Planning

Planning is deciding in advance what to do and how to do. It is one of the basic managerial functions. Before doing something, the manager must formulate an idea of how to work on a particular task. Thus, planning is closely connected with creativity and innovation. Planning is what managers at all levels do. It requires taking decisions since it involves making a choice from alternative courses of action. Planning, thus, involves setting objectives and developing appropriate courses of action to achieve these objectives.

NATURE AND CHARACTERISTICS OF PLANNING

The managerial function of planning has certain unique characteristics of its own, which distinguish it from the other managerial functions. It also shares a few characteristics with other managerial functions. All the characteristics together reflect the nature of the planning function. They are discussed as below:

 (i) Planning provides directions:

Planning provides a clear sense of direction to the activities of the organisation and to the job behaviour of managers and others. It strengthens their confidence in understanding where the organisation is heading and what for, how best to make the organisation move along the chosen path, and when should they take what measures to achieve the goals of the organisation.

 (ii) Planning reduces the risks of uncertainty:

Planning forces managers to shake off their inertia and insular outlook. It induces them to look beyond those noses, beyond today and tomorrow, and beyond immediate concerns. It encourages them to probe and cut through complexities and uncertainties of the environment and to gain control over the elements of change.

 (iii) Planning reduces overlapping and wasteful activities:

Planning serves as the basis of coordinating the activities and efforts of different divisions, departments and individuals. It helps in avoiding confusion and misunderstanding. Since planning ensures clarity in thought and action, work is carried on smoothly without interruptions. Useless and redundant activities are minimised or eliminated. It is easier to detect inefficiencies and take corrective measures to deal with them.

 (iv) Planning promotes innovative ideas:

Since planning is the first function of management, new ideas can take the shape of concrete plans. It is the most challenging activity for the management as it guides all future actions leading to growth and prosperity of the business.

 (v) Planning facilitates decision making:

Planning helps the manager to look into the future and make a choice from amongst various alternative courses of action. The manager has to evaluate each alternative and select the most viable proposition. Planning involves setting targets and predicting future conditions, thus helping in taking rational decisions.

 (vi) Planning establishes standards for controlling:

If there is any deviation from plan it can be corrected. Therefore,  planning is a prerequisite for controlling. If there were no goals and standards, then finding deviations which are a part of controlling would not be possible. The nature of corrective action required depends upon the extent of deviations from the standard. Therefore, planning provides the basis of control.

Features of Planning

These features throw light on its nature and scope.

 (i) Planning focuses on achieving objectives:

Organisations are set up with a general purpose in view. Specific goals are set out in the plans along with the activities to be undertaken to achieve the goals. Thus, planning is purposeful. Planning has no meaning unless it contributes to the achievement of predetermined organisational goals.

(ii) Planning is a primary function of management:

Planning precedes all other managerial functions. The process of management begins with planning. Planning provides the basis for the subsequent functions of organising, staffing, directing and controlling, though all the functions are highly interrelated and are equally important. Planning is the prime function from which the other functions get the necessary base.

 (iii) Planning is pervasive:

Planning is a pervasive function of managers at all levels of the managerial hierarchy, right from the chief executive down to the first line supervisor. However, the content and quality of the function differ from level to level. The time devoted to planning also differs. Typically, the chief executive and other top level managers concentrate on corporate-wide planning function. Their decisions on planning have far reaching effects on the organisation. Managers at middle and lower levels have more limited planning functions.

 (iv) Planning is continuous:

 Plans are prepared for a specific period of time, may be for a month, a quarter, or a year. At the end  of that period there is need for a new plan to be drawn on the basis of new requirements and future conditions. Hence, planning is a continuous process. Continuity of planning is related with the planning cycle. It means that a plan is framed, it is implemented, and is followed by another plan, and so on.

 (v) Planning is futuristic:

Planning is regarded as a forward looking function based on forecasting. Through forecasting, future events and conditions are anticipated and plans are drawn accordingly. Thus, for example, sales forecasting is the basis on which a business firm prepares its annual plan for production and sales.

 (vi) Planning involves decision making:

Planning essentially involves choice from among various alternatives and activities. If there is only one possible goal or a possible course of action, there is no need for planning because there is no choice. The need for planning arises only when alternatives are available. In actual practice, planning presupposes the existence of alternatives. Planning, thus, involves thorough examination and evaluation of each alternative and choosing the most appropriate one.

 (vii) Planning is a mental exercise:

Planning is an intellectual process , a mental exercise and requires certain conceptual skills. It requires abilities to think both in abstract and concrete terms, to visualise and look ahead into the future and to form ideas and images of future expectations and desires.

Limitations of Planning

The major limitations of planning are given below:

 (i) Planning leads to rigidity:

The plans produced through the planning process tend to introduce rigidity into the functioning of the organisation. Managers are likely to insist on strict compliance with pre-determined plans. This may sometimes mean foregoing new opportunities and better options. A faithful conformity with plans would stifle initiatives beyond the established ways and routines.

(ii) Planning may not work in a dynamic environment:

Planning, under conditions of rapid changes in the external environment tends to be a tough job. Plans would become quickly outdated and irrelevant even before they are implemented. Though flexible plans would be of some help under such conditions, there are also limits on injecting flexibility into organisational plans.

(iii) Planning reduces creativity:

 Most of the time, employees do not even attempt to formulate plans. They only carry out orders. Thus, planning in a way reduces creativity since people tend to think along the same lines as others. There is nothing new or innovative.

(iv) Planning involves huge costs:

When plans are drawn up huge costs are involved in their formulation. These may be in terms of time and money for example, checking accuracy of facts may involve lot of time. Detailed plans require scientific calculations to ascertain facts and figures. The costs incurred sometimes may not justify the benefits derived from the plans. There are a number of incidental costs as well, like expenses on boardroom meetings, discussions with professional experts and preliminary investigations to find out the viability of the plan.

(v) Planning is a time-consuming process:

Sometimes plans to be drawn up take so much of time that there is not much time left for their implementation.

(vi) Planning does not guarantee success:

It is a tool to be used with caution. It provides a base for analysing future courses of action. But, it is not a solution to all problems.

Planning Process

Since planning is an activity there are certain logical steps for every manager to follow.

(i) Setting Objectives:

Objectives may be set for the entire organisation and each department or unit within the organisation. Objectives or goals specify what the organisation wants to achieve. It could mean an increase in sales by 20% which could be objective of the entire organisation.

(ii) Developing Premises:

Assumptions are the base material upon which plans are to be drawn. The base material may be in the form of forecasts, existing plans or any past information about policies. The premises or assumptions must be the same for all and there should be total agreement on them.

Forecasts can be made about the demand for a particular product, policy change, interest rates, prices of capital goods, tax rates etc. Accurate forecasts, therefore become essential for successful plans.

(iii) Identifying alternative courses of action:

All the alternative courses of action should be identified. The course of action which may be taken could be either routine or innovative. An innovative course may be adopted by involving more people and sharing their ideas

(iv) Evaluating alternative courses:

The next step is to weigh the pros and cons of each alternative. Each course will have many variables which have to be weighed against each other. The positive and negative aspects of each proposal need to be evaluated in the light of the objective to be achieved.

(v) Selecting an alternative:

This is the real point of decision making. The best plan has to be adopted and implemented. The ideal plan, of course, would be the most feasible, profitable and with least negative consequences.

(vi) Implementing the plan:

 This is the step where other managerial functions also come into the picture. The step is concerned with putting the plan into action, i.e., doing what is required.

vii) Follow-up action:

To see whether plans are being implemented and activities are performed according to schedule is also part of the planning process.