Chapter 07 Managerial Planning and Goal Setting

Managerial Planning and
Goal Setting
Chapter7

Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved.
2
Planning for the Future
 Most organizations are facing turbulence
and growing uncertainty
● Economic, political, & social turmoil =
managers wonder how to cope
● Renewed interest in organizational planning
Manager’s Challenge: Europa hotel

3
Managerial Planning
and Goal Setting
 Process of planning
 How managers develop effective plans
 Goal setting
 Types of plans
 New approaches to planning
Topics
Chapter 7

4
The Importance of Goals and Plans
Guides to action
Rationale for decisions Standard of performance
Goals and Plans

5
Goals and Plans
 Goal - A desired future state that the organization
attempts to realize.
 Plan - A blueprint specifying the resource
allocations, schedules, and other actions necessary
for attaining goals
 Planning – determining the organization’s goals and
the means for achieving them
– the most fundamental management function
– the most controversial management function.

6
Mission
Statement
Strategic Goals/Plans
Senior Management
(Organization as a whole)
Tactical Goals/Plans
Middle Management
(Major divisions, functions)
Operational Goals/Plans
Lower Management
(Departments, individuals)
Internal Message
Legitimacy,
motivation,
guides,
rationale,
standards
External Message
Legitimacy for
investors, customers,
suppliers, community
Levels of Goals/Plans & Their Importance

7
Benefits for the Organization
• Legitimacy
• What the organization stands for - reason for being
• Symbolizes legitimacy
• Employees identify with overall purpose
• Source of Motivation and Commitment
• Employees’ identification with the organization
• Motivate by reducing uncertainty
• Guides to Action
• Provide a sense of direction; focus attention on specific
targets
• Direct efforts toward important outcomes
Provided from Internal and External Messages Goals and Plans Send

8
Benefits for the Organization
• Rationale for Decisions
• Learn what organization is trying to accomplish
• Make decisions to ensure that internal policies, roles,
performance, structure, products, and expenditures will be
made in accordance with desired outcomes
• Standard of Performance
• Serve as performance criteria
• Provide a standard of assessment
Provided from Internal and External Messages Goals and Plans Send

9
Organizational Mission
 Mission = organization’s reason for existing
 Mission Statement
– Broadly states the basic business scope and
operations that distinguishes it from similar types
of organizations
– May include the market and customers
– Some may describe company values, product
quality, attitudes toward employees

10
Bristol-Myers Squibb
Mission Statement
Our company’s mission is to
extend and enhance human life
by providing the highest-quality
pharmaceutical and related
health care products.

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Strategic Goals and Plans
Strategic Goals
 Where the organization wants to be in the future
 Pertain to the organization as a whole
Strategic Plans
 Action Steps used to attain strategic goals
 Blueprint that defines the organizational
activities and resource allocations
 Tends to be long term

12
Tactical Goals and Plans
●Tactical Goals
- Apply to middle management
- Goals that define the outcomes that major
divisions and departments must achieve
●Tactical Plans
-Plans designed to help execute major strategic plans
-Shorter than time frame than strategic plans

13
Operational Goals and Plans
• Operational Goals
- Specific, measurable results
- Expected from departments, work groups, and
individuals
• Operational Plans
- Organization’s lower levels that specify action
steps toward achieving operational goals
- Tool for daily and weekly operations
- Schedules are an important component

14
Goal Attainment
Means-end Chain
 Attainment of goals at lower levels permits
the attainment of high-level goals
 Traditional organizational responsibility
– Strategic = top management
– Tactical – middle management
– Operational = 1st line management & workers

15
Hierarchy of Goals
Operational
Goals
Tactical
Goals
Strategic
Goals
Mission
Traditional Responsibility
Top
Management
Middle
Management
1st-line
Management
& Workers
•Shrinking middle
management
•Employee
empowerment
Employees
Today

16
Characteristics of Effective
Goal Setting
 Specific and measurable
 Specific and measurable
 Challenging but realistic
● Defined time period
● Linked to rewards

17
Model of the MBO Process
Step 1: Set Goals Step 2: Develop Action Plans
Step 3:
Review Progress
Corporate Strategic Goals
Departmental goals
Individual goals
Step 4: Appraise Overall
Performance
Appraise Performance
Take Corrective Action
Review Progress
Action Plans

18
MBO Benefits and Problems
Benefits of MBO
 Manager and employee
efforts are focused on
activities that will lead to
goal attainment
 Performance can be
improved at all company
levels
 Employees are motivated
 Departmental and
individual goals are
aligned with company
goals
 Constant change prevents
MBO from taking hold
 An environment of poor
employer-employee relations
reduces MBO effectiveness
 Strategic goals may be
displaced by operational goals
 Mechanistic organizations and
values that discourage
participation can harm the
MBO process
 Too much paperwork saps
MBO energy
Problems with MBO

19
Single-Use Plans
For Goals Not Likely To Be Repeated
● A program is a complex set of objectives and
plans to achieve an important, one-time
organizational goal
● A project is similar to a program, but
generally smaller in scope and complexity

20
Standing Plans
For Tasks Performed Repeatedly
● A policy is a general guide to action and
provides direction for people within the
organization
● Rules describe how a specific action is to be
performed
● Procedures define a precise series of steps
to be used in achieving a specific job
Experiential Expercise: Company Crise Wave

21
Contingency Plans
Specific Situations - unexpected conditions
 Identify Uncontrollable Factors
– Economic turndowns
– Declining markets
– Increases in costs of supplies
– Technological developments
– Safety accidents
 Minimize Impact of Uncontrollable Factors
– Forecast a range of alternative responses to
most-likely high-impact contingencies

22
Building Scenarios
 Looking at trends and
discontinuities and imagining
possible alternative futures to
build a framework within which
unexpected future events can be
managed
Forces managers to rehearse mentally what they
would do if their best-laid plans were to collapse

23
Crisis Management Planning
Sudden - Devastating –Require Immediate Response
 Prevention
– Build trusting relationship with key stakeholders
– Open communication
 Preparation
– Crisis Management Team
– Crisis Management Plan
– Establish an Effective Communications system
 Containment
Ethical Dilemma: Completing Project WebFirst

24
Planning for High Performance
 Central Planning = Traditional Department
Group of planning specialists who develop plans for
the organization as a whole and its major divisions
and departments and typically report directly to the
president or CEO
 Decentralized Planning = High-Performance
Managers work with planning experts to develop their
own goals and plans

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Planning In The New Workplace
 Have a strong mission statement and vision
 Set stretch goals for excellence
 Establish a culture that encourages learning
 Embrace event-driven planning
 Utilize temporary task forces
 Planning still starts and stops at the top
Planning comes alive when employees are involved in
setting goals and determining the means to reach them

Chapter 07 Managerial Planning and Goal Setting

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Chapter 07 Managerial Planning and Goal Setting