Planning and Desicion Making (Chapter 2)

7/27/2019 Planning and Desicion Making (Chapter 2)

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PLANNING AND DECISION MAKING

Functions / process of management In 1916, Henri Fayol provided a functional approach to management in his book,industrial and general management. Fayols list of managerial functions includesplanning, organising, commanding, coordination and controlling. In 1930s, Luther Gullickcoined the functions of management in one word POSDCORB Planning, Organising,

Staffing, directing, Co-ordinating, Reporting and Budgeting.The important functions of management are briefly explained as follows:

Process of Management

1. Planning :James Stonerstates planning is a process of establishing goals and asuitable course of action for achieving those goals.The main steps in planning are stated as follows:

o Analysing the internal environment to identify strengths and weaknesses.

o Analysing the external environment to identify the opportunities and threats.

o Setting of clear and realistic goals.

o Framing alternative plans.o Studying (evaluating) the alternative plans.

o Selection of the best suitable plans(s).

o Implementation of the plan(s).

o Review of the plan(s).

2. Organising: Louis Allen states Organising is a process of identifying and grouping ofthe work to be performed, defining and delegating authority and responsibility, andestablishing relationships to accomplish objectives. The main steps in organising areas follows:

o Determining goals of the organisation.

Planning

OrganisingControlling Objectives

Directing


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o Identifying the activities to be performed to achieve into departments.

o Grouping of the related activities into departments.

o Making arrangement of resources.

o Defining authority and responsibility.

o Delegating authority to managers.

o Establishment superior-subordinate relationships.

o Coordinating of activates in the organisation.

3. Staffing: It is important element of organising. Since staffing is very vital, it needs to begiven proper focus. A major aspect of staffing is to find out the right person for the rightjob. It also involves:

o Placing the right person at right job.

o Performance appraisal.

o Promotion and transfers.

o Training and development.

o Motivating and rewarding the employees.

4. Directing: The plans may be best feasible ones, the activities may be systematicallyorganised, the staff may be highly efficient, but the organisation will not succeed if thereis no proper direction. Directing involves not only instructing people what to do, but alsoensuring that they know what is expected of them. The manager should help, motivatesand guide his subordinates. Most of all, directing involves development of high moraleof the subordinates. Directing involves three sub-functions:

o Communicating: It involves transfer of massages from one person to another.Effective communication taken place only. When the massage is clearly understoodand a proper feedback is received o proper action is taken.

o Leading: Leading is an act of influencing subordinates to work willing towards theattainment of desired objectives.

o Motivating: The manager should motivate his subordinates by providing incentivesso that they work with dedication and commitment to achieve goals of theorganisation.

5. Controlling: In the words James Stoner Controlling is the process of ensuringthat actual activities confirm to the planned activities. In controlling, the mangermonitors actual performance, and takes corrective measures, if required. Controllinginvolves the following steps:

o Setting of standards or targets.

o Implementation of tasks.

o Measuring actual performance.o Comparing actual performance with plans or targets.

o Finding out causes of deviations if any.

o Listing out various corrective measures.

o Selecting the appropriate corrective measures.

o Implementation and review of corrective measures.

6. Coordination: It refers to integration of activities or actions of the subordinates by thesuperiors. There is a need for coordination at all levels.

o The top level coordinates the activities of the middle level.


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o The middle level coordinates the activities of the lower level.

o The lower level managers coordinate the activities of the subordinates.

Meaning and definition of Planning

Planning provides a sense of direction to business activities. If you dont know where youare going, no road will take you there. Planning bridges the gap from where we are and

where we want to go.

Knootz and ODonnell, Planning is deciding in advance what to do, how to do it,when to do it, and who is to do it.

James Stonerdefines Planning is the process of establishing goals and a suitablecourse of action for achieving those goals.

Nature and Characteristics of Planning

The nature and characteristics of planning can be explained as follows:

1. Planning is Goal Oriented: Planning is goal oriented in the sense that plans aredeveloped and executed to achieve goals. At first the goods are set, and then plans areframed to accomplish them. Planning has no meaning, unless it contributed to theachievement of goals. For instance, the goal of the production department may be toproduce 10,000 units of brand A during a particular year. Accordingly, plans aredrawn to achieve the desired target

.2. Future Oriented:Planning is future related activity. Necessary forecasts are made

about the future and accordingly plans are made. The future may relate to one weekfrom now, or one year from now, or even ten years from now. In other words, plans aremade or the future activities whether short term, medium term, or long term.

3. Continuous Activity: Planning is a continuous activity. It is an ongoing process.Effective planning request constant and continuous checking of events. Accordingly,plans are redrawn depending upon the situation or circumstances at the time ofimplementation. For instance, the marketing department may plan to spend Rs. 5 croreon advertising during the year 2006-07. This budget of Rs. 5 crore may have to beincreased, if a competitor resorts to aggressive advertising during 2006-07.

4. Link between the past, present, and future: Planning acts as a link between the

past, present and future. Although planning is a future related activity, yet, one cannottotally ignore the past and present events and achievements while planning for thefuture eventsor achievements. It is the past experience that helps in preparing realisticfuture plans.

