Plans

Plans commit individuals, departments, organizations, and the resources of each to specific actions for the future. Effectively designed organizational goals fit into a hierarchy so that the achievement of goals at low levels permits the attainment of high-level goals. This process is called a means-ends chain because low-level goals lead to accomplishment of high-level goals.

Planning in organizations and public policy is both the organizational process of creating and maintaining a plan; and the psychological process of thinking about the activities required to create a desired goal on some scale. As such, it is a fundamental property of intelligent behavior. This thought process is essential to the creation and refinement of a plan, or integration of it with other plans, that is, it combines forecasting of developments with the preparation of scenarios of how to react to them. An important, albeit often ignored aspect of planning, is the relationship it holds with forecasting. Forecasting can be described as predicting what the future will look like, whereas planning predicts what the future should look like.

The term is also used for describing the formal procedures used in such an endeavor, such as the creation of documents, diagrams, or meetings to discuss the important issues to be addressed, the objectives to be met, and the strategy to be followed. Beyond this, planning has a different meaning depending on the political or economic context in which it is used.

Two attitudes to planning need to be held in tension: on the one hand we need to be prepared for what may lie ahead, which may mean contingencies and flexible processes. On the other hand, our future is shaped by consequences of our own planning and actions.

Purpose Of A Plan

Just as no two organizations are alike, so also their plans. It is therefore important to prepare a plan keeping in view the necessities of the enterprise. A plan is an important aspect of business. It serves the following three critical functions:

• Helps management to clarify, focus, and research their business's or project's development and prospects.
• Provides a considered and logical framework within which a business can develop and pursue business strategies over the next three to five years.
• Offers a benchmark against which actual performance can be measured and reviewed.

Importance Of The Planning Process

A plan can play a vital role in helping to avoid mistakes or recognize hidden opportunities. Preparing a satisfactory plan of the organization is essential. The planning know the business and that they have thought through its development in terms of products, management, finances, and most importantly, markets and competition. Planning helps in forecasting the future, makes the future visible to some extent. It bridges between where we are and where we want to go. Planning is looking ahead.

The Types Of Planing

Three major types of plans can help managers achieve their organization's goals: strategic, tactical, and operational. Operational plans lead to the achievement of tactical plans, which in turn lead to the attainment of strategic plans. In addition to these three types of plans, managers should also develop a contingency plan in case their original plans fail.

1.      Operational plans

The specific results expected from departments, work groups, and individuals are the operational goals. These goals are precise and measurable. “Process 150 sales applications each week” or “Publish 20 books this quarter” are examples of operational goals. An operational plan is one that a manager uses to accomplish his or her job responsibilities.

Planning is a crucial element of starting and operating a business. Entrepreneurs create plans to address an array of issues. Plans help business owners to think through complex processes and address each of a series of requirements to accomplish certain goals. Managers draft both standing plans and single-use plans to address the range of challenges they confront in their leadership roles. Understanding the difference between the two can help you to create effective business plans.

·         Single-use plans

            Single-use plans apply to activities that do not recur or repeat. A one-time occurrence, such as a special sales program, is a single-use plan because it deals with the who, what, where, how, and how much of an activity. A budget is also a single-use plan because it predicts sources and amounts of income and how much they are used for a specific project.

Single-use plans are created to address short-term challenges or provide guidance for short-term initiatives. Single-use plans can be created in teams or by individual managers. The scope of these plans is generally smaller than the scope of standing plans. For example, single-use plans can be created for specific work groups or departments to guide their contributions to short-term company objectives.

·         A PROGRAM is a single use plan to carry out a special project within an organization. The Project itself is not intended to remain in existence over the entire life of the organization. Rather, it exists to achieve some purpose, that if accomplished, will contribute to  the organization’s long term success.

·         A BUDGET is a single user financial plan that covers a specificed length of time. It details how funds will be spent on labour, raw materials, capital goods, information systems, marketing and so on, as well as how the funds will be obtained.

