PLANNING

Planning– Meaning & Definition

 Planning is the beginning process of management

 Planning is an intellectual process which requires a manager to
think in advance.
 Definition—Planning is defined as a process of choosing among
alternatives.
 Planning is preparing for tomorrow, today. It's the activity that
allows managers to determine what they want and how they will
achieve it.
 Planning is a continuous process and an all pervasive function.

Planning is based on the theory of “thinking before

acting”.
 Definition-Planning

 According to Theo Haimann, “Planning is deciding in

advance, what is to be done. When a manager plans, he
projects a course of action for the future, attempting to
achieve a consistent, coordinated structure of operations
aimed at the desired results.”

 According to Alford and Beaty, “Planning is the thinking

process, the organized foresight, the vision based on fact
and experience that is required for intelligent action.”
 Importance of Planning

Without planning, business decisions would become

random, ad hoc choices.

a. Minimises Risk and Uncertainty.

b. Leads to success
c. Focuses attention on Organisation’s Goals
d. Facilitates Control
e. Planning reduces overlapping and wasteful activities.
f. Planning promotes innovative ideas.
Process of Planning

Setting Objectives

Developing Premises

Identifying Alternatives

Selecting from alternatives

Implementation

Follow up Action
 Establishing Verifiable Goals– The first step in planning is to
determine the enterprise objectives. These are most often set by top
level managers after the possible objectives being considered. These
are most often set by top level managers after the possible objectives
being considered.

Establishing Planning Premises – They are certain assumptions

about the future on the basis of which the plan will be ultimately
formulated.
Classification of Planning premises:
 Internal and External premises

 Tangible and Intangible premises

 Controllable and Non-controllable premises.
 Deciding the Planning Period- Business vary considerably in the
planning period. In some cases, plans are to be made for a year and in
some other for decades.
 Finding alternative course of action – The next step is to search
for and examining alternatives course of action.
 Evaluating and Selecting a course of action– Having sought
alternatives courses, the next step is to evaluate them and select the
best course of action.
 Developing Derivative Plans- Once plan has been formulated, its
broad goals must be translated into day-to –day operations of the
organisation.
 Forms of Planning

 Strategic Planning - Strategic planning is a process in which

organizational leaders determine their vision for the future as well as
identify their goals and objectives for the organization. The process also
includes establishing the sequence in which those goals should fall so
that the organization is enabled to reach its stated vision.
Tactical planning-- involves deciding specifically how the resources of
the organisation will be used to help the organisation achieve its strategic
goals .e.g; what should be the levels of our operations be a year from now.
 Strategic Vs. Tactical Planning
 It decides the major goals and  It decides the detailed use of
policies of allocation of resources resources for achieving each
to achieve their goals. goal.
 It is done at the higher level of
 It is done at the lower level of
management.
management.
 It is long-term.
 It is short-term.
 It is generally based on long-
 It is generally based upon the
term forecasts about technology,
political environment etc.& is past performance of the
more uncertain. organisation and is less
 It is less-detailed because it is uncertain.
not involved with the day-to-day  It is more-detailed because it
operations of the organisation. is involved with the day-to-
day operations of the
organisation.
 Types of Plans
Hierarchy of Organisational Plans

Objectives

Strategies

For non repetitive

For repetitive activities
activities

Standing
Single Use Plans Plans(Policies,
(Programmes & Procedures, Methods&
Budgets) Rules)
 OBJECTIVES

 OBJECTIVES– are goals or aims which the management

wish the organisation to achieve. Objectives should be
distinguished from two other words ‘ purpose’ and
‘mission’.
 The purpose of the organisation is the primary role
defined by the society in which it operates. e.g the purpose
of every university is to impart education.
 The mission of an organisation is the unique aim that sets
the organisation apart from the others of its type. It is the
specialisation in some area-service ,product or client. Thus,
a University may have its mission to impart education to
poor women.
Characteristics of Objectives
 Objectives are multiple in number.
 Objectives are either tangible or intangible.
 Objectives have a priority
 Objectives are generally arranged in an hierarchy.
 Objectives sometimes clash with each other.
Requirements of a sound Objective
 Objectives must be both clear and acceptable.
 Objectives must support each other.
 Objectives must be precise and measurable.
 Objectives should always remain valid.
 STRATEGIES

