Concepts of Management

Professor Dr Parvaiz Talib

Handouts
Unit 2

Planning
Planning is the process of establishing objectives and courses of action, prior to taking action.
Plans are methods formulated before hand for achieving desired results. It is map for the future.
It’s concerned with both ends (what is to be done) and means (how it is to be done). Planning is
often called the “first among equals” of the four management functions (planning, organizing,
leading, and controlling), because it establishes the goals which are (or should be) the basis of all
other functions.

Goals are desired outcomes. They provide direction for all management decisions. Plans are
documents that outline how goals are going to be met. They describe resource allocations,
schedules, and other necessary actions to accomplish goals

Types of Goals: all organizations have hierarchy of goals (called strategic intent as well). For
example, Vision, mission, objective, goals, targets etc. Further, all organizations have multiple
objectives. For example, earning profits vs. be environmentally friendly.
Vision is the world view through which the strategist peeps into the future. It is a process of
looking ahead to evolve a foresight. It is relatively permanent.
The organization's environment supplies the resources that sustain the organization. In exchange
the organization supplies goods and services to society. Every organization exists to accomplish
something in the larger environment. This link is provided by its mission statement.
Deciding about Mission and Purpose is the highest level of planning activity. It involves
answering the following questions:
• What is our business?
• what will it be?
• What should it be?
Mission lies outside the business. It lies in the society since a business enterprise is an organ of
society. Mission specifies need of the society that it seeks to fulfill. It defines the role that the
organization intends to play in the society. Mission once formulated should serve the
organization for many years. However, as time passes, the organization expands, the
environment changes. The mission, then, have to be renewed.
In developing the mission statement, the management must take into account three elements: its
history, its distinctive competencies and environment
Objectives are open ended attributes that denote the future states or outcomes.
Goals are close ended attributes which are precise and expressed in specific terms. They are
measurable and verifiable.
Canara Bank: To be the most competitive and progressive institution in our country.
Objectives: growth, innovativeness and high profits.
Growth in terms of customers, reserves, average business per employee, deposits per branch
Innovativeness: new schemes.
High profits:

Handout Note Dr Parvaiz Talib Page 1 of 9

Example of New Management Complex. (Vision, Taleem and Tarbiyat, Mission, Professionalize
Management Practices Objective; To be among top 5 UMDs, Improve the physical infrastructure,
Goal: have building ready by 2014-15, Target 2.5 Crore till December 2012

How to Set Motivational Goals

Goals are only useful to the extent that employees are motivated to achieve them. In general,
setting specific goals with subordinates, rather than setting no goals or telling them to “do their
best,” can substantially improve performance. The following guidelines may be followed.
Assign Measurable Goals Wherever possible, goals should be stated in quantitative terms and
include target dates or deadlines for accomplishment.
Assign Challenging But Doable Goals. Goals should be challenging but not so difficult that they
appear impossible or unrealistic. A goal is probably too difficult if it calls for a large
improvement in performance when conditions are worsening, or if the targeted level of
performance is well above that of people in comparable positions.
Encourage Participation Where Possible Employees who participate in setting their goals tend to
perceive themselves as having had more impact on the setting of those goals than do employees
who are simply assigned goals. Then, participatively set goals tend to be higher—more difficult
—than the goals the supervisor would normally have assigned. Third, even when goals set
participatively are more difficult than the assigned ones, they are not perceived as such by the
subordinates. Fourth, when the participatively set goals are higher and more difficult than the
assigned goals, then the participatively set goals usually lead to higher performance. Finally,
goals unilaterally assigned by managers can trigger employee resistance, regardless of the goal’s
reasonableness. Insofar as participation creates a sense of ownership in the goals, it can reduce
resistance.

APPROACHES TO SETTING GOALS

Goals can be set either through a process of traditional goals setting or by using management by
objectives.

In traditional goals, goals set by top managers, then they flow down through the organization
and become subgoals for each organizational area. Turning broad strategic goals into
departmental, term, and individual goals can be a difficult, challenging and, at times, a frustrating
process.

Organization’s goals are generally set in broad terms- such as achieving “sufficient” profits or
increasing “market leadership” – these ambiguous goals have to be made more specific as they
flow down through the organization. What often happens is that clarity is lost as the goals make
their way down from the top of the organization to lower levels.

Instead of using traditional goal setting, many organizations use management by objectives
(MBO), a process of setting mutually agreed upon goals and using those MBO programs have
four elements: goals specificity, participative decision making, an explicit time period, and
performance feedback. Instead of using goals to make sure employees are doing what they’re

Handout Note Dr Parvaiz Talib Page 2 of 9

supposed to be doing, MBO uses goals to motivate employees as well as. The appeal is that MBO
focuses on employees working to accomplish goals by they’ve had a hand in setting.

