Management. Part II: Planning Ch. 5. Organizational goals and plans

Transcription

1 Management Part II: Planning Ch. 5. Organizational goals and plans Dan C. Lungescu, PhD, assistant professor

2 Course outline Management Part I: Introduction Part II: Planning Part III: Organizing Part IV: Leading Part V: Controlling

3 Part II outline Management Part II: Planning Ch. 5. Organizational goals and plans Ch. 6. Strategic management Ch. 7. Decision making Ch. 8. Managing innovation and change

4 Learning objectives After studying this chapter, you should: Describe the major components in the overall planning process. Explain the concept of organizational mission and the purposes of a mission statement. Outline the major benefits of goals and explain how goals differ according to organizational level. Explain how goals facilitate performance. Explain how plans differ by organizational level and extent of recurring use. Describe the nature of tactical and operational planning. Discuss how to develop and implement tactical plans. Discuss the role of contingency planning. Identify the major barriers to effective planning and discuss how managers can overcome them.

5 Chapter 5 outline A. The overall planning process B. Organizational goals C. Organizational plans D. Contingency planning E. Managing the planning process F. Management by objectives

6 A. The overall planning process Mission Goals Plans Goal attainment (organizational efficiency and effectiveness) Outline» A. The overall planning process

7 Major components of planning Mission The organization s purpose or fundamental reason for existence. Mission statement A broad declaration of the basic, unique purpose and scope of operations that distinguishes it from others of its type. Goal A future target or end result that an organization wishes to achieve. Objective More narrow target, shorter time frame. Plan The means devised for attempting to reach a goal. Outline» A. The overall planning process» Major components of planning

8 Mission statement s components Customers: who are the organization s customers? Products or services: what are the organization s major products/services? Location: where does the organization compete? Technology: what is the firm s basic technology? Concern for survival: what is the organization s commitment to economic objectives? Philosophy: what are the basic beliefs, values, aspirations, and philosophical priorities of the organization? Self-concept: what are the organization s major strengths and competitive advantages? Concern for public image: what are the organization s public responsibilities and what image is desired? Concern for employees: what is the organization s attitude toward employees? Outline» A. The overall planning process» Components» Mission statement s components

9 Samples of mission statement Motorola The purpose of Motorola is to honorably serve the needs of the community by providing products and services of superior quality at a fair price to our customers. McGraw-Hill To serve the worldwide need for knowledge at a fair profit by gathering, evaluating, producing, and distributing valuable information in a way that benefits our customers, employees, authors, investors, and our society. Eli Lilly and Company The company feels an obligation to be a good corporate citizen wherever it operates. Outline» A. The overall planning process» Components» Mission statement» Samples

10 B. Organizational goals Benefits of goals: Goals can increase performance. Goals help clarify expectations. Goals facilitate the controlling function. Goals increase motivation. Levels of goals Outline» B. Organizational goals

11 Levels of goals Mission Owners Strategic goals Strategic plans Top management Organization-wide perspective Tactical goals Tactical plans Middle management Department perspective Operational goals Operational plans First-level management Unit/individual perspective Outline» B. Organizational goals» Levels of goals

12 Levels of goals (2) Strategic goals Broadly defined targets or future end results set by top management. Typically address issues relating to the organization as a whole. May sometimes be stated in fairly general terms. Are sometimes called official goals. Tactical goals Targets or future end results usually set by middle management for specific departments or units. Spell out what must be done by various departments to achieve the results outlined in the strategic goals. Tend to be stated in more measurable terms than is sometimes true of strategic goals. Operational goals Targets or future end results set by lower management that address specific measurable outcomesrequired from the lower levels. Outline» B. Organizational goals» Levels of goals (2)

13 The hierarchy of goals To sell merchandise and services to consumers at a profit, primarily but not exclusively in the US, in a manner consistent with corporate ethics and responsibilities. Mission To achieve and maintain: A position of leadership in the business in which we compete 16% return on equity 11% earnings growth 35-40% dividend payout Strategic goals Vice president of operations Open 20 new metropolitan stores Reduce costs by 2% Vice president of merchandising Expand lines of apparel and soft home furnishings Increase gross profit margins by 5% Vice president of marketing Increase sales per sq. foot by 15% Plan and implement 2 national promotions Tactical goals Store manager Coordinate store remodeling to be completed by Dec. 1 Reduce customer complaints by 5% Reduce costs by 2% Merchandising manager Increase gross profit margins by 5% Achieve desired apparel / home mix within budget Reduce markdowns by 10% Advertising manager Develop advertising campaign aimed at 5 targeted consumer types Test new advertising in 4 test markets Reach targeted segments within budget Operational goals Outline» B. Organizational goals» Levels of goals» The hierarchy of goals