 Corporate Strategy--is a plan which take the factors into account and
provide an optimal match between the firm and the environment. The
factors that should be taken into consideration are opportunities,
threats, strength and weaknesses. Two important activities involved in
Strategy formulation are Environment Appraisal and Corporate
Appraisal.
 Environment Appraisal– An analysis of the relevant environment
results in the identification of threats and opportunities. Some key
environmental factors which need to be studied are political & legal
factors, economic factors, competitive factors ,social and cultural
factors.
 Corporate Appraisal– This involves an analysis of the company’s
strengths and weaknesses. A co.'s strength may lie in its outstanding
manufacturing skills ,efficient distribution, efficient customer service
etc. It may also suffer a lot of weaknesses.
STANDING PLANS

Policies– A policy is a general guideline for decision making.

“Policy is a verbal, written or implied overall guide, setting up
boundaries that supply the general limits and direction in
which managerial action will take place.”
George R. Terry
Procedures– Policies are carried out by detailed guidelines
called ‘procedures’. A procedure provides a detailed set of
instructions for performing a sequence of action involved in
doing a certain piece of work.
 Difference b/w Policy and Procedure

 Policies are general guidelines  Procedures are general guides

to both thinking & action of of action only usually for
people at higher levels. people at lower levels.

 Policies help in fulfilling the  Procedures show us the way to

objectives of the enterprise. implement policies.

 Policies are generally broad and  Procedures are specific & lay
allow for some direction. down the sequence in definite
acts.
 Policies are often established  Procedures are always
without and study or analysis. established after thorough
study & analysis of work.
 Methods – A method is a prescribed way in which one step of a
procedure is to be performed. A method is thus a component part of the
procedure. For performing a particular step, an organisation may have
no. of methods. The method that is selected for discharging a particular
task under the existing conditions may become outdated in due course
of time because of the discovery of better and economical methods.

 Rules– Rules are detailed and recorded instructions that a specific

action must or must not be performed in a given situation
SINGLE USE PLANS

Programmes- are precise plans or definite steps in proper sequence

which need to be taken to discharge a given task. It includes all the
activities necessary for achieving a given objective .

Budgets- According to Institute of Costs & Works Accountants, London,

a budget is “ a financial and /or quantitative statement prepared prior to
definite period of time of the policy to be persuaded during that period.
Being expressed in numerical terms, they facilitate comparison and actual
results with planned ones and thus serves as a control device and yard
stick for measuring performance.
 Limitations of Planning

 It is an expensive and time consuming process and involves money,

energy and risk.
 It sometimes restricts the organisation to the most rational and risk
free opportunities.
 Its scope is said to be limited in case of organisations with rapid
changing conditions e.g. publication houses.
 Difficulty in acquiring accurate premises and at time planning faces
people’s resistance.

Making Planning Effective

Planning can be made Effective by better Coordination, Communication ,
Participation and Proper Climate
 ORGANISING

 "Organising is the process of defining and grouping the

activities of the enterprise and establishing the authority
relationships among them.“
Theo Haimann
 "Organising is the process of identifying and grouping the
work to be performed, defining and delegating
responsibility and authority and establishing relationships
for the purpose of enabling people to work most effectively
together in accomplishing objectives.“
Louis Allen
 Steps in the Process of Organising

 Organising is a step-by-step process. At each step, an important task is

performed by the administrators working at the top-level of
management.

