Summary: Chapter 7, Management, by Stephen Robbins

FOUNDATIONS OF PLANNING

What Is Planning and Why Is It Important

Consider this: A motorcycle manufacturing company Harley-Davidson recognizes that the demand for its motorcycles will continue to grow in the range of 7-9% per year. Realising this problem, they now plan to continue expanding production capacity. This is exactly like doing planning.

Planning - Def:
Defining organization's goals, establishing an overall strategy for achieving those goals, and developing plans for organizational work activities.

Formal Planning: In formal planning, specific goals covering a period of years are defined. These goals are written and shared with organizational members.

Importance of Formal Planning:

1. Provides Direction: When every employee knows what he has contirbute to the company, what it takes to do so, that he can cooperate with each other - such a company is mostly likely to reach its goals efficiently.

2. Reduces Uncertainty: Planning cannot utterly defy dynamic situations. Best it can do is unable managers to see ahead, anticipate changes and develop appropriate responses.

3. Minimizes Waste and Redundancy: When all means and ends are made clear, inefficiences are
easily detected and can be corrected. This happens so when work activities and plans are coordinated with the company.

4. Establishes goals or standards used in Controlling: When managers plan, they develop goals and plans. Thus they easily control the progress. Without any planning there would be no control.

5. Positive Financial Results: Planning is as such concerned with higher profits, higher return on assets. Planning seems good if its implemented good rather than does the extent and amount of planning

- Critical Enviormental Forces: Studies have found that when some company's planning fails, it is majorly because of external conditions as Government regulations, Tough Labor Unions etc, which leave managers with little or no choice.
- Time Frame: Usualy a company can take four years for its complete formal plans.

Types of Goals:

Goals in short are the foundations of management science/art. In real and profession life there are two kinds of goals:
-stated goals
-real goals

Stated goals: are those statements which show what we want to achieve, what we aspire to do. From organization's perspective, stated goals are "outlines of what an organiztion say, and what it wants its stakeholders/customers to believe, its goals are."

Real goals: The goals organization actually pursues. It is manifested only in the 'doings' of its members, not in it's sayings.

One thing must not go unwatched in the discussion of goals. There maybe a conflict/contradiction b/w what a company say and what it does. The gap b/w stated and real goals is- conflict in stated goals.*

Types of Plans:

There are four ways to describe a plan, we'll mention only there names:

1. Breadth: strategic plans (positioning of entire org. relative to enviornment); operational plans (to limit details as to how achieve overall goals)

2. Time Frame: Long-Term Plans (beyond 3 years); Short-Term Plans (1 year or less)

3. Specificity: Directional Plans (in which intent is revealed, its flexible, leaves room of interpretations); Specific Plans (Rigid, clearly defined, no place for interpretation)

4. Frequency of Use: Single use; Standing (ongoing plans)- Approaches to establishing/implementing goals.

How do Mangers Set Goals?


- Traditional Approach: "Top-Down"

In a traditional goal setting, there's always an elite which works at top management level, very few in numbers. They're the head, the boss. And they are followed by a number of officials, managers, employees, workers etc., but in "hierarchy", in descending order everyone gets samller in rank.

(a) If Hierarchy of goals is clearly defined, a mean-end chain is formed
(b) If it is not clear, goals lose clarity and unity

- Management by Objectives (MBO) approach:

Def: A process of setting mutually agreed-upon goals and using those goals to evaluate employee performance.

A four-step process:
1. Goal Specificity
2. Participative Decision Making
3. Explicit Time Period

4. Performance Feed-Back
What is needed in an organization is: a corporate culture in which the heirarchic levels break up, where it needs to. So that the bosses assure that plans are not being imposed from the top. And, that the different isolated levels of the order mix up with each other, so as to let everyone understand complexity of the problem and find integrated solutions..... I call it- decentralization. "Decentralization, if implemented with sophistication and best monitring tools, could be great."

Charatersitics of Well-Defined Goals

They are
-Stated are stated in terms of outcomes rather than actions
- Measureable and quanitifiable
-Clear time time-frame
-written down
- and, communicated to all organizational members.

What Contemporary Planning Issues Managers Face?

Criticisms of Planning:

1. Creates ridigity: Since Plans are written at a point in time, it can fail us to react to changing situations

2. Can't be Developed for Dynamic Enviornment.

3. Can't replace intuition and creativity: A research study has found that a greater percentage of CEOs get their business flourish better if they're more intuitive in anticipation than those who are not. Gut feeling has no alternative.

4. Focuses on today, not tommorrow.

5. Reinforces success, which can lead to failure: Unique situations demand unique solutions. Established plans are no option in unique crisises.