Functions of Management: PLANNING

What is planning?
• Planning is an intellectual process which is concerned with deciding in advance what, when,
why, how, and who shall do the work.
• It focuses on the future course of action.
• A primary managerial activity that specifies the objectives to be achieved in the future and
selects the alternative course of action to reach defined objectives. Thus it involves:
• Defining the organization’s goals
• Establishing an overall strategy for achieving those goals
• Developing plans for organizational work activities

It is the determination of future course of action in advance.

It is the blue print of action and operation.

Definitions of Planning
“Is a process which begins with objectives and strategies, policies and detailed plans to achieve them.”
….George A. Steiner
“Planning bridges the gap from where we are to where we want to go. It makes it possible for things to
occur which would not otherwise happen."
…Koontz and O'Donnel
“Planning is a mental predisposition to do things in orderly way, to think before acting and to act in the
light of facts rather than guesses.
…Urwick

• Planning in Management Planning is deciding in advance what to do and how to do.

• It is one of the basic managerial functions.
• Before doing something, the manager must formulate an idea of how to work on a particular
task.
• Thus, planning is closely connected with creativity and innovation.
• It involves setting objectives and developing appropriate courses of action to achieve these
objectives.

• Formal Planning is associated with

-higher profits and returns on assets
-positive financial results

Why do Managers Plan?

Purposes of Planning
– Provides direction
– Reduces uncertainty
– Minimizes waste and redundancy
– Sets the standards for controlling

Benefits of Planning
• Goal Focus
 • Minimize Uncertainty
• Improve efficiency
• Facilitates to Control
• Innovation and Creativity
• Better Coordination
• Ensures Commitment
• Aid to Business Success
• Brings Systematization

Elements of Planning
• Goals (also Objectives)
– Desired outcomes for individuals, groups, or entire organizations
– Provide direction and evaluation performance criteria
• Plans
– Documents that outline how goals are to be accomplished
– Describe how resources are to be allocated and establish activity schedules

Planning Framework
A planning framework defines the basic planning process structure. This typically includes the
following components:
1. Principles – A basic rule or concept used for decision-making.
2. Vision – A general description of the desired result of the planning process.
3. Problem – An undesirable condition to be mitigated (solved, reduced or compensated).
4. Goals – A general desirable condition to be achieved, usually too general to be quantified, such
as wealth, health, equity and freedom.
5. Objectives – Specific, potentially quantifiable ways to achieve goals, such as increased income
and economic activity, reduced crashes, and improved accessibility for non-drivers.
6. Targets or standards – Quantitative levels of objectives to be achieved. Standards are sometimes
required by law or regulation, such as minimum parking requirements in zoning codes.
7. Performance indicators – Practical ways to measure progress toward objectives, such as specific
definitions of income, crash rates, and accessibility.
8. Plans – A scheme or set of actions. This may be a strategic (general and broad) or an action
(specific and narrow) plan.
9. Options – Possible ways to achieve an objective or solutions to a problem.
10. Policies or strategies – A course of action implemented by a jurisdiction or organization.
11. Programs – A specific set of objectives, responsibilities and tasks within an organization.
12. Tasks or actions – A specific thing to be accomplished.
13. Scope – The range (area, people, time, activities, etc.) to be included in a process.
14. Evaluation criteria – The impacts (costs and benefits) considered in an analysis.
15. Evaluation methodology – The process of valuing and comparing options, such as cost
effectiveness, benefit/cost, or lifecycle cost analysis.
 Ty
pes
of
Plan
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Strategic Plans
o Apply to the entire organization.
o Establish the organization’s overall goals.
o Seek to position the organization in terms of its environment.
o Cover extended periods of time

 Operational Plans
o Specify the details of how the overall goals are to be achieved.
o Cover short time period.

 Long-Term Plans
o Plans with time frames extending beyond three years.

 Short-Term Plans
o Plans with time frames on one year or less.

 Specific Plans
o Plans that are clearly defined and leave no room for interpretation.

 Directional Plans
o Flexible plans that set out general guidelines, provide focus, yet allow discretion in
implementation.

 Tactical plans tend to cover shorter periods of time.

 Strategic plans tend to cover five years or more.

 Single Use Plans
o A one-time plan specifically designed to meet the need of a unique situation.

 Standing Plans
o Ongoing plans that provide guidance for activities performed repeatedly.
 STANDING PLANS- these are plans that are used again and again, and they focused on
managerial situations that recur repeatedly. Standing plans are further classified as follows:
Objectives, Policy, Strategy, Procedures, Methods and Rules

• Single Use Plans – These plans are specifically developed to implement courses of action that
are relatively unique and are unlikely to be repeated.
• Program, Budget and Project

Functional Area of Plans

1. Marketing Plan – this is the written document or blueprint for implementing and controlling
an organization’s marketing activities related to a particular marketing strategy.

2. Production Plan- this is the written document that states the quantity of output a company
must produce in broad terms and by product family.

3. Financial Plan- it is a document that summarizes the current financial situation of the firm,
analyzes financial needs, and recommends a direction for financial activities.

