COURSE: LEADERSHIP AND MANAGEMENT

LECTURE FIVE: PLANNING

BY: ABDIRAHMAN SULEIMAN

FEBRUARY 21, 2025

Contents
Planning ........................................................................................................................................................ 2
What is Planning? ..................................................................................................................................... 2
Scope of plans ............................................................................................................................................... 4
Levels of planning ......................................................................................................................................... 5
Strategic planning ......................................................................................................................................... 6
Characteristics of strategic plans ............................................................................................................. 7
Why organizations employ strategic planning ............................................................................................ 8
Steps in Planning .......................................................................................................................................... 9
Effective Planning ................................................................................................................................... 12
Management by Objectives ....................................................................................................................... 12
The MBO process.................................................................................................................................... 13
Advantages and Disadvantages of MBO ..................................................................................................... 14
Barriers to effective planning .................................................................................................................... 15
To avoid barriers to effective planning, managers can do the following: ........................................... 16
Summary................................................................................................................................................. 18
Suggestions for further reading ................................................................................................................... 19
3.8 Reference and Textbooks ...................................................................................................................... 19

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Planning
Planning is the first task of a manager and forms the basis from which all the other tasks are
derived. Management decides the future of the organization, by planning, strategizing and
implementing plans.

What is Planning?

Planning is deciding what objectives to accomplish, the actions to be taken in order to achieve
them, the organizational position assigned to do them and who would be responsible for the
actions needed.

a) Planning precedes all other managerial functions as it establishes the objectives and
purpose of the project or enterprise.

b) It is the ‘star or compass' which directs the project.

c) Planning is a pervasive function - as it is performed by all managers at all levels. It only

varies with authority and nature of policies. (A manager is not a manager if he does not perform
a planning function).

d) Research has shown that effective supervisors even at the lowest levels are those who have
the ability to plan.

e) Plans must be efficient - where efficiency is measured by the contribution of the plan to
accomplish objectives at the lowest cost. It implies the input-output ratio and cost-benefit
analysis of the of the plan.

f) Efficiency of plans is not measured only in terms of money but intangible costs such low
morale, hostility by employees, layoffs, and resentment.

g) A plan becomes inefficient if it cannot accomplish its intended objective or accomplishes it

at high costs e.g. A CEO who adopts a retrenchment plan to cut costs only to experience lower
productivity due to fear, resentment and loss of morale by the employees thus defeating the
objectives of reducing expenses and making profits.

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Organizations function in uncontrollable environments and to survive they must plan to enable
them be proactive. Effective planning requires development of objectives to direct the plans.
Plans can be influenced by: Values, experiences and personality of the leader of an organization.
Corporate culture - i.e. the beliefs and values shared by people

Types of Plans

Plans are hierarchical. They range from the broad mission or purpose of the organization to
specific strategies.

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Scope of plans
Plans can be divided into:

Strategic plans - These are broad plans developed by top managers to guide the general
direction of the firm. They follow from major goals of the firm and indicate what business the
firm is in or what business it intends to be in. They show where the firm will position itself
within its environment.

Tactical plans - They have a moderate scope and immediate timeframe. They are concerned
with how to implement the strategic plans that are already developed. They deal with specific
resources and time constraints. They mainly focus on people and action. They are mainly
associated with middle management.

Operational plans - They have the narrowest focus and they fall into many types. They include:

Standing plan- these are developed to handle recurring and relatively routine situations. When
the same situations occur repeatedly, managers have to develop policies, rules and standard
operating procedures to control the way employees perform their tasks.

Single use plans - are developed handle non-programmed decision making in an unusual or
unique situation, e.g. specific action plan to complete a project or programme.

Long-range planning - covers several time periods from 5 years. They are mostly associated
with with activities such as major expansion of facilities, development of top managers, change
of manufacturing systems etc.Top managers are responsible for long range planning
(modernization of Kenyan airports is a KAA long range plan driven by top management)

Intermediate planning - they are less than five years and because of the uncertainty associated
with long-range plans, intermediate plans are the primary concern of most organizations. They
are usually developed by both top and middle management. They are the building blocks in the
pursuit of long range plans.

