Page 171 - Fundamentals of Management Myths Debunked (2017)_Flat

170 Part 2 • Planning
Exhibit 5–8 Planning and Organizational Level

Strategic
Planning Top
Executives

Middle-Level
Managers

First-Level
Operational Managers
Planning

developing plans. The process of developing plans is influenced by three contin-
gency factors and by the planning approach followed.

Contingency Factors in Planning. Three contingency factors affect the choice of plans:
(1) organizational level, (2) degree of environmental uncertainty, and (3) length of future
commitments. 35
Exhibit 5–8 shows the relationship between a manager’s level in the organization and the
type of planning done. For the most part, lower-level managers do operational (or tactical)
planning while upper-level managers do strategic planning.
The second contingency factor is environmental uncertainty. When uncertainty is high,
plans should be specific, but flexible. Managers must be prepared to change or amend plans
as they’re implemented. For example, at Continental Airlines (now part of United Airlines),
the former CEO and his management team established a specific goal of focusing on what
customers wanted most—on-time flights—to help the company become more competitive
in the highly uncertain airline industry. Because of that uncertainty, the management team
identified a “destination, but not a flight plan,” and changed plans as necessary to achieve its
goal of on-time service.
The last contingency factor also is related to the time frame of plans. The commitment
concept says that plans should extend far enough to meet those commitments made when
the plans were developed. Planning for too long or too short a time period is inefficient and
ineffective. We can see the importance of the commitment concept, for example, with the
plans that organizations make to increase their computing capabilities. At the data centers
where companies’ computers are housed, many have found their “power-hungry computers”
generate so much heat that their electric bills have skyrocketed because of the increased need
36
for air conditioning. How does this illustrate the commitment concept? As organizations
expand their computing technology, they’re “committed” to whatever future expenses are
generated by that plan. They have to live with the plan and its consequences.

38 percent of leaders say planning for next
year is a challenge. 37

Approaches to Planning. Federal, state, and local government officials are working
together on a plan to boost populations of wild salmon in the northwestern United States.
Managers in the Global Fleet Graphics division of the 3M Company are developing detailed
plans to satisfy increasingly demanding customers and to battle more aggressive competi-
tors. Emilio Azcárraga Jean, chairman, president, and CEO of Grupo Televisa, gets input
commitment concept from many different people before setting company goals and then turns over the planning
The idea that plans should extend far enough to for achieving the goals to various executives. In each of these situations, planning is done a
meet those commitments made when the plans little differently. How an organization plans can best be understood by looking at who does
were developed
the planning.