Chapter 4 :-Essentials of Planning andManaging by Objectives Module 2 :- Planning Asst. Professor :- Shirufi Daruwala P...
Mod-2
Definition of Planning   Planning involves selecting missions and    objectives and the actions to achieve them; it    re...
   It is a bridges the gap from where we are to    where we want to go.                      Asst. Prof. Shirufi Daruwala...
Why Goals are important for an     organization1.    Goals provide a sense of direction2.    Goals focus our efforts3.    ...
Fig. 4-1 Close Relationship of Planning and Controlling                        Asst. Prof. Shirufi Daruwala      6
Types of PlansPlans can be classified as:1. Missions or purposes2. Objectives or goals3. Strategies4. Policies5. Procedure...
Types of Plans1. The mission, or purpose, identifies the basic purpose   or function or tasks of an enterprise or agency o...
2. Objectives2. Objectives, or goals, are the ends toward   which activity is aimed.It represents not only the end point o...
3. Strategy   Strategy is the determination of the basic    long‑term objectives of an enterprise and the    adoption of ...
4. Policies   Policies are general statements or understandings that guide or    channel thinking in decision making   P...
5. Procedures   Procedures are plans that establish a required method    of handling future activities.   They are chron...
6.Rules Rules spell out specific required actions or  nonactions, allowing no discretion. E.g :- No smoking That is cer...
7. Programs Programs are a complex of goals, policies,  procedures, rules, task assignments, steps to be  taken, resource...
8. BudgetA budget is a statement of expected results expressed in numerical terms. the financial operating budget is oft...
Steps in Planning1. Being aware of opportunities2. Establishing objectives or goals3. Developing premises4: Determining al...
STEPS INVOLVED IN PLANNING1.    Being aware of opportunities      In light of :      The market      Competition      What...
STEPS INVOLVED IN PLANNING5.   Evaluating alternative courses     Which alternatives will give us the best chance of meeti...
STEPS INVOLVED IN PLANNING8.   Quantifying plans by budgeting     Develop such budgets as:     Volume and price of sales  ...
Fig. 4-2 Steps in Planning            Asst. Prof. Shirufi Daruwala   20
Making Planning EffectiveLinked to Long term objectivesConsistencyEveryone participatesFeasibleFlexibleSimpleTop Managemen...
Verifiable Objectives Objectives are the important ends toward which  organizational and individual activities are  direc...
The Nature of Objectives Objectives state end results and overall  objectives need to be supported by sub  objectives. Th...
Fig. 4-3 Relationship of Objectives and theOrganizational Hierarchy                      Asst. Prof. Shirufi Daruwala   24
HOW TO SET CORPORATE OBJECTIVES                    Socio-economic purpose                             To become the leadin...
Key Results Areas    Key Results Areas: Areas in which performance is     essential for success    These are more specif...
Multiplicity of objectives Objective are normally multiple. Eg university mission is education and research  is not enou...
How to Set ObjectivesCompare nonverifiable with verifiable objectives    Nonverifiable                            verifi...
Evolving Concepts in MBO   Management by objectives is a comprehensive    managerial system that integrates many key    m...
Management by Objectives(MBO): Management by Objectives (MBO): This  approach is proposed by Peter Drucker in his  book ‘...
THE NATURE & PURPOSE OF         MBOMBO is concerned with goal setting and planningfor individual managers and their units....
ESSENTIAL STEPS FOR MBO   Set Goals (The most difficult step)      What are we trying to accomplish?   Develop Action P...
STEPS FOR MBO   STEP 1: SET GOALS          STEP 2: DEVELOP PLANS •Corporate Strategic goals                               ...
OBJECTIVE SETTING In an MBO, good goals are SMART goals:        S   specific                                 S            ...
Uses of MBO1.   Appraisal Tool- Performance appraisal2.   Motivating individuals3.   Strategic planning                   ...
Other integration of MBO Human resource planning and development Career planning Reward system Budgeting              ...
What Is Management by Objectives?Organizational Objectives     Divisional     Objectives        Departmental         Objec...
