CHAPTER 8 PLANNING AND CONTROLLING BOH 4 M

CHAPTER 8: PLANNING AND CONTROLLING BOH 4 M 1

2 How and Why Managers Plan

How do managers plan? 3 Ø Planning The process of ______________________and determining how to best accomplish them. Ø Objectives Identify the __________ or __________ that one intends to achieve. Ø Plan A statement of action steps to be taken in order to accomplish the objectives.

How do managers plan? 4 Ø Steps in the planning process: Define your objectives. Determine where you stand vis-à-vis objectives. Develop premises regarding future conditions. Analyze and choose among action alternatives. Implement the plan and evaluate results.

How do managers plan? 5 Ø Benefits of planning: Improves focus and flexibility. Improves action orientation. Improves coordination. Improves time management. Improves control.

6 Types of Plans Used by Managers

What types of plans do managers use? 7 Ø Short-range and long-range plans Short-range plans = 1 year or less Intermediate-range plans = 1 to 2 years Long-range plans = 3 or more years Ø Ø People vary in their capability to deal effectively with different time horizons. Higher management levels focus on longer time horizons.

What types of plans do managers use? 8 Ø Strategic and operational plans Strategic plans — set broad, comprehensive, and longer-term action directions for the entire organization. Operational plans — define what needs to be done in specific areas to implement strategic plans. Production plans Financial plans Facilities plans Marketing plans Human resource plans

What types of plans do managers use? 9 Ø Policies and procedures Standing plans Policies and procedures that are designed for repeated use. Policy Broad guidelines for making decisions and taking action in specific circumstances. Rules or procedures Plans that describe exactly what actions are to be taken in specific situations.

What types of plans do managers use? 10 Ø Budgets and project schedules Single-use plans Only used once to meet the needs and objectives of a well- defined situation in a timely manner. Budgets Single-use plans that commit resources to activities, projects, or programs. Fixed, flexible, and zero-based budgets. Projects One-time activities that have clear beginning and end points. Project management and project schedules.

11 Planning Tools and Techniques

What are the useful planning tools and techniques? 12 Ø ______________ Making assumptions about what will happen in the __________. Qualitative forecasting uses expert opinions. Quantitative forecasting uses mathematical and statistical analysis. All forecasts rely on __________________. Planning involves deciding on how to deal with the implications of a forecast.

What are the useful planning tools and techniques? 13 Ø __________ Identifying alternative courses of action that can be implemented to meet the needs of changing circumstances. Contingency plans anticipate __________. Contingency plans contain trigger points.

What are the useful planning tools and techniques? 14 Ø ________________ A ________ of contingency planning. Identifying Plans alternative future scenarios. made for each future scenario. Increases organization’s flexibility and preparation for future shocks.

What are the useful planning tools and techniques? 15 Ø ____________ Use of external comparisons to better evaluate current performance and identify possible actions for the future. Adopting best practices of other organizations that achieve superior performance.

What are the useful planning tools and techniques? 16 Ø Use of staff planners Coordinating the planning function for the total organization or one of its major components. Possible communication gaps between staff planners and line management.

What are the useful planning tools and techniques? 17 Ø Participation and involvement Participatory planning requires that the planning process include people who will be affected by the plans and/or will help implement them. Benefits of participation and involvement: Promotes creativity in planning. Increases available information. Fosters understanding, acceptance, and commitment to the final plan.

18 The Control Process

What is the control process? 19 Ø Controlling The process of __________ and taking action to ensure desired results. Has a positive and necessary role in the management process. Ensures that the right things happen, in the right way, at the right time. Organizational learning and after-action review.

What is the control process? 20 Ø Steps in the control process: Step 1 — establish objectives and standards. Step 2 — measure actual performance. Step 3 — compare results with objectives and standards. Step 4 — take corrective action as needed.

What is the control process? 21 Ø Step 1 — establishing objectives and standards Output standards Measure performance results in terms of quantity, quality, cost, or time. Input standards Measure effort in terms of amount of work expended in task performance.

What is the control process? 22 Ø Step 2 — measuring actual performance Goal is accurate measurement of actual performance results and/or performance efforts. Must identify significant differences between actual results and original plan. Effective control requires measurement.

