I. HOW DO MANAGERS SET GOALS AND DEVELOP PLANS?
A. What Types of Goals Do Organizations Have and How Do They Set Those Goals?
1. Planning involves two important aspects: goals and plans.
2. Types of Goals
a) Stated goals – official statements of what an organization says, and what it
wants its stakeholders to believe, found in public documents.
b) Real goals – those goals an organization actually pursues – observe what
organizational members are doing.
1) Real and stated goals may be different.
3. Setting goals – goals provide the direction for all management decisions and
actions and form the criterion against which actual accomplishments are
measured.
a) Traditional goal setting – goals set by top managers that flow down through
the organization and become sub-goals for each organizational area. See
Exhibit 5-5.
b) Top-down goals may not translate easily into departmental, team, or
individual goals.
c) Ambiguous goals have to be made more specific.
d) Means-ends chain is when higher-level goals (or ends) are linked to
lower-level goals, or goals achieved at lower levels become the means to
reach the goals (ends) at the next level.
From the Past to the Present
Management by objectives is not new. The concept goes back almost fifty years. Its appeal is its
emphasis on converting overall objectives into specific objectives. MBO makes objectives
operational by cascading them down through the organization and works from the bottom up as
well as from the top down. The result is a hierarchy that links objectives at one level to those at
the next level. For the individual employee, MBO provides specific personal performance
objectives. Top management must be committed to the process for MBO to work.
Discuss This:
Why do you think management commitment is so important to the success of MBO
programs?
How could you use MBO for your personal goals?
4. Instead of traditional ways, many organizations use management by objectives
(MBO), which is a process of setting mutually agreed-upon goals and using those
goals to evaluate employee performance.
a) There are four ingredients common to MBO programs: goal specificity;
participative decision making; an explicit time period; and performance
feedback.
5. Studies of actual MBO programs confirm that MBO effectively increases
employee performance and organizational productivity. Goal setting can been an
effective tool in motivating employees.
6. Characteristics of well-written goals. See Exhibit 5-6.
7. Six steps in goal setting:
a) Review the organization’s mission and employee’s key job tasks.
b) Evaluate available resources.
c) Determine the goals individually or with input from others.
d) Make sure goals are well-written and then communicate them to all who need
to know.
e) Build in feedback mechanisms to assess goal progress.
f) Link rewards to goal attainment.
B. What Types of Plans Do Managers Use and How Do They Develop Those Plans?
1. Exhibit 5-7 illustrates the relationship of the types of plans.
a) Breadth—strategic versus tactical.
b) Time frame—long-term versus short.
c) Specificity—directional versus specific.
d) Frequency of use—single use versus standing.
2. Breadth:
a) Strategic plans apply to the entire organization, establish the organization’s
overall objectives, and seek to position the organization in terms of its
environment.
b) Tactical plans (operational plans) specify the details of how to achieve the
overall objectives.
3. Timeframe:
a) Short-term covers less than one year.
b) Any time frame beyond three years is classified as long-term.
4. Specificity:
a) It appears intuitively correct that specific plans are always preferable to
directional, or loosely guided, plans.
b) Specific plans have clearly defined objectives.
c) Specific plans require clarity and a predictability that often does not exist.
d) When uncertainty is high, and management must maintain flexibility in order
to respond to unexpected changes, directional plans may be preferable.
e) Directional plans, on the other hand, identify general guidelines.
f) They provide focus but do not lock managers into specific objectives or
specific courses of action.
5. Frequency of Use
a) A single-use plan is used to meet the need of a particular or unique situation.
b) Standing plans are ongoing, providing guidance for repeatedly performed
actions.
6. Developing plans:
a) Contingency factors affect the choice of plans: organizational level, degree of
environmental uncertainty, and length of future commitments.
b) Exhibit 5-8 shows the relationship between a manager’s level in the
organization and the type of planning being done.
c) When uncertainty is high, plans should be specific, but flexible.
d) The commitment concept says that plans should extend far enough to meet
those commitments made when the plans were developed.
7. Two approaches to planning:
a) A formal planning department is a group of planning specialists whose sole
responsibility is to help write the various organizational plans.
1) Under this approach, plans developed by top-level managers flow down
through other organizational levels.
2) In a survey of managers about formal top-down organizational planning
processes, over 75 percent said that their company’s planning approach
was unsatisfactory.
b) Planning by organizational members.
1) In this approach, plans aren’t handed down from one level to the next, but
instead are developed by organizational members at the various levels and
in the various work units to meet their specific needs.
2) When organizational members are more actively involved in planning,
they see that the plans are used in directing and coordinating work.
II. WHAT CONTEMPORARY PLANNING ISSUES DO MANAGERS FACE?
A. How Can Managers Plan Effectively in Dynamic Environments?
1. Managers should develop plans that are specific, but flexible.
a) Managers need to recognize that planning is an ongoing process.
b) Managers need to stay alert to environmental changes that may impact
implementation and respond.
c) It is important to continue formal planning even in an uncertain environment in
order to see any effect on organizational performance.
d) A flatter organizational hierarchy helps to effectively plan in dynamic
environments.
B. How Can Managers Use Environmental Scanning?
1. Environmental scanning—screening large amounts of information to detect
emerging trends and create a set of scenarios.
2. Competitive intelligence is accurate information about competitors that allows
managers to anticipate competitors’ actions rather than merely react to them.
3. How is competitive intelligence useful?
a) It seeks basic information about competitors: Who are they? What are they
doing? How will what they are doing affect us?
b) Most of the competitor-related information an organization needs to make
crucial strategic decisions is available and accessible to the public.
c) Competitive intelligence isn’t organizational espionage.
d) Competitive intelligence becomes illegal corporate spying when it involves
the theft of proprietary materials or trade secrets by any means.
e) The Economic Espionage Act makes it a crime in the United States to
engage in economic espionage or to steal a trade secret.
f) There’s often a fine line between what’s considered legal and ethical and
what’s considered legal, but unethical.