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Short range planning - These cover time periods of one year or less. They focus on day to day
activities and provide a concrete base for evaluating progress towards achievement of
intermediate and long range plans e.g. the economic survey.

Levels of planning
Planning takes place at three levels of management: corporate, business and functional.

Corporate level strategy: The corporate level plan contains top management decisions
pertaining to the organization's mission and goals, overall strategy and structure. The corporate
level strategy indicates the industry and markets the organization intends to operate in. It also
provides the framework within which managers create their business level plan.

Business level strategy: states the methods the division or business it intends to use to compete
against its rivals in an industry. The business level plan provides the framework within which
functional managers propose to pursue to help the division attain its business level goals which
in turn will allow the organization to achieve its corporate goals.

Functional level strategy: These set out the actions managers intend to take at the level of
departments such as manufacturing, marketing, and research and development to allow the
organization to attain its goals.

Consistency across the three levels is important for success. Functional strategies should be
consistent with divisional goals while business goals should in turn be consistent with corporate
strategies.

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Strategic planning
Strategic planning is the formalized long-range planning process used to define and achieve
organizational goals. It involves: selecting an organizational goal, determining the policies and
strategic programmes necessary to achieve specific objectives, establishing the methods
necessary to ensure that policies and strategic programmes are implemented. A vital component
in strategic planning is organizational goals. They provide a sense of direction for organizational
activities. Goal includes purpose, mission and objectives.

Purpose is the primary role of an organization as defined by the society in which it operates. It is
a broad aim that applies not only to a given organization but to all organizations of its type in
that society. For example, the purpose of all hospitals is to provide healthcare.

Mission is that unique aim that sets the organization apart from others of its type. Although the
purpose of all hospitals is the same, individually, they have different missions.

Objective is the target that must be reached if the organization is to achieve its goals. They are
the translation of its mission into specific corporate terms against which results can be measured.

Strategy refers to the pattern of the organizations response to its environment over time. Thus it
is a broad programme for achieving the organizations objectives and thus implementation of its
vision.

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Characteristics of strategic plans

A useful strategic plan exhibits many characteristics. Specifically, it should:

1. Provide answers to basic problems such as: what business should we be in? who are our
customers or who should they be?
2. Provide the basis for detailed planning and the day to day managerial decisions
3. Set priorities - Setting priorities allows for the plan to be adjusted according to changing
needs or resources.
4. Achievable, measurable, and time sensitive [SMART] -remember, it's better to do a
few things well than many things poorly. The plan should contain goals that are
measurable and have deadlines.
5. Flexible and responsive to changing conditions - the plan is a road map that may
contain unforeseen detours such as unexpected crises, new opportunities, or changes in
resources.
6. Short and simple - plans that are more like a book will sit on a shelf. Keep it focused on
the most important things to accomplish.
7. A unit, not a menu - a useful plan is not a wish book. Everything in the plan needs to be
accomplished.
8. The means to an end, not an end in itself - the plan is the process by which it reaches
its destination; it is not the destination.
9. Based on a three- to five-year period - the strategic plan should be a living document
that has a one-year drop off and a new year added so that it always covers the same time
period.

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Why organizations employ strategic planning

1. Managers find that the definition of the mission of their organizations in specific terms
through strategic planning gives their organization direction and purpose.
2. It results in better functioning of the organization because it helps managers develop a
clear cut concept of their organization making it possible to formulate plans and activities
that bring the organization closer to its goals
3. It helps managers to prepare for and respond to the increasing complex and dynamic
environment. They are able to anticipate changes in the environment and prepare for them.
Such changes include: technological change; growing complexity of managerial jobs;
complex external environment (politics, culture, society etc); time lag between current
decisions and their future results etc. With all these changes managers cannot afford to
take a short-term perspective of their organization. They need to look more into the future
and integrate it with the present if their organizations are going to survive.

