Summary Chapter 6 \"Managerial Planning and Goal Setting\" PDF

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Summary of Chapter 6 about "Managerial Planning and Goal Setting in the Company"...

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Chapter 6 Managerial Planning and Goal Setting Every organization must want to make a profit in their business. And beside that they must also want to make their company more known not just in their own home country but in well known in the world as well. When they want to make their business more well known and go international they need to have a good management. Of the four management functions—planning, organizing, leading, and controlling. Planning is considered the most fundamental. Everything else stems from planning. Yet planning also is the most controversial management function in make a good planning so they can achieve to their goal. But in order to have a planning they also need a good motivation. That’s why goal is also an important thing in order to planning. In this chapter we will discuss about the important reason why we need to have a good planning and a goal.

Overview of Goals and Plans Goals and plans have become general concepts in our society. A goal is a desired future state that the organization attempts to realize. Goals are important because organizations exist for a purpose and goals define and state that purpose. A plan is a blueprint for goal achievement and specifies the necessary resource allocations, schedules, tasks, and other actions. Goals specify future ends; plans specify today’s means. The word planning usually incorporates both ideas; it means determining the organization’s goals and defining the means for achieving them. The planning process starts with a formal mission that defines the basic purpose of the organization, especially for external audiences. The mission is the basis for the strategic (company) level of goals and plans, which in turn shapes the tactical (divisional) level and the operational (departmental) level. Top managers typically are responsible for establishing strategic goals and plans that reflect a commitment to both organizational efficiency and effectiveness. Tactical goals and plans are the responsibility of middle managers, such as the heads of major divisions or functional units. A division manager formulates tactical plans that focus on the major actions the division must take to fulfill its part in the strategic plan set by top management. Operational plans identify the specific procedures or processes needed at lower levels of the organization, such as individual departments and employees. Front-line managers and

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supervisors develop operational plans that focus on specific tasks and processes and that help to meet tactical and strategic goals. Planning at each level supports the other levels.

Purposes of Goals and Plans The

complexity

of

today’s

environment and uncertainty about the future overwhelm many managers and cause them to focus on operational issues and short-term results rather than long-term goals and plans. Planning, however, generally positively affects a company’s performance. These messages go to both external and internal audiences and provide important benefits for the organization : 

Legitimacy. An organization’s mission describes what the organization stands for and its reason for existence. It symbolizes legitimacy to external audiences such as investors, customers, suppliers, and the local community. The mission helps them look on the company in a favorable light.

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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. Managers are revising processes and procedures, mechanics are coming up with innovative machine adjustments, and assembly-line workers are trying new techniques to meet this ambitious goal.9 Lack of a clear goal can damage employees’ motivation and commitment because people

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don’t understand what they’re working toward. Whereas a goal provides the “why” of an organization or subunit’s existence, a plan tells the “how.” A plan lets employees know what actions to undertake to achieve the goal. 

Resource allocation. Goals help managers decide where they should allocate resources, such as employees, money, and equipment. For example, DuPont has a goal of generating 25 percent of revenues from renewable resources by 2010. This goal lets managers know that they must use resources to develop renewable and biodegradable materials, acquire businesses that produce products with renewable resources, and buy equipment that reduces waste, emissions, and energy usage.

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Guides to action. Goals and plans provide a sense of direction. They direct attention to specific targets and direct employee efforts toward important outcomes.

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Rationale for decisions. Through goal setting and planning, managers learn what the organization is trying to accomplish. They can make decisions to ensure that internal policies, roles, performance, structure, products, and expenditures will be made in accordance with desired outcomes. Decisions throughout the organization will be in alignment with the plan.

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Standard of performance. Because goals define the desired outcomes for the organization, they also serve as performance criteria. They provide a standard of assessment. If an organization wishes to grow by 15 percent and actual growth is 17 percent, managers will have exceeded their prescribed standard.

Goals in Organizations Setting goals starts with top managers. The overall planning process begins with a mission statement and strategic goals for the organization as a whole.

ORGANIZATIONAL MISSION At the top of the goal hierarchy is the mission—the organization’s reason for existence. The mission describes the organization’s values, aspirations, and reason for being. The formal mission statement is a broadly stated definition of purpose that distinguishes the organization from others of a similar type. The content of a mission statement often focuses on the market and customers and identifies desired fields of endeavor. Some mission statements describe company characteristics such as corporate values, product quality, location of facilities, and attitude toward employees. Mission statements often reveal the

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company’s philosophy as well as purpose. An example is the mission statement for BristolMyers Squibb Company. Such short, straightforward mission statements describe basic business activities and purposes, as well as the values that guide the company. Another example of this type of mission statement is that of State Farm Insurance. Our success is built on a foundation of shared values quality service and relationships, mutual trust, integrity, and financial strength.

GOALS AND PLANS Broad statements describing where the organization wants to be in the future are called strategic goals. They pertain to the organization as a whole rather than to specific divisions or departments. Strategic goals often are called official goals, because they are the stated intentions of what the organization wants to achieve. There are 2 plans that’s usually being used : 

Strategic plans define the action steps by which the company intends to attain strategic goals. The strategic plan is the blueprint that defines the organizational activities and resource allocations—in the form of cash, personnel, space, and facilities—required for meeting these targets. Strategic planning tends to be long-term and may define organizational action steps from 2 to 5 years in the future. The purpose of strategic plans is to turn organizational goals into realities within that time period.

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Tactical plans are designed to help execute the major strategic plans and to accomplish a specific part of the company’s strategy. Tactical plans typically have a shorter time horizon than strategic plans—covering the next year or so. The word tactical originally comes from the military. In a business or nonprofit organization, tactical plans define what major departments and organizational subunits will do to implement the organization’s strategic plan.