1. The top management first fixes the common objectives of the organisation.
2. They (top management) identify all the activities (i.e. works or jobs) which are
required to achieve these predefined objectives.
3. They group similar (related) activities and make their individual departments.
4. They define the responsibilities (duties) of all the staff members (employees and
managers).
5. They delegate authority to staff members.
6. The authority relationships between superiors and subordinates are established.
7. They provide the staff members with all the essential requirements like money,
machines, materials, etc., which are used for achieving the objectives.
8. They co-ordinate the efforts of all staff members and direct it towards achieving the
common objectives of the organisation.
Importance of organisation in building Management Structure

 Facilitates efficient Management

 Optimum utilisation of Human Resources
 Helps in the growth of enterprise
 Facilitates Co-ordination
 Encourages Creativity, Initiative and Innovation
 Motivates the employees
 Facilitates delegation of authority
 Principles of Organisation in Management

E.F.L Brech
 Objectives-The objectives of the organisation should be clearly
defined. Every single individual in the organisation should understand
these objectives. This will enable them to work efficiently and help the
organisation to achieve its objective

 Specialisation-Every single individual in the organisation should be

asked to perform only one type of function (work). This function should
be related to his educational background, training, work-experience,
ability, etc., in other words, there should be a division of work and
specialization in the organisation. This will increase the efficiency,
productivity and profitability of the organisation.
 Co-ordination--The efforts of all the individuals, departments, levels,
etc. should be co-coordinated towards the common objectives of the
organisation. Therefore, managers must try to achieve co-ordination.

 Authority--Every individual should be given authority (power) to

perform his responsibilities (duties). This authority should be clearly
defined. Authority should be maximum at the top level and it should
decrease as we come to the lower levels.
 There should be a clear line of authority which joins all the members of
the organisation from top to bottom. This line of authority should not
be broken.
 Responsibility--The responsibility (duties) of every individual should
be clearly defined. This responsibility is absolute, i.e. it cannot be
delegated. The responsibility given to an individual should be equal to
the authority given to him.

 Span of Control--Span of control means the maximum number of

subordinates which one superior can manage effectively. The span of
control should be as small as possible. Generally, at the top level, the
span of control should be 1:6, while at the lower level, it should be 1:20.
Span of control depends on many factors such as nature of job, ability
of superior, skill of subordinate, etc.
 Balance--There should be a proper balance between the different
levels, functions and departments of the organisation. Similarly, there
should be a proper balance between centralisation and
decentralisation, authority and responsibility, etc. If there is no balance
between these factors then the organisation will not function smoothly.

 Chain of Command--The chain of command should be very short.

That is, there should be very few levels of management. If not, there
will be many communication problems and delays in execution of
workflow.
 Delegation--Authority and responsibility should be delegated to the
lowest levels of the organisation. Therefore, the decisions can be made
at the lowest competent level. The authority delegated to an individual
should be equal to his responsibility.

 Continuity--The organisation structure should have continuity. That

is, the enterprise should be able to use the organisation structure for a
long period of time. The organisation structure should be able to
achieve not only present objectives but also future objectives of the
enterprise.
 Classification of Organisations

Formal Organization - This is one which refers to a

structure of well defined jobs each bearing a measure of
authority and responsibility. It is a conscious
determination by which people accomplish goals by
adhering to the norms laid down by the structure.
Formal organization has a formal set up to achieve pre-
determined goals.
Informal Organization - It refers to a network of
personal and social relationships which spontaneously
originates within the formal set up. Informal organizations
develop relationships which are built on likes, dislikes,
feelings and emotions. Therefore, the network of social
groups based on friendships can be called as informal
organizations. There is no conscious effort made to have
informal organization. It emerges from the formal
organization and it is not based on any rules and regulations
as in case of formal organization.
 Delegation of Authority

 Delegation is about entrusting someone else to do parts of your job.

