Planning Ahead (management)
Schermerhorn –Wright
Prepared by:Michael K. McCuddy
Adapted by: Lynda
Anstett & Lorie Guest
Published by: John Wiley & Sons Canada, Ltd.
Planning Ahead
—Chapter 8 Study Questions
ØHow do managers plan?
ØWhat types of plans do managers use?
ØWhat are the useful planning tools and techniques?
ØWhat is the control process?
ØWhat are the common organizational controls?
Study Question 1: How
do managers plan?
ØPlanning
–The
process of setting objectives and determining how to best accomplish them.
ØObjectives
–Identify
the specific results or desired outcomes that one intends to achieve.
ØPlan
–A
statement of action steps to be taken in order to accomplish the objectives.
ØSteps in the planning process:
–Define
your objectives.
–Determine
where you stand vis-à-vis objectives.
–Develop
premises regarding future conditions.
–Analyze
and choose among action alternatives.
–Implement
the plan and evaluate results.
ØBenefits of planning:
–Improves
focus and flexibility.
–Improves
action orientation.
–Improves
coordination.
–Improves
time management.
–Improves
control.
Study Question 2:
What types of plans do managers use?
ØShort-range and long-range plans
–Short-range
plans = 1 year or less
–Intermediate-range
plans = 1 to 2 years
–Long-range
plans = 3 or more years
ØPeople vary in their capability to deal effectively with
different time horizons.
ØHigher management levels focus on longer time horizons.
ØStrategic and operational plans
–Strategic
plans —set broad, comprehensive, and longer-term action directions for the
entire organization.
–Operational
plans —define what needs to be done in specific areas to implement strategic
plans.
•Production
plans
•Financial
plans
•Facilities
plans
•Marketing
plans
•Human
resource plans
ØPolicies and procedures
–Standing
plans
•Policies
and procedures that are designed for repeated use.
–Policy
•Broad
guidelines for making decisions and taking action in specific circumstances.
–Rules
or procedures
•Plans
that describe exactly what actions are to be taken in specific situations.
ØBudgets and project schedules
–Single-use
plans
•Only used once to meet the needs
and objectives of a well-defined situation in a timely manner.
–Budgets
•Single-use
plans that commit resources to activities, projects, or programs.
•Fixed,
flexible, and zero-based budgets.
–Projects
•One-time
activities that have clear beginning and end points.
•Project
management and project schedules.
Study Question 3:
What are the useful planning tools and techniques?
ØForecasting
–Making
assumptions about what will happen in the future.
–Qualitative
forecasting uses expert opinions.
–Quantitative
forecasting uses mathematical and statistical analysis.
–All
forecasts rely on human judgment.
–Planning
involves deciding on how to deal with the implications of a forecast.
ØContingency planning
–Identifying alternative courses
of action that can be implemented to meet the needs of changing circumstances.
–Contingency
plans anticipate changing conditions.
–Contingency
plans contain trigger points.
ØScenario planning
–A
long-term version of contingency planning.
–Identifying
alternative future scenarios.
–Plans
made for each future scenario.
–Increases
organization’s flexibility and preparation for future shocks.
ØBenchmarking
–Use of external comparisons to
better evaluate current performance and identify possible actions for the
future.
–Adopting
best practices of other organizations that achieve superior performance.
ØUse of staff planners
–Coordinating the planning
function for the total organization or one of its major components.
–Possible
communication gaps between staff planners and line management.
ØParticipation and involvement
–Participatory planning requires
that the planning process include people who will be affected by the plans
and/or will help implement them.
–Benefits
of participation and involvement:
•Promotes
creativity in planning.
•Increases
available information.
•Fosters
understanding, acceptance, and commitment to the final plan.
Study Question 4:
What is the control process?
ØControlling
–The
process of measuring performance and taking action to ensure desired results.
–Has a
positive and necessary role in the management process.
–Ensures
that the right things happen, in the right way, at the right time.
–Organizational
learning and after-action review.
ØSteps in the control process:
–Step 1
—establish objectives and standards.
–Step 2
—measure actual performance.
–Step 3
—compare results with objectives and standards.
–Step 4
—take corrective action as needed.
ØStep 1 —establishing objectives and standards
–Output
standards
•Measure
performance results in terms of quantity, quality, cost, or time.
–Input
standards
•Measure
effort in terms of amount of work expended in task performance.
ØStep 2 —measuring actual performance
–Goal
is accurate measurement of actual performance results and/or performance
efforts.