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Operational plans are developed at the lower levels of the organization to specify action steps toward achieving operational goals and to support tactical plans. The operational plan is the department manager’s tool for daily and weekly operations. Goals are stated in quantitative terms, and the department plan describes how goals will be achieved. Operational planning specifies plans for department managers, supervisors, and individual employees. When we planning something then we must

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have a result. The results expected from departments, work groups, and individuals are the operational goals. Schedules are an important component of operational planning. Schedules define precise time frames for the completion of each operational goal required to meet the organization’s tactical and strategic goals. Operational planning also must be coordinated with the budget, because resources must be allocated for desired activities. For example, Apogee Enterprises, a window and glass fabricator with 150 small divisions, is rigorous in operational planning and budgeting.

ALIGNMENT OF GOALS Effectively designed organizational goals are aligned into a hierarchy in which the achievement of goals at low levels permits the attainment of high-level goals, also called a meansends chain. Achievement of operational goals leads to the achievement of tactical goals, which in turn leads to the attainment of strategic goals. Organizational performance is an outcome of how well these interdependent elements are aligned, so that individuals, teams, departments, and so forth are working in concert to attain specific goals that ultimately help the organization fulfill its mission. strategic goals are considered the responsibility of top management, tactical goals that of middle management, and operational goals that of firstline supervisors and workers.

Criteria for Effective Goals To ensure goal-setting benefits for the organization, certain characteristics and guidelines should be adopted. These characteristics pertain to organizational goals at the strategic, tactical, and operational levels:

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Specific and measurable. Goals are qualitative as well as quantitative, especially at the top of the organization. The key point is that the goals be defined precisely and allow for measurable progress.

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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. Instead, managers establish goals based on the idea of choice and clarity. A few carefully chosen, clear, and direct goals can be aimed more powerfully

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at organizational attention, energy, and resources. Managers should identify a few key result areas perhaps up to four or five for any organizational department or job. Key result areas are activities that contribute most to company performance and competitiveness. 

Challenging but realistic. Goals should be challenging but not unreasonably difficult. When goals are unrealistic, they set up employees for failure and a decrease in employee morale. For example, one team at a Texas-based company that was recognized as tops in the organization had its quota raised by 65 percent, an impossible goal to reach, while lesser-performing teams had their targets raised by only 15 percent. Members of the high-performing team were so discouraged that most of them began looking for other jobs. If goals are too easy, however, employees may not feel motivated. Stretch goals are extremely ambitious but realistic goals that challenge employees to meet high standards.

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Defined time period. Goals should specify the time period over which they will be achieved. A time period is a deadline stating the date against which goal attainment will be measured. A goal of implementing a new customer relationship management system, for instance, might have a deadline of September 1, 2008. If a strategic goal involves a 2- to 3-year time horizon, specific dates for achieving parts of it can be set up. For example, strategic sales goals could be established on a 3-year time horizon, with a $100 million target in year one, a $129 million target in year two, and a $165 million target in year three.

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Linked to rewards. The ultimate impact of goals depends on the extent to which salary increases, promotions, and awards are based on goal achievement. Employees pay attention to what is noticed and rewarded in the organization, and people who attain goals should be rewarded for doing so. Rewards give meaning and significance to goals and help commit employees to achieving goals. Managers also should remember that failure to attain goals often relates to factors outside employees’ control. For example, failure to achieve a financial goal may be associated with a drop in market demand because of an industry recession; thus, an employee could not be expected to reach that goal. A reward still might be appropriate if the employee partially achieves goals under difficult circumstances.

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Mission, Vision & Values By: The Coca-Cola Company

The world is changing all around us. To continue to thrive as a business over the next ten years and beyond, we must look ahead, understand the trends and forces that will shape our business in the future and move swiftly to prepare for what's to come. We must get ready for tomorrow today. That's what our 2020 Vision is all about. It creates a long-term destination for our business and provides us with a "Roadmap" for winning together with our bottling partners.

Our Mission Our Roadmap starts with our mission, which is enduring. It declares our purpose as a company and serves as the standard against which we weigh our actions and decisions. 

To refresh the world...

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To inspire moments of optimism and happiness...

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To create value and make a difference.

Our Vision Our vision serves as the framework for our Roadmap and guides every aspect of our business by describing what we need to accomplish in order to continue achieving sustainable, quality growth. 

People: Be a great place to work where people are inspired to be the best they can be.

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Portfolio: Bring to the world a portfolio of quality beverage brands that anticipate and satisfy people's desires and needs.

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Partners: Nurture a winning network of customers and suppliers, together we create mutual, enduring value.

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Planet: Be a responsible citizen that makes a difference by helping build and support sustainable communities.

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Profit: Maximize long-term return to shareowners while being mindful of our overall responsibilities.

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Productivity: Be a highly effective, lean and fast-moving organization.

Our Winning Culture Our Winning Culture defines the attitudes and behaviors that will be required of us to make our 2020 Vision a reality.

Live Our Values Our values serve as a compass for our actions and describe how we behave in the world. 

Leadership: The courage to shape a better future

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Collaboration: Leverage collective genius

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Integrity: Be real

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Accountability: If it is to be, it's up to me

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Passion: Committed in heart and mind

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Diversity: As inclusive as our brands

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Quality: What we do, we do well

Focus on the Market 

Focus on needs of our consumers, customers and franchise partners

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Get out into the market and listen, observe and learn

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Possess a world view

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Focus on execution in the marketplace every day

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Be insatiably curious

Work Smart 

Act with urgency

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Remain responsive to change

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Have the courage to change course when needed

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Remain constructively discontent

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Work efficiently

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Act Like Owners 

Be accountable for our actions and inactions

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Steward system assets and focus on building value

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Reward our people for taking risks and finding better ways to solve problems...