Managerial Planning and Goal Setting
CHAPTER 6
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• 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 how managers use strategy maps to align goals.
• Define the characteristics of effective goals.
• Describe the four essential steps in the management by objectives (MBO) process.
• Explain the difference between single-use plans and standing plans.
• Describe and explain the importance of contingency planning, scenario building, and crisis planning in today’s environment.
• Summarize the guidelines for high-performance planning in a fast-changing environment.
Learning Outcomes
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Overview of Goals and Plans
• A goal is a desired future state that the organization attempts to realize
• A plan is a blueprint for goal achievement
• There are different levels of planning and goals in an organization
• Goals at each level of the organization guide the organization
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Levels of Goals/Plans and their Importance
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Characteristics of Goals and Plans
Legitimacy
Source of motivation and commitment
Resource allocation
Guides to action
Rationale for decisions
Standards of performance
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The Organizational Planning Process
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Organizational Mission
• The mission statement is the reason the organization exists– Top of the goal hierarchy– Describes the values, aspirations and reason
for being– A well-defined mission is the basis for all
other goals
• Mission statements outline the stated purpose and values to stakeholders
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Types of Goals and Plans
• Strategic Goals – official goals, broad statements about the organization– Define the action steps the company intends to attain– The blueprint that defines activities
• Tactical Goals – help execute major strategic plans– Specific part of the company’s strategy– Plans of the divisions and departments
• Operational Goals – results expected from departments, work groups, and individuals– Lower levels of the organization– Specific action steps
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Aligning Goals with Strategy Maps
• Goals should be consistent and mutually supportive
• The achievement of goals at low levels permits the attainment of high-level goals
• Individuals, teams, and departments should be working in concert
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Strategy Map for Aligning Goals
Goals should be consistent
and mutually
supportive
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Operational Planning
• Operational goals should direct employees and resources toward outcomes
• It is important to establish effective goals– Management by objective– Single-use plans– Standing plans
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Characteristics of Effective Goal Setting
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Management by Objective
Defined by management scholar Peter Drucker in his 1954 book, The Practice of Management
Process of defining goals and monitoring progress
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Model of the MBO Process
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MBO Benefits and Problems
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Single-Use and Standing Plans
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Planning for a Turbulent Environment
• Contingency Planning – plans for emergencies, setbacks or unexpected conditions
• Building Scenarios – visualizing future possibilities
• Crisis Planning – preparing to cope with unexpected events
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Essential Stages of Crisis Planning
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Planning for High Performance
Traditional Approach:• Done by top
executives (top down)• Central planning
departments• Planning specialist
High-Performance Approach:
• Decentralized planning• Managers plan
throughout the organization
• Now involves line-managers and employees
• Dynamic plans for fast-changing needs
Stretch Goals and Big Hairy Audacious
Goals (BHAG) are big and inspiring
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Performance Dashboard for Planning
• Gauge progress toward goals
• Align and track goals
• All employees can track progress
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