Essential of Planning and Management by Objectives

Planning:

Selecting missions and objectives as well as the actions to achieve them, which require decision making, that is choosing a course of action from among alternatives

Types of Plans

Mission or Purpose:

The basic purpose or function or tasks of an enterprise or agency or any part of it. For example

At KFC we are committed to customer satisfaction through offering high quality with excellent services and good value. We take great pride in serving each other, our customer and our communities.We seek continuous improvement in all that we do.

At IBM, we strive to lead in the invention, development and manufacture of the industry's most advanced information technologies, including computer systems, software, storage systems and microelectronics. We translate these advanced technologies into value for our customers through our professional solutions, services and consulting businesses worldwide

Objectives or Goals:

The ends toward which activity is aimed

Strategies:

The determination of the basic long-term objectives of an enterprise and the adoption of courses of action and allocation of resources necessary to achieve these goals

Policies: General statements or understandings

that guide or channel thinking in decision making

Procedures: Plans that establish a required method of

handling future activities

Rules : Spell out specific required actions or non-actions allowing no

discretion

Programs: A complex of goals, policies, procedures, rules, task

assignments, steps to be taken, resources to be employed and other elements necessary to carry out a given course of action

Budgets : A statement of expected results expressed in numerical

terms

Steps in Planning: Being aware of opportunities

Establishing objectives

Developing premises

Determining Alternative Courses

Evaluating alternative Courses

Selecting a Course

Formulating Derivative Plans

Quantifying Plans By Budgeting

Hierarchy of Objectives

Multiplicity of Objectives

Objectives are normally multiple

State the importance of each goal so that major goals receive more attention than lesser ones

How to set Objectives

Objectives must be verifiable

Example of non verifiable Objective: To make a reasonable profit

Example of verifiable objective: To achieve a return on investment of 12% at the end of the current fiscal year

Guidelines for Setting Objectives

Management By Objectives

A comprehensive managerial system that integrates many key managerial activities in a systematic manner and is consciously directed toward the effective and efficient achievement of organizational and individual objectives

A formal set of procedures that establishes and reviews progress toward common goals for managers and subordinates

Elements of MBO

Commitment to the program: At every level managers are committed to achieving organizational and personal objectives

Top level goal setting: First determine the organization’s strategy and set goals that resemble annual objectives

Individual Goals: In an effective MBO program each manager and staff member has clearly defined job responsibilities and objectives

Participation: Managers and employees must participate in goal setting

Autonomy in implementation of plans: The employees enjoy full freedom in choosing the means for achieving objectives

Performance review: Managers and employees periodically meet to review progress toward the objectives

Benefits of MBO

Improvement of managing through results oriented planning

Clarification of organizational roles and structure as well as delegation of authority

Encouragement of commitment to personal and organizational goals

Development of effective controls that measure results and lead to corrective actions

Focuses on three key concepts – specific goal setting, feedback on performance and participation

Failure of Management by Objectives

Failure to teach the philosophy of MBO

Failure to give guidelines to goal setters

Setting verifiable goals with right degree of flexibility

Overuse of quantitative goals

May downgrade important goals that are difficult to state in terms of end result

Danger of forgetting that managing involves more than goal setting