·         standing plans

Standing plans are used over a long period of time, sometimes indefinitely, and can be altered to adapt to changing circumstances. A standing plan is often created with input from a wide range of individuals over a longer period of time than single-use plans. Standing plans generally encompass a wider scope than single-use plans, involving more than one department or business function.

standing plans are usually made once and retain their value over a period of years while undergoing periodic revisions and updates. The following are examples of standing plans:

o    A policy

policy is a standing plan that furnishes broad guidelines for taking action consistent with reaching organizational objectives. A policy provides a broad guideline for managers to follow when dealing with important areas of decision making. Policies are general statements that explain how a manager should attempt to handle routine management responsibilities. Typical human resources policies, for example, address such matters as employee hiring, terminations, performance appraisals, pay increases, and discipline.

To formulate a policy, the manager mus have knawlandge and skill in area for which the policy is being created. Hawever, certain generalizations applay to the establishment of policies. The most important has already been stated: policies must be based on a through analysis of objectives. Several other point can help manager create appropriate policies:

·         Policies should be base on fuctual information.

·         Subordinate and supervisor policies should be complementary, not contradictory.

·         Policies of different divisions or department should be coordnated.

·         Policies should be definiti, undertsndable, and preferably in writing.

·         Policies should be stable and flexible.

·         Policies should be reasonably comprehensive in scope.

o    A procedure

procedure is a standing plan that outlines a series of related actions that must be taken to accomplish a particular task.Procedures outline more specific actions than policies do. Organizations usually have many different sets of procedures covering the various tasks to be accomplished. Managers must be careful to apply the appropriate organizational procedures for the situations they face and apply them properly.

A procedure is a set of step-by-step directions that explains how activities or tasks are to be carried out. Most organizations have procedures for purchasing supplies and equipment, for example. This procedure usually begins with a supervisor completing a purchasing requisition. The requisition is then sent to the next level of management for approval. The approved requisition is forwarded to the purchasing department. Depending on the amount of the request, the purchasing department may place an order, or they may need to secure quotations and/or bids for several vendors before placing the order. By defining the steps to be taken and the order in which they are to be done, procedures provide a standardized way of responding to a repetitive problem.

o    A Rule

Rule is a standing plan that designates specific required action. A rule indicates what an organization member should or should not do and allows no room for interpretation.

Rule  is an explicit statement that tells an employee what he or she can and cannot do. Rules are “do” and “don't” statements put into place to promote the safety of employees and the uniform treatment and behavior of employees. For example, rules about tardiness and absenteeism permit supervisors to make discipline decisions rapidly and with a high degree of fairness.

Figure : organizational plans

Single-use plans and standing plans are not always used independently. You can often find single-use plans used within standing plans to aid in accomplishing the grand goals of the standing plans. Consider a 20-year plan to maintain market dominance through frequent new product introductions, for example. This plan is likely to require a large number of smaller product development and marketing plans, as well as plans for developing and retaining the top talent in the industry. standing plans are used over and over again because they focus on organizational situations that occur repeatedly. single user plans are used only once, or at most, couple of times, because they focus on unique or rare situations within the organization.

Examples

o    Business plans are an ideal example of a standing plan. Entrepreneurs draft business plans before opening the doors to their business, and they can use their plan to guide their efforts for years into the future. Initially used to guide business owners through the process of addressing every aspect of their operations and finances, as well as to attract lenders and investors, business plans can also guide future product development initiatives, marketing campaigns and other strategic decisions.

An outline for an advertising campaign is an example of a single-use plan. An ad campaign plan may contain the number and types of advertisements to be used in the campaign, the specific outlets that will be used, and the frequency and duration of the advertisements' exposures. After the campaign runs its course, the short-term plan will lose its relevance, except as a guide for creating future plans.

2.      Strategic plans

A strategic plan is an outline of steps designed with the goals of the entire organization as a whole in mind, rather than with the goals of specific divisions or departments. Strategic planning begins with an organization's mission.

Strategic plans look ahead over the next two, three, five, or even more years to move the organization from where it currently is to where it wants to be. Requiring multilevel involvement, these plans demand harmony among all levels of management within the organization. Top-level management develops the directional objectives for the entire organization, while lower levels of management develop compatible objectives and plans to achieve them. Top management's strategic plan for the entire organization becomes the framework and sets dimensions for the lower level planning.