Elements of MBO system
Systems Approach to MBO           Asst. Prof. Shirufi Daruwala   39
Benefits of Management byObjectivesClear Goals: Motivate employees. Improve managing through results-oriented planning....
Failures of Management by            ObjectivesFailure to teach the philosophy of MBOEmployees may go for unethical means ...
Asst. Prof. Shirufi Daruwala   42
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Ch 4 pom shirufi mam

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  • Set goals – not day to day but rather goals that answer at least a portion of the “where are we going” question and then are linked with other goals Plans – Steps required Review – make sure plan is working; Is corrective action necessary either in the plan or the execution? CAUTION : Don’t get locked into PREDETERMINED behavior or sacrifice QUALITY to “MEET” goal
  • Set goals – not day to day but rather goals that answer at least a portion of the “where are we going” question and then are linked with other goals Plans – Steps required Review – make sure plan is working; Is corrective action necessary either in the plan or the execution? CAUTION : Don’t get locked into PREDETERMINED behavior or sacrifice QUALITY to “MEET” goal
  • 12 Management by objectives (MBO)is a system of allowing employees to work with their supervisors in setting performance objectives in an effort to achieve organizational outcomes. It emphasizes participation to set goals that are tangible, verifiable, and measurable. MBO’s appeal lies in its emphasis on converting overall organizational objectives into specific objectives for units and members of the organization. As the figure above shows, the organization’s overall objectives are translated into specific objectives for each succeeding level (divisional, departmental, or individual) in the organization. But because lower-unit managers jointly participate in setting their own goals, MBO works from the “bottom-up” as well as from the “top down.” The result is a hierarchy of objectives that links objectives at one level to those at the next level. And for the individual worker, MBO provides specific personal performance objectives. So each person has an identified specific contribution to make to his or her unit’s performance. If all individuals achieve their goals, then their unit’s goals will be attained and the overall objectives of the organization will become a reality.
  • Ch 4 pom shirufi mam

    1. 1. Chapter 4 :-Essentials of Planning andManaging by Objectives Module 2 :- Planning Asst. Professor :- Shirufi Daruwala Parul Institute of Management and Research Asst. Prof. Shirufi Daruwala 1
    2. 2. Mod-2
    3. 3. Definition of Planning Planning involves selecting missions and objectives and the actions to achieve them; it requires decision making, that is, choosing from among alternative future courses of action amongst all alternatives. Asst. Prof. Shirufi Daruwala 3
    4. 4.  It is a bridges the gap from where we are to where we want to go. Asst. Prof. Shirufi Daruwala 4
    5. 5. Why Goals are important for an organization1. Goals provide a sense of direction2. Goals focus our efforts3. Goals guide our plans and decision4. Goals help us to evaluate our progress
    6. 6. Fig. 4-1 Close Relationship of Planning and Controlling Asst. Prof. Shirufi Daruwala 6
    7. 7. Types of PlansPlans can be classified as:1. Missions or purposes2. Objectives or goals3. Strategies4. Policies5. Procedures6. Rules7. Programs8. Budgets Asst. Prof. Shirufi Daruwala 7
    8. 8. Types of Plans1. The mission, or purpose, identifies the basic purpose or function or tasks of an enterprise or agency or any part of it.Eg : the purpose of business is production and distribution of goods and services.The purpose of courts is of laws and their application.The purpose of university is teaching , research, services to the community.Eg : Dupont – “ better things through chemistry. Asst. Prof. Shirufi Daruwala 8
    9. 9. 2. Objectives2. Objectives, or goals, are the ends toward which activity is aimed.It represents not only the end point of planning but also the end toward which organizing , staffing, leading and controlling are aimed. Asst. Prof. Shirufi Daruwala 9
    10. 10. 3. Strategy Strategy is 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. Asst. Prof. Shirufi Daruwala 10
