PLANNING

Meaning

Planning, in the context of management, refers to the process of setting goals, defining
strategies, and outlining actions or steps to achieve those goals. It involves thinking ahead,
making decisions, and organizing resources to ensure that an organization or individual can
accomplish their objectives effectively and efficiently. Planning is a fundamental function of
management and serves as a roadmap for guiding decision-making and actions.

Definition

According to McFarland, "Planning may be broadly defined as a concept of executive action

that embodies the skills of anticipating, influencing, and controlling the nature and direction
of change."

Benefits/ Advantages of Planning:

1. Goal Achievement: Planning helps set clear objectives and goals for an organization
or a team. It provides a road map for where the organization wants to go and how it
will get there, increasing the likelihood of achieving those goals.

2. Improved Decision-Making: Planning requires careful analysis and consideration of

various options and alternatives. This process of weighing pros and cons helps
managers make informed and better decisions.

3. Resource Allocation: Effective planning helps allocate resources like time, money,
and manpower efficiently. It ensures that resources are used wisely and optimally to
achieve desired outcomes.

4. Risk Mitigation: Potential risks and challenges can be identified in advance through
planning. Managers can then develop contingency plans and strategies to mitigate
these risks, reducing the likelihood of setbacks or failures.

5. Coordination and Alignment: Planning helps align the efforts of different

individuals, departments, and teams within an organization towards common goals. It
promotes better coordination and cooperation among employees.
 6. Clarity and Focus: Having a well-defined plan provides clarity and focus for both
managers and employees. It helps everyone understand their roles and responsibilities,
reducing confusion and workplace stress.

7. Efficiency and Productivity: A well-structured plan outlines the steps and timelines
for achieving objectives. This structured approach enhances efficiency and
productivity as employees have a clear roadmap to follow.

8. Resource Conservation: Planning minimizes wastage of resources by ensuring they

are used only for essential tasks and activities related to achieving goals.

9. Flexibility and Adaptability: While planning sets a direction, it also allows for
adjustments as circumstances change. Managers can modify plans when needed to
respond to unexpected events or market shifts.

10. Motivation: Setting specific goals and targets through planning can motivate
employees. It gives them a sense of purpose and achievement as they work towards
fulfilling the organization's objectives.

11. Measurable Progress: Planning often includes key performance indicators (KPIs)
and milestones. This allows managers to track progress and measure success, making
it easier to identify areas that may need improvement.

12. Competitive Advantage: Effective planning can provide a competitive advantage by

helping an organization anticipate market trends and customer needs, enabling it to
respond faster and more effectively than competitors.

In summary, planning is a fundamental function of management that brings structure and

order to an organization's activities. It leads to better decision-making, efficient resource
utilization, and improved chances of success in achieving goals, all of which are critical for
the long-term success of any business or organization.
Steps involved in Planning:

1. Setting Objectives

This is the foundation of any planning process. Objectives define the purpose or goals
that an organization or project aims to achieve. These objectives should be SMART
—Specific, Measurable, Achievable, Realistic, and Time-bound. Setting clear
objectives helps guide all subsequent actions and decisions in the planning process.

2. Analyzing the Current Situation

Before any plan is created, it is crucial to understand where the organization currently
stands. This involves performing a SWOT Analysis (Strengths, Weaknesses,
Opportunities, Threats). Analyzing both internal factors (like resources, capabilities)
and external factors (like market trends, competitors) helps in making informed
decisions about how to proceed.

3. Identifying Alternatives

There are often multiple ways to achieve an objective. This step involves
brainstorming and listing all potential strategies or actions that could lead to the
desired outcome. A good planner considers various options instead of settling for the
first idea that comes to mind.

4. Evaluating Alternatives

Once alternatives are identified, each option must be carefully evaluated. Factors such
as feasibility, risks, costs, benefits, and potential outcomes are considered. The idea is
to compare these alternatives and assess their pros and cons to avoid any impractical
choices.

