Planning

What Would You Do?

In early 2000 MAS controlled 90% of the domestic market By early 2001 MASs share of the market had dropped to 73% Air Asia share had climbed to 14% Air Asia had a significantly lower cost structure than MAS What would you do?

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Who Are You?

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Benefits and Pitfalls of Planning

Benefits of Planning Planning Pitfalls

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Benefits of Planning
Intensified Effort Persistence Direction Creation of Task Strategies

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Planning Pitfalls (criticisms of planning)

Impede change and slow or prevent adaptation Create a false sense of security Detachment of planners

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How to Make a Plan That Works

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Setting Goals (SMART* Goal)

Specific Measurable Attainable Realistic Timely

* by Richard and Becky Dufour

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(SMART Goal)
Specific
A specific objective has a much greater chance of being accomplished.
eg. To obtain 5% market share within the first year of operation within our industry.

Measurable
Establish concrete criteria for measuring progress toward the attainment of each objective you set.
eg. To sell 4000 units per month, which equates to approximately 5% market share.

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Attainable
The objective needs to be attainable by you based on the skills and resources you have and the constraints imposed.
eg. Considering the amount of financial resources and manpower expertise we have, we believe that the objectives set are attainable.

Realistic
Your objective is probably realistic if you truly believe that it can be accomplished. To know if your objective is realistic is to determine if you have accomplished anything similar in the past.
eg. We still have the same set of people, an equal amount of financial resources, we have succeed in this before, we believe that objectives set are realistic.
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(SMART Goal)
Timely
Is there a finish and/or start date clearly stated or defined?
eg. It is the expectation that the 5% market share objective set for our company will be achieved by the end of Dec 31st 2009.

NOW consider SMARTER Goal

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SMARTER Goal
Specific Measurable Attainable Realistic Timely Exciting Rewarding

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Goal Commitment
The determination to achieve a goal. Increased by:
Setting goals participatively Making goals reasonable Making goals public Obtaining top management support

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Developing an Effective Action Plan

For accomplishing a goal an action plan lists:
(HOW) - Specific steps (WHO) - People (WHAT) - Resources (WHEN) - Time period

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Tracking Progress
First method
Set proximal (short-term or sub-goal) goals Set distal (long-term or primary) goals

Second method
Gather and provide performance feedback Make adjustments in effort, direction, and strategies
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Maintaining Flexibility
Options-based planning
keep options open through simultaneous investment invest more in promising options

Learning-based planning
plans need to be continually tested, changed and improved encourages frequent reassessment and revision of goals
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Planning From Top to Bottom

Exhibit 4.3

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Planning From Top to Bottom

Top Level Managers

Strategic Planning

Middle Level Managers

Tactical Planning

First-Line Managers

Operational Planning

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Planning Timeframes

Exhibit 4.4

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Top Level Planning

(Strategic Planning)

Vision
statement of a companys purpose brief, inspirational, clear, and consistent with company beliefs and values

Mission
flows from the vision specific, unifying goal that stretches and challenges the organization and has a timeframe
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Middle Level Planning

(Tactical Planning)

Tactical Plans
specify how a company will use resources, budgets, and people to accomplish goals

Management by Objectives
develop and carry out tactical plans four steps
discuss goals participatively select goals jointly develop tactical plans meet to review performance MBO. (cont)
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MBO.
Management by Objectives (MBO) Based on:
Goal specificity Participative decision making Explicit time period Performance Feedback

Companies that use MBO are likely to out-produce companies that do not use it!
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Planning By First-Line Managers

(Operational Planning)

Operational plans
day-to-day plans

Single-use plans
deal with unique, one-time-only events

Standing plans
plans for recurring events three types
Policies Procedures Rules and regulations

Budgets
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Main Reference
Chuck Williams, (2008)

Effective Management, 3rd Ed. Thomson South-Western (ISBN-13: 978-0-324-54849-5) Chapter 4

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Review Questions
1. Discuss the benefits and pitfalls of planning. 2. Describe how to make a plan that works. 3. Discuss how companies can use plans at all management levels, from top to bottom.
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Review Questions
4. Why is planning essential in organisation (benefits of planning)? 5. Discuss the barriers to planning (criticisms of planning).

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Review Questions
6. Exploring the assigned business, how do you make the plan work?

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Why is planning essential in organisation? (Benefits of Planning)

Intensified Effort Persistence Direction Creation of Task Strategies

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Discuss the barriers to planning (criticisms of planning).

Impede change and slow or prevent adaptation Create a false sense of security Detachment of planners

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Review Questions

7. What is meant by Management by Objectives?

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What is meant by Management by Objectives?

Concept of MBO? Characteristics of MBO Strengths and weaknesses of MBO

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MBO.

Concept of MBO?
In MBO, managers and their staff work together to set common goals. A workers major areas of responsibility are clearly defined in terms of measurable results (objectives). These objectives are used by workers to plan their work and by managers to measure the progress of their staff. Periodic appraisals of performance are made to see if progress towards the objective is made.
Charact of MBO.

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MBO.

Characteristics of MBO.
Goal specificity For MBO to be effective, goals must be stated in clear, measurable term. Goals are set for each individual in the organisation so that everyone has clearly defined job responsibilities and objectives. Participative decision making Employee participation in setting goals is crucial. Managers and staff set objectives together in an atmosphere of mutual trust and respects. Explicit time period Within an agreed time limit, there must be enough confidence in managers to allow staff the freedom to plan and organise their resources in the ways they see fit to achieve objectives. Performance Feedback Regular reviews and performance feedback help both the manager and his staff to focus on the areas likely to give rise to problems and to plan for eventualities. strengths of MBO.
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MBO.

Strengths and weaknesses of MBO.

Strengths of MBO It lets individuals know what is expected of them. It aids planning by making managers establish goals. Communications improve between managers and their staff. Everybody in the organisation becomes more aware of the organisations goals. The evaluation process becomes fairer because people are measured on specific targets.
weaknesses of MBO.

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MBO.

Strengths and weaknesses of MBO.

Weaknesses of MBO Many managers complain that the MBO process involves too much paperwork. MBO emphasises the interpersonal skills of discussion, goal setting and reviewing. Many managers do not have the natural ability. Some managers raise targets by large margins after many periods of steady growth placing pressure on junior manager and their staff. MBO should not hinder creativity in managers and their staff. If MBO puts emphasis on strict adherence to objectives but does not allow individual innovation, then the organisation will lose opportunities. Performance review and counselling not properly implemented. For example, managers doing the appraisal may not be fully aware of how the system should work.
end.
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