    11. 11. 4. Policies Policies are general statements or understandings that guide or channel thinking in decision making Polices help to decide issues before they become problem. E.g.6 of policies :- L&T only first class students are recruited. Only B school students are recruited. Only of following high standard of business ethics – TATA group. Employees satisfaction and engagement policies, retention policies, setting competitive prices etc. Asst. Prof. Shirufi Daruwala 11
    12. 12. 5. Procedures Procedures are plans that establish a required method of handling future activities. They are chronological sequences of required actions. Eg : company made a policy of vacation to employees. Now procedure would be :- Implementing this policy,setting rates of vacation pay, methods for calculating them, maintaining records , and to design procedure for applying for leave. Eg : to get admission in M BA also there is a procedure where students have to give online exam, reporting , paying fees , taking admission etc. Asst. Prof. Shirufi Daruwala 12
    13. 13. 6.Rules Rules spell out specific required actions or nonactions, allowing no discretion. E.g :- No smoking That is certain action must or must not be taken. Asst. Prof. Shirufi Daruwala 13
    14. 14. 7. Programs Programs are 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. E.g. company’ s 5 year plan. Asst. Prof. Shirufi Daruwala 14
    15. 15. 8. BudgetA budget is a statement of expected results expressed in numerical terms. the financial operating budget is often called a profit plan. Asst. Prof. Shirufi Daruwala 15
    16. 16. Steps in Planning1. Being aware of opportunities2. Establishing objectives or goals3. Developing premises4: Determining alternative courses5. Evaluating alternative courses6. Selecting a course7. Formulating derivative plans8. Quantifying plans by budgeting Asst. Prof. Shirufi Daruwala 16
    17. 17. STEPS INVOLVED IN PLANNING1. Being aware of opportunities In light of : The market Competition What customers want Our strengths Our weakness2. Establishing Objectives/ Setting Objectives or Goals where we want to be and what we want to accomplish and when3. Developing Premises In what environment – internal or external will our plans operate?4. Determining Alternatives What are the most promising alternatives in accomplishing our Objectives
    18. 18. STEPS INVOLVED IN PLANNING5. Evaluating alternative courses Which alternatives will give us the best chance of meeting our goals at the lowest cost and highest profit?6. Selecting a course Selecting the course of action we will pursue7. Formulating derivative plans (Supporting plan) Such as plans to: Buy equipment Buy Materials Hire and train workers Develop new product
    19. 19. STEPS INVOLVED IN PLANNING8. Quantifying plans by budgeting Develop such budgets as: Volume and price of sales Operating expenses necessary for plans Expenditures for capital Equipment Co-ordination of Short and long-range plans
    20. 20. Fig. 4-2 Steps in Planning Asst. Prof. Shirufi Daruwala 20
    21. 21. Making Planning EffectiveLinked to Long term objectivesConsistencyEveryone participatesFeasibleFlexibleSimpleTop Management Support
    22. 22. Verifiable Objectives Objectives are the important ends toward which organizational and individual activities are directed. It can be long term, short term, broad or specific. An objective is verifiable when at the end of the period one can determine whether or not the objective has been achieved. Asst. Prof. Shirufi Daruwala 22
    23. 23. The Nature of Objectives Objectives state end results and overall objectives need to be supported by sub objectives. Thus, objectives form a hierarchy as well as network. Organizations and managers have multiple goals that are sometimes incompatible and may lead to conflicts within organization, group or individual. Hierarchy of objectives It ranges from the broad aim to specific individual objectives. Asst. Prof. Shirufi Daruwala 23
    24. 24. Fig. 4-3 Relationship of Objectives and theOrganizational Hierarchy Asst. Prof. Shirufi Daruwala 24
    25. 25. HOW TO SET CORPORATE OBJECTIVES Socio-economic purpose To become the leading supplier of computers in Mission statement LondonTop down approach Overall objectives of org. Bottom-up approach To increase sales in London by 10% in the next 5 years Corporate objectives e.g. (marketing department) to Departmental objectives achieve a 10% share of the computer market in London within the next 5 years Individuals and team e.g. to design questionnaires targets as part of market research
