Mangament Chap 7

8/2/2019 Mangament Chap 7

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―If a man takes no thought about what isdistant, he will find sorrow near at hand.

He who will not worry about what is far offwill soon find something worse thanworry‖



Organizational Goal Setting &

PlanningChapter 7



Microsoft’s Windows Is everywhere…Revenues & stock prices are at an all timehigh

If Bill plans succeed, one wont be able toescape Microsoft

Software will follow you on vacationsRiding along in your car to map out the best

travel routeControl your appliances & feed programs &information to an entire city’s television sets



Why should Bill Gate’s worry about thefuture & suffer new product setbacksrather than concentrate on the businessthat has made Microsoft a dominantcorporate Power?



Difficult for employees & top executives tosee the need to contemplate futuredevelopments when a Company issuccessful like MicrosoftBill Gate’s as a leader to decide where hewants the Company to be in future & howto get there



If you were in gate’s position, how would youmake sure Microsoft employees keep today’s

business healthy while also taking a long-rangeview toward an uncertain future?



OVERVIEW OF GOALS & PLANS

GoalDesired future state that Organization attemptsto realizeGoals are important because Organization existsfor a purpose & goals define and state thatpurposeExample: P&G set goal of doubling its revenuesover a 10 year periodGE: every business owned by the firm would beeither number 1 or number 2 in its industry



PLANIs a blue print for goal achievement & specifiesthe necessary resource allocations, schedule,tasks & other actions

Goals specify future endsPlans specify today’s means

Planning : incorporates both ideasdetermining the Organization’s Goalsdefining the means for achieving them



Planning Example:

Compaq Goal – to transform itself from asupplier of PC’s to corporations into amaker of Machines for every market

From small pocket communicators to

home computers, all at high competitiveprice



How to achieve this Outcome ?

Began running factories around the clockChanged manufacturing system to a ―build -on-order‖ model

Added thousands of retailers (Wal-Mart)Began working with Microsoft to become thebiggest maker of servers to anchor officenetworksLaunched a sub notebook―stunning turnaround at Compaq in only 2 years ‖



Levels of Goals



Levels of Strategies

Operational Level

Functional Level

Division Level

CorpLevel

A Large Company

Strategy making is not just a task for top executive

All managers at all levelmust be involved



Mission Statement

Our mission is to operate achain of restaurants that willprepare & serve high quality

food on timely basis & atreasonable prices

•Keep corporate debt to nomore than 20% of liquidassets for next ten years•Revise computerizedaccounting system with in fiveyears

•Increase per store sales 5% peryear for 10 years•Target & attract two new marketsegments during next 5 years• Develop new promotional strategyfor next year

•Open 150 new restaurantsduring next five years•Decrease average customerwait by 30 seconds this year

•Implement this year’spromotional strategy•Develop regional advertisingcampaigns with in 1 year•Negotiate 5 % lower advertisingrates next yr

•Competitive payrollsystem for each restaurantthis year•Pay all invoices withinthirty days

•Hire & train new assistantmanager•Decrease waste by 5%this year•Implement incentivesystem within 1 year

•Start or purchase newrestaurant

•Chain within few years•Provide 14% return to investorsfor at least 10 years

Strategic Goals(President &CEO)

VP-Operations VP-Marketing VP- Finance

Restaurant Manager Advertising Director Accounting Manager



Mission Statement



Goals In Organizations

Organizational MissionThe Organization reason for existenceDescribes the Organization’s values,aspirations and reason for beingWell-defined mission is the basis fordevelopment of all subsequent goals and

plansMore than half of the companies in the USnow have a formal statement of some kind



What is Our Business ?Statement of purpose that distinguishes oneorganization from other similar enterprises

Declaration of an Org ―reason for being‖

Answers the question ―What is our business‖

Essential for effectively establishingobjectives & formulating strategiesReveals what an ORG wants to be and whom

it wants to serve



The Process of Developing a Mission Statement

Select several articles about MS- ask managers to read these as

background information

Ask managers to prepare a mission statement for the Organization

A facilitator, or committee of top mangers- merge these statements into asingle document & distribute the draft to all mangers

Request for modifications, additions, deletion is needed next along withmeeting to revise to revise the document

Process of developing a mission statement represents a great opportunityfor strategists to obtain needed support from all managers in the firm



MissionElements

CustomersMarkets

Employees

PublicImage

Self-Concept Philosophy

SurvivalGrowthProfit

ProductsServices

Technology



CustomersProduct/Service

MarketsTechnologyConcern for survival, growth & profitability

Philosophy

Self Concept

Who are the firm’s customers

What are the basic belief’s, values, aspiration &

ethical priorities of the firm?

