Planning

PLANNING

Planning is the primary/fundamental function of management. It precedes all other functions of management. A planner foresees the opportunities and designs the ways and means to achieve them.

The words plan and planning seem to be similar, however they are not the same. A plan is a commitment to particular course of action whereas planning is an activity consisting of a process.

Definition:

According to Hart planning is, “The determination in advance of a line of action by which certain results are to be achieved.”

In words of Kuntz & O’Donnell planning is, “The selection from alternatives for future courses of action for the enterprise as a whole and each department with it”. “

Nature / Characteristics of Planning:

1.      It is an Intellectual Process

2.      Primacy of Planning

3.      All managers plan

4.      It is a rational approach

5.      It focuses on objectives

6.      It leads to efficiency and economy

7.      Co-ordination

8.      Flexibility

9.      It is a continuous process

Characteristics of a Good Plan:

1.      Clear Objective

2.      Proper Understanding

3.      Comprehensive

4.      Flexible

5.      Economical

Advantages of Planning

1.      Facing Complexities of Modern Business

2.      Forewarn against Business Failures

3.      Focus on Objectives

4.      Minimising Uncertainties

5.      Better Utilization of Resources

6.      Economy in Operations

7.      Better Co-ordination

8.      Encourages Innovations and Creativity

Disadvantages / Limitations of Planning

1.      Lack of Reliable Data

2.      Difficulty in selecting best alternative

3.      Difficulty in taking quick decisions

4.      Time consuming process

5.      Expensive

6.      External factors may reduce utility

7.      Resistance to change

Approaches to Planning

1.      Top – Down Approach

2.      Bottom – Up Approach

3.      Composite Approach

4.      Team Approach

Types of Plans

1.      On the Basis of Time

i.          Long Term Plans

ii.        Medium Term Plans

iii.      Short Term Plans

2.      On the Basis of Managerial Levels

i.          Top Level Plans

ii.        Middle Level Plans

iii.      Lower Level Plans

3.      On the Basis of Broadness

i.          Corporate Level Plans

ii.        Department Level Plans

4.      On the Basis of Use

i.        Multi-purpose Use Plans

ii.      Single Use Plans

Multi-purpose use plans are made to use again and again. These plans are made for the recurring in nature. Multiple plans are also called as “Repeat Use Plans”.

Multiple plans include – Objectives, Policies, Strategies, Procedures & Rules.

Single use plans are made for non – recurring activities of the business. They are also called as specific plans. They are tailor made plans for a specific purpose or problem.

The examples of Single use plans are – Programmes, Schedules, Budgets, Projects & Methods.

Management By Objectives - MBO

INTRODUCTION TO MBO

Management by objectives is one of the techniques which helps in the achievement of organisational objectives. Peter Drucker said that, “Management by Objectives is a basis for measuring the performance of managers in an organisation. Edward shells supported MBO as a means of integrating individuals with the organisation.

Management by objectives is also known as Management by Results”.

MBO is a new technique of management developed in the recent past. Though it is now practiced around the world yet there is no unanimity about its meaning. Some think of it is an appraisal tool, others see it as a motivational technique, still others consider it as a control device.

Definition of MBO

Terry and Franklin, “A managerial objective is the intended goal that prescribes definite scope and suggests direction to the planning efforts of a manager”.

S.K. Chakravarthy, “MBO is a result centres non specialist operational managerial process for the effective utilisation of material physical and human resources of the organisation by integrating the individual with the organisation and organisation with the environment.”

We can understand MBO better with the help of following facts-

1.       It is a system superior and subordinate identify objectives.

2.       It is an effort to achieve organisational and individual objectives.

3.       It is a result centred exercise for utilising various resources effectively.

4.       Mutually agreed objectives become the basis of performance evaluation.

5.       It is a periodic review of objectives by superior and subordinate.

Features of MBO

1.       It is a philosophy

2.       Objectives are decided collectively

3.       Basis for measuring performance

4.       Regular review of performance

5.       Matching of objectives and resources

6.       More freedom to subordinate

7.       Integration of objectives.

Objectives of MBO

1.       Measuring performance

2.       Increasing growth of subordinates

3.       Increasing efficiency

4.       Relating individual performance to organisational goals

5.       Basis for deciding salary and promotion

6.       Improving communication among superiors and subordinates

7.       Device of organisational control.

Steps in MBO or Process

1.       Setting objectives at the top

2.       Clarifying organisational roles

3.       Setting subordinates objectives

4.       Periodic reviews

5.       Assessing final performance

Classification of objectives

1.       Primary objectives

2.       Secondary objectives

3.       Individual objectives

4.       Social objectives

Hierarchy of objective

Benefits of MBO

1.      Better Management

2.      Clarity in Organisation

3.      Encouraging Personal Commitment

4.      Developing Controls

5.      Improves Communication

6.      Improves Efficiency

Weakness of MBO

1.      Failure to teach MBO Philosophy

2.      Failure to give guidelines foe goal setters

3.      Difficulty in setting goals

4.      Emphasis on short term objectives

5.      Danger of inflexibility