Organizational Planning & Goal Setting

1. Slayt 1

hapter
Seven
Organizational Planning &
Goal Setting
© 2000 by Harcourt, Inc.
Developed by Stephen M.Peters
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2. Goals and Plans

• One of the primary responsibilities of a leader is to
decide where (s)he wants the company to be in the
future and how to get it there.
• In small organizations planning is informal.
• In others, managers follow a well-defined planning
framework. The company establishes a basic mission
and develops formal goals & strategic plans for carrying
it out.
• Of the 4 management functions -planning, organizing,
leading and controlling- planning is considered the most
fundemantal.
Developed by Stephen M.Peters
Copyright © 2000 by Harcourt, Inc. All rights reserved.

3. Definitions - Plan, Goal, Planning

Plan
A milestone to specify the resource allocation, schedules
and other actions necessary for attaining goals.
Goal
A desired future state that the organization attempts to
realize (Goals are important because organizations exist for a
purpose and goals define & state that purpose).
Planning
The act of determining the organization’s goals and the
means for achieving them.
Developed by Stephen M.Peters
Copyright © 2000 by Harcourt, Inc. All rights reserved.

4. Characteristics of Effective Goal Setting

Goal Characteristics
Specific and measurable
Cover key result areas
Challenging but realistic
Defined time period
Linked to rewards
Developed by Stephen M.Peters
Copyright © 2000 by Harcourt, Inc. All rights reserved.

5. Slayt 5

Levels of Goals/Plans
Internal Message
Legitimacy,
motivation,
guides,
rationale,
standards
Mission
Statement
Strategic Goals/Plans
Senior Management
(Organization as a whole)
External Message
Legitimacy for
investors,
customers,
suppliers,
community
Tactical Goals/Plans
Middle Management
(Major divisions, functions)
Operational Goals/Plans
Lower Management
(Departments, individuals)
Developed by Stephen M.Peters
Copyright © 2000 by Harcourt, Inc. All rights reserved.

6. The Importance of Goals and Plans

Mission Statement
What the organization stands for
Symbolizes legitimacy
Describes values, aspirations, and reason for being
Inside Motorola
Focuses on, customers, corporate values, product quality, and attitude toward employees
Source of Motivation and Commitment
Facilitate employees’ identification with the organization
Guides to Action
Provide a sense of direction
Focus attention on specific targets
Direct efforts toward important outcomes
Standard of Performance
Serve as performance criteria
Provide a standard of assessment
Rationale for decisions
Make decisions to ensure that internal policies, roles, performance, structure, products and
expenditures will be made in accordance with desired outcames.
Developed by Stephen M.Peters
Copyright © 2000 by Harcourt, Inc. All rights reserved.

7. TYPES OF GOALS/PLANS

• Strategic goals/plans
• Tactical goals/plans
• Operational goals/plans
Developed by Stephen M.Peters
Copyright © 2000 by Harcourt, Inc. All rights reserved.

8. Strategic Goals and Plans

Strategic Goals
• Describe where the organization wants to be in the
future
• Pertain to the organization as a whole
• Peter Drucker suggests eight content fields in
developing goals
Strategic Plans
• Define Action Steps
• Milestone that defines the organizational activities
and resource allocations
Developed by Stephen M.Peters
Copyright © 2000 by Harcourt, Inc. All rights reserved.

9. Tactical Goals and Plans

Tactical Goals
Goals that define the outcomes that major divisions
and departments must achieve
Tactical Plans
Plans designed to help execute major strategic plans
Developed by Stephen M.Peters
Copyright © 2000 by Harcourt, Inc. All rights reserved.

10. Operational Goals and Plans

Operational Goals
Specific, measurable results expected from
departments, work groups, and individuals
Operational Plans
Organization’s lower levels that specify action
steps toward achieving operational goals
Developed by Stephen M.Peters
Copyright © 2000 by Harcourt, Inc. All rights reserved.

11. Peter Drucker’s Eight Content Fields In Developing Goals

Marketing
Innovation
Productivity
Physical and financial resources
Profitability
Managerial performance and development
Worker performance and attitude
Public responsibility
Developed by Stephen M.Peters
Copyright © 2000 by Harcourt, Inc. All rights reserved.