What are the firm’s major products or services?

Is the firm’s Technology Current

Geographically, where does the firm compete?

Is the firm committed to growth & financial soundness ?

What are the firm’s distinctive competence or major competitive advantage ?



Concern for public image

Concern for employees

Is the firm responsive to social , community &environmental concerns?

Are employees a valuable asset of the firm?



Mission Statement Evaluation Matrix

COMPONENTS

Organization Customers Products Services Markets

Concern for Survival,Growth,

Profitability Technology

PepsiCo Yes No No Yes No

Dell Yes Yes Yes Yes Yes



Mission Statement Evaluation Matrix

COMPONENTS

Organization Philosophy Self- Concept Concern for Public Image Concern for Employees

PepsiCo Yes No No No

Dell Computer No Yes Yes No



Goals & Plans

Strategic Goals / Plans

Tactical Goals / Plans

Operational Goals / Plans



Strategic GoalsBroad statement describing where theorganization wants to be in the future

They pertain to the Org as a whole ratherthan to specific divisions or departments

Also called official goals, because they arethe stated intentions of what theorganization wants to achieve

Ex: P&G goal to double the salesrevenues



Strategic PlansThe action steps by which the company intends to attainstrategic goals

The strategic plan is the blueprint that defines theorganizational activities and resource allocations – in the

form of cash, personnel, space & facilities – required formeeting these targets

The purpose of strategic plans is to turn organizational goals into realities within that time period

Plans are set by BOD & Top management

Have extended time Horizon



Tactical GoalsThe results that major divisions anddepartments within the organization intendto achieve

These goals apply to middle managementand describe what major subunits must doin order for the Org to achieve its overallgoal

Ex: P&G might center on which newproducts to launch, which existing

products to revise, and so forth



Tactical PlansDesigned to help execute major strategicplans & to accomplish a specific part of thecompany’s strategy Have a shorter time horizon than strategicplansThe word tactical comes from the military Define what the major departments &organizational subunits will do to implementthe overall strategic planIt involves middle management



Operational GoalsAre set by and for lower level managersSpecific results are expected fromdepartments, work groups and individuals

They are precise and measurable ― Process 150 sales applications each week‖ ― achieve 90 % of deliveries on time‖

Example: P&G might target number of newproducts to launch each of the next five

years



Operational Plans

Developed at the lower levels of the Org tospecify action steps toward achieving operationalgoals & to support tactical plansHave a short-term focus & relatively narrow inscopeIs the departments managers tool for daily &weekly operationsGoals are stated in quantitative terms & thedepartments plan describes how goals will beachievedOperational planning specifies plans for supervisors, deptt managers and individualsemployees

Example: Book



Goal Hierarchy

Example : Strategic goal translate – Lower mangT level

―Excellence service to customers ‖

―Open new sales office ‖

―Respond to customer inquiries within two hours ‖



Criteria For Effective GoalsSpecific & Measurable

Cover Key Result Areas

Challenging But Realistic

Defined Time Period

Linked To Rewards



Specific & Measurable

Goals should be expressed in quantitativeterms such as increasing profits by 2%,decreasing scrap by 1%

Not all goals can be expressed in numericalterms but vague goals have little motivatingpower for employeesAt the Top Org, goals often are qualitative as

well as quantitative Example (Book): Trimming workforce b8500, decentralizing into smaller units:

Employee satisfaction



Cover Key Result Areas

Goals cannot be set for every aspect ofemployee behavior or Organizationalperformance

Managers should identify a few key resultareas —4 or 5 for any Organizational dept or jobExample: Marketing dept for ALLTEL

key result areas for which goals were specified1. identify emerging areas of service opportunities2.Improve marketing of existing products3. develop a strategic market plan based on customer needs



Challenging but Realistic

Goals should be challenging but not unreasonablydifficultWhen goals are unrealistic, they set employees upfor failure and lead to decreasing employee morale(staff working 100-hour weeks to accomplish everything expected of them)

How ever if goals are too easy, employee may notfeel motivated

Managers should, however make sure that goalsare set within the existing resource base, notbeyond dept’s time, equipment & financial resource

( Kmart: set a goal to have more revenues than Wal-Mart next year)



Defined Time Period

Goals should specify the time period overwhich the will be achievedA time period is a deadline specifying the

date on which goal attainment will bemeasuredExample: Strategic sales goals could beestablished on a three-year time horizon

1st year target $100 million2nd year target $129 million3rd year target $165 million



