PLANNING FUNCTION

Plan is a set of intended actions usually mutually related through which

one expects to achieve a goal.

Planning
This is the basic process by which we select our goals and define how to
achieve them.
Or
This involves determining the organization objective and the goals that
the organization is aiming to achieve.

Objectives
 To provide proper information for decision making.
 To enable managers to identify risks that the organization may be
exposed to.
 To bring certainty in future events.
 To provide specific direction
 To bring economy in managerial operations.
 to predict about the future course of events
 To attain predetermined goals.

Importance of Planning

1. It gives directions to the activities of an organization.

2. It facilitates control.
3. It focuses attention on objectives and results.
4. It establishes a basis for teamwork.
5. It provides guidelines for decision making.
6. It helps to anticipate problems and cope with changes.
7. It serves as a prerequisite to employ all the other management
functions.

Limitations of Planning

1. It is time consuming.
2. It is costly.
3. Lack of commitment.
4. Lack of accuracy.
5. Lack of top management support.
6. Excessive reliance on experience.

Types of Plans

1. Based on Nature

(a) Strategic Plans - These are broad plans which are long-term in
nature and are usually developed by top manager to guide the
general direction of the firm.

1|Page
 (b)Tactical Plans - These are plans concerned with how to implement
the strategic plans that have been already developed. They deal
with specific resources and time constraints. They are mainly
associated with the middle management.
(c) Operational Plans – These are plans associated with day to day
running of an organization.

2. Based on Use
(i) Single use plans
(ii) Standing Plans

Single use Plans

These are plans set up to handle events that happen only once e.g
projects and programs etc.

Standing Plans
These are plans developed to handle recurring activities and relatively
routine situations e.g policies, rules and regulations etc.

3. Based on Time
They may be:
(i) Long range Plans
(ii) Intermediate Plans
(iii) Short range Plans
Long range Plans
These are plans that cover a time period of 5 years to as long as several
decades. They are mainly associated with activities such as major
expansion of facilities etc. Top managers are responsible for long range
planning in most organizations.

Intermediate Plans
These are plans that cover a time period of 1 year to 5 years. They are
usually developed by both top and middle management.

Short range Plans

These are plans that cover a time period of 1 year or less. It focuses on
the day to day activities and provides a concrete base for evaluating
progress towards the achievement of intermediate and long range plans.

Principles of Planning

1. Principle of flexibility - Plans should be flexible to allow for

modifications incase of changes.
2. Principle of commitment – For plans to be effective, there is
need for dedication of the plans to the very end.
3. Principle of contribution to objectives – the purpose of all plans
is to facilitate the effective and efficient achievement of goals of the
organization.

2|Page
 4. Principle of planning premises - Planning should be done within
the planning premise whichthe assumptions are providing a
background against which the estimated events affecting the
planning will take place.
5. Principle of navigational change -Since the environment is
always not the same as predicted, plans should be reviewed
periodically. This may require changes in strategies, objectives,
policies and programmers of the organization. The management
should take all the necessary steps while reviewing the plans so
that they efficiently achieve the ultimate goals of the organization.
6. Principle of primary of planning–Planning should precede all
other managerial functions. All other management functions
cannot be performed without plans.
7. Principle of efficiency of plans - Cost of planning constitute
human, physical and financial resources for their formulation and
implementation as well. Minimizing the cost and achieving the
efficient utilization of resources shall has to be the aim of the.
Employee satisfaction and development, and social standing of the
organization are supposed to be considered while calculating the
cost and benefits of plan.

Barriers to Planning
1. Environmental barriers – These are barriers which involve changes
which are rapid and they may entail technology, economic
conditions etc.
2. Poor goal setting – if the goals set are unrealistic they are
unattainable or too low, this will hinder effective planning.
3. Resistance to change - Planning entails change, gear of the
unknown, preferences for status quo and economic insecurity. All
these may make members to resist change.
4. Time and expense – Lack of time or financial resources can limit
planning. Planning takes time and the manager faces many
pressures and the pressures may cause them to resist planning.

How to avoid the barriers

1. Ensure effective communication.

2. Planners should recognize their limits.
3. Planning should start at the top.
4. Participation by all stakeholders.
5. Contingency planning – managers should develop alternative
actions that a company might follow if conditions change.
6. Integration as much as possible the long term, intermediate and
short term plans must be properly integrated in order for the
overall planning system to be effective.

Steps in planning process

1. Identification of opportunities

3|Page
 2. Establishment of objectives
3. Consider planning premises
4. Determine alternative courses of action
5. Evaluate the alternatives
6. Select one course of action
7. Formulate derivative plans
8. Numberise the plans by budgeting

1. Identification of Opportunities – This step includes a

preliminary look at possible future opportunities and deciding what
the strengths and weaknesses of the organization are.
2. Establishment of objectives – The second step in the planning
process is to establish objectives for the entire organisation and
then for each subordinate work unit.
3. Consider planning premises – There is need to establish in which
environment internal or external the firm’s plans will operate.
4. Determine alternative courses of action – While planning, it is
important that the organization has a number of courses of action to
work with.Alternatives can be discovered through research,
experimentation, and experience.
5. Evaluating Alternative Courses:
After finding out the available alternatives and having made an
analysis of their strong and weak points, the planner must evaluate
the alternatives in the light of premises and goals. Hence, the
effective manager evaluates these alternatives against the
considerations for both feasibility and consequences.
6. Selecting the Best Alternative:
This is the point at which the plan is adopted – the point of decision
making. Selecting the most appropriate alternative involves choos-
ing the plan. Normally, managers will select the alternative that, in
their judgement, will best enable the firm to accomplish its goals.
7. Formulating Derivative Plans:
After the overall plan has been adopted, it is necessary to develop
other derived plans for each segment of the enterprise to support
the major plan. For example most plans my go with the hiring of
some staff.
8. Numberise Plans by Budgeting:
Without budgets, plans cannot be executed; they become paper
exercise. Budgets provide meaning to plans.
Hence, as a part of plan, budgets are passed to make provision for
cash and capital expenditures. Budgets provide standards against
which the progress of plans can be measure.

Goal Setting

A goal like any other target is a statement of where the organization

wants to be at a specific time in the future. Organizational goals are like
a constitution because it guides the behaviour and how the organization
should be governed.

4|Page
Roles

1. Provide employees with a sense of direction

2. Goals encourage managers to use their resources more effectively and

efficiently.

3. Goals provide the basis for achieving organizational co-ordination.

4. Goals provide the basis for evaluating organizational performance as

they can be used as standards against which performance is measured.

Steps in Goal Setting

1. Environmental scanning and monitoring to identify opportunities and

threats

2. Assessment of organizational strengths and weaknesses.

3. Establishment of overall organizational goals.

4. Establishment of unit goals.

5. Establishment of sub-unit goals.

6. Monitoring of progress toward goals attainment at all levels of the

organization.

Barriers to effective goal setting

 Setting inappropriate goals

 Setting unattainable goals
 Overemphasizing quantitative goals
 Overemphasizing qualitative goals
 Rewarding ineffective goal setting
 Not rewarding effective goal setting

How to overcome barriers to effective goal setting

 Understanding the purpose of goals

 Stating goals properly
 Ensuring goals consistency
 Effective Communication

5|Page
  Rewarding effective goal setting

6|Page