The document discusses organizational planning and goal setting. It defines goals and plans, explaining that goals are desired future states and plans are the actions to achieve goals. Goals in organizations form a hierarchy from strategic goals set by senior management down to operational goals for individuals. Effective goals are specific, measurable, challenging but realistic, and linked to rewards. The document also describes different types of plans like single-use, standing, and contingency plans. It outlines traditional centralized planning approaches versus more collaborative new workplace approaches.

1. ORGANIZATIONAL PLANNING AND GOAL SETTING Chapter 7: MANAGEMENT 6 th Edition By: Richard Daft Prepared by: GREGAR DONAVEN E. VALDEHUEZA, MBA Lourdes College Instructor

2. Objectives: Define goals and plans and explain the relationship between them. Explain the concept of organizational mission and how it influences goal setting and planning. Describe the types of goals an organization should have and why they resemble a hierarchy. Define the characteristics of effective goals Describe the four essential steps in the MBO process. Explain the difference between single-use plans and standing plans. Describe and explain the importance of the three stages of crisis management planning. Discuss how planning in the new workplace differs from traditional approaches to planning.

3. Overview of goals and plans Goal a desired future state that the organization attempts to realize Plan a blueprint specifying the resource allocations, schedules, and other actions necessary for attaining goals.

4. External Message Legitimacy for: investors, suppliers, customers, community Internal Message legitimacy, motivation, guides, rationale, standards Mission Statement Strategic Goals/Plans Senior Management (organization as a whole) Tactical Goals/Plans Middle Management (major divisions, functions) Operational Goals/Plans Lower Management (departments, individuals)

5. Purposes of goals and plans Legitimacy. An organization mission describes what the organization stands for and its reason for existence. It symbolizes legitimacy to external audiences such as investors, suppliers, and customers. Source of motivation and commitment. Goals and plans facilitate employees’ identification with the organization and help motivate them by reducing uncertainty and clarifying what they should accomplish. Goal provides the “why” of an organization or subunit’s existence, a plan tells the “how” .

6. Guides to action. Goals and plans provide a sense of direction. They focus attention on specific targets and direct employee efforts toward important outcomes. Rationale for decisions. Through goal setting and planning, managers learn what the organization is trying to accomplish. Standard of performance. Because goals define desired outcomes for the organization, they also serve as performance criteria.

7. Mission Statement Strategic Goals/Plans Senior Management (organization as a whole) Tactical Goals/Plans Middle Management (major divisions, functions) Operational Goals/Plans Lower Management (departments, individuals)

8. Goals in organizations The overall planning process begins with a mission statement and strategic goals for the organization as a whole.

9. Mission The organization’s reason for existence. Mission statement A broadly stated definition of the organization’s basic business scope and operations that distinguishes it from similar types of organizations.

10. Example: Mission Statement for Mail Boxes Etc. Our Mission Making Business Easier Worldwide Through Our Service and Distribution Network, Delivering Personalized and Convenient Business Solutions With World-Class Customers Service. Our Core Values Accountability Respect Trust Integrity Commitment Fairness Honesty Caring

11. Goals and plans Strategic goals. Broad statements of where the organization wants to be in the future; pertain to the organization as a whole rather than to specific divisions or departments. Strategic plans. The actions steps by which an organization intends to attain strategic goals.

12. Tactical goals. Goals that define the outcomes that major divisions and departments must achieve in order for the organization to reach its over-all goals. Tactical plans. Plans designed to help execute major strategic plans and to accomplish a specific part of the company’s strategy.

13. Operational goals. Specific, measurable results expected from departments, work groups, and individuals within the organization. Operational plans. Plans developed at the organization’s lower levels that specify action steps toward achieving operational goals and that support tactical planning activities.

