Chapter 7

Managerial Planning and Goal Setting

 Planning is Fundamental

• All of the other management functions

stem from planning
• How do you plan for an undefined
future?
• No plan is perfect
– Without plans and goals,
organizations flounder

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 Goals, Plans, Planning

A goal is a desired future state

that the organization attempts to PLANNING
realize incorporates
both ideas &
means
determining
the goals and
A plan is a blueprint for goal defining the
achievement and specifies the means for
necessary resource allocations, achieving
schedules, tasks, and other actions them.
3
 Spin vs. Truth

• Spin – Make other people believe what you

want them to believe

• Truth – where your money goes; where

company resources are allocated

• Follow the money – see the company’s

accounting books if what they say (mission,
goals, strategic/tactical plans) is a spin or truth.
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 Goal Setting in Organizations

• Organizational Mission – the organization’s

reason for existence

• Strategic goals – official goals, broad statements

describing the organization’s future

• Strategic plans – define the action steps the

company will take

• Goals should be aligned

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 Strategic Goals, Plan, Planning
• Strategic goals - broad statements describing
where the organization wants to be in the future.
official goals; whole organization

• Strategic plans define the action steps by which

the company intends to attain strategic goals. A
strategic plan is a blueprint that defines
organizational activities and resource allocations.

• Strategic planning tends to be long-term.

7.2 The Organizational Planning Process
 Tactical Goals, Plans
• Tactical goals are the results that major divisions
and departments within the organization intend
to achieve; middle management; describe what
major subunits must do in order for the
organization to achieve strategic goals.

• Tactical plans define what major departments

and organizational subunits will do to implement
the organization’s strategic plan. They tend to be
for a shorter time period.
 Operational Goals, Plans

• Operational goals are the specific results

expected from departments, work groups, and
individuals.

• Operational plans are developed at the lower

levels of the organization to specify action plans
toward achieving operational goals and to
support tactical plans.
7.1 Levels of Goals and Plans
Why Aligning Goals?

• Effectively designed organizational goals are aligned

into a hierarchy in which the achievement of goals at
lower levels permits the attainment of higher-level
goals.
• Operational goals lead to the achievement of tactical
goals, which lead to the attainment of strategic goals.
• Organizational performance is an outcome of how
well these interdependent elements are aligned, so
that individuals, teams, departments, and so forth
are working in concert to attain specific goals that
ultimately help the organization fulfill its mission.
 Aligning Goals with Strategy Map
Strategy maps are visual representations of
• The key drivers of an organization’s success and
• Show how specific goals and plans in each area
are linked.
• They provide a powerful way for managers to see
the cause-and-effect relationships among goals
and plans.
• Help align operational goals with tactical goals;
• Help align tactical goals with strategic goals.
7.4 Example of A Strategy Map
 Operational Planning

• Use operational goals to direct employees and

resources
• Guide efficient and effective performance to
achieve specific outcomes
• Includes planning approaches such as:
– Management by Objectives (MBO)
– Single-Use Plans
– Standing Plans
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 Mission, Goal, Strategic
Planning, Strategy [Lee, 2013]
• Strategy – creating opportunities to gain
competitive advantages
• Competitive Advantage – your strength over
competitors
• Mission – the organization’s reason for existence
• Goal – the organization’s future
• Strategic Planning – process of achieving the
goal by developing a strategy
7.5 Criteria for Effective Goal Setting

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 7.6 Model of the MBO Process
• Defined in 1954 by Peter Drucker
• Method for defining and monitoring goals
7.7 MBO Benefits
Single-Use Plans vs. Standing Plans

Single-Use Plans
– Achieve one-time goal
– Program/Project: building a headquarters,
converting paper files to digital, renovating
the office, setting up a new company intranet

Standing Plans
– Ongoing plans
– Policies, rules, procedures
Benefits and Limitations of Planning

• Goals and plans provide a source of motivation and

commitment
• Goals and plans guide resource allocation (budgeting)
• Goals and plans are a guide to action (specific targets)
• Goals and plans set a standard of performance
• Goals and plans can create a false sense of certainty
• Goals and plans may cause rigidity in a turbulent
environment
• Goals and plans can get in the way of intuition and
creativity
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 Planning for a Turbulent
Environment

• Contingency Planning
– Planning for emergencies, setbacks, or unexpected
conditions
• Building Scenarios
– A forecasting technique to look at current trends and
visualize future possibilities
• Crisis Planning
– Sudden, devastating, unexpected events

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7.9 Essentials Stages of Crisis Planning
Innovative Approaches to Planning -
(1) Set Stretch Goals for Excellence

• Stretch goals are highly ambitious

• Clear, compelling, and imaginative
• Require innovation
• Goals must be seen as achievable
• Like Big Hairy Audacious Goals (BHAG) from 1996
article on building your vision
• As times move faster and become more
turbulent, these are important

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Innovative Approaches to Planning –
(2)Performance Dashboard for Planning
 Innovative Approaches to Planning –
(3) Deploy Intelligence Teams
•

• An intelligence team is a cross-functional group

of managers and employees, usually led by a
competitive intelligence professional
• Work together to gain a deep understanding of
specific business issue, with the aim of presenting
insights, possibilities and recommendations
about goals and plans related to that issue.
• Useful when the organization confronts a major
intelligence challenge.
 Concluding Remarks [Lee, 2013]
• Strategic Planning serves a good starting point:
– Strategic Planning such as MBO, etc. may not be perfect in the
real world.
– However, we have to get started with something.
• A manager must be flexible:
– Be willing to adapt the strategic plan to new environment: new
competition, new law, new customers, new technologies, etc.
– Strategic planning must not discourage employees’ creativity
and imagination.
– A manager must develop a contingency plan in conjunction with
the strategic plan; expect the unexpected outcome; be willing to
admit a possibility of failure.