The Strategic Planning Process

In today's highly competitive business environment, budget-oriented planning or forecast-based planning methods are insufficient for a large corporation to survive and prosper. The firm must engage in strategic planning that clearly defines objectives and assesses both the internal and external situation to formulate strategy, implement the strategy, evaluate the progress, and make adjustments as necessary to stay on track. A simplified view of the strategic planning process is shown by the following diagram:

The Strategic Planning Process

Mission &       Objectives

Environmental  Scanning

Strategy     Formulation

Strategy  Implementation

Evaluation      & Control

-          Mission and Objectives

The mission statement describes the company's business vision, including the unchanging values and purpose of the firm and forward-looking visionary goals that guide the pursuit of future opportunities.

Guided by the business vision, the firm's leaders can define measurable financial and strategic objectives. Financial objectives involve measures such as sales targets and earnings growth. Strategic objectives are related to the firm's business position, and may include measures such as market share and reputation.

-          Environmental Scan

The environmental scan includes the following components:

• Internal analysis of the firm
• Analysis of the firm's industry (task environment)
• External macroenvironment (PEST analysis)

The internal analysis can identify the firm's strengths and weaknesses and the external analysis reveals opportunities and threats. A profile of the strengths, weaknesses, opportunities, and threats is generated by means of a SWOT analysis

An industry analysis can be performed using a framework developed by Michael Porter known as Porter's five forces. This framework evaluates entry barriers, suppliers, customers, substitute products, and industry rivalry.

-          Strategy Formulation

Given the information from the environmental scan, the firm should match its strengths to the opportunities that it has identified, while addressing its weaknesses and external threats.

To attain superior profitability, the firm seeks to develop a competitive advantage over its rivals. A competitive advantage can be based on cost or differentiation. Michael Porter identified three industry-independent generic strategies from which the firm can choose.

-          Strategy Implementation

The selected strategy is implemented by means of programs, budgets, and procedures. Implementation involves organization of the firm's resources and motivation of the staff to achieve objectives.

The way in which the strategy is implemented can have a significant impact on whether it will be successful. In a large company, those who implement the strategy likely will be different people from those who formulated it. For this reason, care must be taken to communicate the strategy and the reasoning behind it. Otherwise, the implementation might not succeed if the strategy is misunderstood or if lower-level managers resist its implementation because they do not understand why the particular strategy was selected.

-          Evaluation & Control

The implementation of the strategy must be monitored and adjustments made as needed. Evaluation and control consists of the following steps:

1. Define parameters to be measured
2. Define target values for those parameters
3. Perform measurements

4.    Compare measured results to the pre-defined standard

5.    Make necessary changes

3.      Contingency plans

Intelligent and successful management depends upon a constant pursuit of adaptation, flexibility, and mastery of changing conditions. Strong management requires a “keeping all options open” approach at all times — that's where contingency planning comes in.

Contingency planning involves identifying alternative courses of action that can be implemented if and when the original plan proves inadequate because of changing circumstances.

Keep in mind that events beyond a manager's control may cause even the most carefully prepared alternative future scenarios to go awry. Unexpected problems and events frequently occur. When they do, managers may need to change their plans. Anticipating change during the planning process is best in case things don't go as expected. Management can then develop alternatives to the existing plan and ready them for use when and if circumstances make these alternatives appropriate.

Figure : level of planning

Succession Planning

Succession planning is a process for identifying and developing internal people with the potential to fill key business leadership positions in the company. Succession planning increases the availability of experienced and capable employees that are prepared to assume these roles as they become available. Taken narrowly, "replacement planning" for key roles is the heart of succession planning. Effective succession or talent-pool management concerns itself with building a series of feeder groups up and down the entire leadership pipeline or progression (Charan, Drotter, Noel, 2001). In contrast, replacement planning is focused narrowly on identifying specific back-up candidates for given senior management positions. For the most part position-driven replacement planning (often referred to as the "truck scenario") is a forecast, which research indicates does not have substantial impact on outcomes.

Fundamental to the succession-management process is an underlying philosophy that argues that top talent in the corporation must be managed for the greater good of the enterprise. Merck and other companies argue that a "talent mindset" must be part of the leadership culture for these practices to be effective.

Research indicates many succession-planning initiatives fall short of their intent (Corporate Leadership Council, 1998). "Bench strength," as it is commonly called, remains a stubborn problem in many if not most companies. Studies indicate that companies that report the greatest gains from succession planning feature high ownership by the CEO and high degrees of engagement among the larger leadership team.