 Delegation of authority can be defined as subdivision and sub-allocation of
powers to the subordinates in order to achieve effective results.
 Elements of Delegation
Authority—
1. Authority can be defined as the power and right of a person to use and
allocate the resources efficiently, to take decisions and to give orders so as to
achieve the organizational objectives.
2. Authority must be well- defined. Authority is the right to give commands,
orders and get the things done. The top level management has greatest
authority.
3. Authority always flows from top to bottom. It explains how a superior gets
work done from his subordinate by clearly explaining what is expected of
him and how he should go about it.
4. Authority should be accompanied with an equal amount of responsibility.
Responsibility—
1. It is the duty of the person to complete the task assigned to him.
2. Responsibility without adequate authority leads to discontent and
dissatisfaction among the person.
3. If he performs the tasks assigned as expected, he is bound for praises.
While if he doesn’t accomplish tasks assigned as expected, then also
he is answerable for that.
Accountability—
4. It means giving explanations for any variance in the actual
performance from the expectations set. Accountability can not be
delegated.
5. The top level management is most accountable. Being accountable
means being innovative as the person will think beyond his scope of
job.
For achieving delegation, a manager has to work in a system and has to
perform following steps : -

 Assignment of tasks and duties

 Granting of authority
 Creating responsibility and accountability
Difference b/w Authority and Responsibility

Authority Responsibility
It is the legal right of a person It is the obligation of
or a superior to command his subordinate to perform the
subordinates. work assigned to him.
Authority is attached to the Responsibility arises out of
position of a superior in superior-subordinate
concern. relationship in which
subordinate agrees to carry out
duty given to him.
Authority can be delegated by a Responsibility cannot be
superior to a subordinate shifted and is absolute
It flows from top to bottom. It flows from bottom to top.
 Centralisation and Decentralisation

 Centralization is said to be a process where the concentration of

decision making is in a few hands.
 All the important decision and actions at the lower level, all subjects
and actions at the lower level are subject to the approval of top
management.
 According to Allen, “Centralization” is the systematic and consistent
reservation of authority at central points in the organization.
 The implication of centralization can be :-

 Reservation of decision making power at top level.

 Reservation of operating authority with the middle level managers.
 Reservation of operation at lower level at the directions of the top level.
 Decentralization is a systematic delegation of authority at all levels of
management and in all of the organization.
 In a decentralization concern, authority in retained by the top
management for taking major decisions and framing policies
concerning the whole concern.
 Rest of the authority may be delegated to the middle level and lower
level of management.
Implications of Decentralization

 There is less burden on the Chief Executive as in the case of

centralization.
 In decentralization, the subordinates get a chance to decide and act
independently which develops skills and capabilities. This way the
organization is able to process reserve of talents in it.
 In decentralization, diversification and horizontal can be easily
implanted.
 In decentralization, concern diversification of activities can place
effectively since there is more scope for creating new departments.
 STAFFING

 According to Theo Haimann, “Staffing pertains to recruitment,

selection, development and compensation of subordinates.”
Nature of staffing Function

1. Staffing is an important managerial function.

2. Staffing is a pervasive activity.
3. Staffing is a continuous activity.
4. The basis of staffing function is efficient management of personnel's.
5. Staffing helps in placing right men at the right job.
6. Staffing is performed by all managers.
 Process of Staffing

1. Manpower Requirements--The very first step in staffing is to

plan the manpower inventory required by a concern in order to
match them with the job requirements and demands.
2. Recruitment- Once the requirements are notified, the concern
invites and solicits applications according to the invitations made to
the desirable candidates
3. Selection- This is the screening step of staffing in which the
solicited applications are screened out and suitable candidates are
appointed as per the requirements.
4. Orientation and Placement- Once screening takes place, the
appointed candidates are made familiar to the work units and work
environment through the orientation programmes. placement takes
place by putting right man on the right job.
5. Training and Development- Training is a part of incentives given to
the workers in order to develop and grow them within the concern.
Training is generally given according to the nature of activities and scope
of expansion in it.
6. Remuneration- It is a kind of compensation provided monetarily to
the employees for their work performances. This is given according to the
nature of job- skilled or unskilled, physical or mental, etc.
7. Performance Evaluation- In order to keep a track or record of the
behaviour, attitudes as well as opinions of the workers towards their jobs.
For this regular assessment is done to evaluate and supervise different
work units in a concern.
8. Promotion and transfer- Promotion is said to be a non- monetary
incentive in which the worker is shifted from a higher job demanding
bigger responsibilities as well as shifting the workers and transferring
them to different work units and branches of the same organization.
 Recruitment

 The process of finding and hiring the best-qualified candidate (from

within or outside of an organization) for a job opening, in a timely and
cost effective manner.

