A plan – This refers to a predetermined course of action for achieving objectives. It’s a frame work that details the methods and tasks that are to be implemented in order to achieve organizational goals. Plans may be tailored to a specific project or they may be established as standing plans for future activities / actions.
Planning – can be defined as the process of selection and sequential ordering of tasks that are required to achieve organizational goals. It’s the process of identifying the task to be achieved, methods/means to be use and time horizons of the implementation of tasks in the organization.
It’s a process of systematic thought that precedes action. It’s a process of deciding in the present what to do in the future. The planning process involves setting objectives and the means for achieving them. Planning is therefore a process of developing plans.
- Planning is goal oriented. A plan is not a goal by itself but a means towards accomplishing objectives. Planning has no meaning unless it is directed towards achievement of desired goals.
- Planning is forward looking or futuristic. Planning is done with an eye in the future and it involves looking ahead and preparing for the future.
- Planning involves making choices among alternative courses of action. The manager identifies the various alternatives, evaluates each one of them and selects the best
- Planning is an intellectual process. It involves imagination.
- Planning is a continuous process. This means that old plans should be continuously reviewed in light of the planning assumptions. Those that are no longer valid are replaced or modified.
- Planning is an integrated process. Planning will involve assimilating the long-term medium and short-term goals. It also involves integrating the sub unit goals in order to achieve the overall organization goals
- Planning is pervasive. (Affects all the areas of the organization.) Managers at all levels are involved in planning for their various areas.
- Planning precedes the execution of all other managerial functions
- Planning is directed towards efficiency. Planning has no relevance if it does not facilitate achievement of objectives efficiently and economically.
Importance of Planning
- Planning provides direction for the organization. Without planning people would not know what is expected of them.
- Planning reduces uncertainty and risk. This is because the managers will predict the circumstances in the future and not leave anything to chance and hence will prepare well for any eventuality.
- It guides decision making; sound planning avoids hasty decisions and the plans established are used as a point of reference for future decision making
- It facilitates control as the activities and the actual performance will be checked or measured against the plans and the objectives they are in.
- It focuses attention on objectives. Plans facilitate the accomplishment of the organizations goals.
- Planning facilitates co-ordination. Through planning it is possible to divide labour and allocate resources and ensure there is harmony between the various interrelated parts of the organization.
- Planning enhances efficiency in operations i.e. planned effort is always more efficient than unplanned action and there is less wastage of time.
- It facilitates optimal allocation of resources. Through the planning process the resources that are available and those that will be available are considered in the light of the various competing needs. These resources are then allocated in such a way that will ensure maximum benefit for the organization.
- Planning precedes the execution of all other activities. Without planning other management functions would not be possible.
- It facilitates decentralization/delegation; The plans set will guide the subordinates who will receive the delegated authority
Douglas B Gehram provided the following answers to the question ‘why plan?’
- It increases chances of success by focusing on results and not activities
- It forces analytical thinking
- It establishes a framework for decision making
- orients people to action instead of reaction
- Modifies style from day to day management to future based managing
- Helps avoid crisis management and provides decision making flexibility
- Provides a basis for measuring performance
- Increases employee involvement and improves communication
Types of Plans
- Strategic Plans
- Tactical Plans
- Operational Plans
- Contingency plans
This is a plan that covers the entire organization as a single business portfolio. This is a broad plan developed by top-level managers to give an organization a general direction. The strategic plans address the issue of; where should the organization be 5-10 years from now. The top level/strategic managers will develop these plans by scanning the environment, determining the opportunities and threats and developing a strategic fit for the organization. Strategic plans are concerned with allocation of corporate resources. They are complex, involve a lot of uncertainties and integrate the various sub units of the organization. These plans are long-range in nature and they are influenced by the values of those in power. Strategic plans are concerned with positioning the firm in its environment.
- Tactical Plans/Business Plans/Competitive Plans
These have a moderate scope and they relate to various sub-units of the organization. Sub-units may be functional areas (marketing, finance, production, human resource etc), or Strategic Business Units. These plans are derived from the strategic plans. They are medium term in nature and they are developed by the tactical or middle level managers.
- Operational Plans
These have the narrowest focus and shortest time frame. They fall into two categories; i.e. standing plans and single use plans.
- Standing plans
These are plans developed to handle routine /recurring situations. They include procedures, rules, policies etc.
2. Single Use Plans
These are plans set-up to handle events that happen only once e.g. Budgets, programs, and projects.
- Contingency plans
Involve identifying alternative courses of action in advance of implementation of a plan in order to overcome possible changes in environmental conditions which may affect goal achievement. Contingency plans therefore add an element of flexibility that assists managers in the anticipation of changes that may occur suddenly.
Time Frame for Planning
There are three levels of planning based on time frame;
- Short range / annual planning
Refers to plans developed for implementation within a planning horizon of up to one year. They are mostly made by line managers and general employees of the organization. They focus on day to day activities of the organization. They help achieve annual objectives.
- Medium term / intermediate planning
Intermediate plans generally involve a time perspective from one to five years and are designed to implement activities among middle or divisional level managers of the organization.
- Long range planning
Involves identfying the activities to be performed over an extended period of 5 years and above. While short range and intermediate planning deals with planning activities which are more specific, long range planning does not. Long range plans help organizations to remain focused and achieve their vision.