Management by objectives (MBO) is a technique used by many firms to assist in the process of
setting organization wide objectives and goals for subsidiary units and their employees. It is
defined as a technique in which supervisor and subordinate jointly set goals for the latter and
periodically assess progress toward those goals. A manager may engage in a modest MBO
program by setting goals with his or her subordinates and periodically providing feedback.
However, the term MBO almost always refers to a comprehensive organization wide program for
setting goals, one usually reserved for managerial and professional employees. As you will see,
one advantage of this technique (in terms of the goal-setting studies just reviewed) is that, if
implemented properly, it can lead to specific, measurable, and participatively set challenging
objectives.

Any business enterprise must build a true team and channelize individual efforts into a common
effort. All must contribute towards a common goal. Employees efforts must move in the same
direction, and their contribution must fit together to produce a whole - without gaps, without
friction, without unnecessary duplication of effort. Thus each must be directed towards the
objectives of the whole business. This suggests that managers must know and understand what
the business goals demand of him in terms of performance.
That objectives of the enterprise should be the basis of all individual efforts is stating the obvious.
However, in the business enterprise managers are not automatically directed towards a common
goal. On the contrary, business by its very nature, contains three powerful forces of misdirection;
in the specialized work of most managers, in the hierarchical structure of management and in the
differences in the vision and work and the resultant insulation of various levels of management.
(The story of three workers working for the same goals, but having different ways of looking at
their work)
Thus, an effective management must direct the vision and efforts of all managers toward a
common goal. It must ensure that that the individual manager understands what results are
expected of him. It must ensure that superior understands what to expect of each of his
subordinate managers. It must motivate each manager to maximum efforts in the right direction.
And while encouraging high standards of workmanship, it must make them the means rather than
ends in themselves.

The MBO process generally consists of five steps:

1. Set organization’s goals. Top management sets strategic goals for the company.
2. Set departments’ goals. Department heads and their superiors jointly set supporting goals for
their departments.
3. Discuss departments’ goals. Department heads present departments’ goals and ask all
subordinates to develop their own individual goals.
4. Set individual goals. Goals are set for each subordinate, and a timetable is assigned for
accomplishing those goals.
5. Feedback. The supervisor and subordinate meet periodically to review the sub-ordinate's
performance and to monitor and analyze progress toward his or her goals

Managers can do several things to make an MBO program more successful. They can state the
goals in measurable terms, be specific, and make sure each person’s goals are challenging but

Handout Note Dr Parvaiz Talib Page 3 of 9

attainable. Most experts also agree that goals should be reviewed and updated periodically, and
that the goals should be flexible enough to be changed if conditions warrant
Again, however, an effective formal MBO program requires more than just setting goals.
Integrating the goals of the individual, of his or her unit, and of the company as a whole is
absolutely essential. As Peter Drucker, an early MBO proponent says: . . . the goals of each
manager’s job must be defined by the contribution he or she has to make to the success of the
larger unit of which they are part. The job objectives of district sales managers should be defined
by the contribution they and their district sales forces have to make to the sales department. The
objectives of the general manager of a decentralized division should be defined by the
contribution his or her division has to make to the objectives of the parent company.

Types of Plans: There are many types of plans as well.

Plans with Differing Time Horizons; Plans also differ in time span they cover. Top management
usually engages in long term (five- to ten-year) strategic planning. A strategic plan specifies the
business of businesses and the major steps it intends take to get there. Middle managers typically
focus on developing tactical plans (of up to five years’ duration). Tactical plans (also some-times
called functional plans) show how top management’s plans are to be carried out at the
departmental / functional level, for instance by the managers responsible for sales, finance, and
manufacturing. First-line managers then focus on shorter-term, operational, or detailed day-to-
day, planning. These might show, for instance, exactly which workers are to be assigned to which
machines or exactly how many units will be produced on a given day.

Plans of Differing Frequency; Some plans are programs established to lay out in an orderly
fashion all the steps in a major one-time project, each in its proper sequence. These are single use
plans. Standing plans are plans made for repeated use. They are designed for achieving enduring
set of goals. Policies, procedures, and rules are examples of standing plans. Policies usually set
broad guidelines for the enterprise. Procedures, as the name implies, specify how to proceed if
some specific situation arises. A rule is a highly specific guide to action. Then there are
contingency plans; i.e. ‘what if’ plans, e.g. y2k plans that were designed to take care of a
contingency if the systems would have failed.
Plans of Differing Formats; Plans differ in format, or the way they are expressed. Perhaps the
most familiar plans are descriptive plans; like the career plan. They state in words what is to be
achieved and how. Plans stated in financial terms are called budgets. Graphic plans show in
charts what is to be achieved and when.