5. Selecting the Best Alternative

After evaluation, the best possible alternative is selected. The chosen plan should be
the one that is most effective and practical in terms of achieving the set objectives
while minimizing risks. It should also align with the organization’s resources,
timelines, and capacity for implementation.

6. Developing Detailed Plans

This step involves breaking down the chosen strategy into specific tasks and actions.
A detailed plan is created that includes resource allocation, timelines, budget, and
responsibilities. It is important to clearly define who will do what and by when.
Contingency plans may also be developed to address potential obstacles.
7. Implementing the Plan

Once the detailed plan is in place, it’s time for action. In this phase, the plan is put
into effect. Responsibilities are assigned to individuals or teams, and resources are
deployed accordingly. Effective communication and leadership play crucial roles
during this step to ensure everything moves smoothly.

8. Monitoring and Controlling

After implementation, continuous monitoring is essential to ensure that everything is

progressing according to plan. Actual performance is compared with the planned
objectives to identify deviations. If things are not going as expected, corrective
measures are taken to bring the plan back on track. This step ensures flexibility and
responsiveness.

9. Reviewing and Revising the Plan

Once the plan is fully executed, it’s important to review its overall success. Was the
objective achieved? What challenges were encountered? By reviewing the outcomes,
valuable insights can be gathered for future planning. If the goals were not fully met,
the plan may be revised, or a new approach may be formulated for subsequent cycles.

Nature of Planning

Goal-Oriented: Planning is inherently goal-oriented. It involves setting specific objectives

and defining what needs to be achieved. Goals provide a clear sense of direction and purpose
for the planning process.

1) Future-Oriented: Planning is focused on the future. It aims to anticipate and prepare for
future events, challenges, and opportunities. It involves making decisions in the present to
shape outcomes in the future.

2) Logical oriented: Planning is a logical process that involves a series of steps or stages. It
requires structured thinking, analysis, and organization to create effective plans.

3) Dynamic: Planning is dynamic and adaptable. Plans may need to be adjusted or revised in
response to changing circumstances, new information, or unexpected developments.

4) Continuous Process: Planning is an ongoing and continuous process. It is not a one-time

activity but involves regular review, adjustment, and improvement of plans.
Management by Objectives

Management by Objectives (MBO) is a goal-setting and performance management process

developed by management theorist Peter Drucker in the 1950s. It's a systematic and
collaborative approach to setting and achieving organizational goals. MBO is a system for
achieving organizational objectives and enhancement of employees' commitment and
participation.

Steps in MBO:

 Set Organizational Objectives:

The first step involves identifying the organization's broad goals. Top management defines
the overall direction, vision, and objectives. These objectives should be SMART (Specific,
Measurable, Achievable, Relevant, Time-bound) and should align with the organization's
mission and long-term goals.

 Cascade Objectives to Employees:

Once organizational objectives are set, they are broken down into smaller, specific objectives
for different departments, teams, and individuals. This step ensures that every employee's
goals contribute to the larger organizational targets. Managers work with employees to set
goals that are aligned with the company’s overall objectives.

 Encourage Participation in Goal Setting:

MBO emphasizes collaboration between managers and employees. Employees are
encouraged to actively participate in setting their own goals, which increases commitment
and motivation. By involving employees in the goal-setting process, they feel more
responsible for achieving the goals.

 Monitor Progress:
After objectives are set, the manager and employees regularly track progress. This involves
setting up milestones and periodic reviews to assess how well the objectives are being
achieved. Managers provide feedback and guidance during this phase to ensure that
employees stay on track.

 Evaluate and Reward Progress:

At the end of the performance period, the outcomes are evaluated against the set objectives.
This evaluation determines whether the goals have been met and to what extent. If objectives
are successfully achieved, employees are rewarded—this could be in the form of bonuses,
promotions, or other recognition.

 Repeat the Cycle:

MBO is a continuous cycle. After evaluation and rewards, the process begins again with
setting new objectives for the next period. This iterative process ensures that the organization
remains focused on its goals and adapts to changes over time.

