions have to be made on various aspects of the environment – both internal and external to the organization. Otherwise, it will be like fighting a battle without a clear assessment of the enemy’s strengths and weaknesses.
i. Internal premises: Important internal premises include sales forecasts and policies of the organization. Each one of these elements is a critical success factor. For instance, the accuracy of the sales forecast influences the procurement of resources, production scheduling and the marketing strategies to be pursued to achieve the objectives. Similarly, however effective the objectives are, it is the people who have to perform and achieve. If their attitude is not positive, nothing moves.
External premises: Important external premises relate to all those factors in the environment outside the organization. They include issues related to technology, general economic conditions, government policies and attitude towards business, demographic trends, socio-cultural changes in the society, political stability, degree of competition in the market, availability of various resources and so on.
It is evident that some of these factors are tangible while others are intangible. For example, material and human resources availability, etc. are tangible factors which can be stated in quantitative terms. On the other hand factors like political stability, attitudes of the people, certain other sociological factors are intangible, in that they cannot be
measured quantitatively. Effective premising – the making of appropriate assumptions, helps the organization to identify the favourable and unfavourable elements in the environment. Though accurate premising is difficult, anticipating future situations, problems and opportunities would undoubtedly help the managers in reducing the risk, though not completely eliminating it.
Decide the planning period
How far in the future should a plan be made is another pertinent question in the process of planning. Businesses vary in their planning periods. In some cases plans are made for a short period, varying from a few months to a year, while in some other cases, they are made to cover a longer period, to cover a period of more than a year. The period may extend up to 5-10 years and even beyond. Companies normally plan for a period that can be reasonably anticipated. The lead time involved in the development and commercialization of a product and time required to recover the capital investment (pay-back period) influence the choice of the length of the plan. Again, in the same organization, different plan periods may exist for different purposes. This gives raise to the two important concepts – operational planning and strategic planning. While operational plans focus on the short-term, strategic plans focus on the long-term.
Develop alternatives and select the course of action
The next logical step in planning involves the development of various alternative courses of action, evaluating these alternatives and choosing the most suitable alternative. Objectives may be achieved by different courses of action (alternatives). For example, technical know-how may be developed by in-house research, collaboration with a foreign company or by tying up with a research laboratory. Similarly, an organization can grow by expanding its scale of operations or through acquisitions and mergers. Technical feasibility, economic viability and the impact on the society are the general thumb rules to select the course of action. The alternative courses are evaluated in the light of the premises and the overall goals of the organization.
Derivative plans
The plan finalized after a thorough analysis of various alternatives suggests the proposed course of action. To make it operational, it has to be split into departmental plans. Plans for the various operational units within the departments have to be formulated. The plans thus developed for the various levels down the organization are called derivative plans. For instance, production and marketing of 10,000 units of a product and achieving a return of 10 percent on the investment may be the enterprise’s plan relevant for the whole organization. Its effective execution is possible only when specific plans are finalized for the various departments like production, marketing, finance, personnel and so on with clear-cut objectives to be pursued by these departments.
Review periodically
Success of the plan is measured by the results and the ease with which it is implemented. Therefore, provision for adequate follow-up to determine compliance should be included in the planning work. To make sure that the plan is contributing for the results, its review at regular intervals is essential. Such a review helps in taking corrective action, when the plan is in force.
Tags : Management Concepts & Organisational Behaviour - Planning
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