An idea to achieve organization’s goals, established strategies and to incorporate organizational work is called planning and when this plan is made for business, then its called Business Plan. The term Planning refers to formal planning for achieving high performances, targets, goals and objectives.
Purposes of Planning
Many significant purposes are achieved through planning.
- Provision of direction to the organization.
- Reduction of impact of the change.
- Establishment of coordinated efforts within the organization.
- Decrement of uncertainty.
- Reduction of overlapping along with useless activities.
- Establishment of objective standards used for monitoring and controlling.
How does Managers Plan?
Planning, usually called as an initial management function due to establishment of foundation for other functions within an organization. It probably involves into two major & important features, which are organizational Goals and Plans.
The Goals are the desired outcome for organizations, groups or for individuals. Goals are usually known as objectives. There are two types of Goals.
- Stated Goals: These are the official statements, which define the requirements of stakeholders.
- Real Goals: The actual pursuit of the organization, are the real goals.
Nature of Organizational Goals
Several benefits can be achieved by using goals, such as:
- Improvement of performance.
- Increment in expectations.
- Facilitation of the controlling function to assess and correct the progress.
- Motivation is increase by achieving the goals.
A hierarchy of three levels of goals is formulated within the organization, through a chain of goals from lower level towards a next increased level.
- Strategic Goals: These are largely defined targets set by higher levels of management.
- Tactical Goals: Targets or future results, set by the medium level of management are called as Tactical Goals.
- Operational Goals: Those goals set by lower management, which address featured and measurable outcome, are operational ones.
Link Between Goals and Plans
Goals and Plans are co-related to each other. Plans are made to achieve the specified goals. Like Goals, there is the hierarchy of Plans also. It is as under:
- Strategic Plans: These are the detailed actions laid out to acquire strategic goals. Top management sets up the wide organizational plans. The time length of these plans is predisposed from 3 to 5 years or more even.
- Tactical Plans: They are mapped to help implementation of the strategic plans and to acquire strategic goals. Tactical plans are more specific and solid than strategic ones. They are very important for the succession of strategic plans. Their time horizon ranges from 1 to 3 years.
- Operational Plans: These plans are developed to implement the tactical plans for achievement of operational goals. These plans are set up for accomplishment the achievement of operational plans. Their time horizon is very short, ranging within 1 year.
Plans are categorized according to the extent of their use.
Single-use Plans: These are the plans targeted to achieve the specified goals, which will not come in the future.
- The program is a plan to coordinate a complex set of activities in relation with major non recurring goals.
- The project is a plan that is targeted to limited activities that do not need the division into several major projects in order to achieve major non recurring goals.
Standing Plans: These plans provide ongoing guidelines to perform recurring activities.
- Policy is general guidance to specify broad constraints within which organizational members operate to pursue organizational goals.
- The procedure is a well defined series of related actions to be taken under recurring situations.
- Procedures are seized & inflexible while policies are general.
- Well formulated and established procedures are usually called as standard operating procedures (SOPs).
Different time horizons are attached with different plans and goals. Time is independent in stable strategic plans, but mostly its period is up to years. The time horizon of plans is very similar to that of goals. It means tactical plan ranges from 1 to 5 years while that of operational plan ranges from 1 week to 1 year.
Innovation in organizations is promoted by using planning process. The mission statement of an organization can be an initial mean of motivating innovation. The goals can be the translation of the mission to support innovation. The competitive plans can give birth to actual plans for acquiring innovative results.