What planning accomplishes: Implemented properly, planning provides several advantages.

• Planning Provides Direction; Planning provides a sense of purpose for the enterprise, thus
providing a rallying point to all managers and employees.
• Planning Reduces Piecemeal Decision Making; A plan provides a unifying framework against
which decisions can be assessed. Planning channels effort toward desired results, and by
providing a sequence of efforts, it minimizes unproductive behavior.
• Planning Reveals Future Opportunities and Threats; Planning can help identify potential
opportunities and threats and at least minimize long-term risks. It reduces the impact of
change.

Handout Note Dr Parvaiz Talib Page 4 of 9

• Planning Facilitates Control; Control means ensuring that activities conform to plans; it is a
three-step process in which standards are set, performance is measured against these standards,
and deviations are identified and corrected. Planning is the first step in this cycle—specifying
what is to be achieved.

Criticism of Planning
Critics have challenged some of the basic assumption of planning:

1. Planning may create rigidity. Formals plans can lock an organization into specific goals to be
achieved within specific time frames. Staying “on course” when the environment is changing
can be a recipe for disaster.

2. Plans can’t be developed for a dynamic environment. Managing under uncertain conditions
requires flexibility, and that may mean not being tied to formal plans.

3. Formal plans replace intuition and creativity. Organizations often succeed because of
someone’s innovation and routine planning efforts may impede such a vision.

4 Planning focuses managers’ attention on today’s competition, not on tomorrow’s

survival. Focus on how to capitalize on existing business opportunities within an industry but
may not allow managers to consider creating or reinventing an industry.

5 Formal Planning reinforces success, which may lead to failure. Success breeds success.
Success may, in fact, breed failure in an uncertain environment. It’s difficult to change or
discard previously successful plans – to leave the comfort of what works for the anxiety of the
unknown. Successful plans may provide a false sense of security, generating more confidence
in the formal plans than is warranted.

In view of the above, Mintzberg’s proposed another view of strategy making

Strategy Making - Planning Model vs. Crafting Model
In the planning model strategy making is visualized as a formal, structured process. It is viewed
as controlled, conscious process having distinct steps. Strategies that are formulated as result can
then be implemented through detailed attention to objectives, budgets, programmes, and
operating plans of various kinds. The term strategy when used in this manner is equivalent to - a
direction, a guide or course of action into future, a path to get from here to there. The image that
emerges of the person who plans the strategies in this manner is that of someone who thinks
orderly, analyses competitors and markets systematically, finds out company’s strengths and
weaknesses, exercises rational control over the process and then formulates explicit, full blown
strategies. First we think then we act. We formulate then we implement. Strategy making, thus, is
viewed as a deliberate process.
However, the other view suggests that strategy evolves. It is actually crafted by the strategist.
Craft, as we know, is different from mechanization. Craft evokes traditional skill, dedication,
perfection through mastery of detail. What springs from the mind is not so much thinking and
reason as involvement, a feeling of intimacy and harmony with the material at hand, developed
through long experience and commitment. Formulation and implementation merge into a fluid
process of learning, through which creative strategies evolve. The strategy, when visualized in

Handout Note Dr Parvaiz Talib Page 5 of 9

this manner, becomes a series of action which converge and patterns emerge. These patterns
again converge and strategy evolves in the process. Like a potter working on the wheel, in this
conception of strategy, one idea leads to another, until a new pattern forms. Action drives
thinking - strategy emerges as a result. Strategy, therefore, is a pattern, that is, consistency in
Behaviour over time.
Which conception is true? Both appear valid. Organization develop plan for their future and they
also evolve patterns out of their past. We call one the intended strategy and the other the realized
strategy. Intentions that are fully realized can be called deliberate strategies. Those that can not
be realized at all can be called unrealized strategies. The third case is that of emergent strategies -
where a pattern realized was not expressly intended. Actions were taken, one by one, which
converged over time to some sort of consistency or pattern.
Few strategies, thus are purely deliberate, just as few are purely emergent. One means no
learning, the other means no control. All real world strategies need to exercise some control while
fostering learning. Strategies, in other words, have to form as well as be formulated. For instance,
the broad outlines are deliberate, while the details are allowed to emerge en route. Thus, emergent
strategies are not necessarily bad and deliberate strategies good; effective strategies mix these in
ways that reflect the conditions at hand, notably the ability to predict as well as the need to react
to unexpected events.