14 How goals facilitate performance Job knowledge and ability Task complexity Goal content Work behavior Performance Goal commitment Knowledge of results (or feedback) Situational constraints (tools, materials, equipment) Outline» B. Organizational goals» How goals facilitate performance

15 1. Goal content Goals should be: 1. Challenging Within reasonable limits, difficult goals lead to higher performance; when individuals are asked to do their best, they typically do not perform nearly as well as they do when they have challenging goals. 2. Attainable If individuals are making maximum use of their skills and abilities, they cannot achieve higher performance levels. 3. Specific and measurable Workers must clearly understand what is expected and know when the goal has been achieved. When possible, goals should be stated in quantitative terms. 4. Time-limited Otherwise, goals have little meaning people can keep putting off achieving them. 5. Relevant In order to elicit support. Outline» B. Organizational goals» How goals facilitate performance» 1. Goal content

16 2. Goal commitment Goal commitment One s attachment to, or determination to reach, a goal. 5 major factors, and another one sometimes helpful: 1. Supervisory authority 2. Peer and group pressure 3. Public display 4. Expectations of success 5. Incentives and rewards (only positive ones) 6. Participation Outline» B. Organizational goals» How goals facilitate performance» 2. Goal commitment

17 3. Work behavior Goal content and goal commitment appear to affect an individual s actual work behavior by influencing four factors: Direction Goals channel attention and action toward activities related to them. Effort Goals to which individuals are committed boost effort by mobilizing energy. Persistence Some goals require persistence (maintaining direction and effort in behalf of a goal until it is reached) commitment to goals generates persistence. Planning Individuals who have committed themselves to achieving difficult goals are likely to develop plans or methods that can be used to attain those goals. Outline» B. Organizational goals» How goals facilitate performance» 3. Work behavior

18 Potential problems with goals Excessive risk taking Solution: Analyze risk; avoid careless or foolish risks. Increased stress Solution: Eliminate unnecessary stress by adjusting goal difficulty, adding staff, and offering training in necessary skills. Undetermined self-confidence (due to failure) Solution: Treat failure as a problem to be solved rather than a signal to punish. Ignored nongoal areas Solution: Make sure goals encompass key areas. Excessive short-run thinking Solution: Include some long-term goals. Dishonesty and cheating Solution: Set example of honesty, avoid using goals punitively, offer help in overcoming difficulties, give frequent feedback, and be open to information indicating goals are inappropriate. Outline» B. Organizational goals» How goals facilitate performance» Potential problems

19 C. Organizational plans Goals have little meaning unless careful consideration is given to how they will actually be achieved goals are the desired ends, plans are the means used to bring about the desired ends. Plans differ by: I. Level in the organization II. Extent of recurring use III. Time horizon Outline» C. Organizational plans

20 I. Levels of plans Level in the organization high middle low Time intervals strategic plans tactical plans operational plans Outline» C. Organizational plans» I. Levels of plans

21 1. Strategic plan Strategic plan Detailed action steps mapped out to reach strategic goals. Address such issues as how to respond to changing conditions, how to allocate resources, and what actions should be taken to create a unified and powerful organizationwide effort. Developed by top management. Long time horizon (years). Outline» C. Organizational plans» I. Levels of plans» 1. Strategic plan

22 2. Tactical plan Tactical plan The means charted to support implementation of the strategic plan and achievement of tactical goals. Intermediate time frames (1 to 3 years). More specific and concrete than strategic plans. Outline the major steps that particular departments will take to reach their tactical goals. Developed by middle managers. Strategy focuses on resources, environment, and mission, whereas tactics deal primarily with people and action. Outline» C. Organizational plans» I. Levels of plans» 2. Tactical plan

23 3. Operational plan Operational plan The means devised to support implementation of tactical plans and achievement of operational goals. Time frames of less than 1 year (even days). Developed by lower-level managers. Spell out specifically what must be accomplished over short time periods in order to achieve operational goals. Outline» C. Organizational plans» I. Levels of plans» 3. Operational plan

24 II. Recurring use of plans According to how frequently the plans will be used: a. Single-use plans Plan aimed at achieving a specific goal that, once reached, will most likely not recur in the future. types b. Standing plans Plan that provides ongoing guidance for performing recurring activities. types Outline» C. Organizational plans» II. Recurring use of plans

