Planning

Planning Definition, Characteristics of Planning and Elements of planning:

Planning is a major and primary function of management. No organisation can operate properly without planning.

Planning is a preparatory step for action. It means systematized pre-thinking for determining a course of action to achieve some desired result.

Therefore, planning may be defined as follows:

Planning is the process by which the managers of an organisation set objectives, make an overall assessment of the future, and chart the courses of action with a view to achieving the organisational goals.

Some important definitions of planning, given by the eminent authors are stated below:

According to Koontz and O’Donnell, planning is “an intellectual process, the conscious determination of courses of action, the basing of decisions on purpose, facts and considered estimates.”

George Terry writes:

“By means of planning management members try to look ahead, anticipate eventualities, prepare for contingencies, map out activities and provide an orderly sequence for achieving the objective.”

Henry Fayol views:

“The plan of action is, at one and the same time, the result envisaged, the line of action to be followed, the stages to go through, and methods to use.”

Characteristics of Planning:

Planning is concerned with the establishment of objectives of an enterprise and finding out the way of realisation of those objectives. However, without setting the objectives there is nothing to organise, direct or control. Therefore, every organisation is required to specify what it wants to achieve. Planning is basically related with this aspect.

1. Intellectual Process:

Planning is an intellectual and rational process. Planning is a mental exercise involving imagination, foresight and sound judgement. It requires a mental disposition of thinking before’ acting in the light of facts rather than guess. The quality of planning depends upon the abilities of the managers who are required to collect all relevant facts, analyse and interpret them in a correct way.

How far into the future a manager can see and with how much clarity he will depend on his intellectual calibre, are chalked out through planning process. In thinking of objectives, alternative courses of action and, above all, in making decision for choosing certain alternatives, the planner goes through an intellectual process.

2. Goal-orientation:

All planning is linked up with certain goals and objectives. It follows, therefore, that every plan must contribute in some positive way to the accomplishment of group objectives. Planning has no meaning without being related to goals and objectives. It must bridge the gap between where we are and where we want to go at the minimum cost.

3. Primary Function:

Planning is said to be the most basic and primary function of management. It occupies first place and precedes all other functions of management which are designed to attain the goals set under planning. This is so because the manager decides upon the policies, procedures, programmes, projects, etc. before proceeding with the work. The other functions of management—organising, direction, co-ordination and control—can be performed only after the manager has formulated the necessary planning.

4. Pervasiveness:

Planning pervades all managerial activities. It is the job of all managers in all types of organisation. It is undertaken at all segments and levels of the organisation—from the general manager to the foreman. Whatever be the nature of activity, management starts with planning. The character and breadth of planning will, of course, vary from one job to another—depending on the level of management.

5. Uniformity:

There may be separate plans prepared in different levels in the organisation, but all the sub-plans must be united with the general plan so as to make up a comprehensive plan for operation at a time. So, uniformity must be there in all levels of planning to match the general plan.

6. Continuity:

To keep the enterprise as a going concern without any break, it is essential that planning must be a continuous process. So, the first plan must follow the second plan and the second plan the third and so on in never-ending series in quick succession.

7. Flexibility:

Plans should not be made rigid. It should be as flexible as possible to accommodate all possible changes in the enterprise with a view to coping with the changing conditions in the market. In fact, planning is a dynamic activity.

8. Simplicity:

The language of the work schedule or programme in the planning should be simple so that each and every part of it may easily be understood by the employees at different levels, specially at the lower level.

9. Precision:

Precision is the soul of planning. This gives the planning exact, definite, and accurate meaning in its scope and content. Any mistake or error in planning is sure to upset other functions of management and, thus, precision is of utmost importance in every kind of planning.

10. Feasibility:

Planning is neither poetry nor philosophy. It is based on facts and experience, and thereby realistic in nature. It represents a programme which is possible to execute with more or less existing resources.

11. Choice among Alternative Courses:

Planning involves selection of suitable course of action from several alternatives. If there is only one way of doing something there is no need of planning. Planning has to find out several alternatives, estimate the feasibility and profitability of the different alternatives, and to choose the best one out of them.

12. Efficiency:

Planning is directed towards efficiency. A plan is a course of action that shows promise of optimizing return at the minimum expense of inputs. In planning, the manager evaluates the alternatives on the basis of efficiency. A good plan should not only attain optimum relationship between output and input but should also bring the greatest satisfaction to those who are responsible for its implementation.

13. Inter-dependence:

The different departments may formulate different plans and programmes for their integration in the overall planning. But sectional plans cannot but be inter-dependent. For example, production planning depends upon sales planning—and vice versa.

Again, planning for purchase of raw materials, employment of labour, etc. cannot be an isolated act apart from sales planning and production planning. Planning is a structured process and different plans constitute a hierarchy. Different plans are inter-dependent and inter-related. Every lower-level plan serves as a means towards the end of higher plans.

