BY – Gaurav singh butola MHA
Planning is the process of thinking about and organizing the activities required to achieve a desired goal. It involves the creation and maintenance of a plan, such as psychological aspects that require conceptual skills. There are even a couple of tests to measure someone’s capability of planning well. Planning is the basic function of management and with it starts the other functions of management. So long, planning does not determine the objectives and the methods of achieving those objectives and the methods of achieving those objectives, the other functions like organising, staffing, directing and controlling are meaningless.
Meaning of Planning
Planning forms that part of management which lays down the objectives and various activities to be done for the attainment of those objectives. Under this it is decided – What is to be done , How it is to be done , When it is to be to be done and by Whom it is to be done .
Definitions of Planning
According to Koontz and O Donnell , “ Planning is deciding in advance what to do , how to do it , when to do it , and who is to do it “
According to M.E. Harley , “ Planning is deciding in advance what is to be done . It involves the selection of ojectives , policies , procedures and programmes from among alternatives “
According to Alford and Beatt, “Planning is the thinking process, the organized foresight, the vision based on fact and experience that is required for intelligent action.”
Features/Nature/Characteristic of Planning:
- Planning contributes to Objectives:
Planning starts with the determination of objectives. We cannot think of planning in absence of objective. After setting up of the objectives, planning decides the methods, procedures and steps to be taken for achievement of set objectives. Planners also help and bring changes in the plan if things are not moving in the direction of objectives.
- Planning is Primary function of management:
Planning is the primary or first function to be performed by every manager. No other function can be executed by the manager without performing planning function because objectives are set up in planning and other functions depend on the objectives only.
- Planning is Pervasive:
Planning is required at all levels of the management. It is not a function restricted to top level managers only but planning is done by managers at every level. Formation of major plan and framing of overall policies is the task of top level managers whereas departmental managers form plan for their respective departments. And lower level managers make plans to support the overall objectives and to carry on day to day activities.
- Planning is futuristic/Forward looking:
Planning always means looking ahead or planning is a futuristic function. Planning is never done for the past. All the managers try to make predictions and assumptions for future and these predictions are made on the basis of past experiences of the manager and with the regular and intelligent scanning of the general environment.
- Planning is continuous:
Planning is a never ending or continuous process because after making plans also one has to be in touch with the changes in changing environment and in the selection of one best way. So, after making plans also planners keep making changes in the plans according to the requirement of the company.
- Planning involves decision making:
The planning function is needed only when different alternatives are available and we have to select most suitable alternative. We cannot imagine planning in absence of choice because in planning function managers evaluate various alternatives and select the most appropriate. But if there is one alternative available then there is no requirement of planning.
- Planning is a mental exercise:
It is mental exercise. Planning is a mental process which requires higher thinking that is why it is kept separate from operational activities by Taylor. In planning assumptions and predictions regarding future are made by scanning the environment properly. This activity requires higher level of intelligence. Secondly, in planning various alternatives are evaluated and the most suitable is selected which again requires higher level of intelligence. So, it is right to call planning an intellectual process.
- Setting up of the objectives:
In planning function manager begins with setting up of objectives because all the policies, procedures and methods are framed for achieving objectives only. The managers set up very clearly the objectives of the company keeping in mind the goals of the company and the physical and financial resources of the company. Managers prefer to set up goals which can be achieved quickly and in specific limit of time. After setting up the goals, the clearly defined goals are communicated to all the employees.
- Developing premises:
Premises refer to making assumptions regarding future. Premises are the base on which plans are made. It is a kind of forecast made keeping in view existing plans and any past information about various policies. There should be total agreement on all the assumptions. The assumptions are made on the basis of forecasting. Forecast is the technique of gathering information. Common forecast are made to find out the demand for a product, change in government or competitor policy, tax rate, etc.
- Listing the various alternatives for achieving the objectives:
After setting up of objectives the managers make a list of alternatives through which the organisation can achieve its objectives as there can be many ways to achieve the objective and managers must know all the ways to reach the objectives.
For example, if the objective is to increase in sale by 10% then the sale can be increased:
(a) By adding more line of products;
(b) By offering discount;
(c) By increasing expenditure on advertisements;
(d) By increasing the share in the market;
(e) By appointing salesmen for door-to-door sale etc.
So, managers list out all the alternatives.
- Evaluation of different alternatives:
After making the list of various alternatives along with the assumptions supporting them, the manager starts evaluating each and every alternative and notes down the positive and negative aspects of every alternative. After this the manager starts eliminating the alternatives with more of negative aspect and the one with the maximum positive aspect and with most feasible assumption is selected as best alternative. Alternatives are evaluated in the light of their feasibility.
- Selecting an alternative:
The best alternative is selected but as such there is no mathematical formula to select the best alternative. Sometimes instead of selecting one alternative, a combination of different alternatives can also be selected. The most ideal plan is most feasible, profitable and with least negative consequences.
After preparing the main plan, the organisation has to make number of small plans to support the main plan. These plans are related to performance of routine jobs in the organisation. These are derived from the major plan. So, they are also known as derivative plans. These plans are must for accomplishing the objective of main plan. The common supportive plans are plans to buy equipment, plan for recruitment and selection of employees, plan to buy raw material, etc.
