Concept of Planning
Concept of Planning
Concept of Planning
Limitations of Planning
• Even though planning is all-pervasive and a primary function of
management, it is subject to certain limitations. Awareness of these
may improve the efficiency of planning. The limitations are:
a) Planning premises may be wrong: The premises of planning are
the basis and framework for any decision. Understanding the planning
premises with absolute accuracy is impossible. There always exists
some margin of error that may vitiate the plans.
b) Rapidity of change: Every organization operates in the context of a
certain internal and external environment. The environment cannot be
always stable. Thus, the extent of change in the internal and external
environment creates various situations of instability, making the
planning job extremely difficult.
c) Time and Cost Constraints: Every organization has to plan within
given time and cost constraints. Such constraints stand against the
efficiency of planning.
• Non-availability of time and resources may compel the
organization to settle for the most convenient business plan.
d) Planning may limit new ideas: New ideas or innovations in
planning may not be encouraged because of the traditional mind-sets
of people. If the vision and philosophy of the organization are not
progressive, it may limit the planning initiative of the management.
e) Capital Investment Constraint: Capital investment in a business,
in the form of both equipment and employees (investment in
training), often limits the planning initiative.
f) Lack of control over external factors: Some external factors may
seriously impede the process of planning e.g. a sudden change in the
government policies, union pressure for a wage hike, war,
international policies etc.
Steps in Planning
• The steps of planning are detailed as follow:
1) Being aware of opportunities: Although it precedes actual
planning and not strictly a part of the planning process, an awareness
of opportunities in the external as well as within the organization is
the real starting point for planning.
• All managers should take a preliminary look at possible future
opportunities and see them clearly and completely.
• Setting realistic objectives depends on this awareness as planning
requires a realistic diagnosis of the opportunity situation.
2) Establishing objectives: The second step in planning is to establish
objectives for the entire enterprise and then for each subordinate work
unit. This is to be done for long-term as well as for short-term range.
• Objectives specify the expected results and indicates the end points
of what is to be done, where the primary emphasis is to be placed
and what is to be accomplished by the network of strategies,
policies, procedures, rules, budgets and programs
• Enterprise objectives give direction to the major plans, which, by
reflecting these objectives, define the objectives of every major
department. Major departmental objectives, in turn, control the
objectives of subordinate departments, and so on down the line.
• Managers should also have the opportunity to contribute ideas for
setting their own goals and those of the enterprise.
3) Developing premises: The next logical step in planning is to
establish, circulate, and obtain agreement to utilize critical planning
premises such as forecasts, applicable basic policies, and existing
company plans.
• Premises are assumptions about the environment in which the plan
is to be carried out. It is important for all managers involved in
planning to agree on the premises.
4) Determining alternative courses: The fourth step in planning is to
search for and examine alternative courses of action, especially those
not immediately apparent.
• The more common problem is not finding alternatives but reducing
the number of alternatives so that the most promising may be
analysed.
• The planner must usually make a preliminary examination to
discover the most fruitful possibilities.
5) Evaluating the alternative courses: After seeking out alternate
courses and examining their strong and weak points, the next step is
to evaluate the alternatives by weighing them in light of premises and
goals.
• One course may appear to be the most profitable but may require a
large cash outlay and have a slow payback; another may look less
profitable but may involve less risk; still another may better suit
the company’s long-range objectives.
• There are so many alternative courses in most situations and so
many variables and limitations to be considered that evaluation can
be exceedingly difficult. Due to these complexities, the newer
methodologies, applications and analysis should be considered.
6) Selecting a course: This is the point at which the plan is adopted-
the real point of decision-making.
• Occasionally, an analysis and evaluation of alternative courses
will disclose that two or more are advisable, and the manager
may decide to follow several courses rather than the one best
course.
7) Formulating Derivative/Supporting Plans: When a decision is
made, planning is seldom complete, and a seventh step is indicated.
Derivative plans are almost invariably required to support the basic
plan.
8) Quantifying Plans by Budgeting: After decisions are made and
plans are set, the final step in giving them meaning is to quantify
them by converting them into budgets.
• The overall budget of an enterprise represents the sum total of
income and expenses, with resultant profit or surplus, and the
budgets of major balance sheet items such as cash and capital
expenditures.
