Planning

Organizational Goal Setting and Planning

Definitions

Goal A desired future state the organization

attempts to realize e.g. - Increase net profit 20% by the end of

next quarter Plan

A blueprint or plan for goal achievement e.g. - Sell life insurance to existing auto

insurance customers.

Purposes of Goals

Provide guidance and a unified direction

Improve quality of planning Motivate employees Help to evaluate

and control the organization.

Levels of Goals

Mission Statement

Strategic Goals/Plans

Tactical Goals/Plans

Operational Goals/Plans

Organizational Mission

Reason for existence, the basic purpose of the organization

Focus on items such as: Market and customers Desired types of activities Values, aspirations, and reason for being Product quality Location of facilities Attitude toward employees.

Strategic Goals

Set by and for top management Broad statements describing where the

organization wants to be in the future Drucker suggests eight areas of focus,

including: market standing, innovation, productivity, managerial performance, profitability, worker performance, social responsibility, and resource management.

Tactical Goals

Set by and for middle managers Aligned with strategic goals Define specific results

that major divisions and departments will achieveto contribute to strategic goals.

Operational Goals

Set by and for lower-level managers

Address issues associated with achieving tactical goals.

Organizational Goals Example

Accounting manager

ï Split accounts receivable/payable functions from other areas within two yearsï Computerize payroll system for each restaurant this yearï Pay all invoices within thirty days

Advertising director

ï Develop regional advertising campaigns within one yearï Negotiate 5 percent lower advertising rates next yearï Implement this year ís promotional strategy

Restaurant manager

ï Implement employee incentive system within one yearï Decrease waste by 5 percent this yearï Hire and train new assistant manager

Vice president ñ finance

ï Keep corporate debt to no more than 20 percent of liquid assets for next ten yearsï Revise computerized accounting system within five yearsï Earn 9 percent on excess cash this year

President and CEO

ï Provide 14 percent return to investors for at least ten yearsï Start or purchase new restaurant chain within five yearsï Negotiate new labor contract this year

Mission: Our mission is to operatea chain of restaurants that willprepare and serve high-qualityfood on a timely basis and atreasonable prices.

Vice president ñ marketing

ï Increase per store sales 5 percent per year for ten yearsï Target and attract two new market segments during next five yearsï Develop new promotional strategy for next year

Vice president ñ operations

ï Open 150 new restaurants during next ten yearsï Decrease food-container costs by 15 percent during next five yearsï Decrease average customer wait by thirty seconds this year

Strategic Goals

Tactical Goals

Operational Goals

Figure 7.2

? Discussion Question ?

In your groups identify a mission statement, strategic, tactical and operational goals for this university. Assume that departments (e.g. Management and Finance) are the equivalent of departments in the organization, and that professors are the equivalent of line management.

Compare your goals with the goals of the group sitting next to you. How are they different? The same? What implications do the differences in your goals have for the university?

? Discussion Question ?

Other Types of Goals

By Area different functional areas of organization

(e.g. sale, marketing, human resources) By Time Frame

short, intermediate, or long-term explicit or open-ended time frame.

Managing Multiple Goals

Optimizing allows managers to balance and reconcile inconsistent or conflicting goals.

Managers can choose to pursue one goal and exclude all others or to seek a mid-range goal.

Management By Objectives (MBO)

Starting

the formal

goal-setting

program

Establishment

of organiza-

tional goals

and plans

Collaborative

goal setting

and planning

Communicat-

ing organiza-

tional goals

and plans

Meeting

Verifiable

goals and

clear plans

Counseling

Resources

Periodic

reviewEvaluation

Figure 7.5

Benefits of MBO

Improves employee motivation Enhances communication Makes performance appraisals objective Focuses attention on organizational

priorities Helps identify managerial talent Provides a systematic management

philosophy Facilitates control of the organization.

Problems with MBO

Poor implementation of the goal setting process

Lack of top-management support for goal setting

Delegation of the goal-setting process to lower levels

Overemphasis on quantitative goals Too much paperwork and record keeping Managerial resistance to goal setting.

Types of Plans

Mirror types of goals: Strategic Tactical Operational.

Mission Statement

Strategic Goals/Plans

Tactical Goals/Plans

Operational Goals/Plans

Operational Single-Use Plans

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.

Operational Standing Plans

A policy is a general guide to action 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. Processes are ways goals are achieved

Contingency Planning

Defines company responses to be taken in case of emergency or setback

Ongoing planning process

Action point 1 Action point 2 Action point 3 Action point 4

Develop plan,

considering

contingency events

Implement plan and

formally identify

contingency events

Specify indicators

for the contingency

events and develop

contingency plans for

each possible event

Successfully complete

plan or contingency

plan

Monitor contingency event indicators andimplement contingency plan if necessary

Figure 7.3

Barriers to Goal Setting and Planning

Inappropriate goals Improper reward systems Dynamic and complex

environment Reluctance to

establish goals Resistance to

change Constraints.

Overcoming Barriers to Goal Setting and Planning

Understand your purposes for goal setting and planning

Communicate and allow employee participation in goal setting and planning

Use consistency, revision and updating to match goals and environment