The Benefits of Planning in a Business Environment - Assignment Example

?The role of planning as one of the primary functions of management in achieving organisational goals and objectives 0 Introduction The four functions of management include planning, organizing, directing and controlling. The management needs to be equipped with all four functions but any situation needs planning ahead of implementation after which control can be exercised. Planning has been described as assessing the future, setting goals and devising means to achieve these goals (Dooris, Kelley and Trainer, 2002). MIntzberg and Quinn think of strategy as a plan and specify that it should be made in advance and it should be developed consciously and purposefully (cited in Dooris, Kelly and Trainer, 2002). Planning is thus an ability to improve the condition, which could include increasing market share or enhancing profits. It thus suggests that planning is a primary management function aimed at achieving organizational goals and objectives. 2.0 The Planning Environment Every business, regardless of size, must develop a comprehensive plan which would force the management to think of the realties to be faced in the business world (French, Kelly and Harrison, 2004). This should have well-defined format and parts. This conforms to Valdehueza’s (2009) definition that goals are a desired future state that the organization focuses on while plans are the blueprint that specifies the resource allocation, schedules and actions necessary to achieve the intended goals. Organizational goals, mission and objectives symbolize legitimacy to the external stakeholders while plans motivate the employees to perform action, thereby reducing uncertainty. 3.0 Benefits of Planning The benefits of planning range from economic benefits to adaptive thinking and can also include integration and control (Appiah-Adu, Morgan and Katsikeas, 1996). Planning benefits could either be utilitarian or psychological in nature. The Utilitarian benefits are the planning capabilities that manifest in enhanced organizational processes, acquisition of knowledge-based skills and coordination of strategic activities (Appiah-Adu, Morgan and Katsikeas, 1996). Psychological benefits demonstrate the values and perceptions of management. The psychological benefits include enhanced morale, motivation and commitment by the employees to the strategic plans drawn up by the management. This is specially perceived in change management when the management the planned the change process before the actual change takes place. Mergers and acquisitions can have a demoralizing effect on employees but with the right planning the objectives of change can me met and resistance overcome. Wolverhampton & Dudley Breweries plc (W&DB) UK took over two breweries within twelve months which resulted in considerable downsizing and closing down of some units (Pollitt, 2006). This can lead to demoralizing of staff resulting in reduced productivity. However, W&DB had strategically planned the change process and could overcome the resistance within a short period of time. The goal of the organization was to avoid imbalance, which is generally expected in any change, with the right organizational strategy. Through transparency, effective communication, removal of management trappings and employee involvement they could achieve the desired goal. They could achieve this because the change process was planned much before the actual change took place. 4.0 Long-Term Planning As uncertainty manifest in the modern business enterprise formal strategic planning took shape in organizations. The purpose of strategic planning is to rationalize and articulate the process of integrated decision making among firms. Planning can be strategic or operational where strategic planning pertains to long-term planning and operational to short-term planning. A study of ninety-seven small firms in central Iowa, in the USA was conducted to evaluate the planning/performance relationship (Shrader et al cited in French, Kelly and Harrison, 2004). The study found that planning and performance are inter-related but small firms seldom undertook strategic planning and there was a possibility they were missing out on potential benefits. Sophistication in the planning process and quality of planning can help achieve organizational goals and not the time spent in the planning process (French, Kelly and Harrison, 2004). Larger firms engage in long-term strategic planning while smaller firms focus on operational planning. The authors also cite that mission and vision are the key variables in strategic planning and there is no empirical evidence to support the claim that it positively impacts firm performance. 5.0 Alternative Models of Planning People relate the future with goals but alternative modes of planning such as domain and direction planning do not involve goal-setting (McCaskey, 1976). Planning can differ across organizational culture, size and situation. When people create an image of the future and then plan, it implies setting specific, objective and measurable goals. McCaskey observes that such planning is workable after the problem has been identified and defined. Moreover, goals are made to rationalize the decision or plans that have been made in advance. Such rationalization and justification for actions may blind the management to the unforeseen circumstances such as the external and the internal environment. Contingency theorists recognize several different modes of planning and the planning process should be aligned with the given situation (McCaskey, 1976). Planning for a well-defined problem in a stable environment is likely