Topic 4

UBMM1013 MANAGEMENT

PRINCIPLES

Topic 4Managerial Planning and

Goal Setting

Learning Objectives•Define goals and plans and explain the relationship between them.•Explain the concept of organizational vision and mission and how it influences goal setting and planning.•Describe the types of goals an organization should have and how managers use strategy maps to align goals.•Define the characteristics of effective goals.•Describe the four essential steps in the management by objectives (MBO) process.•Explain the difference between single-use plans and standing plans.•Describe and explain the importance of contingency planning, scenario building, and crisis planning in today’s environment.•Summarize the guidelines for high-performance planning in a fast-changing environment.

Overview of Goals and Plans

PlansPlans

GoalsGoals

Planning

Overview of Goals and Plans

•determining the organization’s goals and the means for achieving them

•A blueprint specifying the resource allocations, schedules, and other actions necessary for attaining goals

•A desired future state that the organization attempts to realize

Levels of Goals and Plans

•Strategic Goals/Plans

•Mission

•Operational Goals/Plans

•Tactical Goals/Plans

•Vision


•What our organization to be?

•Why does the organization exist?


Vision and mission of Ford

•Become the main company of the world products and services of the car.

•We are a global, diverse family with a proud inheritance, providing exceptional products and services.

•What our organization to be?

•Why does the organization exist?

Vision VS Mission

Vision? Defines and describes the future situation

that a company wishes to have The vision of the company is the response

to the question of: What our organization to be?

Example: Vision of Ford – Become the main company of the world products and services of the car.

Vision VS Mission

Mission? It defines the basic purpose of the organisation especially

for external audiences It describes what the organisation stand for and its

reason for existence 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 The mission of the company is the answer of the

question: Why does the organization exist? Example: Mission of Ford – We are a global, diverse family

with a proud inheritance, providing exceptional products and services


Lower Management (Departments, work groups, individuals) ?

Middle Management (Major divisions, functions) ?

Senior Management (organisation as a whole ?

Strategic Goals and PlansStrategic Goals

Apply to senior management Where the organization wants to be in the future Often called official goals because they are the stated intentions of what

the organisation wants to achieve 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 and may define organisational action steps from two

to five years in the future The purpose of strategic plans is to turn organisational goals into realities

within that period

Tactical Goals and Plans

Tactical Goals Apply to middle management Goals that define the outcomes that major divisions intend

achieve Describe what major subunits must do for the organisation

to achieve its overall goals

Tactical Plans Plans designed to achieve tactical goals Plans designed to help execute major strategic plans Shorter than time frame than strategic plans

Operational Goals and Plans

Operational Goals

Apply to lower management Goals that define the results that expected from

departments, work groups and individuals They are precise and measurable

Operational Goals and Plans

Operational Plans

Developed at the lower levels of the organisation to specify action steps toward achieving operational goals and to support tactical plans

It is the department manager’s tool for daily and weekly operations Goals are stated in quantitative terms and the department plan describes

how goals will be achieved Operational planning specifies plans for department managers, supervisors

and individuals employees Schedules are an important component of operational planning Schedules define precise time frames for the completion of each operational

goal required for the organisation’s tactical and strategic goals Operational planning also must be coordinated with the budget because

resources must be allocated for desired activities

???? Message Legitimacy,

motivation, guides, rationale,

standards

???? Message Legitimacy for

investors, customers, suppliers, community

Purpose of Goals and Plans


Legitimacy Source of motivation and commitment Resource allocation Guides to action Rationale for decisions Standard of performance


Legitimacy An organization’s mission describes what the

organisation stands for and its reason for existence. It symbolizes legitimacy to external audiences such as

investor, customers, suppliers and the local community. The mission helps them look on the company in a

favorable light. A strong goals and plans also have an impact on

employees, enabling them to become committed to the organization because they identify with its overall purpose and reason for existence. They also know what actions to undertake to achieve the goal.


Source of motivation and commitment Goals and plans enhance employees’

motivation and commitment by reducing uncertainty and clarifying what they should accomplish.

Lack of a clear goal can hamper motivation because people don’t understand what they’re working toward.

Whereas a goal provides the “why” of an organisation or subunit’s existence, a plan tells the “how”.

A plan lets employees know what actions to undertake to achieve the goal.


Resource allocation Goals and plans help managers decide

where they need to allocate resources such as employees, money and equipment.

Managers know they need to use resources in alignment with the goals and plans.


Guides to action Goals and plans provide a sense of

direction. They focus attention on specific targets

and direct employee efforts toward important outcomes.


Rationale for decisions Through goals and plans, managers clarify

what the organization is trying to accomplish. They can make decisions to ensure that

internal policies, roles, performance, structure, products and expenditures will be made in accordance with desired outcomes.

Decisions throughout the organisation will be in alignment with the goals and plans.


Standards of performance Goals define desired outcomes for the

organization and the plan lets employees know what actions to undertake to achieve the goal.

Hence, they can serve as performance criteria.

