UNIT 2

Dr. Nitika Asawa

 Definition of Planning
 Planning is the process of thinking regarding the
activities required to achieve a desired goal. Planning
is based on foresight, the fundamental capacity for
mental time travel. Some researchers regard the
evolution of forethought - the capacity to think ahead -
as a prime mover in human evolution.
 Planning is a primary function of management and is a
continuous process that precedes other management
functions. It is an intellectual process that helps to
bridge the gap between the present and the desired
future.
 Definition of Planning
Alford and Beatt
 Planning is the process of thinking, organized foresight, and a vision
based on experience and facts that is required for intelligent action.
Theo Haimann
 Planning is the act of deciding in advance what needs to be done.

Koontz and O'Donnell

 Planning is the act of deciding in advance what to do, how to do it, when
to do it, and who is to do it.
Mitchell
 Planning is the process of developing a strategy to achieve desired
objectives, solve problems, and facilitate action.
Richard Daft
 Management planning is the act of determining goals and defining the
means.
 Nature of Planning

Intellectu Forward
al activity looking

Related to Basic
objective function
 Significance of Planning

Focus is on Planning ensures

attention on economic
objectives cooperation

Reduces Facilitat
uncertainty e control
 Importance of Planning

Planning Planning
provides decreases the
directions chances of risk

Planning Planning
decreases encourages
overlapping and innovative
wasteful activities
ideas
Planning Process
 Principles of Planning
Principle of Principle of Principle of
top
management
long-range contribution
interest view to objectives

Principle of Principle of
Principle of
primacy of navigationa
flexibility
planning l change

Principle of Principle of
commitmen the limiting
t factor
 Types of Planning

Corporate Divisional Sectional

planning planning planning

Strategic Operationa Tactical

planning l planning planning

Long-run Medium
Short range
range
planning planning
planning
 6 P’s of Planning

Philosop
Purpose
hy

Promise Policies
 Advantages of Planning
Helps in Better
Economy in
achieving utilizations
of resources operation
objectives

Reduces Improve Effective

uncertaint competitiv
y and risk e strength control

Coordi Guides in
Encourages
motivation
decision
nation making
 Disadvantages of Planning

Lack of
accurate
Time
information and cost

Inflexib Delay during

emergency
ility period
 Management by Objectives
(MBO)
 Management by objectives (MBO) is a strategic
management model that aims to improve the
performance of an organization by clearly defining
objectives that are agreed to by both management and
employees. According to the theory, having a say in
goal setting and action plans encourages participation
and commitment among employees, and aligns
objectives across the organization.
 Management by Objectives
(MBO)
Key Takeaways
 Management by objectives (MBO) is a process in which a
manager and an employee agree on specific performance goals
and then develop a plan to reach them.
 It is designed to align objectives throughout an organization and
boost employee participation and commitment.
 There are five steps: define objectives, share them with
employees, encourage employees to participate, monitor progress,
and finally, evaluate performance and reward achievements.
 Critics of MBO argue that it incentivizes employees to achieve
these goals by any means necessary, often at the cost of the
company.
 Process of MBO
 Either determine or revise organizational objectives for the entire company. This broad
overview should be derived from the firm’s mission and vision.
 Translate the organizational objectives to employees. In 1981, George T. Doran used the
acronym SMART (specific, measurable, acceptable, realistic, time-bound) to express
the concept.
 Stimulate the participation of employees in setting individual objectives. After the
organization’s objectives are shared with employees from the top to the bottom,
employees should be encouraged to help set their own objectives to achieve these larger
organizational objectives. This gives employees greater motivation since they have
greater empowerment.
 Monitor the progress of employees. In this way, managers can measure and track the
goals set by employees. As step two states, a key component of the objectives is that
they are measurable for employees and managers to determine how well they are met
across a given timeframe.
 Evaluate and reward employee progress. This step includes honest feedback on what
was achieved and not achieved for each employee.
 Advantages of MBO
 Employees take pride in their work and are assigned goals they
know they can achieve that match their strengths, skills, and
educational experiences.
 Assigning tailored goals brings a sense of importance to
employees, boosting their output and loyalty to the company.
 Communication between management and employees is
increased.
 Management can create goals that lead to the success of the
company
 Limitations of MBO
 As MBO is focused on goals and targets, it often ignores other
parts of a company, such as the culture of conduct, a healthy work
ethos, and areas for involvement and contribution.
 Strain is increased on employees to meet the goals in a specified
time frame.
 Employees are encouraged to meet targets by any means
necessary, meaning that shortcuts could be taken and the quality
of work compromised.
 If management solely relies on MBO for all management
responsibilities, it can be problematic for areas that don’t fit under
MBO.
 What Is the Goal of
Management by Objectives

(MBO)?
Management by objectives (MBO) uses a set of quantifiable or
objective standards against which to measure the performance of
a company and its employees. By comparing actual productivity
to a given set of standards, managers can identify problem areas
and improve efficiency. Both management and workers know and
agree to these standards and their objectives.
What Is an Example of MBO?
 A company can set various goals with its employees. In the case
of a call center, an MBO could increase customer satisfaction,
say, by 10%, while reducing call times by one minute. The onus is
now on finding ways to achieve this goal. Once that’s decided on,
it’s important to get employees on board and then monitor their
progress, provide feedback, and reward those who do a good job.
 Drawbacks of Using MBO
 As MBO is entirely focused on goals and targets, it often ignores
other parts of a company, such as the corporate culture, worker
conduct, a healthy work ethos, environmental issues, and areas for
involvement and contribution to the community and social good.
 Between MBO and
Management by Exception
(MBE)?
 In management by exception (MBE), management only addresses
instances where objectives or standards are transgressed. Thus,
workers are left alone unless productivity is not met.
 Conclusion
 As a theory, MBO makes a lot of sense: if employees are involved
in setting company goals, they are more likely to share
management’s objectives, work harder, and deliver.
 However, there’s also a good reason why MBO is widely
criticized. Like most things that look good on paper, it doesn’t
always work in practice. The key is to be aware of its drawbacks,
customize the plan according to your organization, ensure that
everyone is fully on board, and identify objectives that are clear
and reasonable before putting them into action.
Thank you