4.Human Resource Management Plan- it is a document that indicates the human resource
needs of a company detailed in terms of quantity and quality and based on the requirements of
the company’s strategic plan.

Traditional Goal Setting

Downside of Traditional Goal Setting

Ø Broad goals are set at the top of the organization.
Ø Goals are then broken into sub-goals for each organizational level.
Ø Assumes that top management knows best because they can see the “big picture.”
Ø Goals are intended to direct, guide, and constrain from above.
Ø Goals lose clarity and focus as lower-level managers attempt to interpret and define the goals for their
areas of responsibility.
Planning in the Hierarchy of Organizations

Planning Process
Analyze Opportunities
• Not a step of Planning
• It is pre-step of planning
• Essential to make a successful plan
• SWOT analysis
1.Establish objectives
• First and real starting point of planning
• Management has to define objectives in clear manner by considering organizational resources
and opportunities because a minor mistake in setting objectives might affect in implementation
of plan.
• Objectives must be specific, clear and practical.
• They should be time bound and expressed in numerical terms.
SMART – Specific, Measurable, Attainable, Realistic, Time-bounded
2. Determination of Premises 
• Premises are the assumptions about the future in which the planning is implemented. They
provide environment and boundaries for the implementation of plan in practical operation.

These premises may be tangible and intangible, internal and external.

(a) Tangible and intangible: Tangible premises involve capital investment, unit of production, units
sold, cost per unit, time available etc. Similarly, intangible premises involve employee’s moral,
goodwill, motivation, managerial attitude, etc.
(b) Internal and external: Internal premises involve money, materials, machines and managements.
In the similar manner, external factors involve competitor strategy, technological change,
government policy, social and cultural beliefs etc.

3. Determination of alternative courses of action

• Once objectives are set, assumptions are made. Then the next step would be to act upon them.

4. Evaluating alternative courses

• The next step is to weigh the pros and cons of each alternative.

5. Selecting an alternative
• This is the real point of decision making. The best plan has to be adopted and implemented.

6. Formulation of derivative plans. 

• It is essential to formulate action or derivative plans for each step of work and to all
departments of the organization.
• These action plans involve formulation of policies, rules, schedule and budget to
complete defined objectives.
• Thus, formulation of derivative plans is an essential step in planning process.
• It is difficult to implement main plan without formulation of derivative plan.

7. Implantation of Plans
• Without this step, other this procedure of plan will remain as paper work.
• This step brings all the procedure of plan into action.
• For implementation plan, management has to take some steps such as to communicate with
subordinates who initiate to plan into action; provide necessary instruction and guidance; make
arrangement of all resources like materials, machines, money, equipment etc. make timely
supervision and control over subordinates.
8. Reviewing the Planning Process

Characteristics of Planning
1. Planning is goal-oriented.
– Planning is made to achieve desired objective of business.
2. Planning is looking ahead.
– Planning is done for future.
– It requires peeping in future, analyzing it and predicting it.
3. Planning is an intellectual process.
– Planning is a mental exercise involving creative thinking, sound judgment and
imagination.
4. Planning involves choice & decision making.
– Planning essentially involves choice among various alternatives.
– Thus, decision making is an integral part of planning.
5. Planning is the primary function of management / Primacy of Planning.
– Planning lays foundation for other functions of management.
– It serves as a guide for organizing, staffing, directing and controlling.
6. Planning is a Continuous Process.
– Planning is a never ending function due to the dynamic business environment.
7. Planning is all Pervasive.
– It is required at all levels of management and in all departments of enterprise.
– Of course, the scope of planning may differ from one level to another.

8. Planning is designed for efficiency.

– Planning leads to accomplishment of objectives at the minimum possible cost.
– Planning leads to proper utilization of men, money, materials, methods and machines.
9. Planning is Flexible.
– Planning is done for the future.

PLANNING BARRIERS

1. Inability to plan
2. Improper planning process
3. Lack of commitment to the planning process
4. Improper information
5. Focusing on the present at the expense of the future
6. Too much reliance on the planning department
7. Concentrating on only the controllable variables.
Decision Making
 Decision Making as a Management Responsibility Managers of all kinds and types, including the
engineer manager, are primarily tasked to provide leadership in the quest for the attainment of the
organization’s objectives.
• Many times, he will be confronted with situations where he will have to choose from among
various options.
• The engineer manager’s decision-making skills will be very crucial to his success as a
professional.

A blunder in decision-making may be sufficient to cause the destruction of any organization while good
decisions will provide the right environment for continuous growth.

• Decision-making may be defined as “the process of identifying and choosing alternative courses
of action in a manner appropriate to the demands of the situations.”
• Decisions are made at various management levels (i.e. top, middle, lower level) and at various
management functions (i.e. planning, organizing, staffing, directing and controlling)
• According to Nickels, decision-making “is the heart of all the management functions.”

