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Planning is the key of managment
Planning is the
primary function of management. It is the important process of deciding
business objectives and charting out the method to accomplish these
goals. This includes decision of what type of activity is to be done,
where to be done and how the results to be analyzed.
Theoretical
review: Many theorists thoroughly describe the planning process of
management function. Koontz and O'Donnel stated that "Planning is
deciding in advance what to do, how to do it, when to do it and who is to
do it. It bridges the gap from where we are and to where we want to go.
It is an essence of the exercise of foresight. Another management
theorist, M.S. Hardly explained "Planning is deciding in advance
what is to be done". It involves the selection of objectives,
policies, procedures and programs from among alternatives. Heying and
Massie defined "It can be said that planning is first function of
the manager in which he has to decide in advance action that is to be
done." It is an intellectual process in which managers must have to
use their imaginative mind. Planning is an attempt to foresee the future
in order to get high performance.
Plans have
numerous benefits. Planning enables managers to think ahead. It leads to
development of performance standards. Plan forces management to
articulate clear objectives. Planning makes organization to get ready for
unexpected developments.
Planning
includes various features such as Planning is mainly concerned with
looking into future. In planning process, management team has to select
suitable course of action under particular business environment. It means
there are several ways to achieve objectives. Planning is done at all
levels of the organization because managers at all levels are concerned
with determination of future course of action. Planning is persistent and
constant managerial function.
Nature of
planning: planning is a rational approach, open system, flexibility
and pervasiveness. It clarifies where one stands, where one wants to go
in future and how accomplishes goal. Rationalist denotes a manager
chooses suitable way to achieve the stated objectives and rational
approach fills the gap between the current status and future status.
Planning is an open System approach in which firm is an open system
because it accepts inputs from the environment and exports output to
environment. Planning accepts an open system approach. Open system
approach designates that the gap between current and desired status and
the action required overpassing this gap which is influenced by array of
environmental economic, legal, political, technological, socio-cultural
and competitive factors. These factors are vibrant and change with time.
Therefore managers have to take into account the dynamic features of
environment while using open system approach. Another aspect of planning
is the flexibility of Planning: it means plan has ability to change
direction to take on to changing situations without excessive cost. Many
scholars said that the plans must be stretchy to become accustomed to changes
in technology, market, finance, personal and organizational factors.
However flexibility is possible only within limits, because it involves
extra cost. Another feature is pervasiveness of Planning. Planning is
persistent and it broadens throughout the organization. Planning is the
primary management function and every manager at different level has to
do planning within his particular area of activities. Top management is
responsible for general objectives and action of the organization.
Therefore it must plan what these objectives should be and how to achieve
them. Similarly a departmental head has to develop the objectives of his
department within the organizational objectives and also the methods to
accomplish them.
Significance of
planning process:
Planning has
core value in all organization whether business or non-business, private
or public, small or large. The organization which has mindset for future
is likely to succeed as compared to one which fails to do so. Planning
establishes the objectives and all other functions are performed to
achieve the objectives set by the planning process. The company
constantly interacts with the external dynamic environment where there is
high risk and ambiguity. In this changing dynamic environment where social
and economic conditions change quickly, planning assists the manager to
adjust with and prepare for altering environment. Through rational and
fact based process for making decisions, manager can lessen market risk
and uncertainty. Planning focuses on organizational objectives and course
of action to accomplish targeted goal. It facilitates managers to apply
and organize all resources of the organization successfully in achieving
the objectives. The whole organization is required to embrace identical goals
and work together in achieving them. Planning establishes the goal and
develops plan to attain them. These goals and plans become the standards
against which the actual performance can be measured. Control involves
the dimension of actual performance, comparing it with the standards and
taking remedial action if there is divergence. Control makes certain that
the activity confirms to plans. Hence control can be exercised if there
are plans. Planning also enhances organizational effectiveness.
Types of planning:
Planning can be
categorized as coverage of activities, importance of contents in
planning, approach adopted in planning process, time dimension and degree
of formalization in planning process.
The planning
activities at the corporate level which include activities of whole
organizational are termed as corporate planning. Corporate planning is
done to chase long term objectives as a whole and to create plans to
accomplish these objectives bearing in mind the possible changes in
dynamic environment.