5. Primacy of planning: Planning is the primary or basic function of management.Without planning, it would be difficult to organise, to direct, and to control. When theplans are well defined and clear, it would be easy to organise the resources, to providenecessary directions, and to take proper control measures.


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6. Pervasiveness of planning: Planning is the functional of every manager. The need forplanning exists at all levels of managements. Planning is required not only in businessorganisations, but also in non-business organisations, such as governmentorganisations, educational institutions, charitable trusts, etc.

7. Intellectual Process: The success of plans depends upon to a great extent on theintelligence of the manger. A great deal of imagination and intelligence is needed to

prepare sound plans.

8. Integrated process: Every plan needs to be integrated with other plans. The plan of asection of a department needs to be integrated with those of other sections in thedepartment to achieve departmental goals. Again, the plan of one department needs tobe integrated with those of other departments in order to achieve organisational goals.

Advantages of planning

1. Minimizes Risks: Planning helps to minimize or reduce risks. Potential risks areforecasted and necessary protective devices are directed well in advance. If the risks

occur, then the protective devices are put into practice. The protective devices are thecontingency plans that help to reduce risks.

2. Facilitates Coordination: The plans of one department are coordinated with the plansof all other concerned departments. This brings in unity among the variousdepartments of the organisation. In other words, the concerned departments work inclose harmony in the implementation of the plans.

3. Facilitates Organising: Planning enables a manager to organise the resourcesproperly. If required, he may make arrangement for additional resources in order toachieve the planned targets. Depending upon the targets, the manager will make

proper arrangement of resources.

4. Facilitates proper direction: Planning provides proper schedules or time or to whenthe activities need to be conducted. This facilitates the manger to direct hissubordinates as and when required. Clear directions can be given to the subordinatesso that they undertaken the right tasks at the right time.

5. Facilitates Control: A plan provides a yard sticks (target) against which actualperformance can be compared. Such comparison will enable to find out the deviationsfrom the plans. If deviations are noticed, the manager may take the right corrective

steps at the right time.

6. Generates Efficiency: Planning enables optimum unitisation of resources. All theresources i.e., physical, financial and human resources are put to their best use. Theoptimum utilisations of resources enable a company to achieve highest possiblereturns at lowest possible costs.

7. Encourages Innovation: The planning process encourages creative thinking on thepart of managers. They strive to come out with innovative ways to achieve the resultsas per the plans even during the tough times. The innovative ideas often bring bestresult to the organisation.


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8. Focus on goals: Planning is goal oriented in the sense that plans are developed andexecuted to achieve certain goals. Every activity is directed towards the attainment ofgoals. Activities are conducted in a systematic and smooth manner. There is hardly anyscope for haphazard activities.

9. Facilitates Decision-Making: normally, a manager frames alternative plans. After

necessary analyses of the plans, the best is selected. Thus, planning facilities thechoice of the best plan. Accordingly, managers take decisions to organise, to direct,and to control the activities.

10.Motivates Personnel: Professional managers frame the plans in consultation with thesubordinates. When there is active involvement of the subordinates in planning, thenthey become highly committed to the achievement of the goods. Also, plans provide achallenge for the superiors and subordinates to achieve the targets. Thus, planningdevelops a motivated and dedicated work force in the organisation.

Disadvantages / Constraints of Planning

The constraints or limitation of planning are as follows:

1. Time Consuming: There is a need to collect and analyse data before framing plans.The subordinates and the concerned departments may have to be consulted. Theremay be a need to get approved from higher authorities. All this takes a good amount oftime.

2. Paper Work: Planning required a good deal of paper work. Quite often, plans aredrawn and re-drawn. Necessary reports are required to be collected from subordinatesto prepare the final plans. Paper work is also involved in taking approval of the plansfrom the top management.

3. Expensive:A good amount of money is spent on collecting and analysing data whichis required to frame the plans. The company may consult professionals before finalisingthe plans, for which consultancy fees need to be paid.

4. Generates Rigidity: Managers may tend to achieve only what has been planned.Even if the situation permits them to achieve on the higher side, they may not put extraefforts. However, managers and their subordinates can be motivated to put in their bestefforts and not just to stick to planned targets.

5. Generates Frustration: At times, managers may not be able to achieve the plannedtargets, despite their best efforts. This may generates frustration and loss of initiativeon the part of the mangers and others. However, necessary motivation and trainingmay be given so that the managers and others can easily over come the frustration andstress.

6. Dangers of Over targeting: There are cases, where functional managers plan thetargets on the higher side. This is more so on the part of the over enthusiasticmanagers. Again, the managers may get wrong data, or their may be wronginterpretation of data and as such over-targeting.


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7. Danger of Under-targeting: There are cases, where the managers deliberately framethe plans with lower targets. This is because they can easily attain such targets andreceive complaints for the same. This is more so in government and public sectororganisations. There may be genuine cases of under-targeting due to wrong datacollection and interpretation.

8. Danger of human Error: Plans are based on forecasts. A good deal of experience and

judgment is necessary to forecast and frame the plans. There are cases where eventhe intelligent managers failed to judge certain factors and as such the plans wereunrealistic. Thus, planning is subjective to human error or poor judgment.

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Planning and Desicion Making (Chapter 2)