12. Slayt 12

The Shewhart Cycle of Continuous
Improvement
(PDCA)
1. Plan
4. Act
Analyze results; put Decide what changes are
desirable, and plan a
learning into action
change or test
3. Check
Observe the results
2. Do
Carry out the change
or test
Source: Based on Thomas F. Rienzo, “Planning Deming Management Service Organizations,” Business Horizons 36, no.3 (May-June1993),19-29
Developed by Stephen M.Peters
Copyright © 2000 by Harcourt, Inc. All rights reserved.

13. PLANNING TYPES & MODELS

PLANNING TYPES & MODELS
• Management by Objectives (MBO)
• Single-Use and Standing Plans
• Contingency Plans
Developed by Stephen M.Peters
Copyright © 2000 by Harcourt, Inc. All rights reserved.

14. Model of the MBO Process

Step 1: Setting Goals
Corporate Strategic Goals
Departmental goals
Individual goals
Step 2: Developing Action Plans
Action Plans
Review Progress
Step 3:
Reviewing Progress
Corrective Action
Appraisal Of Overall Performance
Step 4: Appraising Overall
Performance
Developed by Stephen M.Peters
Copyright © 2000 by Harcourt, Inc. All rights reserved.

15. Slayt 15

MBO Benefits and Problems
Benefits of MBO
Problems with MBO
1. Manager and employee efforts
are focused on activities that will
lead to goal attainment.
1. Constant change prevents MBO from
taking hold.
2. Performance can be improved at
all company levels.
2. An environment of poor employeremployee relations reduces MBO
effectiveness.
3. Employees are motivated
3. Strategic goals may be displaced by
operational goals.
4. Departmental and individual
goals are aligned with company
goals.
4. Mechanistic organizations and values
that discourage participation can harm
the MBO process.
5. Too much paperwork saps MBO
energy.
Developed by Stephen M.Peters
Copyright © 2000 by Harcourt, Inc. All rights reserved.

16. Single-Use Plans For Goals Not Likely To Be Repeated

A program is a complex set of objectives
and plans to achieve an important, one-time
organizational goal
A project is similar to a program, but
generally smaller in scope and complexity
Developed by Stephen M.Peters
Copyright © 2000 by Harcourt, Inc. All rights reserved.

17. Standing Plans

A policy is a general guide to action and provides
direction for people within the organization
Rules describe how a specific action is to be
performed
Procedures define a precise series of steps to be
used in achieving a specific job
Total quality management (TQM) to improve
quality and production.
Developed by Stephen M.Peters
Copyright © 2000 by Harcourt, Inc. All rights reserved.

18. Standing Plans - Quality Planning and the Shewhart Cycle (PDCA) - TQM

Plan a test or change in a specific process
Do the test or carry out the change
Check the results
Act to improve the process based on what
you learn.
Developed by Stephen M.Peters
Copyright © 2000 by Harcourt, Inc. All rights reserved.

19. Contingency Plans

Plans (sometime referred to as scenarios) that define company
responses to specific situations, such as emergencies or
setbacks.
To develop these plans, planners identify uncontrollable
factors, such as recession, inflation, technological
developments or safety accidents.
To minimize the impact of these potential factors, a
planning team can forecast the worst-case scenarios.
Ex: if sales fall 20% and prices drop 8%, what will the
company do?
Developed by Stephen M.Peters
Copyright © 2000 by Harcourt, Inc. All rights reserved.

20. Planning Time Horizon

Long-term planning (includes strategic goals & plans
and may extend as far as 5 years into the future).
Intermediate-term planning (includes tactical goals
and has a time horizon of from 1 to 2 years).
Short-term planning (includes operational goals for
specific departments and individuals and has a time
horizon of 1 year or less).
Today
Short-Term
planning
1 year
2 years 3 years 4 years 5 years & beyond
Intermediate-Term
planning
Operational goals Tactical goals
Developed by Stephen M.Peters
Long-Term
planning
Strategical goals
Copyright © 2000 by Harcourt, Inc. All rights reserved.

21. The New Planning Paradigm

Make
Continuous
Improvement
a Way of Life
Planning
Still Starts
and Stops at
the Top
Start with
a Strong
Mission
Six Rules of
Planning
Design
New Roles
For
Planning
Staff
Developed by Stephen M.Peters
Create an
Environment
that
Encourages
Learning
Set Stretch
Goals
Copyright © 2000 by Harcourt, Inc. All rights reserved.