to be a rational process with specific objectives and measurable goals. With an ill-defined problem in a fuzzy environment, the planning process would depend on intuition. Such alternative planning is based on symbols and is intuitive in nature. Since these are based on emotions, such planning can evoke strong commitments. Moreover such planning is not rigid and constrained. They are subject to revision as the actions evolve and the environment changes. Van Woerkum, Aarts and De Grip (2007) also agree that planning related to goal-setting and efforts directed at meeting these goals, has been contested. This is because planning as a means to achieve the end (goal) overrates predictability as the business environment is ever-changing. This means-end planning implies that objectives are measurable and that the results of actions can be assessed precisely. Thus, if planning is carefully implemented, the results can be achieved. However, the external environment is continuously changing, and more importantly, emotions, values and norms influence human interactions within the organization. Planning can only prevent the application of wrong ideas (Van Woerkum, Aarts and De Grip, 2007). Thus, plans or written guidelines are insufficient which necessitates alternative planning models. Van Woerkum et al., used creativity as the source new and competitive ideas which help an organization to position itself in the dynamic business environment. To meet the challenges of tomorrow, an organization must be capable of enhancing the existing procedures while maintaining reduced costs and simultaneously creating new ideas for products and services. Companies must be able to continuously innovate to meet the challenges. This is considered a change and this change needs to be planned. Planning hence needs creativity to achieve the goals. Planning if based on intrinsic motivation would tend to be creative and innovative. As models of planning have changed, it has led to new creativity and enhanced organizational capacity for innovation. 6.0 Conclusion and Recommendation The literature indicates that planning is the primary management function which helps in achieving organizational objectives and goals. Studies have also described the benefits of planning but as the business environment became complex and dynamic, plans had to be revised. Organizations thus entered the era of strategic planning which pertains to long-term plans. This has also been differentiated by researchers as operational (short-term) and strategic plans (long-term). Reasons why smaller firms tend to work on operational plans is their goals focus on short-term profits. They may be constrained for resources to invest in long-term plans. Larger firms need to have strategic plans to sustain competition in the dynamic business environment. Planning however is essential because it provides a guideline to action. Planning and performance have been found to be interrelated and panning enhances performance. Planning can generate utilitarian or psychological benefits, both of which are essential for an organization. However, several authors suggest alternate models of planning because if planning is based on defined goals, the management may overlook or may not be prepared for sudden changes that may occur during the implementation stage. Planning related to defined goals can be constrained and limited, thereby stifling creativity. At the same time, there is no evidence to support that claim strategic planning with defined mission and vision can lead to success. A review of different perceptions of planning as instrumental in achieving organizational goals and objectives leads one to re-think over the issue. Planning should never be done alone but should involve the actors that would be implementing the plans. This infuses new thoughts, perceptions, creativity and innovation. It also makes every individual accountable for the success of the plans. This also serves to empower and motivate the participants. Goals are a desired future state on which plans are based. Here flexibility is required, adaptability is essential because the external and internal environment may change which can impact the desired goals. Moreover, goals are set based on individual hopes and image. If creativity and innovation is infused in planning, the outcome may be far superior to the set goals. Therefore alternative modes of imaging the future may generate more appropriate and powerful plans. However, planning would differ across the nature and size of the organization. References Appiah-Adu, K., Morgan, RE. and Katsikeas, CS. (1996) Diagnosing organizational planning benefits: the efficacy of planning formalization. Journal of Strategic Marketing, 4 (4), 221-238 Dooris, MJ., Kelley, JM. and Trainer, JF. (2002) Strategic Planning in Higher Education. NEW DIRECTIONS FOR HIGER EDUCATION, 116, 5-11 French, SJ., Kelly, SJ. and Harrison, JL. (2004) The role of strategic planning in the performance of small, professional service firms - A research note. Journal of Management Development, 23 (8), 765-766 McCaskey, MB. (1977) Goals and Direction in Personal Planning. Academy of Management Review, July 1997, 454-463 Pollitt, D. (2006) Raise a glass to HR at Wolverhampton and Dudley Breweries. Human Resource Management International Digest, 14 (1), 9-12, Valdehueza, GD. (2009) Organizational Planning & Goal Setting. Available from http://www.slideshare.net/gar_dev/organizational-planning-goal-setting [Accessed April 15, 2013] Van Woerkum, CMJ., Aarts, MNC. and De Grip, K. (2007) Creativity, planning and organizational change. Journal of Organizational Change Management, 20 (6), 847-865 Read More