25 a. Single-use plans 1. Project A plan that coordinates a set of limited-scope activities that do not need to be divided into several major projects in order to reach a major nonrecurring goal. Often has its own budget. May be one of several related to a particular program, or may be a separate, self-contained set of activities sufficient to reach a particular goal. 2. Program A comprehensive plan that coordinates a complex set of activities related to a major nonrecurring goal. Typically involves several different departments or units. Is composed of several different projects. May take more than 1 year to complete. Outline» C. Organizational plans» II. Recurring use of plans» a. Single-use plans

26 b. Standing plans 1. Rule A statement that spells out specific actions to be taken or not taken in a given situation. 2. Procedure A prescribed series of related steps to be taken under certain recurring circumstances. 3. Policy A general guide that specifies the broad parameters within which organization members are expected to operate in pursuit of organizational goals. Outline» C. Organizational plans» II. Recurring use of plans» b. Standing plans

27 III. Time horizons of goals and plans Goals Operational Tactical Strategic 1 year 1 to 5 years 5+ years Short range Intermediate range Plans Long range Outline» C. Organizational plans» III. Time horizons of goals and plans

28 D. Contingency planning Contingency planning The determination of alternative courses of action to be taken if an intended plan is unexpectedly disrupted or rendered inappropriate. Action point 1: Action point 2: Action point 3: Action point 4: Develop plan, considering contingency events. Implement plan and formally identify contingency events. Specify indicators for the contingency events and develop contingency plans for each possible event. Successfully complete plan or contingency plan. Monitor contingency event indicators and implement contingency plan if necessary. Outline» D. Contingency planning

29 E. Managing the planning process Barriers to planning Environment Reluctance to establish goals Resistance to change Constraints Time and expense Effective planning Overcoming the barriers Start at the top Recognize limits Communication Participation Revision and updating Contingency planning Outline» E. Managing the planning process

30 Barriers to effective planning Dynamic and complex environment Rapid change, technological innovation, intense competition, and similar factors can each make it difficult for an organization to accurately assess future opportunities and threats. Reluctance to establish goals The reason may be lack of confidence or fear of failure; if a manager sets a goal that is specific concise, and time related, then whether he/she attains it is obvious; other factors: lack of ability, lack of information, poor reward system. Outline» E. Managing the planning process» Barriers to effective planning

31 Barriers to effective planning (2) Resistance to change Almost by definition, planning involves changing one or more aspects of the organization s current situation. Reasons for resistance: fear of the unknown, a preference for familiar goals and plans, economic insecurity. Constraints A lack of human/financial/physical resources, government restrictions, strong competition, a lack of information. Time and expense I m too busy to plan today; I ll do it tomorrow. ; effective planning takes hours and hours of time, enormous energy, and an unwavering belief in its importance. Outline» E. Managing the planning process» Barriers to effective planning (2)

32 Overcoming the barriers Starting at the top Top management must take the lead in establishing the importance of planning in determining the mission and strategy that the organization is to follow. Such action sets the stage for subsequent planning at lower levels and also reinforces the importance of planning to everyone in the organization. Recognizing the limits to planning Planning is not a panacea that will solve all of an organization s problems, nor is it an iron-clad set of procedures to be followed at any cost» adjustments and exceptions are to be expected as the plan unfolds. Communication Planning must be communicated to others in the organization everyone involved in the planning process should know what the overriding organizational strategy is, what the various functional strategies are, and how they are all to integrated and coordinated. Outline» E. Managing the planning process» Overcoming the barriers

33 Overcoming the barriers (2) Participation It is important that people responsible for implementing plans have a voice in developing them from the outset people are usually more committed to plans that they have helped to shape. Revision and updating The manager should recognize that planning is a dynamic process in which long-range and intermediate plans are frequently revised and updated in response to new information ant the completion of short-range plans. Contingency planning Is especially useful when environmental turbulence is likely. Proper contingency planning enables the organization to avoid crisis management. When a contingency event occurs, the prepared organization is able to make a smooth transition to the appropriate contingency plan rather than having to react hastily by throwing a new plan together on short notice. Outline» E. Managing the planning process» Overcoming the barriers (2)

34 F. Management by objectives MBO A process through which specific goals are set collaboratively for the organization as a whole and every unit and individual within it; the goals are then used as a basis for planning, managing organizational activities, and assessing and rewarding contributions. Outline» F. Management by objectives

35 Dan C. Lungescu, PhD, assistant professor