It is the methodology by which certain objectives are identified and strategies are devised for its subsequent realization.
It is a preparatory step. It is a systematic activity which determines what, why, how, when, how, who and where is going to perform a specific job.
Characteristics of Planning:
It is a primary or basic function:
Planning is the foundation on which all other managerial functions rest.
It serves as a guide and framework for organizing, staffing, directing and controlling.
Hence planning is the basic or primary or fundamental function of management.
It is the intellectual process:
Planning is a mental exercise involving creative thinking, sound judgement and imagination and not a guess work.
It is a process rather than behaviour at a given point of time. The process determines the future course of action. It involves processes of understanding goals and facts, perception, analysis, estimation and thought.
It is future-oriented:
Planning primarily involves looking into the future. It requires anticipating future situations that ought to lead to correct decisions about the future course of action.
It is a mental predisposition for things to happen in future. Through forecasting, future events and conditions are anticipated and plans are drawn accordingly.
It is goal-oriented:
Planning is made to achieve set the objective of business. Specific goals or objectives are set out in the plans along with the activities to be undertaken to achieve the goals. Thus, planning is purposeful.
If goals are not achieved then there is the failure of the plan. There is a wastage of individual efforts & energies.
It provides the sense of direction to various activities.
It is decision oriented:
The need for planning arises only when alternatives are available. Planning involves selecting a suitable course of action among various alternatives. Decision making that requires specific actions necessary to achieve future goals becomes an integral part of the planning process.
Thus, decision making is an integral part of planning. The manager has to pick the best depending upon requirements & resources of the enterprises
It is top management function:
Planning is undertaken at all levels of management as every level is concerned with determining a future course of action.
It is flexible:
Planning is flexible as commitment is based on future conditions that are always changing.
Since future is unpredictable, planning must provide enough room to cope with the changes occurring in future. Under the changed circumstances, the original plan of action must be revised and updated to make it more practical and up to date.
It is pervasive:
Planning is required at all levels of management, in all departments and continuous managerial function that involves the complex processes of perception, analysis, conceptual thought, communication decision, and action.
The scope of planning may differ from one level of management to another.
The top level management is concerned about planning the organization as a whole. The middle-level management may be more specific in departmental plans while the lower level management plans the implementation of the plan on day to day basis.
It is a continuous and dynamic activity:
Planning is a never ending activity due to the dynamic business environment. In order to be successful at planning, one has to adjust to changes taking place in the environment and react accordingly.
Plans are prepared for specific period f time and at the end of that period, they are reevaluated and redesigned as per new requirements and changing conditions.
Continuity of planning is related to the planning cycle. It means that a plan is framed, it is implemented, and is followed by another plan, and so on.
It is the basis of control and Efficiency:
As per, Koontz and O’Donnell (1986) ‘plans furnish the standards of control. Unplanned action cannot be controlled and any attempt to control without plans would be meaningless.’
It leads to accomplishment of objectives at the minimum possible cost. It ensures optimum utilization of resources and avoids wastage of resources. Planning leads to saving of time, effort and, money and optimum utilization of men, money, materials, methods, and machines.
Steps Involved in Planning:
Planning function of management is an intellectual function which involves following steps:-
Step – 1: Establishment of Goals and Objectives of Organization:
Every organization must have certain goals or objectives. Objectives may be set for the entire organization and each department or unit within the organization. How all departments would contribute to the organizational goals is the plan that is to be drawn up.
It starts with the setting goals and objectives of the organization.
The attention of manager is always at the end result of all activities planned.
All the objectives should be stated in a clear, precise and unambiguous language. At the same time, they should be specified in a quantitative manner with the specific time period. It avoids confusion.
Some times objectives of some criteria like the performance of personnel can not be specified quantitatively, then clear expectations should be mentioned.
In short, the objectives should be specific, measurable, archivable, realistic and time bound. If the end result is clear it becomes easier to work towards the goal.
Objectives have to percolate down to each unit and employees at all levels.
Step – 2: Establishment of Planning Assumptions or Premises:
Planning premises are the assumptions about the likely shape of events taking place in future. They form the basis of planning. Therefore, the manager is required to make certain assumptions about the future.
In determines probable causes of deviation of the actual plan and probable causes behind it. It also determines probable obstacles in the way of business. It determines which causes and obstacles can be avoided and corresponding actions are decided to avoid them to maximum extent or to minimize the effect on the business.
The base material for the assumptions may be in the form of forecasts, existing plans or any past information about policies. The premises must be the same for all and there should be total agreement on them. All managers involved in planning should be familiar with and use the same assumptions. So that there is no discrepancy. Accurate forecasts, become essential for successful plans.
Planning premises may be internal or external. Internal premises includes capital investment policy, management of labour relations, philosophy of the management, The external premises include socio- economic, political and economic factors. Internal premises are controllable and external are non- controllable.
Step – 3: Identifying Alternative Course of Action:
Once objectives are set, assumptions are made. Then the next step would be to act upon them.
There may be many ways to act and achieve objectives. All the alternative course of actions have to be considered.
The course of action may be routine or innovative.
If the project is important, then more alternatives should be generated and thoroughly discussed amongst the concerned members of the organization.
Step – 4: Evaluating Alternative Courses:
Each course will have many variables which have to be weighed against each other.
Each and every alternative is evaluated by considering its pros and cons in reference to the resources available and the requirements of the organization.
The positive and negative aspects of each proposal need to be evaluated in the light of the objective to be achieved. Feasibility and consequences of all the alternatives are studied.
Step – 5: Selecting an Alternative:
This is the step of decision making. The manager will have to apply permutations and combinations and select the best possible course of action. After scientific evaluation and using quantitative techniques, the best alternative is chosen.
The selected alternative would be the most feasible, profitable and with least negative consequences.
When alternatives can not be subjected to a mathematical analysis, the manager’s experience, judgement and intuition play an important role.
Sometimes, a combination of plans may be selected instead of one best course.
Step – 6: Formulation of Derivative Plans:
Derivative plans are the sub plans or secondary plans which help in the achievement of main plan. They indicate time schedule, sequences of the tasks.
These are detail plans which include policies, procedures, rules, programmes, budgets, schedules, drawings etc.
These plans will flow from the basic plan and support, expedite the achievement of basic plans.
Step – 7: Securing Co-operation:
Next step is to take subordinates or those who have to implement these plans into confidence. Due to which subordinates may feel motivated since they are involved in decision-making process. They give suggestions and improvements in the plan.
Step – 8: Implementing the plan:
The step is concerned with putting the plan into action. This step involves other departments of the organization. This step would also involve organizing for labour and purchase of machinery.
Step – 9: Follow up/Appraisal of Plans:
This step establishes a link between planning and controlling function.
To see whether plans are being implemented and activities are performed according to schedule is also part of the planning process.
Monitoring the plans is equally important to ensure that objectives are achieved.After choosing a particular course of action, it is put into action.
The appraisal is done on the basis of feedback or information received from departments or persons concerned.
It helps management to locate and correct deviations or modify the plan.