14. MISSION Finance V.P. Keep outstanding accounts below $500,000 Keep borrowing below $2 million Provide monthly budget statements for departments Have delinquent accounts of no more than 2% of total Supervisor – Automatic Machines Produce 150,000 standard units at average cost of $16 Have machine downtime of less than 7% Respond to employee grievances within 24 hours STRATEGIC GOALS President 12% return on investment ; 5% growth No employee layoff ; Excellent service to customer TACTICAL GOALS Production V.P. Manufacture 1,200,000 products at average cost of $19 Increase manufacturing productivity by 2% Resolve employee grievances within 3 working days OPERATIONAL GOALS Accounts Receivable Manager Issue invoices within 5 days of sale Check new customers’ credit within 1 working day Allow no account to be overdue more than 5 months Call delinquent accounts weekly Manufacture both standard and custom metal products for various applications in the machine tool industry

15. Criteria of effective goals Specific and measurable. When possible, goals should be expressed in quantitative terms, such as increasing profits by 2 percent. Cover key result areas. Goals cannot be set for every aspect of employee behavior or organizational performance; if they were, their sheer number would render them meaningless.

16. Challenging but realistic. Goals should be challenging but not unreasonably difficult. Defined time period. Goals should specify the time period over which they will be achieved. Linked to rewards. The ultimate impact of goals depends on the extent to which salary increases, promotions, and awards are based on goal achievement.

17. Planning types and performance Purpose of planning and goal setting is to help the organization achieve high performance. Management by Objectives (MBO) Single-use Plans Standing Plans Contingency (or scenario) Plans

18. Management by Objectives (MBO) Is a method whereby managers and employees define goals for every department, project, and person and use them to monitor subsequent performance. 4 major activities : Set goals Develop action plans Review progress Appraise overall performance

19. Step 1: Set Goals Take Corrective Action Review Progress Step 3: Review Progress Appraise Performance Step 4: Appraise Overall Performance Action Plans Step 2: Develop Action Plans Corporate Strategic Goals Departmental Goals Individual Goals

20. 5. Too much paperwork saps MBO energy. 4. Mechanistic organizations and values that discourage participation can harm the MBO process. 4. Departmental and individual goals are aligned with company goals. 3. Strategic goals may be displaced by operational goals. 3. Employees are motivated. 2. An environment of poor employer-employee relations reduces MBO effectiveness. 2. Performance can be improved at all company levels. 1. Constant change prevents MBO from taking hold. 1. Manager and employee efforts are focused on activities that will lead to goal attainment. Problems with MBO Benefits of MBO

21. Single-use Plans Plans that are developed to achieve a set of goals that are unlikely to be repeated in the future.

22. Setting up a company intranet Renovating the office Examples: Often one part of a larger program Smaller in scope and complexity than a program; shorter time horizon Also a set of plans for attaining a one-time goal Project Converting all paper files to digital Building a new headquarters Examples: Large in scope; may be associated with several projects Major undertaking that may take several years to complete Plans for attaining a one-time organizational goal Program SINGLE-USE PLANS

23. Standing Plans Ongoing plans that are used to provide guidance for tasks performed repeatedly within the organization.

24. Procedures for handling employee grievances Procedures for issuing refunds Examples: Defines a precise series of steps to attain certain goals Sometimes called a standard operating procedure (SOP) Procedure No-smoking rule in areas of plant where hazardous materials are stored Example: May apply to specific setting Describes how a specific action is to be performed Narrow in scope Rule Sexual harassment policies Drug-free workplace policies Examples: Defines boundaries within which to make decisions Based on organization’s overall goals/strategic plan Broad in scope – a general guide to action Policy STANDING PLANS

25. Contingency Plans Plans that define company responses to specific situations, such as emergencies, setbacks, or unexpected conditions. Crisis Management Planning A special type of contingency plan.

26. Return to business. Meet safely and emotional needs. Get the awful truth out. Rapid response: Activate the crisis management plan. Containment Set up effective communications system. Create detailed crisis management plan. Designate crisis management team and spokesperson. Preparation Detect signals from environment. Build relationships Prevention STAGES OF CRISIS MANAGEMENT

27. Traditional approaches to planning Top executives Consulting firms Central planning department A group of planning specialists who develop plans for the organization as a whole and its major divisions and departments and typically report directly to the president or CEO.

28. New workplace approaches to planning Involvement of everyone in the organization Sometimes outside stakeholders Decentralized planning Managers work with planning experts to develop their own goals and plans.

29. Guidelines for planning in the new workplace Start with a strong mission Set stretch goals Create a culture that encourages learning Design new roles for planning staff Use temporary task forces Planning still starts and stops at the top