Management
A Practical Introduction
Third Edition
Angelo Kinicki &
Brian K. Williams
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
Chapter 5: Planning
The Foundation of Successful
Management
Planning & Uncertainty
Fundamentals of Planning
The Planning/Control Cycle
Management by Objectives
Project Planning
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
2
5.1 Planning & Uncertainty
HOW CAN PLANNING HELP MANAGERS DEAL
WITH UNCERTAINTY?
Planning can be defined as setting goals and deciding how
to achieve them
Planning also involves coping with uncertainty by
formulating future courses of action to achieve specified
results
Planning is used together with strategic management and
evolves from the company’s mission and vision
Planning covers strategic planning (done by top managers,
tactical planning (done by middle managers), and operational
planning (done by first-line managers)
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
3
5.1 Planning & Uncertainty
Figure 5.1: Planning and Strategic Management
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
4
5.1 Planning & Uncertainty
WHY NOT PLAN?
Managers need to be cautious when planning for two
reasons:
1. Planning requires managers to set aside their
regular responsibilities to develop plans
2. Managers need to be flexible enough to react to
new events because there may not always be
enough time to plan
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
5
5.1 Planning & Uncertainty
HOW DOES PLANNING HELP?
There are four main benefits of planning:
1. Organizations can use plans to check their
progress toward their goals
2. Plans define the responsibilities of a firm’s
departments and coordinates their activities
3. Planning requires managers to consider what may
happen in the future
4. Planning for unpleasant contingencies helps
managers deal with uncertainty
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
6
5.1 Planning & Uncertainty
There are three types of uncertainty:
1. When the environment is considered unpredictable
there is state uncertainty
2. When the effects of environmental changes are
unpredictable there is effect uncertainty
3. When the consequences of a decision are
uncertain there is response uncertainty
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
7
5.1 Planning & Uncertainty
Raymond E. Miles and Charles C. Snow suggested that firms
will adopt one of four strategies to respond to uncertainty:
1. defenders are expert at producing and selling narrowly
defined products or services
2. prospectors focus on developing new products or services
and in seeking out new markets, rather than waiting for things
to happen
3. analyzers let other organizations take the risk of product
development and marketing and then imitate what seems to
work best
4. reactors make adjustments only when finally forced to by
environmental pressures
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
8
5.1 Planning & Uncertainty
Miles and Snow also argued that firms continuously
make decisions about three kinds of business
problems:
1. entrepreneurial - selecting and making
adjustments of products and markets
2. engineering - producing and delivering the
products
3. administrative - establishing roles, relationships,
and organizational processes
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
9
5.2 Fundamentals Of Planning
WHAT IS INVOLVED WITH PLANNING?
Planning translates an organization’s mission
(purpose or reason for being) into objectives
The mission statement answers the question “what
is our reason for being?”
The vision statement answers the question “what
do we want to become?”
Planning begins with the mission statement
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
10
5.2 Fundamentals Of Planning
Figure 5.2: Making Plans
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
11
5.2 Fundamentals Of Planning
Having clearly defined mission and vision statements
allows three things to happen:
1. strategic planning by top management where longterm goals are determined and available resources
are identified
2. tactical planning by middle management where
contributions their departments or similar work units
can make are determined
3. operational planning by first-line managers where
how specific tasks will be accomplished using
available resources is determined
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
12
5.2 Fundamentals Of Planning
Figure 5.3: Three Levels of Management, Three
Types of Planning
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
13
5.2 Fundamentals Of Planning
The purpose of planning is to set goals and then formulate
action plans
Specific commitments to achieve a measurable result within
a stated period of time are known as goals or objectives
Goals are put in a means-end chain where the achievement
of low-level goals is the means to achieve high-level goals or
ends
Strategic goals focus on objectives for the organization as a
whole, while tactical goals focus on the actions needed to
achieve strategic goals, and operational goals are concerned
with short-term matters associated with realizing tactical goals
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
14
5.2 Fundamentals Of Planning
Once goals are set, the firm makes an action plan which
defines the course of action needed to achieve stated goals
An operating plan defines how the firm will conduct
business based on the action plan - it identifies clear targets
such as revenues, cash flow, and market share
Plans developed for activities that occur repeatedly over a
period of time are called standing plans
Standing plans consist of policies (a standing plan that
outlines the general response to a designated problem or
situation), procedures (a standing plan that outlines the
response to a particular problem or circumstance), and rules
(a standing plan that designates specific required action)
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
15
5.2 Fundamentals Of Planning
WHAT ARE SMART GOALS?
Good goals are SMART:
they should be stated in specific terms
they should be measurable or quantifiable
they should be challenging but attainable
they should be results-oriented and support the
organization’s vision
they should specify target dates by which they should be
accomplished
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
16
5.3 The Planning/Control Cycle
WHY HAVE PLANNING AND CONTROL?
Once an organization has a plan, it needs to make sure it
stays on track
The planning/control cycle has two planning steps, and two
control steps:
planning steps: make the plan, and carry out the plan
control steps: control the direction by comparing results with
the plan, and control the direction by taking corrective actions
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
17
Chapter 5: Planning
Figure 5.5: The Planning/Control Cycle
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
18
5.4 Promoting Goal Setting:
Management By Objectives
HOW CAN MANAGERS PROMOTE GOAL
SETTING?
Management by Objectives (MBO) is a four step system
designed to motivate employees to achieve goals
1. Managers and employees jointly set objectives for the
employee
2. Managers develop action plans
3. Managers and employees periodically review the
employee’s performance
4. The manager makes a performance appraisal and rewards
the employee according to the results
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
19
5.4 Promoting Goal Setting:
Management By Objectives
If MBO is to be successful, three things must occur:
1. Top management must be committed
2. It must be applied organization-wide
3. Objectives must cascade
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
20
5.5 Project Planning
WHAT IS PROJECT PLANNING?
The preparation of single-use plans or projects is
called project planning
Project management involves achieving a set of
goals through planning, scheduling, and maintaining
progress of the activities that comprise the project
Project planning reduces the risk of uncertainty and
speeds up the process of getting things done
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
21
5.5 Project Planning
All projects go through a life cycle:
1. In the definition stage, the problem is stated,
assumptions and risks are identified, goals and
objectives are determined, and the budget and
schedule are set
2. In the planning stage, facilities and equipment are
identified, people and their duties are selected, and
the schedule is considered
3. During the execution stage, the management style
and control tools are established
4. Closing occurs when the client accepts the project
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
22
5.5 Project Planning
Figure 5.6: The Project Life Cycle
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
23