Linked To Rewards

The ultimate impact of goals depends on theextent to which salary increases, promotions andawards are based on goal achievementPeople who attain goals should be rewardedRewards give meaning & significance to goals and helpcommit employee to achieving goalsFailure to attain goals often is due to factors outsideemployees controlExample: Federal Express stated goal of encouragingriskLost $233 M on an unsuccessful service called Zapmail,no one was punished



Planning Types & ModelsSingle-Use & Standing Plans

Single Use Plans: developed to achieve aset of goals that are not likely to berepeated in the futureNon programmed decision making of a kindsituation

Programs Projects



ProgramsA single use plan for a largeset of activities

Integrated set of plans

Example: NASA (to reachmoon)

Projects Plans created to

complete various aspectsof a programProject may be a part ofbroader program

Example : Lunar modelcapable of landing on themoon and returning to theearth



Standing Plans

Are the ongoing plans that are used toprovide guidance for tasks performedrepeatedly within the organizationPoliciesStanding Operating ProceduresRules & Regulations



Policy : Organizations general response to a designatedproblem or situationMcDonald’s will not grant a franchise to an individual who alreadyowns another fast-food restaurantUniversity admission will be granted only to applicants with a

min SAT score Standing Operating Procedures : More specific than policy,in that it outlines the steps to be followed in particular circumstancesMcDonald’s has SOP’s explaining how Big Macs are to becooked, how long they can stay in the warming rack and so forth

Rules & Regulations : Narrowest of the standingplans, describe exactly how specific activities areto be carried outMcDonald’s prohibiting customers from using itstelephones



Standing Plan : Ethical behavior byemployeesPolicy : Employees expected to behave

ethically in their dealings with suppliers &customersRule : Requires any employee who receivesfrom customer a gift larger than $10 reportthe giftSOP: recipient of the gift to make disclosurein writing with in 30 days



Contingency Planning & Crisis Management

Contingency Planning :Company responses tobe taken in the case ofemergencies or setbacks

Determination ofalternative course ofaction to be taken if anintended plan of action is

unexpectedly disruptedExample: Y2K Bug:banks, hospital Org

Crisis Management : setof procedures the orguses in the even ofdisaster

Example: 911



Planning Types & Models

Management by Objectives(MBO)

Setting GoalsDeveloping Action PlansReviewing Progress

Appraising overall Performance



MBO

Is a method whereby managers andemployees define goals for everydepartment, project, and person and usethem to monitor subsequent performance

1) Setting Goals2) Developing Action Plans3) Reviewing Progress4) Appraising overall Performance



Setting GoalsThis is the most difficult step in MBOSetting goals involves employees at all levels and looksbeyond day-today activities to answer the question ―Whatare we trying to accomplish?‖ A good goal should be concrete & realistic, provide aspecific target & time frame & assign responsibilityGoals maybe quantitative or qualitative, depending onwhether outcomes are measurableExample:―salesperson Jones will obtain 16 new accounts in

December‖ Quantitative terms―Marketing will reduce complaints by improving customer service next year‖ Qualitative terms Mutually agreed : All members should participate in

setting goals



Developing Action plans

Defines the course of action needed toachieve the stated goalsAction plans are made for both individualsand departments



Reviewing progress

A periodic progress review is important toensure that action plans are working.These reviews can occur informally betweenmanagers and subordinates(Org may wish to conduct 3, 6, 9 month reviewsduring the year)this checkup allows managers & employees to

see whether they are on target or whether

corrective action is necessaryThe point of MBO is to achieve goalsThe Action plan can be changed whenevergoals are not being met



Appraising overall performance

The final step in MBO is to carefully evaluate whetherannual goals have been achieved for both individualsand departmentsSuccess or failure to achieve goals can become part of

the performance appraisal system and the designation ofsalary increases & other rewardsThis appraisal of departmental & overall corporateperformance shapes goals for next yearMBO cycle repeats itself on an annual basisExample: High employee accident rate: Gas Company



Benefits & Problems with MBO

Benefits1. Manager & employee efforts

are focused on activities thatwill lead to goal attainment

2. Performance be improved atall company level

3. Employees are motivated4. Departmental & individual

goals are aligned withcompany goals

Problems with MBO1. constant change prevents

MBO from taking hold2. An environment of poor

employer-employee relations

reduces MBO effectiveness3. Strategic goals may be

displaced by operationalgoals

4. Mechanistic Org & values thatdiscourage participation canharm the MBO process

5. Too much paper work sapsMBO energy



Organization Responsibility for Planning

Traditional Approaches To PlanningCentral Planning Departments

Modern Approaches To PlanningDecentralized Planning StaffPlanning Task Force

The New Paradigm

Find out the difference



Summary

Documents

Mangament Chap 7