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Planning – A Management Function

• satyendra
• August 1, 2015
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• controls, management function, planning, plans, risks, systems,

Planning – A Management Function

In the world of management, planning is a very important function since it is the first of the basic functions of management which are planning, organizing, directing, coordinating and controlling. It is often being thought that planning is the most fundamental of the managerial functions since all other functions stem from the planning function. Planning prepares organizations for tomorrow by assessing today what an organization wants to accomplish and how it will go about achieving that goal.

Through planning, management decides the best alternative among others to perform different managerial functions in order to achieve predetermined goals. Without setting a goal to be reached and lines of action to be followed, there is nothing to organize, to direct, to coordinate and to control in the organization. However this should not lead one to hold the view that planning is an isolated activity required in the beginning only. On the other hand, it is a continuous and unending process to keep the organization on the path of progress while other management functions are also performed simultaneously.

Planning is nothing but looking ahead and preparing the organization for the future course of actions which need to be followed. It is a preparatory step and consists of chalking out an activity plan for doing the things in an orderly manner for the achievement of the desired targets and objectives. It is a mental predisposition to think before acting and to act in the light of facts rather than guesses. It is a detailed programme regarding future course of action. It is a systematic activity which determines why an action is needed, what is to done, who has to carry out the action, how it is to be done and when to be done. It bridges the gap between where we are, and where we want to go. It makes possible things to occur which would not otherwise occur. The idiom ‘well planned is half done’ amply describes the importance of planning as a management function.

Planning takes into consideration of available and prospective human and physical resources of the organization so as to get effective co-ordination, contribution as well as perfect adjustment. It includes formulation of one or more detailed plans to achieve optimum balance of needs or demands with the available resources. Through the function of planning policies, programmes, procedures, budgeting and other related elements gets generated.

There are several steps involved in the process of planning. These steps include (i) choosing of goals,(ii) identification of actions, (iii) allocation of responsibilities, (iv) reviewing the performance , and (v) making adjustment in the plan. These steps are shown in Fig 1.

