Planning is a crucial activity, for it designs the map that lays the groundwork for the other functions. The plan itself specifies what should be done, by whom, where, when, and how. All businesses — from the smallest restaurant to the largest multinational corporation — need to develop plans for achieving success. But before an organization can plan a course of action, it must first determine what it wants to achieve. Objectives
, the end results desired by the organization, are derived from the organization's mission statement.
The mission statement explains what the organization stands for and why it exists. A strong mission statement symbolizes legitimacy to external audiences, such as investors, customers, and suppliers. Likewise, a strong mission statement allows employees to identify with the overall purpose of the organization and commit to preserving it.
The mission statement is the basis for all goals and plans outlined throughout the organization. Therefore, managers must use effective planning and goal‐setting techniques to ensure that internal policies, roles, performances, structures, products, and expenditures are in line with the mission of the organization.
To make sure that goal setting benefits the organization, managers must adopt certain characteristics and guidelines. The following describes these criteria:
- Goals must be specific and measurable. When possible, use quantitative terms, such as increasing profits by two percent or decreasing student enrollment by one percent, to express goals.
- Goals should cover key result areas. Because goals cannot be set for every aspect of employee or organizational performance, managers should identify a few key result areas. These key areas are those activities that contribute most to company performance — for example, customer relations or sales.
- Goals should be challenging but not too difficult. When goals are unrealistic, they set employees up for failure and lead to low employee morale. However, if goals are too easy, employees may not feel motivated. Managers must be sure that goals are determined based on existing resources and are not beyond the team's time, equipment, and financial resources.
- Goals should specify the time period over which they will be achieved. Deadlines give team members something to work toward and help ensure continued progress. At the same time, managers should set short‐term deadlines along the way so that their subordinates are not overwhelmed by one big, seemingly unaccomplishable goal. It would be more appropriate to provide a short term goal such as, “Establish a customer database by June 30.”
- Goals should be linked to rewards. People who attain goals should be rewarded with something meaningful and related to the goal. Not only will employees feel that their efforts are valued, but they will also have something tangible to motivate them in the future.
All the different levels of management should have plans that work together to accomplish the organization's purpose. The plans of the top‐, middle‐, and first‐level managers of an organization should work together to achieve the main goal.
All managers plan basically the same way, but the kinds of plans they develop and the amount of time they spend on planning vary. Here are some examples:
- Top‐level managers are concerned with longer time periods and with plans for larger organizational units. Their planning includes developing the mission for the organizational units, the organizational objective, and major policy areas. These goals are called strategic goals or objectives.
- Middle‐level managers' planning responsibilities center on translating broad objectives of top‐level management into more specific goals for work units. These goals are called tactical goals or objectives.
If a first‐level manager develops a set of plans that contradicts that of a middle‐level manager, conflicts will result. Therefore, all managers must work together when planning their activities and the activities of others.
- First‐level managers are involved in day‐to‐day plans, such as scheduling work hours, deciding what work will be done and by whom, and developing structures to reach these goals. These goals are called operational goals or objectives.