Organizing:

Definition: According to Louis Allen, “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”

Steps involved in organizing:

1) Identification and Division of Work:

The process of organising starts with the identification and division of work. The whole work
is to be divided into manageable activities so that duplication is avoided and work can be
completed as per predetermined goals.

2) Departmentalisation:

Departmentalisation refers to the process of grouping the activities of similar nature under
same departments. This facilitates specialisation and coordination in the organisation.
Following are the various ways of departmentalisation:

(i) On the basis of functions:

Numerous activities are grouped into different departments on the basis of various functions.
For example, Purchase Department for purchase functions, Finance Department for financing
activities etc.

(ii) On the basis of type of products manufactured:

In this case, activities are grouped into different departments on the basis of products
manufactured or produced by organisation. For example, textile division, food division,
clothing division, Steel division etc.

(iii) On the basis of territory:

Here, activities are grouped into offices/branches on the basis of four directions (or locations)
North, East, West, South (NEWS) e.g., Southern Zone, Eastern Branch etc.

3) Assignment of Duties:

Once the departments have been formed; the next step is to assign the work to the employees
according to their skills and competencies. In order to ensure effective performance in an
organization, it is essential that a balance is created between the nature of a job and ability of
the employee responsible for that job.

4) Establishing Reporting Relationships:

Establishing responsibility relationships in an organisation structure implies the allocation of

authority and responsibility among employees of the enterprise in such a way that each
person should know who is responsible to whom and for what.

Significance of Organizing:

1) Role Clarity: In the organising function the employees are assigned different jobs
and the managers clearly define the jobs. The jobs are defined on the written
document called job description which clearly spells out what exactly has to be done
in every job. This description of job brings clarity in the minds of employees.
2) Expansion and Growth: With optimum utilization of resources and proper division
of work and departmentation, companies can easily meet the challenges and can
expand their activities in a planned manner.
3) Development of personnel: Delegation of authority is an important part of
organising. By delegating the routine, the employees can concentrate to develop new
methods and ways of performing job. It gives them time to innovate new technologies
and areas for growth of the companies. Delegation not only reduces the work load of
managers but it also helps them to use and realise their full potential for more creative
work.
4) Promotes Effective Communication: Organizing is an important means of creating
coordination and communication among the various departments of the organization.
 Different jobs and positions are interrelated by structural relationship. It specifies the
channel and mode of communication among different members.

Centralization and Decentralization

Centralization:

Centralization is a form of organizational structure where the decision making capability rests
with the top management. A couple of hand-picked members are entitled to create strategies,
determine the goals and objectives based on which an organisation will function. In a
centralized organisation, the top management sets rules and procedures which are then
communicated to the lower-level employees, who are expected to carry out the same without
questioning the authority. The advantage of such a structure is, it allows employees to have a
well-defined framework within which all work needs to carried out. Examples – Military

Decentralization:

Decentralization is another form of organizational structure that functions by delegating

decision-making capabilities to multiple teams across geographies. In such an organization,
most of the planning, strategy and decision to implement them are taken by the people in the
top, middle and lower level of management. Example: Spotify

SPAN OF MANAGEMENT:

The Span of Management refers to the number of subordinates who can be managed
efficiently by a superior.
Differences between Centralized and Decentralized structure of management

Aspect Centralization Decentralization

Decision-making Decision-making
Decision making capability capability rests with the capabilities delegated
top management across multiple levels

Flow of
Information/Communicatio Vertical Open and free
n

Decision-making speed Comparatively slow Significantly faster

Few handpicked people Higher number of people

People Involved involved in decision- from each level involved in
making decision-making

Highly motivated
Employee Motivation Demotivated employees
employees

Conflict in Decision Least likely to occur Most likely to occur

Burden carried by one Burden shared among

Burden
group many levels

Relatively stable as
Prone to instability due to
decisions made by central
Stability multiple conflicting
authority with common
decisions
ideology