Page 156 - Fundamentals of Management Myths Debunked (2017)_Flat

CHAPTER 5 • Foundations of Planning 155
What Is Planning and Why Do Managers Need to Plan?

5-1 Discuss the nature All managers plan.
and purposes Planning is often called the primary management func-
of planning. tion because it establishes the basis for all the other
things managers do as they organize, lead, and control.
What is meant by the term planning? As we said in Chapter 1, planning involves defining
the organization’s objectives or goals, establishing an overall strategy for achieving those
goals, and developing a comprehensive hierarchy of plans to integrate and coordinate
activities. It’s concerned with ends (what is to be done) as well as with means (how it’s to
be done).
Planning can be further defined in terms of whether it’s formal or informal. All manag-
ers plan, even if it’s only informally. In informal planning, very little, if anything, is written
down. What is to be accomplished is in the heads of one or a few people. Furthermore, the
organization’s goals are rarely verbalized. Informal planning generally describes the planning
that takes place in many smaller businesses. The owner-manager has an idea of where he or
she wants to go and how he or she expects to get there. The planning is general and lacks
continuity. Of course, you’ll see informal planning in some large organizations, while some
small businesses will have sophisticated formal plans.
When we use the term planning in this book, we’re referring to formal planning. Formal
planning means (1) defining specific goals covering a specific time period, (2) writing down
these goals and making them available to organization members, and (3) using these goals to
develop specific plans that clearly define the path the organization will take to get from where
it is to where it wants to be.

Why Should Managers Formally Plan?
How does McDonald’s—with over 35,000 restaurants in approximately 120 countries serving
over 68 million customers every day—do what it does? The key is its Plan to Win, which is
built on three components: operational excellence, being the leader in marketing, and contin-
ual product innovation. McDonald’s managers—from corporate to individual stores—know
that planning is vital to the company’s continued success. Now, as the company struggles
with declining global sales, that plan takes on added importance for managers.
Managers should plan for at least four reasons. (See Exhibit 5–1.) First, planning
establishes coordinated effort. It gives direction to managers and nonmanagerial employees.
When all organizational members understand where the organization is going and what they
must contribute to reach the goals, they can begin to coordinate their activities, thus fostering
teamwork and cooperation. On the other hand, not planning can cause organizational
members or work units to work against one another and keep the organization from moving
efficiently toward its goals.
Second, planning reduces uncertainty by forcing managers to look ahead, anticipate
change, consider the impact of change, and develop appropriate responses. It also clarifies the
consequences of the actions managers might take in response to change. Planning, then, is
precisely what managers need in a changing environment.
Third, planning reduces overlapping and wasteful activities. Coordinating efforts and
responsibilities before the fact is likely to uncover waste and redundancy. Furthermore, when
means and ends are clear, inefficiencies become obvious.
Finally, planning establishes the goals or standards that facilitate control. If organi-
zational members aren’t sure what they’re working towards, how can they assess whether
they’ve achieved it? When managers plan, they develop goals and plans. When they
control, they see whether the plans have been carried out and the goals met. (We’ll discuss
controlling in depth in Chapter 14.) If significant deviations are identified, corrective action
can be taken. Without planning, there are no goals against which to measure or evaluate
work efforts.