    26. 26. Key Results Areas  Key Results Areas: Areas in which performance is essential for success  These are more specific and overall objectives of organization  According to Peter Drucker KRA are :- innovation, productivity, physical and financial resources, profitability, workers performance and attitude, and pubic responsibility. Asst. Prof. Shirufi Daruwala 26
    27. 27. Multiplicity of objectives Objective are normally multiple. Eg university mission is education and research is not enough. It would be much more than that :- attracting good quality students and faculties Offering basic training in professional fields Discovering and organizing new knowledge through research. Asst. Prof. Shirufi Daruwala 27
    28. 28. How to Set ObjectivesCompare nonverifiable with verifiable objectives Nonverifiable  verifiable objectives1. To make a reasonable 1. To achieve ROI of 12 % profit. at the end of fiscal year2. To improve 2. Is issue a 2 page monthly communication newsletter beginning 13. To improve productivity July 2012. 3. To increase productivity by 5 % by 31 december 2012. Asst. Prof. Shirufi Daruwala 28
    29. 29. Evolving Concepts in MBO Management by objectives is 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. Asst. Prof. Shirufi Daruwala 29
    30. 30. Management by Objectives(MBO): Management by Objectives (MBO): This approach is proposed by Peter Drucker in his book ‘The Practice of Management’. MBO refers to a formal set of procedures that begins with goal setting and continues through performance review. MBO goes beyond setting annual objectives for organizational units to setting performance goals for individual employee Asst. Prof. Shirufi Daruwala 30
    31. 31. THE NATURE & PURPOSE OF MBOMBO is concerned with goal setting and planningfor individual managers and their units.The essence of MBO is a process of joint goalsetting between a supervisor and a subordinate.Managers work with their subordinates to establishperformance goals that are consistent with higherorganizational objectives.MBO helps clarify the hierarchy of objectives as aseries of well-defined means-ends chains.
    32. 32. ESSENTIAL STEPS FOR MBO Set Goals (The most difficult step)  What are we trying to accomplish? Develop Action Plans  “What do we need to do to get there?”  Groups and individuals Review Progress  “How are we doing?”  Periodically (How Often?) Appraise Performance  Rewards?
    33. 33. STEPS FOR MBO STEP 1: SET GOALS STEP 2: DEVELOP PLANS •Corporate Strategic goals Action plan •Departmental goals –Course of action –For both workgroups and •Individual goals individuals Review Progress &Appraise Performance Take Corrective Action –How are we doing? –Do we need to restate our goals? STEP 3: REVIEW PROGRESS STEP 4: APPRAISEOVERALL PERFORMANCE
    34. 34. OBJECTIVE SETTING In an MBO, good goals are SMART goals: S specific S U M measurable C A achievableWORK HAVE C R result oriented E T time-related S S
    35. 35. Uses of MBO1. Appraisal Tool- Performance appraisal2. Motivating individuals3. Strategic planning Asst. Prof. Shirufi Daruwala 35
    36. 36. Other integration of MBO Human resource planning and development Career planning Reward system Budgeting Asst. Prof. Shirufi Daruwala 36
    37. 37. What Is Management by Objectives?Organizational Objectives Divisional Objectives Departmental Objectives Individual Objectives
    38. 38. Elements of MBO system
    39. 39. Systems Approach to MBO Asst. Prof. Shirufi Daruwala 39
    40. 40. Benefits of Management byObjectivesClear Goals: Motivate employees. Improve managing through results-oriented planning. Clarify organizational roles, structures, and the delegation of authority. Encourage commitment to their personal and organizational goals. Facilitate effective controlling, measuring of results, and implementation of corrective actions. Asst. Prof. Shirufi Daruwala 40
    41. 41. Failures of Management by ObjectivesFailure to teach the philosophy of MBOEmployees may go for unethical means to achieve goalsand objective.Difficulty in setting verifiable goals with right degree.The major reason for MBO failure is lack of topmanagement supportSome firms may overemphasize quantitative goalsSome managers will not sit down and work out goals withtheir subordinatesEncourage individual rather than team efforts
    42. 42. Asst. Prof. Shirufi Daruwala 42

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