They provide a standard of assessment.

Operational Planning

Criteria for effective goals

Management by Objectives (MBO)

Single-use and Standing Plans

Effective Goals

Effective Goals

Criteria

•Specific and Measurable

•Cover Key Result Areas

•Challenging but realistic

•Defined Time Period

•Linked to Rewards

Criteria for Effective Goals

Specific and Measurable- When possible, operational goals should be expressed in quantitative

terms- Vague goals tend not to motivate employees.

Cover Key Result Areas- Key result areas are those items that contribute most to company

performance and competitive- Goals cannot be set for every aspect of employee behavior or

organisational performance

Challenging but Realistic- Goals Should be challenging but not unreasonably difficult - When goals are unrealistic, they set employees up for failure and lead

to decreasing employee morale. - If goals are too easy, employees may not feel motivated. - Stretch goals are extremely ambitious but realistic goals that challenge

employees to meet high standards.

Criteria for Effective Goals

Defined Time Period- Goals should specify the time period over which they will be

achieved. - A time period is a deadline on which goal attainment will be

measured.

Linked to Rewards- The impact of goals depends on the extent to which salary

increases, promotions, and other rewards are based on goal achievement.

- People who attain goals should be rewarded.


Management by Objectives (MBO) is a method whereby managers and employees define objectives for every department, project, and person and use them to monitor subsequent performance.

Four major activities must occur in order for MBO to be successful.

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 PerformanceTake Corrective Action

Review Progress

Action Plans


Set goals The first step is setting goals. The setting of goals

involves employees at all levels and looks beyond day-to-day activities to answer the question “what are we trying to accomplish?”

Managers heed the criteria of effective goals and make sure to assign responsibility for goal accomplishment.

However, goals should be jointly derived. Mutual agreement between employee and supervisor creates the strongest commitment to achieving goals.

In the case of teams, all team members may participate in setting goals.


Develop action plans The second step is developing action

plans. These action plans will specify how the goals are to be achieved.

An action plan defines the course of action needed to achieve the stated goals.

Action plans are made for both individuals and departments.


Review progress Next, a periodic progress review is important to

ensure that the action plans are working. These reviews can occur informally between

managers and subordinates, where the organization may wish to conduct three-, six- or nine-month reviews during the year.

The periodic checkup allows managers and employees to see whether they are on target or whether corrective action is needed. Managers and employees should not be locked into predefined behavior and must be willing to take whatever steps are necessary to produce meaningful results.

The point of MBO is to achieve goals. The action plan can be changed whenever goals are not being met.


Appraisal overall performance

The last step is to carefully evaluate whether annual goals have been achieved for both individuals and departments.

Success or failure to achieve goals can become part of the performance appraisal system and the designation of salary increases and other rewards.

The appraisal of departmental and overall corporate performance shapes goals for the next year. The MBO cycle repeats itself on an annual basis.

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

Single Use and Standing Plans

Single‑use plans Single-use plans are developed to achieve objectives

that are not likely to be repeated in the future. Single‑use plans include both programs and projects.

Standing plans Standing plans are used to provide guidance for tasks

performed repeatedly within the organization. The primary standing plans are organizational

policies, rules, and procedures. Many companies are discovering a need to develop

standing plans regarding the use of email.

Planning for a Turbulent Environment

Contingency Plans

Building Scenario

Crisis Planning

Contingency Plans

Contingency plans, often referred to as scenarios, define company responses to be taken in case of emergencies or setbacks.

It cover such situations as catastrophic decreases in sales or prices, and loss of important managers.

Building Scenario

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

Crisis Planning

Some firms also engage in crisis planning to enable them to cope with unexpected events that are so sudden and devastating that they have the potential to destroy the organisation if managers are not prepared with a quick and appropriate response

Crisis planning reduces the incidence of trouble, much like putting a good lock on a door reduces burglaries

Crisis Planning

The two essential stage of crisis planning include prevention and preparation

Prevention Build relationships Detect signals from environment

Preparation Designate crisis management team and

spokesperson Create detailed crisis management plan Set up effective communications system

Planning for High Performance

Traditional Approaches to Planning

High-Performance Approaches to Planning

Done by top executives (top down)

Central planning departments• Group of planning specialists who report directly to CEO or President•Planning specialist were hired to gather data and develop detailed strategic plans for the corporations as whole• Top Down method of planning

Traditional Approaches to Planning

Decentralized planning•planning experts work with managers in major divisions or departments to develop their own goals and plans

Managers plan throughout the organization

Now involves line-managers and employees

Dynamic plans for fast-changing needs

High Performance Approaches to Planning

Set Stretch Goals for Excellence

Use Performance Dashboards

Deploy Intelligence Teams

High Performance Approaches to Planning

Performance Dashboard for Planning

Gauge progress toward goals

Align and track goals

All employees can track progress

Thank you

Topic 4

Documents

overview of goals

organizations goals

types of goals

official goals

services levels of goals

strategic goals blueprint

vision of ford

purpose of strategic