Fig 1 Steps in the process of planning

Characteristics of planning

• Planning as the primary function – Planning is the primary function of the management. It lays the foundation for other functions. It serves as a guide for organizing, directing, coordinating and controlling. All these other functions of management are performed within the framework of plans laid out which makes planning as the basic function of management.
• Establishment of objectives – Planning starts with the setting of goals and objectives to be achieved. These objectives provide nucleus to the planning process and a rationale for carrying out different activities besides indicating direction of efforts. The objectives focus the attention of management on the end results to be achieved. To avoid the undertaken activities to be ineffective, the objectives are to be stated in a clear, precise and unambiguous language and in quantitative terms. Only those objectives where quantitative terms are not feasible are to be specified in qualitative terms. Further the objectives are to be practical, acceptable, workable and achievable.
• Establishment of assumptions – Assumptions are required for those variables which needed for during planning and which cannot be identified presently. They determines the shape of events in future. They serve as the basis of planning. These assumptions in fact are norms which are to be followed during planning. Accurate assumptions decreases the probability of deviations from actual plan during the implementation of the plans. Planning assumptions can be for issues that are either internal or external to the organization. Assumptions for internal issues are controllable and can be made with higher probability of accuracy whereas the assumptions on external issues are non- controllable and can only be imagined.
• Choice regarding the course of actions – Normally for the planning a number of course of actions are available. It is necessary that each and every alternative course of action is evaluated by weighing its pros and cons in the light of resources available and requirements of the organization. The merits, demerits as well as the consequences of each alternative course of actions is to be examined before the choice is eventually made. The best alternative is to be chosen only after objective and scientific evaluation of each alternative course of actions. Help of various quantitative techniques is generally taken to judge the suitability of an alternative.
• Formulation of derivative plans – Derivative plans are the sub plans or secondary plans which help in the achievement of main plan. These derivative plans are detailed plans and flow from the main plan. They are meant to support and expedite the achievement of main plan. These detail plans include policies, procedures, rules, programmes, budgets, schedules, sales maximization, production maximization, and cost minimization etc. The derivative plans also indicate time schedule and sequence of accomplishing various tasks.
• Securing cooperation – After the plans have been made it is necessary as well as advisable to take subordinates or those who have to implement these plans into confidence. The purposes behind taking them into confidence include (i) subordinates feel motivated since they get involved in the process of decision making, (ii) There is possibility of getting valuable suggestions and improvement in formulation as well as implementation of plans, (iii) making the subordinates and through them the other employees more interested in the execution of the plans.
• Follow up or appraisal of the plans – After choosing a particular course of action, the plan is put into the phase of implementation. During the plan implementation it is essential to appraise the effectiveness of the plan periodically. In case during appraisal, deviations are noticed then, it enables the management to take mid-course corrections or in case of necessity to modify the plan. This characteristic of planning establishes a link between planning and controlling function. The periodic appraisal of the plans during the implementation phase also helps in making the future plans more realistic.
• Planning is goal oriented – Plans are made to achieve desired objective of the organization. The realistic goals need to be established for the achievement of the objectives otherwise the efforts and energies gets misguided and misdirected. Planning identifies the actions which are needed for the achievement of the desired goals quickly and economically. It provides sense of direction to various activities.
• Planning is looking ahead – Planning is done for the future and is based on forecasting. The plan does the synthesis of forecast and requires glancing in the future, analyzing it and predicting it. Through the plan, mental predisposition is made for things to happen in future.
• Planning is an intellectual process – Planning is an exercise which involves creative thinking, foresight, sound judgement and imagination. It is not a mere guesswork but has its roots in the process of deep thinking. Extensive use of analyzing tools are made for the making of the plans. Planning is essentially based on goals, facts and considered estimates.
• Planning involves choice and decision making – Planning principally involves choice among various alternatives. Hence decision making is an integral part of planning. During the preparation of the plan, management is to pick the best available alternative depending upon the organizational requirements and the resources which are available.
• Planning is a continuous process – Planning is a never ending function due to the dynamic environment which normally exist in the organization. Plans are usually made for a specific period of time and after the end of the period, plans generally need review and revaluation because there may be new requirements due to the change in the operating environment. Planning never ceases in the organization since new issues and problems keep cropping up every now and then and the same are to be tackled by effective and sound planning.
• Planning is universal – Planning is required at all the levels of the management and in all the departments of the organization. Planning is needed for the every activity of the organization. However the scope of planning may differ from activity to other activity and for different levels of the management in the organization. While the top level of the management is usually more concerned about planning as a whole in the organization, the middle management level may be more interested in the specific departmental plans and the lower level management plans may be regarding implementation of the department plans.
• Planning and efficiency – Plans are normally designed and made with inbuilt efficiency and hence they lead to accomplishment of the objectives at the minimum possible cost. They are designed to ensure adequate and optimum utilization of resources and thus avoiding their wastages. An efficient plan takes into account the cost which is likely to be incurred in its implementation. An efficient planning leads to saving in time, effort and money. It also leads to proper utilization of men, money, materials, methods and machines.
• Planning and flexibility- Planning is always done for the future which is unpredictable. Hence the planning is to provide enough room to cope with the changes which may occur in the operating environment of the organization such as change in the demand of the customers, and change in the policies of the government etc. The plans are to be flexible so that they can be revised and updated if the circumstances calls for it due to the change in the environment.
• Planning facilitates management by objectives – Planning begins with determination of objectives. Plans make objectives clearer and specific and highlight the purposes for which different activities are to be undertaken in the organization. They help in focusing the attention of the employees on the objectives or goals of the organization. In fact they guide the organization in its journey towards success. Planning compels the management to prepare a blue-print of the courses of action to be followed for the accomplishment of the objectives and hence it brings order and rationality into the organizational operations.
• Planning minimizes uncertainties – Usually an organization operates in an environment which is full of uncertainties. There are always risks of various types due to these uncertainties. Planning helps in reducing these risks which are because of the uncertainties of the future since it is done with the anticipation of future events. Although the future events cannot be predicted with cent percent accuracy, still the planning helps management with the cushioning comforts since plans are made after considering anticipated changes which are likely to occur in future. Plans always help management to minimize the impact of the future uncertainties.
• Planning facilitates co-ordination – Planning revolves around organizational goals hence all the activities of the organization gets directed towards the common goals. It helps in an integrated effort throughout the organization for the achievement of the common goal. It avoids duplication of the efforts and hence leads to better co-ordination within the organization.
• Planning has positive impact on the organizational morale – Planning creates an atmosphere of discipline in the organization. It creates a healthy environment towards work which helps in boosting the morale and efficiency of the employees. Through plans, the employees are aware in advance what is expected from them and hence their energy gets concentrated in achieving the targets. This in turn helps the organization in achieving the objective.
• Planning and economical operations – Planning helps the organization towards its economical operations since it leads to orderly allocation of resources for the various operations. It also facilitates optimum utilization of resources and avoids wastage of resources by selecting most appropriate use that contributes to the organizational objectives.
• Planning facilitates controlling – Planning facilitates existence of planned goals and standard performance parameters which provides basis for effective controls. Controls can be effectively exercised by comparing the actual performance against the planned goals and the standard performance parameters set in the plans.
• Planning provides the organization an edge over the competitors. Since it involves in the changing of the work methods, quality, quantity designs, extension of work, redefining of goals, etc. With the help of forecasting not only the organization secures its future but at the same time it is also able to estimate the future motives of the competitor which helps in facing future challenges. Since the planning leads to best utilization of possible resources, improvement in the quality of production, it helps in improving the competitive strength of the organization.
• Planning and innovations – In the process of planning, there are a number of innovation opportunities available to the planners for suggesting ways and means of improving the organizational performance.
• Planning and decision making – Planning is basically a decision making function since it provides ample opportunities for the management to take decisions during the plan preparation. The quality of these decisions influences the results when the plans are implemented. Well informed decisions and decisions taken through the creative thinking and imagination ultimately leads to innovation of methods and operations for growth and prosperity of the organization.