• Each department or program of a business or some other
enterprise can have its own budgets, usually of expenses and
capital expenditures, which tie into the overall budget.
• If done well, budgets become a means of adding the various plans
and set important standards against which planning progress can be
measured.
*** Key Result Areas (KRAs): Key Result Areas are the areas in
which performance is essential for the success of the enterprise. Such
individual employee-level objectives so called KRAs become the
basis for performance evaluation.
*** Management By Objectives (MBO): MBO is a comprehensive
managerial system that integrates may key managerial activities in a
systematic manner and is consciously directed toward the effective
and efficient achievement of organizational and individual objectives.
Delegation of Authority
• Delegation of Authority means division of authority and powers
downwards to the subordinates. Delegation is about entrusting
someone else to do part of a superior’s job.
• It can be defined as subdivision and sub-allocation of powers to the
subordinates in order to achieve effective results.
• No organization is possible without delegation because it would
then imply the non-existence of subordinates in the organization
and one man doing everything.
• While establishing the organization structure, the managers must
group activities, assign them to different individuals in the
organization, and delegate authority necessary for their effective
and efficient functioning to achieve the mission of the enterprise.
Authority is delegated when a superior gives a subordinate
discretion to make decisions.
Staffing
• The managerial function of staffing is defined as filling, and
keeping filled, positions in the organization structure.
• This is done by identifying workforce requirements, inventorying
the people available, and recruiting, selecting, placing, promoting,
appraising, planning the careers of, compensating, and training or
otherwise developing both candidates and current job holders so
that they can accomplish their tasks effectively and efficiently.
• It is clear that staffing must be closely linked to organizing, that is,
setting up of intentional structures of roles and positions.
• Staffing affects leading and controlling i.e. proper staffing
facilitates leading and selecting quality managers affects
controlling by preventing many undesirable deviations from
becoming major problems.
• Staffing requires an open system approach. It is carried out within
the enterprise which in turn is linked to the external environment.
• Recruitment, Selection, Induction and Placement altogether form
the staffing function.
*** Recruitment: Recruitment is the process of discovering sources of
the workforce to meet the requirements or the staffing schedule of an
organization and employing effective measures for attracting that
workforce in adequate numbers to facilitate the selection of an
efficient workforce.
• Thus, recruiting involves attracting candidates to fill the positions in
the organization structure.
*** Selection: Selecting a manager is choosing from among the
candidates the one who best meets the position requirements. Since the
selection may be for a specific job opening or for future managerial
requirements, there are two approaches to filling organizational
positions- selection approach and placement approach.
*** Induction: Induction or orientation programme of an organization
is a process to guide and counsel the employees to familiarize them
with the job and the organization. It involves the introduction of new
employees to the enterprise- its functions, tasks, and people.
Decision making process
• Decision making is the process of making choices by
identifying a decision, gathering information, and assessing
alternative resolutions.
• Using a step-by-step decision making process can help a
manager make more deliberate, thoughtful decisions by
organizing relevant information and defining alternatives. The
steps of decision making process are:
1) Identifying the decision/goal: A manager realizes that he
needs to make a decision. He needs to clearly define the nature
of the decision he would make. This first step is very important.
2) Gathering relevant information: The manager needs to
collect some pertinent information before he makes his decision-
what information is needed, and how to get it. This step involves
both the external and external sources of information.
3) Identification of alternatives: As the manager collects
information, he would probably identify several possible paths
of action or alternatives. In this step, he would list all possible
and desirable alternatives.
4) Weighing and Evaluation of alternatives: A manager
would weigh the alternatives during the evaluation of the
alternatives to meet or resolve the need or goal identified
in the step-I through the use of each alternative.
5) Choosing among alternatives: Once the manager hs
weigh all the alternatives, he is ready to select the
alternative that seems to be best one for him. He may even
choose a combination of alternatives.
6) Taking decision for implementation: The manager is
ready to take some positive action by beginning to
implement the alternative he chose.
7) Reviewing the decision and its consequences: In this
final step, the manager needs to consider the results of his
decision whether or not it has met or resolved the need or
goal identified in the first step. If the decision has not met
the identified need, he needs to repeat certain steps of the
process to make a new decision.