The Decision-Making Process

According to David H. Holt, rational decision-making is a process involving the following steps:
1. Diagnose problem
2. Analyze environment
3. Articulate problem or opportunity
4. Develop viable alternatives
5. Evaluate alternatives
6. Make a choice
7. Implement decision
8. Evaluate and adapt decision results

1. Diagnose Problem
• State the problem objectively.
• Define what is happening.
• A problem exists when there is a difference between an actual situation and a desired
situation.
“identification of the problem is tantamount to having the problem half-solved”

2. Analyze the environment

• The environment where the organization is situated plays a very significant role in the
success or failure of such an organization.
• The objective of environmental analysis is the identification of constraints, which may be
either internal or external limitations.
3. Articulate Problem or Opportunity
• Gather information about the problem.
• List the pros and cons of the problems.
 • Sometimes the easiest way to solve a problem or make a decision is to weigh two
opposite sides of a coin.
a. Make a Pro/Con List
b. Construct a Cost/Benefit Analysis
c. Compare the Risks and Rewards

4. Develop viable alternatives

• Do not force yourself into only one choice, and be sure that each solution solves the
problem.

5. Evaluate alternatives
• Proper evaluation makes choosing the right solution less difficult.
• Look at pros and cons.
“each alternative must be analyzed and evaluated in terms of its value, cost and risk
characteristics”

6. Make a choice
• Make a decision that is based on what is best for the situation keeping the goal in mind.
• Choice-making refers to the process of selecting among alternatives representing
potential solutions to a problem.
“particular effort should be made to identify all significant consequences of each choice”

7.Implement decision
• Implementation refers to carrying out the decision so that the objectives sought will be
achieved.
• At this stage, the resources must be made available so that the decision may be
properly implemented.
• It involves clear communication of the decision to all concerned and obtaining
their commitment.
8.Evaluate and adapt decision results
• Evaluation forms an integral part of any process. It involves evaluation of the outcome
based on the desired goal and criteria. It also involves assessing the effectiveness and
efficiency of the outcome (or the entire process).
• In case of any undesired results, each step of the process is carefully reviewed to trace the
root causes.
• Make changes as necessary.

• It is therefore, important for the manager to use control and feedback mechanisms to ensure
results and to provide information for future decisions.
Feedback refers to the process which requires checking at each stage of the process to assure
that the alternatives generated, the criteria used in evaluation, and the solution selected for
implementation are in aligned with the goals and objectives originally specified.
Control refers to actions made to ensure that activities performed match the desired activities
or goals, that have been set.

Decision Types
 Effective managers make various kinds of decisions. In general, these decisions are either:
q Programmed decisions
q Non-programmed decisions

1. Programmed Decisions - routine, almost automatic. process

q Situations occurred often enough to enable decision rules to be developed and applied in
the future (There are rules or guidelines to follow)
q Made in response to recurring organizational problems (managers have made decision
may times before)
Example: deciding to reorder office supplies, determining billing dates

2. Non-programmed Decisions – Unusual situations that have not been often addressed
– In response to unique, poorly defined and largely unstructured, and have important
consequences to the organization
– No rules to follow, since the decision is new
– These decisions are made based on information, and a managers intuition and judgment
Example: should the firm invest in a new technology?
Conditions that influence decision making

Certainty
• all the information the decision maker needs is fully available
• Risk
• Lacks complete information
• future outcomes associated with each alternative are subject to chance

Uncertainty
• Sometimes cant even assign probabilities
• information about alternatives and future events is incomplete
• managers may have to come up with creative approaches to alternatives
• Ambiguity
• by far the most difficult decision situation
• goals to be achieved or the problem to be solved is unclear
• alternatives are difficult to define
• information about outcomes is unavailable

Certainty – confident, sureness, firmness

Risk – gamble, probability, chance
Uncertainty – doubt, vagueness
Ambiguity – insignificance

Decision Styles
• Differences among people with respect to how they perceive problems and make decisions
• Thus in real organizational settings, the quality of decision does depend on the ability, style and
approach of the manager
• Not all managers make decisions the same
 – Directive style
– Analytical style
– Conceptual style
– Behavioral style

Directive Style
• People who prefer simple, clear-cut solutions to problems
• Make decisions quickly
• May consider only one or two alternatives
• Efficient and rational
• Prefer rules or procedures

Analytical Style
• Complex solutions based on as much data as they can gather
• Carefully consider alternatives

• Base decision on objective, rational data from management control systems and other sources
• Search for best possible decision based on information available
Conceptual Style
• Consider a broad amount of information
• Decision-making is a very important function of the engineer manager.
• His organization will rise or fall depending on the outcomes of his decisions.
• It is therefore, necessary for the engineer manager to develop some skills in decision-making.
Behavioral Style

• Have a deep concern for others as individuals

• Like to talk to people one-on-one
• Understand their feelings about the problem and the effect of a given decision upon them
• Concerned with the personal development of others
• May make decisions to help others achieve their goals

Summary
• Decision-making is a very important function of the engineer manager.
• His organization will rise or fall depending on the outcomes of his decisions.
• It is therefore, necessary for the engineer manager to develop some skills in decision-making.