What is the control process? 23 Ø Step 3 — comparing results with objectives and standards Need for action reflects the difference between desired performance and actual performance Comparison methods: Historical comparison Relative comparison Engineering comparison

What is the control process? 24 Ø Step 4 — taking corrective action Taking action when a discrepancy exists between desired and actual performance. Management by exception Giving attention to situations showing the greatest need for action. Types of exceptions Problem situation Opportunity situation

What is the control process? 25 Ø Feedforward controls … Employed _______ a work activity begins. Ensures that: Objectives Proper Right are clear. directions are established. resources are available. Focuses on quality of resources.

What is the control process? 26 Ø Concurrent controls … Focus on what happens ________ work process. Monitor ongoing operations to make sure they are being done according to plan. Can reduce waste in unacceptable finished products or services.

What is the control process? 27 Ø Feedback controls … Take place ________ work is completed. Focus on quality of end results. Provide useful information for improving future operations.

What is the control process? 28 Ø Internal and external control Internal control Allows motivated individuals and groups to exercise ______________ in fulfilling job expectations. External Occurs control through _____________________and the use of formal administrative systems.

29 Organizational Control Systems

What are the common organizational controls? 30 Ø Management by Objectives (MBO) A structured process of ___________________. Supervisor/team leader and workers jointly set performance objectives. Supervisor/team results. leader and workers jointly review

What are the common organizational controls? 31 Ø MBO involves a formal agreement specifying … Workers’ performance objectives for a specific time period. Plans through which performance objectives will be accomplished. Standards for measuring accomplishment of performance objectives. Procedures for reviewing performance results.

What are the common organizational controls? 32 Ø The MBO process: Supervisor and workers jointly set objectives, establish standards, and choose actions. Workers act individually to perform tasks; supervisors act individually to provide necessary support. Supervisor and workers jointly review results, discuss implications, and renew the MBO cycle.

What are the common organizational controls? 33 Ø Types of MBO performance objectives Improvement Personal development Maintenance Ø Criteria for effective performance objectives Specific Time defined Challenging Measurable

What are the common organizational controls? 34 Ø Pitfalls to avoid in using MBO Tying MBO to pay. Focusing too much attention on easily quantifiable objectives. Requiring Having excessive paperwork. managers tell workers their objectives.

What are the common organizational controls? 35 Ø Advantages of MBO Focuses workers on most important tasks and objectives. Focuses supervisor’s efforts on important areas of support. Contributes to relationship building. Gives workers a structured opportunity to participate in decision making.

What are the common organizational controls? 36 Ø Employee discipline systems ____________ is the act of influencing behavior through reprimand. Discipline that is applied fairly, consistently, and systematically provides useful control.

What are the common organizational controls? 37 Ø To be effective, reprimands should … Be immediate. Be directed toward actions, not personality. Be consistently applied. Be informative. Occur in a supportive setting. Support realistic rules.

What are the common organizational controls? 38 Ø Employee discipline systems ___________ ties reprimands to the severity and frequency of the employee’s infractions. Progressive discipline seeks to achieve compliance with the least extreme reprimand possible.

What are the common organizational controls? 39 Ø Important financial aspects of organizational performance … Liquidity Leverage The ability to earn more in returns than the cost of debt. Asset management The ability to generate cash to pay bills. The ability to use resources efficiently and operate at minimum cost. Profitability The ability to earn revenues greater than costs.

What are the common organizational controls? 40 Ø Break-even analysis … Determination of the point at which sales revenues are sufficient to cover costs. Break-Even Point = Fixed Costs / (Price – Variable Costs) Used in evaluating: New products New program initiatives

What are the common organizational controls? 41 Ø Purchasing control … A productivity tool Trends in purchasing control: Leveraging buying power Committing to a small number of suppliers Working together in supplier-purchaser partnerships

What are the common organizational controls? 42 Ø Inventory control Goal is to ensure that inventory is just the right size to meet performance needs, thus minimizing the cost. Methods of inventory control: Economic order quantity Just-in-time scheduling

What are the common organizational controls? 43 Ø Statistical quality control Quality control involves checking processes, materials, products, and services to ensure that they meet high standards. Statistical Taking quality control involves: samples of work. Measuring quality in the samples. Determining the acceptability of results.