–Must identify significant differences between
actual results and original plan.
–Effective
control requires measurement.
ØStep 3 —comparing results with objectives and standards
–Need
for action reflects the difference between desired performance and actual
performance
–Comparison
methods:
•Historical
comparison
•Relative
comparison
•Engineering
comparison
ØStep 4 —taking corrective action
–Taking
action when a discrepancy exists between desired and actual performance.
–Management
by exception
•Giving
attention to situations showing the greatest need for action.
•Types
of exceptions
–Problem
situation
–Opportunity
situation
ØFeedforward controls…
–Employed
before a work activity begins.
–Ensures
that:
•Objectives
are clear.
•Proper
directions are established.
•Right
resources are available.
–Focuses
on quality of resources.
ØConcurrent controls…
–Focus
on what happens during work process.
–Monitor
ongoing operations to make sure they are being done according to plan.
–Can
reduce waste in unacceptable finished products or services.
ØFeedback controls …
–Take
place after work is completed.
–Focus
on quality of end results.
–Provide
useful information for improving future operations.
ØInternal and external control
–Internal
control
•Allows motivated individuals and
groups to exercise self-discipline in fulfilling job expectations.
–External
control
•Occurs
through personal supervision and the use of formal administrative systems.
Study Question 5:
What are the common organizational controls?
ØManagement by Objectives (MBO)
–A
structured process of regular communication.
–Supervisor/team
leader and workers jointly set performance objectives.
–Supervisor/team
leader and workers jointly review results.
ØMBO involves a formal agreement specifying …
–Workers’
performance objectives for a specific time period.
–Plans
through which performance objectives will be accomplished.
–Standards
for measuring accomplishment of performance objectives .
–Procedures
for reviewing performance results.
ØThe MBO process:
–Supervisor
and workers jointly set objectives, establish standards, and choose actions.
–Workers act individually to
perform tasks; supervisors act individually to provide necessary support.
–Supervisor and workers jointly
review results, discuss implications, and renew the MBO cycle.
ØTypes of MBO performance objectives
–Improvement
–Personal
development
–Maintenance
ØCriteria for effective performance objectives
–Specific
–Time
defined
–Challenging
–Measurable
ØPitfalls to avoid in using MBO
–Tying
MBO to pay.
–Focusing
too much attention on easily quantifiable objectives.
–Requiring
excessive paperwork.
–Having
managers tellworkers their objectives.
ØAdvantages of MBO
–Focuses
workers on most important tasks and objectives.
–Focuses
supervisor’s efforts on important areas of support.
–Contributes
to relationship building.
–Gives
workers a structured opportunity to participate in decision making.
ØEmployee discipline systems
–Disciplineis
the act of influencing behavior through reprimand.
–Discipline
that is applied fairly, consistently, and systematically provides useful
control.
ØTo be effective, reprimands should …
–Be
immediate.
–Be
directed toward actions, not personality.
–Be
consistently applied.
–Be
informative.
–Occur in
a supportive setting.
–Support
realistic rules.
ØEmployee discipline systems
–Progressive disciplineties
reprimands to the severity and frequency of the employee’s infractions.
–Progressive discipline seeks to
achieve compliance with the least extreme reprimand possible.
ØImportant financial aspects of organizational performance …
–Liquidity
•The
ability to generate cash to pay bills.
–Leverage
•The
ability to earn more in returns than the cost of debt.
–Asset
management
•The
ability to use resources efficiently and operate at minimum cost.
–Profitability
•The
ability to earn revenues greater than costs.
ØBreak-even analysis …
–Determination
of the point at which sales revenues are sufficient to cover costs.
–Break-Even
Point = Fixed Costs / (Price – Variable Costs)
–Used
in evaluating:
•New
products
•New
program initiatives
ØPurchasing control …
–A
productivity tool
–Trends
in purchasing control:
•Leveraging
buying power
•Committing
to a small number of suppliers
•Working
together in supplier-purchaser partnerships
ØInventory control
–Goal
is to ensure that inventory is just the right size to meet performance needs,
thus minimizing the cost.
–Methods
of inventory control:
•Economic
order quantity
•Just-in-time
scheduling
ØStatistical quality control
–Quality
control involves checking processes, materials, products, and services to
ensure that they meet high standards.
–Statistical
quality control involves:
•Taking
samples of work.
•Measuring
quality in the samples.
•Determining
the acceptability of results.
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