Recruitment is of 2 types
 Internal Recruitment - is a recruitment which takes place within the
concern or organization. Internal sources of recruitment are readily
available to an organization.
 Internal sources are primarily of three types:
1. Transfers
2. Promotions (through Internal Job Postings) and
3. Re-employment of ex-employees - Re-employment
 External Recruitment - External sources of recruitment have to be
solicited from outside the organization. External sources are external to
a concern. But it involves lot of time and money.
 Different ways of external recruitment:
1. Employment at Factory Level - This a source of external
recruitment in which the applications for vacancies are presented on
bulletin boards outside the Factory or at the Gate.
2. Advertisement
3. Employment exchange.
4. Employment agencies.
5. Educational Institutions
6. Recommendations
7. Labour Contractors
 Employee Selection Process

 Employee Selection is the process of putting right men on right job. It is

a procedure of matching organizational requirements with the skills
and qualifications of people.
 Employee selection Process
1. Preliminary Interview- It is used to eliminate those candidates
who do not meet the minimum eligibility criteria laid down by the
organization. The skills, academic and family background,
competencies and interests of the candidate are examined during
preliminary interview. Preliminary interviews are less formalized and
planned than the final interviews
2. Application Blank-The candidates who clear the preliminary
interview are required to fill application blank. It contains data record
of the candidates such as details about age, qualifications, reason for
leaving previous job, experience, etc.
3.Written Tests-Various written tests conducted during selection
procedure are aptitude test, intelligence test, reasoning test, personality
test, etc. These tests are used to objectively assess the potential candidate.
They should not be biased.
4. Interviews-It is a one to one interaction between the interviewer and
the potential candidate. It is used to find whether the candidate is best
suited for the required job or not.
5. Medical Examination-Medical tests are conducted to ensure
physical fitness of the potential employee. It will decrease chances of
employee absenteeism
6. Appointment Letter-A reference check is made about the candidate
selected and then finally he is appointed by giving a formal appointment
letter.
 Recruitment Vs. Selection

Basis Recruitment Selection

Meaning It is an activity of It is a process of picking
establishing contact up more competent and
between employers and suitable employees.
applicants.
Objective It encourages large It attempts at rejecting
number of Candidates for unsuitable candidates.
a job.
Process It is a simple process. It is a complicated
process.
Hurdles The candidates have not Many hurdles have to be
to cross over many crossed.
hurdles.
Approach It is a positive approach. It is a negative approach.
Sequence It proceeds selection. It follows recruitment.
Economy It is an economical It is an expensive method.
method.
Time Consuming Less time is required. More time is required.
 Directing

 DIRECTING is said to be a process in which the managers instruct,

guide and oversee the performance of the workers to achieve
predetermined goals.
 Directing is said to be the heart of management
process. Planning, organizing, staffing have got no importance if
direction function does not take place.
 Directing initiates action and it is from here actual work starts.
Direction is said to be consisting of human factors.
Direction has got following characteristics:
 Pervasive Function - Directing is required at all levels of
organization. Every manager provides guidance and inspiration to his
subordinates.
 Continuous Activity - Direction is a continuous activity as it
continuous throughout the life of organization
 Human Factor - Directing function is related to subordinates and
therefore it is related to human factor. Since human factor is complex
and behaviour is unpredictable, direction function becomes important.
 Creative Activity - Direction function helps in converting plans into
performance. Without this function, people become inactive and
physical resources are meaningless.
 Executive Function - Direction function is carried out by all
managers and executives at all levels throughout the working of an
enterprise, a subordinate receives instructions from his superior only.
 Delicate Function - Direction is supposed to be a function dealing
with human beings. Human behaviour is unpredictable by nature and
conditioning the people’s behaviour towards the goals of the enterprise.
 Controlling