Strategic
planning sets future directions of the organization in which it wants to
proceed in future such as diversification of business into new lines,
planned growth rate in sales. It has three major characteristics such as
it embraces all activities of organization, has long time horizon and
successful implementation. Operational planning involves to decide
effectual use of resources already allocated to achieve the
organizational objectives such as adjustment of production within
available capacity, increasing the efficiency of the operating activity
by analyzing past performance. The long term planning is strategic in
nature and involves more than one year period and can extend to 15 to 20
years. Proactive planning develops appropriate courses of action in
expectation of likely changes of environment. Managers who adopt
proactive changes do not wait for environment to change, but take action
in advance of environmental changes. To get success, it is necessary to
continuously review the environment conditions. In reactive planning,
response comes after environmental changes occur. Informal planning is
done by small organizations. This planning process is based on manager's
experience, intuitions instead of methodical evaluation of environmental
changes. This planning process is part of manager's normal activity.
Mainly two types
of plans are formulated in management that includes standing plans and
single use plans. Standing plans give guidelines for advance course of
action and are used over a period of time. Standing plans are designed
for situations that persist often enough to justify a standardize
approach. Single use plans are intended for specific end when that end is
reached, the plan is dissolved or devised again for next end.
Major steps in planning
process:
The planning
process is different from one plan to another and varies from company to
company. Common steps in planning are mentioned below:
- Establishing
goals or objectives: The initial phase of planning process is to
establish the business objectives. These organizational goals are
made by senior level managers after reviewing numerous objectives.
These objectives are based on the number of factors like mission of
the organization, abilities of the organization. Once management team
establishes the organizational goals, the section wise or department
wise objectives are planned at the lower level. Defining the
objectives of every department is important and accordingly precise
direction is given to the departments.
- Establishing
planning premises: The next step in planning which involves
establishing planning premises is the conditions under which
planning activities will be done. Planning premises are planning
statements that are the expected environmental factors, pertinent
facts and information relating to the future such as general
economic conditions, population trends, and competitive behavior.
The planning premises can be Internal and External premises,
Tangible and Intangible premises, Controllable and non-controllable
premises.
- Deciding
the planning period: After determining the long term objectives and
planning premises, another phase is to choose the period of the
plan. Some plans are made for a year and other plans are devised for
longer period. There are many factors which influence the choice of
a period. Lead time in development and commercialization of a new
product. Big companies like an aircraft building company plans for a
period of five to ten years where as a small manufacturer can
commercialize his idea in a year. Another factor is time needed for
recovery of capital investment or the payback period. The payback
period also influence the planning period. Length of commitment
already made also impact the choice of time span in planning.
Researchers emphasized that the plan period should be made in such a
way that it can fulfil the commitments already made. Identification
of alternatives is important factor in determining time frame in
planning. A particular objective can be achieved through various
actions. Evaluation and selection of alternative is the next step
which assess the alternatives with the support of the premises and
goals and to choose the best course or courses of action.
- Developing
derivative/supportive plans: After selection process of plan done, various plans
are derived so as to support the main plan. These derivative plans
are devised from the main plan.
- Measuring
and controlling the process: It is advised that plans once established should
not be executed unless its progress is monitored. Managers must have
continually monitor progress of their plans so that remedial action
can be taken to make fruitful plan.
Obstacles in
planning process:
It is observed
that many executives involve in implementing plans instead of spending
time to develop effectively. It is founds that there are many barriers
that inhibit planning process. In order for plans to be effective and to
get the desired results, managers must recognize any potential barriers
and make efforts to reduce them. Common barriers that hinder successful
planning are as under:
The first
barrier is incapability to plan or it can be said as inadequate planning.
Managers do not have inherent quality to devise effective plan. Some
managers are not successful planners because they do not have ability,
education to develop planning for particular situation. Such incapability
creates hindrance in planning process.
Another barrier
is lack of commitment to the planning process. Planning process require
hard work. Another cause for lack of commitment can be fear of failure.
As a result, managers may choose to do little or nothing to help in the
planning process.
Inferior
information also creates hindrance in planning process. It is observed
that poor information or of inadequate quantity can be major barriers to
planning. Even though managers are proficient in planning but if they do
not have latest information their plans will possibly fail.
Another barrier
to planning process is failure to consider the longâ€term effects of a
plan because more emphasis is given to short term issues. This may result
in preparing for the future.
If managers
excessively depend on the organization's planning department, their plans
may not be successful. Many companies have a planning department or a
planning and development team. These departments conduct studies, do
research, build models, and project probable results, but they do not
implement plans.
In order to make
effective plan, keep the planning process simple. It is advised to
discuss the objectives of organization with top level team before
preparing for plans and use participative approach in developing plan.
It can be
concluded that management planning is the process to evaluate an
organization's goals and create a realistic, detailed plan of action for
meeting those goals. Planning is the continuous process of systematically
making plans with the knowledge of the future, organizing the activities
needed to carry out the plans and monitoring the results of the plans
through comments. Planers must communicate plan to other staff members as
why specific action is taken.
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