Handout Note Dr Parvaiz Talib Page 6 of 9

 Decision Making

Management is always a decision making process. Managers are evaluated and rewarded on the
basis of the importance, number and results of their decisions.
Decision Making is identifying and selecting a course of action to deal with a problem or take
advantage of an opportunity. Most decisions are prompted by problems. A problem is a
discrepancy between a desirable and an actual situation. A problem may also be an opportunity in
disguise. They are often intertwined. Still a distinction may be made between the two. A problem
endangers the organization's ability to reach its objectives and opportunity offers a chance to
exceed objectives

Types of Managerial Decisions

Any decision a manager makes can be classified as either a programmed decision
or a non-programmed decision. The two differ in the extent to which the decision
must be handled as a completely new situation

Programmed and non programmed decision

PDs involve routine matters, handled by written or unwritten policies, procedures, and rules. Such
decisions should be made without expanding unnecessary time and efforts on them.
NP decisions involve unstructured, unusual or exceptional situations. These decisions rely heavily
on judgment and focus on the firm’s long-term strategic development and survival. They are
often irreversible. Thus, the need of taking an NP must be properly identified.

Decision Problem Procedures Examples

Programmed Repetitive, Rules, Policies, Business: Processing
predictable, Standard pay roll ,
computatio Procedures, University: Processing
nal computerized Admission applications
solutions
Non Novel, use of judgment,Business: introducing a
-Programmed unique, creativity & new product
Complex, intuition University: Starting
New Dental College
Typical Decisions Managers Face/take in different Functional Areas

Planning What are the organization’s long-term objectives?

What strategies will best achieve these objectives?
What should the organization’s short-term objectives be?
How difficult should individual goals be?
Organizing How many subordinates should I have report directly to me?
How much centralization should there be in the organization?
How should jobs be designed?
When should the organization implement a different structure?
Leading How do I handle employees who appear to be low in motivation?
What is the most effective leadership style in a given situation?
How will a specific change affect worker productivity?

Handout Note Dr Parvaiz Talib Page 7 of 9

When is the right time to stimulate conflict?
Controlling What activities in the organization need to be controlled?
How should these activities be controlled?
When is a performance deviation significant?
What type of management information system should the organization
have?

The process of Decision Making

Decisions are means rather than ends. They are processes by which a manager seeks to achieve
some desired state.
In most decision situations managers go through a number of stages that help them think through
the problem and develop alternative strategies. The stages need not be rigidly applied ; their value
lies in their ability to force the decision maker to structure the problem in a meaningful ways.

Problem identification
Four formal and intuitive situations usually act as warning signals:
• performance deviates from the past experience
• performance deviates from a plan
• other people’s dissatisfaction & criticism
• performance of competitors challenges an organization

Difficulties in problem identification

• Perceptual problem; we protect ourselves from unpleasant realities
• Defining problem by solutions; jumping to conclusions
• Identifying symptoms as problem

Types of problem; opportunity, crises or routine. crisis and routine problems must be attended to
while opportunities must usually be found

Developing alternatives
The existence of some choice is a prerequisite to effective decision making. In fact, when a
manager has no choice, there really isn’t any decision to make—except perhaps to “take it or
leave it.” Sometimes good alternatives can be readily developed. But as often as not, developing
good alternatives is no easy matter; it takes a great deal of creativity and judgment. It also
involves bringing assumptions at the conscious level.
The search process investigates relevant internal and external environments within the existing
constraints of time and cost. There is linkage between number of alternatives considered and the
speed with which decision can be reached.

Evaluating alternatives
Three key question are to be asked
• Is the alternative feasible?
• Is the alternative a feasible solution?
• What are the possible consequences on the rest of the organization?

Handout Note Dr Parvaiz Talib Page 8 of 9

Implementing the decision,
It involves more than giving orders. Resources must be acquired and allocated. Assign
responsibility to specific tasks. Specify procedure for measuring progress
The model described above is the rational decision making model. “Rational” decision making
assumes ideal conditions such as accurate definition of the problem and complete knowledge
about all relevant alternatives and their values.
Challenges to Rational Model

Bounded Rationality, Decision makers copes with inadequate info., a lack of time or money to
compile more complete info., inability to remember large amount of info. and limits to their own
intelligence. Thus, they settle for an alternative that adequately serves their purpose. They
satisfies rather than maximize
Heuristics, People rely on thumb rules to simplify decision making. Three heuristics show up
repeatedly in human decision making - availability, representativeness, anchoring

Dated: 3rd November, 2012

Edited By- Mohammad Abdullah
email: [email protected]

Handout Note Dr Parvaiz Talib Page 9 of 9