UBMM1013 0

MANAGEMENT
PRINCIPLES

Topic 4
Managerial 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

Goals

Plans

Planning
Overview of Goals and Plans

•A blueprint specifying the resource

allocations, schedules, and other actions
necessary for attaining goals

•A desired future state that the organization

attempts to realize

•determiningthe organization’s goals and the

means for achieving them
Levels of Goals and Plans

•Strategic Goals/Plans
•Mission
•Operational Goals/Plans
•Tactical Goals/Plans
•Vision
Levels of Goals and Plans

•What our organization to be?

•Why does the organization exist?

 Levels of Goals and Plans
•What our Vision and mission of Ford
organization to be?
•Become the main company of the
•Why does the world products and services of the
organization exist? car.

•We are a global, diverse family

with a proud inheritance, providing
exceptional products and services.
 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
Levels of Goals and Plans

Lower Management (Departments,

work groups, individuals) ?

Middle Management (Major

divisions, functions) ?

Senior Management (organisation

as a whole ?
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Strategic Goals and Plans

Strategic 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
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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 0

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 0

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
Purpose of Goals and 0

Plans

???? Message
Legitimacy for
investors, customers,
suppliers, community

???? Message
Legitimacy,
motivation,
guides,
rationale,
standards
Purpose of Goals and Plans

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

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.
Purpose of Goals and Plans

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.
Purpose of Goals and Plans

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.
Purpose of 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.
Purpose of Goals and Plans

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.
Purpose of 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 Management Single-use

effective by Objectives and Standing
goals (MBO) Plans
 Effective Goals

Criteria
•Specific and Measurable
•Cover Key Result Areas
Effective Goals
•Challenging but realistic
•Defined Time Period
•Linked to Rewards
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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.
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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)
 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 0

Process
Step 1: Set Goals Step 2: Develop Action Plans
Corporate Strategic Goals
Departmental goals
Action Plans
Individual goals

Review Progress

Step 3:
Review Progress

Take Corrective Action

Appraise Performance
Step 4: Appraise Overall
Performance
 Management by Objectives
(MBO)

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.
 Management by Objectives
(MBO)

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.
 Management by Objectives
(MBO)

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.
 Management by Objectives
(MBO)

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 0

Benefits of MBO Problems with MBO

 Manager and employee  Constant change prevents

efforts are focused on MBO from taking hold
activities that will lead  An environment of poor
to goal attainment employer-employee
 Performance can be relations reduces MBO
improved at all effectiveness
company levels  Strategic goals may be
displaced by operational
 Employees are goals
motivated  Mechanistic organizations
 Departmental and and values that
individual goals are discourage participation
can harm the MBO
aligned with company process
goals  Too much paperwork saps
MBO energy
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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 Building Crisis Planning

Plans Scenario
 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.
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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
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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
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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 High-Performance
Approaches to Approaches to
Planning Planning
Traditional 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
 High Performance
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 0

Approaches to Planning

Set Use Deploy

Stretch Performance Intelligence
Goals for Dashboards Teams
Excellence
 Performance Dashboard 0

for Planning
 Gauge progress
toward goals

 Align and track

goals

 All employees
can track
progress
Thank you