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BMGT – Principles of Management hapter Seven Organizational Planning & Goal Setting BMGT – Principles of Management The Importance of Goals and Plans Goals and Plans Rationale for decisions Standard of performance Guides to action The Tide Clothesline BMGT – Principles of Management Characteristics of Effective Goal Setting Goal Characteristics Specific and measurable Cover key result areas Challenging but realistic Defined time period Linked to rewards SMART Specific, Measurable, Achievable. Realistic and Timely BMGT – Principles of Management Goals and Plans Plan A blueprint specifying the resource allocation, schedules, and other actions necessary for attaining goals. Planning is considered the most fundamental function Planning is the most controversial management function Goal A desired future state that the organization attempts to realize. Levels of Goals/Plans & Their Importance Internal Message Legitimacy, motivation, guides, rationale, standards Mission Statement Strategic Goals/Plans Senior Management (Organization as a whole) Tactical Goals/Plans Middle Management (Major divisions, functions) Operational Goals/Plans Lower Management (Departments, individuals) External Message Legitimacy for investors, customers, suppliers, community BMGT – Principles of Management Goals and Plans for External and Internal Audiences Mission Statement What the organization stands for Symbolizes legitimacy Describes values, aspirations, and reason for being Focuses on, customers, corporate values, product quality, and attitude toward employees Source of Motivation and Commitment Facilitate employees’ identification with the organization Guides to Action Standard of Performance Provide a sense of direction Serve as performance criteria Focus attention on specific targets Provide a standard of assessment Direct efforts toward important outcomes BMGT – Principles of Management Strategic Goals and Plans Strategic Goals Where the organization wants to be in the future Pertain to the organization as a whole Peter Drucker suggests eight content areas in developing goals Strategic Plans Action Steps Blueprint that defines the organizational activities and resource allocations BMGT – Principles of Management Peter Drucker’s Eight Content Areas In Developing Goals Marketing Innovation Productivity Physical and financial resources Profitability Managerial performance and development Worker performance and attitude Public responsibility BMGT – Principles of Management Tactical Goals and Plans Tactical Goals Goals that define the outcomes that major divisions and departments must achieve Tactical Plans Plans designed to help execute major strategic plans BMGT – Principles of Management Operational Goals and Plans Operational Goals Specific, measurable results expected from departments, work groups, and individuals Operational Plans Organization’s lower levels that specify action steps toward achieving operational goals Model of the MBO Process Step 1: Setting Goals Corporate Strategic Goals Departmental goals Individual goals Step 2: Developing Action Plans Action Plans Review Progress Step 3: Reviewing Progress Corrective Action Appraisal Of Overall Performance Step 4: Appraising Overall Performance MBO Benefits and Problems Benefits of MBO Problems with MBO 1. Manager and employee efforts are focused on activities that will lead to goal attainment. 1. Constant change prevents MBO from taking hold. 2. Performance can be improved at all company levels. 3. Employees are motivated 4. Departmental and individual goals are aligned with company goals. 2. An environment of poor employeremployee relations reduces MBO effectiveness. 3. Strategic goals may be displaced by operational goals. 4. Mechanistic organizations and values that discourage participation can harm the MBO process. 5. Too much paperwork saps MBO energy. The Shewhart Cycle of Continuous Improvement 1. Plan 4. Act Analyze results; put Decide what changes are desirable, and plan a leaning into action change or test 3. Check Observe the results 2. Do Carry out the change or test Source: Based on Thomas F. Rienzo, “Planning Deming Management Service Organizations,” Business Horizons 36, no.3 (May-June1993),19-29 The New Planning Paradigm Make Continuous Improvement a Way of Life Planning Still Starts and Stops at the Top Start with a Strong Mission Six Rules of Planning Design New Roles For Planning Staff Create an Environment that Encourages Learning Set Stretch Goals BMGT – Principles of Management The Importance of Goals and Plans Guides to action Rationale for decisions Standard of performance Dilbert Zone BMGT – Principles of Management Single-Use Plans For Goals Not Likely To Be Repeated A program is a complex set of objectives and plans to achieve an important, onetime organizational goal A project is similar to a program, but generally smaller in scope and complexity BMGT – Principles of Management Standing Plans A policy is a general guide to action and provides direction for people within the organization Rules describe how a specific action is to be performed Procedures define a precise series of steps to be used in achieving a specific job Total quality management (TQM) to improve quality and production. BMGT – Principles of Management Shewhart Cycle (PDCA) TQM Plan a test or change in a specific process Do the test or carry out the change Check the results Act to improve the process based on what you learn.