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Steps in Planning
1. Being aware of opportunities by analyzing the environment. At the outset the internal
and external environment is analyzed in order to identify the company's strengths and
weaknesses (in internal environment) and opportunities and threats (existing in the
external environment) this is also known as SWOT (Strengths Weaknesses Opportunities
and Threats) analysis.
2. Establishing objectives or goals in the light of the environmental scanning, clear or
probable opportunities are identified and objectives or goals are clearly defined in
specific terms. Priorities in all the key areas of operations associated with such objectives
are also identified and defined, so that there may be special emphasis on their planned
solutions.
3. Premising are planning assumptions which form the context in which planning takes
place.
4. Planning premises set the parameters or boundaries within which realistic goals can be
formulated.
5. It means the organization cannot set goals and make goals that are unattainable in terms
of the environment and resources at the disposal of the org.

According to Koontz & O'Donnel:

"Planning premises include assumptions or forecasts of the future & known conditions that will
affect the course of plans, such as prevailing policies and existing company plans that control the
basic nature of supporting plans."

Planning Premises can be classified into external and internal premises. External premises are
those which lie outside the firm. General business environment including economic,
technological, political and social conditions, the product market consisting of the demand and
supply forces for the production or service and the factor market for production resources.
Internal premises include purpose, mission, experience of management and management values
which determine the organizational commitment to social responsibility.

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In order to develop consistent and coordinate plans, it is necessary that planning is based upon
carefully considered assumption and predictions

a. Determining alternative courses of action.

This step involves search and examination of alternative courses of action. Alternatives are many
but they have to be reduced and analyzed until only a few promising ones remain. Impossible or
highly difficult propositions are left out.

b. Evaluating alternative courses of action.

Evaluation involves weighing the strengths and weaknesses of a plan against set objectives in
terms of risk, profitability, returns, costs, technology, image etc. Evaluation is difficult because
of the many variables that can influence a plan.

c. Selecting a course of action.

This is the point at which a plan is adopted. It is the point of decision making on which
alternative to follow.

d. Formulating derivative plans.

Once a decision is made and a course of action taken, derivative plans are required to support the
basic plan. E.g. If Kenya airways (KQ) decides to acquire a new fleet of planes, derivative plans
would be needed for expansion of runways, hiring and training new pilots, crew, acquisition of
spare parts, scheduling and advertising, insurance etc.

e. Numbering plans by budgeting.

After decisions are made and plans set, they have to be given meaning. This is done by
converting the plans into budgets representing income and expenses, profit and losses. Budgets
are an important measure and means of control of plans.

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Planning is a rational, systematic approach to accomplishing an objective

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Effective Planning

Lack of effective planning is the major cause of many management failures. There are two main
barriers to effective planning: i). the reluctance to establish goals, and ii) resistance to change.

Management by objectives is one approach to planning that helps to overcome some of these
barriers. It is based on the idea that organizational objectives are such an important and
fundamental part of management that managers should use a management approach based
exclusively on them. This concept emphasizes the establishment of common objectives by
managers and their subordinates acting together and the use of these objectives as the primary
basis of motivation, evaluation, and control efforts. The management by objectives approach has
been widely adopted in many organizations.

Management by Objectives
The term management by objectives (MBO) was popularized as an approach to planning by
Peter Drucker in 1954 in his book The Practice of Management. Drucker argued that the first
requirement of managing any enterprise is "management by objectives and self control." He
contrasted management by objectives with management by drivers. Management by drivers
responses to new financial or market pressures with an "economy drive" and "production drive."
In management by objectives, effective planning depends on every manager having clearly
defined objectives that apply specifically to his individual functions within the company. Each
person has an identified specific contribution to enhance his unit's performance. If all the
individuals achieve their objectives, then the organization's overall objectives will be attained.

According to Drucker an MBO system has the following basic characteristics:

 MBO is a planning system requiring each manager to be involved in the total planning
process by participating in establishing the objectives for his own department and for
higher levels in the organization.
 MBO improves communications within the firm by requiring that managers and
employees discuss and reach agreement on performance objectives.