Companies that are well known for their succession planning and executive talent development practices include: GE, Honeywell, IBM, Marriott, Microsoft, Pepsi and Procter & Gamble.

Research indicates that clear objectives are critical to establishing effective succession planning. These objectives tend to be core to many or most companies that have well-established practices:

• Identify those with the potential to assume greater responsibility in the organization
• Provide critical development experiences to those that can move into key roles
• Engage the leadership in supporting the development of high-potential leaders
• Build a data base that can be used to make better staffing decisions for key jobs

In other companies these additional objectives may be embedded in the succession process:

• Improve employee commitment and retention
• Meet the career development expectations of existing employees
• Counter the increasing difficulty and costs of recruiting employees externally

Management is responsible to ensure that the organization continually has high-quality operations and employees. One of the most important practices to meet this responsibility is to conduct successful succession planning. Employees leave their jobs either on a planned or unplanned basis. Unplanned termination may occur because of sudden illnesses or death, or poor performance on the part of the employee. Planned termination usually occurs because the employee is making a career or life change.

Especially regarding managers in the workplace, demographic trends indicate that there are not sufficient numbers of next-generation leaders to replace retiring baby-boomers in organizations. Thus, succession management is an increasingly important priority. Consider the following advice.

Basic Principles of Successful Succession Planning

• Do not wait until the employee will be leaving. Start planning now.
  Succession planning is a matter of strong practices in personnel management, not a matter of sudden crisis management. Start attending to those practices now.
• Focus on policies, procedures and practices, not on personalities.
  Succession planning is being able to effectively and promptly re-fill a role, not replacing a certain person. Be sure all key positions are defined well, and then look to find the best person to fill the position. Do not look for someone who is just like, or a lot different than, the previous employee.
• Succession planning is a responsibility of the management, not just the employee.
  The best succession planning results from 1) a working partnership between management and employees to accurately define the employee’s role and current priorities, and 2) the employee ensuring that management has the information and resources to refill the role.
• Succession planning should be in accordance with up-to-date personnel policies.
  Hiring of new employees must be in accordance with up-to-date personnel policies to ensure fair, equitable and legally compliant employment practices.
• Quality in managing succession is proportionate to the quality of the new employee.
  The best way for management to promptly convey expectations of high quality to a new employee is to convey that high-quality in how the employee was hired. The more thorough and careful that management does the succession, the more likely that the organization will get a new employee who successfully fills the position for the long-term.

Key Practices in Successful Succession of Managers

If the organization has already established strong practices in governance, leadership and management, then succession planning often is a matter of using current practices, rather than establishing many new ones. Key practices include having:

• A strategic plan that clearly conveys the organization’s mission and current strategic priorities. Ideally, that plan also includes specific action plans that specify who is going to do what and by when in order to address each priority.
• Up-to-date and management-approved personnel policies about hiring, supervising and firing personnel in a fair and equitable manner that complies with employment laws.
• An up-to-date job description for each of the roles, and that explains the general duties and responsibilities of the positions.
• Suitable compensation for the roles (often this is a major challenge for new organizations because they often have very limited resources).
• An annual calendar of the role’s most important activities, for example, when the person in that role evaluates personnel, does any staffing analysis, updates job descriptions and participates in important committees.
• Regular reports from the person in the role. These reports should include the trends, highlights and issues regarding the person’s activities.
• Evaluation of the person on an annual basis, including in reference to the job description and any performance goals established for that role.
• Arrangements with the person when he or she goes on vacation so that others have an opportunity to effectively replace the employee if only for a temporary period of time.
• A complete list of major stakeholders – of people who have an interest in, or will be influenced by, the employee’s leaving and being replaced by someone else. Get a list, including contact information and also how each is approached and who does that, in case that information is needed when/if the employee leaves. This is true especially if the employee is a high-level executive. In that case, get a complete list of other stakeholders, for example, collaborators and suppliers.
• Fiscal policies and procedures to ensure strong oversight of finances, including that financial numbers are correct and tracked accurately, and also that there are sufficient funds to pay near-term expenses.
• At least annual discussions with key employees regarding succession planning, including how to manage effectively in the employee’s absence. (Be sensitive in raising this topic with the employee so that he or she is not overly concerned that executives somehow want a change now). This discussion can be an opportunity to hear about the employee’s career plans and desires, too.