 Controlling consists of verifying whether everything occurs in

conformities with the plans adopted, instructions issued and principles
established.
 Controlling ensures that there is effective and efficient utilization of
organizational resources so as to achieve the planned goals.
 Controlling measures the deviation of actual performance from the
standard performance, discovers the causes of such deviations and
helps in taking corrective actions.
 Controlling has got two basic purposes
 It facilitates co-ordination.
 It helps in planning
 Controlling is an end function- A function which comes once the
performances are made in conformities with plans.
 Controlling is a pervasive function- which means it is performed
by managers at all levels and in all type of concerns.
 Controlling is forward looking- because effective control is not
possible without past being controlled. Controlling always look to
future so that follow-up can be made whenever required.
 Controlling is a dynamic process- since controlling requires taking
reviewal methods, changes have to be made wherever possible.
 Controlling is related with planning- Planning and Controlling
are two inseparable functions of management. Without planning,
controlling is a meaningless exercise and without controlling, planning
is useless.
Tools of controlling
 Direct/supervision and Observation-The supervisor himself
observes the employees and their work. This brings him in direct contact
with the workers. This technique is most suitable for a small-
sized business.
 Financial Statements- All business organisations prepare Profit and
Loss Account. It gives a summary of the income and expenses for a
specified period. They also prepare Balance Sheet, which shows the
financial position of the organisation at the end of the specified period.
Financial statements are used to control the organisation. The figures of
the current year can be compared with the previous year's figures. They
can also be compared with the figures of other similar organisations.
 Ratio analysis -can be used to find out and analyse the financial
statements. Ratio analysis helps to understand the profitability, liquidity
and solvency position of the business.
 Budgetary Control-A budget is a planning and controlling device.
Budgetary control is a technique of managerial control through
budgets. It is the essence of financial control. Budgetary control is done
for all aspects of a business such as income, expenditure, production,
capital and revenue. Budgetary control is done by the budget
committee.
 Break Even Analysis-Break Even Analysis or Break Even Point is
the point of no profit, no loss. For e.g. When an organisation sells 50K
cars it will break even. It means that, any sale below this point will
cause losses and any sale above this point will earn profits. The Break-
even analysis acts as a control device. It helps to find out the company's
performance. So the company can take collective action to improve its
performance in the future. Break-even analysis is a simple control tool.
 Return on Investment (ROI)-Investment consists of fixed assets
and working capital used in business.
 Profit on the investment is a reward for risk taking. If the ROI is high
then the financial performance of a business is good and vice-versa.
 ROI is a tool to improve financial performance. It helps the business to
compare its present performance with that of previous years'
performance.
 It helps to conduct inter-firm comparisons. It also shows the areas
where corrective actions are needed.
 Management Audit-Management Audit is an evaluation of the
management as a whole. It critically examines the full management
process, i.e. planning, organising, directing, and controlling. It finds
out the efficiency of the management.
 Management Information System (MIS)-In order to control the
organisation properly the management needs accurate information. They
need information about the internal working of the organisation and also
about the external environment. Information is collected continuously to
identify problems and find out solutions. MIS collects data, processes it and
provides it to the managers. MIS may be manual or computerised. With MIS,
managers can delegate authority to subordinates without losing control.
 PERT and CPM Techniques-Programme Evaluation and Review
Technique (PERT) and Critical Path Method (CPM) techniques were
developed in USA in the late 50's.
 Any programme consists of various activities and sub-activities. Successful
completion of any activity depends upon doing the work in a given sequence
and in a given time.
 Importance is given to identifying the critical activities. Critical activities are
those which have to be completed on time otherwise the full project will be
delayed.
 Self-Control-Self-Control means self-directed control. A person is
given freedom to set his own targets, evaluate his own performance and
take corrective measures as and when required.
 Self-control is especially required for top level managers because they
do not like external control.
 The subordinates must be encouraged to use self-control because it is
not good for the superior to control each and everything.
 However, self-control does not mean no control by the superiors. The
superiors must control the important activities of the subordinates.