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  By participating in the process of setting objectives, managers and employees develop a
better understanding of the broader objectives of the organization and how their goals
relate to those of the total organization.
 Performance reviews are conducted periodically to determine how close individuals are
to attaining their objectives.
 Rewards are given to individuals on the basis of how close they come to reaching their
objectives.

MBO offered a comprehensive program for converting overall organizational objectives into
specific objectives for organizational units and individual members. Many similar programs have
been developed, including "management by results," "goals management," "goals and controls,"
"performance targets", "Key performance indicators" and others. Despite differences in name,
these programs are similar.

The MBO process

There are four essential elements common to MBO programs:

 Goal specificity. Objective setting involves employees at all levels. Objectives should be
jointly derived. Appropriate goals must be set by top managers of the organization.
However, managers and subordinates must develop and agree on each individual's
objectives.
 Action planning. Action plans are made for both individuals and for departments. The
individuals have a wide range of discretion on choosing the means of achieving
objectives.
 Self-control. Self control means systematic monitoring and measuring of performance by
the individuals themselves.
 Periodic review. This final step evaluates performance and initiates corrective action
when behavior deviates from the established objectives. Managers and subordinates
periodically meet to review progress towards the objectives. Moreover, management
must follow through on the employees performance evaluations and reward employees
accordingly.

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Each of these elements can be converted into specific steps.

Management by objectives is one useful method of seeking individual manager

commitment to the objectives of the organization and providing managers with
clearly stated expectations.

Advantages and Disadvantages of MBO

MBO has many benefits when used properly and is associated with management problems when
used improperly.

Several reasons why organizations can fail in their MBO efforts have been identified. Some of
these are:

1. Failure to teach the philosophy of MBO. Not all managers are familiar with MBO and
may not be able to explain it to subordinates.
2. Failure to give guidelines to goal-setters. MBO cannot work if organizational goals,
mission and purpose are not clear to the managers who are expected to implement it.
Managers need planning premises - i.e. assumptions as to the future, knowledge of major
policies etc..
3. Difficulty of setting goals. Goal setting can be technical and complex requires thorough
knowledge and study.
4. Dangers of inflexibility. Managers are reluctant to change objectives or allow
subordinates to change them due to obsolescence.
5. lack of involvement and commitment of top level managers
6. Overemphasizing performance appraisal aspects,

When used properly, MBO has the following benefits:

1. Better managing - MBO forces managers to think of planning for results rather than
merely planning for activities. e.g. on communication, a good objective would be "to
issue a two page newsletter beginning April 1, 2002 to all employees".

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 2. Clarify organization roles and structures. Forces managers to make use of the people
around them through delegation, decentralization to work etc.
3. Encourages personal commitment: Clearly defined objectives encourage commitment as
people know exactly what is expected from them, hence people become masters of their
own fate.
4. Development of effective controls. Involves measuring results and taking action to
correct deviations from plans to ensure goals are reached.
5. Improved communication because of the process of goal discussion between managers
and subordinates.

Barriers to effective planning

Plans sometimes fail because of:-

1) Lack of commitment to planning. This results in fighting fires hence management by crises.

2) Failure to develop and implement sound strategies due to fear of failure.

3) Lack of meaningful objectives and goals because they are not clear and actionable, thus
cannot be accomplished.

4) Tendency to underestimate the importance of planning premises - by ignoring the

environment.

5) Failure to see the scope of plans i.e. neglecting other types of plans e.g. strategies, policies,
rules etc.

6) Failure to see planning as a rational process.

7) Excessive reliance on experience yet the past is not always the same as the future.

8) Lack of top management support.

9) Lack of clear delegation.

10) Lack of adequate control techniques and information - need for feedback and evaluation.

11) Resistance to change.

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12) Time consuming and expensive hence, planning is neglected in favour of short-term
activities.