- Implement the plan:
The managers prepare or draft the main and supportive plans on paper but there is no use of these plans unless and until these are put in action. For implementing the plans or putting the plans into action, the managers start communicating the plans to all the employees very clearly because the employees actually have to carry on the activities according to specification of plans. After communicating the plan to employees and taking their support the managers start allocating the resources according to the specification of the plans. For example, if the plan is to increase in sale by increasing the expenditure on advertisement, then to put it into action, the managers must allot more funds to advertisement department, select better media, hire advertising agency, etc.
Planning is a continuous process so the manager’s job does not get over simply by putting the plan into action. The managers monitor the plan carefully while it is implemented. The monitoring of plan is very important because it helps to verify whether the conditions and predictions assumed in plan are holding true in present situation or not. If these are not coming true then immediately changes are made in the plan.
During follow up many adjustments are made in the plan. For example, if the expenditure planning is done keeping in mind 5% inflation rate but in present situation if the inflation rate rises to 10% then during follow up the managers make changes in the plans according to 10% inflation rate.
Types of Plans:
Planning is a pervasive function which means it is not the task of top level managers only but managers working at different levels perform planning function. The plans framed by top level manager may differ from the plans formed by middle and lower level managers. The different types of plans or common plans formed by the managers at different levels are:
Objectives – Rules
Strategy – Programmes
Policies – Methods
Procedures – Budgets
Objectives are the ends towards which the activities are directed. They are the end result of every activity. An objective:
(a) Should be related to single activity;
(b) Should be related to result and not to activity to be performed;
(c) It should be measurable or must be measured in quantitative term;
(d) It must have a time limit for achievement of objective;
A strategy is a comprehensive plan to achieve the organisational objectives. The dimensions of strategy are:
(i) Determining long term objectives.
(ii) Adopting a particular course of action.
(iii) Allocating resources for achieving the objectives.
Strategy formulation is the task of top level people and it is must to scan and understand clearly the business environment before framing the strategy. The common decisions in strategy are whether to introduce a new product or not. If to introduce then how, finding out customer for your products making changes in existing products etc. All the strategic decisions are greatly influenced by the business environment. Strategy defines the future decisions regarding the organisation’s direction and scope in the long run.
Policy can be defined as organisation’s general response to a particular problem or situation. In simple words, it is the organisation’s own way of handling the problems. Policies are made at every level because the managers at every level need to decide or predetermine the way of handling a situation and policy acts as a guide to take decisions in unexpected situation.
Policy formation always encourages initiatives of employees because employees have to deal with situations and the way of handling the situation is decided in consultation with the employees. Then they will be able to handle the situation in a much better way.
Procedures are required steps established in advance to handle future conditions. The sequence of steps to be followed by employees in different situations must be predetermined so that everyone follows same steps.The procedure can be defined as the exact manner in which an activity has to be accomplished.
Rules spell out special actions or non-actions of the employees. There is no discretion allowed in rules, i.e., they must be followed strictly and if rules are not followed then strict actions can be taken against employees who are disobeying the rules. Rules are spelt out to create the environment of discipline in the organisation.
Programmes are the combination of goals, policies, procedures and rules. All these plans together form a program. The programmes are made to get a systematic working in the organisation. The programmes create relation between policies, procedures and goals. The programmes are also prepared at different levels. A primary programme is prepared by the top level and then to support the primary programme supportive programmes of different levels are prepared for smooth function of the company.
Methods can be defined as formalized or systematic way of doing routine or repetitive jobs. The managers decide in advance the common way of doing a job. So, that
(a) There is no doubt in the minds of employees;
(b) There can be uniformity in actions of the employees;
(c) These help in applying the techniques of standardization and simplification;
(d) Act as guide for employees.
If the common way of doing the job is not decided in advance then there will be confusion and comparison will not be possible. For example, for the valuation of stock, the organisation must decide in advance what method has to be adopted (lifo or fifo). So that everyone follows the same method and comparison with the past value of stock can be done, method for calculation of depreciation.
Limitations of Planning
The information and variables of plan have to be updated frequently which is not always possible. The longer the plan period, the lesser the accuracy and reliability of information. The planning involves forecasting for long-term future. As the overall environment change, the past information becomes meaningless over time.
- Expensive process:
It requires extra efforts and time for collecting information, evaluating the alternative and forecasting. Experts have to be hired to evaluate the alternative and selecting the best course of action. Extra budget have to be managed beside the normal investment.
Planning is only as good as the inputs used. In the time of emergencies, planning has no meaning as on-the-spot decisions are taken. Confusion among the manager about different dimensions and expectation, ultimately affects effective plan implementation.
- Based on certain assumptions:
Plans are formulated on the basis of certain assumptions. When premises do not remain the same, the overall plan of the organization is affected.
- Based on actions:
Thinking and deciding is advance, is slow intellectual exercise, therefore it will likely to delay in action. During emergencies and crisis period, organizational plans have to be abandoned. Many managers may not have the sufficient time for such exercise.
- Incomplete information:
The manager may not be able to collect the required information needed for planning. The information may not be available in time an it’s reliability trends to be suspicious. Sometimes, the information and assumptions on which the plan is based may change.