14. Forecasting:

Above all, no planning can proceed without forecasting—which means assessing the future and making provision for it. Planning is the synthesis of various forecasts—short-term or long-term, special or otherwise. They all merge into a single programme and act as a guide for the whole concern.

Elements of Planning:

Planning as a managerial process consists of the following elements or components:

1. Objectives:

The important task of planning is to determine the objectives of the enterprise. Objectives are the goals towards which all managerial activities are aimed at. All planning work must spell out in clear terms the objectives to be realised from the proposed business activities. When planning action is taken, these objectives are made more concrete and meaningful. For example, if the organisational objective is profit earning, planning activity will specify how much profit is to be earned looking into all facilitating and constraining factors.

2. Forecasting:

It is the analysis and interpretation of future in relation to the activities and working of an enterprise. Business forecasting refers to analysing the statistical data and other economic, political and market information for the purpose of reducing the risks involved in making business decisions and long range plans. Forecasting provides a logical basis for anticipating the shape of the future business transactions and their requirements as to man and material.

3. Policies:

Planning also requires laying down of policies for the easy realisation of the -objectives of business. Policies are statements or principles that guide and direct different managers at various levels in making decisions. Policies provide the necessary basis for executive operation. They set forth overall boundaries within which the decision-makers are expected to operate while making decisions. Policies act as guidelines for taking administrative decisions.

In a big enterprise, various policies are formulated for guiding and directing the subordinates in different areas of management. They may be production policy, sales policy, financial policy, personnel policy etc. But these different policies are co-ordinated and integrated in such a way that they ensure easy realisation of the ultimate objectives of business. Policies should be consistent and must not be changed frequently.

4. Procedures:

The manner in which each work has to be done is indicated by the procedures laid down. Procedures outline a series of tasks for a specified course of action. There may be some confusion between policies and procedures. Policies provide guidelines to thinking and action, but procedures are definite and specific steps to thinking and action. For example, the policy may be the recruitment of personnel from all parts of the country; but procedures may be to advertise and invite applications, to take interviews and offer appointment to the selected personnel.

Thus, procedures mean definite steps in a chronological sequence within the area chalked out by the policies. In other words, procedures are the methods by means of which policies are enforced. Different procedures are adopted in different areas of business activities. There may be production procedure, sales procedure, purchase procedure, personnel procedure etc.

Production procedure involves manufacturing and assembling of parts; sales procedure relates to advertising, offering quotations, securing and execution of orders; purchase procedure indicates inviting tenders, selecting quotations, placing orders, storing the goods in go-down and supplying them against requisition to different departments and personnel procedure is the recruitment, selection and placement of workers to different jobs.

5. Rules:

A rule specifies necessary course of action in a particular situation. It acts as a guide and is essentially in the nature of a decision made by the management authority. This decision signifies that a definite action must be taken in respect of a specific situation. The rules prescribe a definite and rigid course of action to be followed in different business activities without any scope for deviation or discretion.

Any deviation of rule entails penalty. Rule is related to parts of a procedure. Thus, a rule may be incorporated in respect of purchase procedure that all purchases must be made after inviting tenders. Similarly, in respect of sales procedure, rule may be enforced that all orders should be confirmed the very next day.

6. Programmes:

Programmes are precise plans of action followed in proper sequence in accordance with the objectives, policies and procedures. Programmes, thus, lead to a concrete course of inter-related actions for the accomplishment of a purpose. Thus, a company may have a programme for the establishment of schools, colleges and hospitals near about its premises along with its expanding business activities.

Programmes must be closely integrated with the objectives. Programming involves dividing into steps the activities necessary to achieve the objectives, determining the sequence between different steps, fixing up performance responsibility for each step, determining the requirements of resources, time, finance etc. and assigning definite duties to each part.

7. Budgets:

Budget means an estimate of men, money, materials and equipment in numerical terms required for implementation of plans and programmes. Thus, planning and budgeting are inter-linked. Budget indicates the size of the programme and involves income and outgo, input and output. It also serves as a very important control device by measuring the performance in relation to the set goals. There may be several departmental budgets which are again integrated into the master budget.

8. Projects:

A project is a single-use plan which is a part of a general programme. It is part of the job that needs to be done in connection with the general programme. So a single step in a programme is set up as a project. Generally, in planning a project, a special task force is also envisaged.

It is a scheme for investing resources which can be analysed and appraised reasonably and independently. A project involves basically the investment of funds, the benefits from which can be accrued in future. Examples of such investment may be outlays on land, building, machinery, research and development, etc. depending upon the situation.

9. Strategies:

Strategies are the devices formulated and adopted from the competitive standpoint as well as from the point of view of the employees, customers, suppliers and government. Strategies thus may be internal and external. Whether internal or external, the success of the plans demands that it should be strategy-oriented.

The best strategy of planning from the competitive standpoint is to be fully informed somehow about the planning ‘secrets’ of the competitors and to prepare its own plan accordingly. Strategies act as reserve forces to overcome resistances and reactions according to circumstances. They are applied as and when required.