To avoid barriers to effective planning, managers can do the following:

1) Start at the top - to ensure commitment top managers should set the goals and strategies that
lower level managers will follow

2) Planners should recognize limits - no planning system is perfect

3) Communication - vertical communication within the organizational hierarchy

4) Participation - involvement leads to motivation and ownership of the plans

5) Integration - of the long-term, intermediate and short-range plans must be properly integrated
for effective overall planning

6) Contingency planning - develop alternative plans of action if conditions change

7) Planning must not be left to chance

8) Planning must be organized

9) Goals, strategies and policies must be communicated clearly

10) Planning must include awareness and acceptance of change

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Self-assessment questions

Activity

To gauge how well you have understood the lecture on planning, make an attempt to answer the
following questions.

1) Define planning

2) Explain why planning is important.

3) Explain the types of plans in the hierarchy of plans

4) Identify the three levels of plans

5) State the characteristics of strategic plans

6) Outline the steps in the planning process

7) State what is meant by planning premises and explain their importance

8) Describe the concept of ‘management by objectives'

9) Identify the barriers to planning and discuss how they may be avoided

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Summary

In this lecture, we discussed the planning function of management. We noted that planning
involves deciding what objectives to accomplish, the actions position assigned to do them and
who would be responsible for the actions needed. Planning precedes all other managerial functions
as it establishes the objectives and purpose of the project or enterprise. to be taken in order to
achieve them, the organizational

It is analogous to a ‘star or compass' which directs the project. It is also a pervasive function as it
is performed by all managers at all levels. It only varies with authority and nature of policies. Plans
are in a hierarchy from the most broad - vision and mission to the most specific such as projects
and budgets. Plans take place at three levels - corporate, business and functional and fall within
long term, intermediate and short term. We also noted that the planning process begins with a
SWOT analysis to identify opportunities and this is followed by a number of decisions that include
formulating alternative plans, evaluating, choosing and eventually numberizing through budgets.
For plans to be effective, they should be founded on clear objectives and outcomes. This is best
understood by the discussion on management by objectives (MBO). In management by objectives,
effective planning depends on every manager having clearly defined objectives that apply
specifically to his individual functions within the company. Each person has an identified specific
contribution to enhance his unit's performance. If all the individuals achieve their objectives, then
the organization's overall objectives will be attained.

We also observed that plans can sometimes fail due to lack of commitment by the implementers,
lack of meaningful objectives and goals, tendency to underestimate the importance of planning
premises, failure to see the scope of plans and lack of clear delegation. To avoid barriers to
effective planning, managers can ensure commitment of top managers, recognize limitations,
greater participation and developing alternative plans of action

Planning is a process that does not end when a plan is agreed upon; plans must be implemented.
At any time during the implementation and control process, plans may require modification to
avoid becoming useless or even damaging.

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Suggestions for further reading

1. Koontz H.O et al, (1988) Management, McGraw Hill

2. Cole G.A, (1996) Management - Theory and Practice, Pitman, London
3. Donnelly J, Fundamentals of Management, Irwin, Boston
4. Dressler, G, (2002) Management Fundamentals-Modern principles and practices, Irwin,
Boston

Reference and Textbooks

Edwin A. Fleishman and Edwin F. Harris, "Patterns of Leadership Behaviour related to

employee Grievances and Turnover," Personnel Psychology, Spring, 1962, pp. 43-56

Robert R. Blake and Jane S. Mouton, The Managerial Grid, " Managerial Facades,"

Advanced Management Journal, July, 1966, p.31

R.N. McMurry, "The Case for Benevolent Autocracy," Harvard Business Review,

January- February, 1958, pp-82-90

Victor H. Vroom and Floyd C. Mann, "Leader Authoritarianism and Employee

Attitudes," 1960, pp. 125-140

C.G. Browne and Richard P. Shore, "Leadership and Predictive Abstracting," Journal of

Applied Psychology, April, 1956, pp. 112-116

G. A. Cole (1996) Management Theory and Practice, fifth edition, ELBS, London.

Dubrin, Ireland & Williams (1998) Management & Organization, South Western,

London

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