Limitations of planning

There are several limitations of planning. Some of them are inherit in the process of planning like rigidity etc. while the other arise due to the shortcoming of the techniques of planning and in the planners themselves. These limitations are due to the causes which can be either internal to the organization or due to the factors which are external to the organization. For planning function to be useful and purposeful, management is to be aware of the limitations usually associated with the planning process. Major limitations are given below.

• Planning has tendency to make administration inflexible since it is a rigid process.
• Planning can be misdirected and biased. There can be attempts to influence setting of the planning objectives. In such case it may be used to serve individual interests rather than the interest of the organization.
• Planning is not very effective in an environment which is uncertain and dynamic.
• Planning needs accurate data from internal and external sources. Unreliable data makes the planning ineffective.
• Planning reduces creativity of the employees.
• Planning involves large costs and is a costly process.
• Planning is time consuming process and it delays the actions. Hence the process is not suitable for emergencies and crisis situations.
• Planning does not bring success always since due to it the employees can develop an attitude of false sense of security which can make them careless in their work.

External limitations of planning include change in the political climate, loss of time due to strikes, lockouts, agitations since this factor cannot be considered in the planning, technological changes which are affecting the work environment, change in the policies of the competitors, the natural calamities, and changes in demand and prices etc.

Planning impacts everything which is done in an organization either in a positive or negative way. It makes supervision more effective and hence makes the work more efficient. Poor planning and lack of planning brings inefficiencies in the organization. Further both the proper planning and the poor planning has a multiplier effect on the working environment of the organization.