CH 5 Planning

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Planning Different Career Paths
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The purpose of planning is to help deal with uncertainty, both for the organization and for your individual career. In this chapter, we discuss planning from an organizational point of view, but of course you also need to do personal planning for a career. Today, experts say, success requires coupling an in-demand degree with expertise in emerging trends, such as mastery of social media
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3 Principle Career Paths
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The three principal career paths, suggested the late management professor Michael J. Driver, are linear, steady-state, and spiral careers, but there are also others called transitory and portfolio careers -The Linear Career: Climbing the Stairs The linear career resembles the traditional view of climbing the stairs in an organization’s hierarchy. That is, you move up the organization in a series of jobs—generally in just one functional area, such as finance—each of which entails more responsibility and requires more skills. Of course, it’s possible that a linear career will plateau. That is, you’ll rise to a certain level and then remain there; there will be no further promotions. Career plateaus actually happen a lot and need not signify disgrace; they happen even to very successful managers. Another possibility, of course, is the declining career, in which a person reaches a certain level and then after a time begins descending back to the lower levels. This could come about, for instance, because technology changes the industry you’re in. -The Steady-State Career: Staying Put The steady-state career is almost the opposite of a linear career: You discover early in life that you’re comfortable with a certain occupation and you stay with it. Or you accept a promotion for a while, decide you don’t like the responsibility, and take a step down. This kind of career is actually fairly commonplace: Sales representatives, computer programmers, or physicians, for example, may decide they are happy being “hands-on” professionals rather than managers. -The Spiral Career: Holding Different Jobs That Build on One Another The spiral career is, like the linear career, upwardly mobile. However, on this career path, you would have a number of jobs that are fundamentally different yet still build on one another, giving you more general experience and the skills to advance in rank and status. The Transitory Career Path: Continually Shifting Sideways It’s possible that you might (like some salespeople, actors, chefs, or construction workers) favor the transitory career path. That is, you’re the kind of person who doesn’t want the responsibility that comes with promotion. You’re a free spirit who likes the variety of experience that comes with continually shifting sideways from job to job or place to place (or you’re afraid of making the commitment to doing any one thing). -Portfolio Careers: Holding Multiple Jobs Some people put together portfolio careers, assembling lists (portfolios) of multiple part-time jobs that, when combined, are equivalent to a full-time position, such as Pilates instructor/art dealer, attorney/minister, teacher/dancer/puppeteer. And some change their professions entirely, perhaps by switching departments within their companies or by going back to school and retraining for something else.
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Planning
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We previously defined as setting goals and deciding how to achieve them. Another definition: Planning is coping with uncertainty by formulating future courses of action to achieve specified results. When you make a plan, you make a blueprint for action that describes what you need to do to realize your goals.
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Planning & Strategic Management
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Planning, which we discuss in this chapter, is used in conjunction with strategic management, as we describe in Chapter 6. As we will see, strategic management is a process that involves managers from all parts of the organization—top managers, middle managers, and first-line managers—in the formulation, implementation, and execution of strategies and strategic goals to advance the purposes of the organization. Thus, planning covers not only strategic planning (done by top managers) but also tactical planning (done by middle managers) and operational planning (done by first-line managers). Planning and strategic management derive from an organization’s mission and vision about itself.
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5 Steps in Planning & Strategic Management
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1. Establish the organizations mission & vision 2. Formulate the grand strategy 3. Formulate the strategic plans, then the tactical and operational plans 4. Implement the strategic plans 5. Control the strategy
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Why Not Plan?
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1. Planning Requires You to Set Aside the Time to Do It Time-starved managers may be quite resentful when superiors order them to prepare a multiyear plan for their work unit. “What?” they may grouse. “They expect me to do that and still find time to meet this year’s goals?” Somehow, though, that time for planning must be found. Otherwise, managers are mainly just reacting to events. Planning means that you must involve the subordinates you manage to determine resources, opportunities, and goals. During the process, you may need to go outside the work unit for information about products, competitors, markets, and the like. 2. You May Have to Make Some Decisions without a Lot of Time to Plan In our time of Internet connections and speedy-access computer databases, can’t nearly anyone lay hands on facts quickly to make an intelligent decision? Not always. A competitor may quickly enter your market with a highly desirable product. A change in buying habits may occur. A consumer boycott may suddenly surface. An important supplier may let you down. The caliber of employees you need may not be immediately available at the salary level you’re willing to pay. And in any one of these you won’t have the time to plan a decision based on all the facts. Nevertheless, a plan need not be perfect to be executable. While you shouldn’t shoot from the hip in making decisions, often you may have to “go with what you’ve got” and make a decision based on a plan that is perhaps only three-quarters complete.
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4 Benefits of Planning
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1. Planning Helps You Check on Your Progress How well is your work going in an organization? You won’t know unless you have some way of checking your progress. That’s why, like a golfer, you need to have some expectations of what you’re supposed to do—in other words, a plan. 2. Planning Helps You Coordinate Activities “The right hand doesn’t know what the left hand is doing!” 3. Planning Helps You Think Ahead The service or product with which you’re engaged will probably at some point reach maturity, and sales will begin to falter. Thus, you need to look ahead, beyond your present phase of work, to try to be sure you’ll be one of the quick rather than one of the dead. 4. Above All, Planning Helps You Cope with Uncertainty You don’t care for unpleasant surprises? Most people don’t. (Pleasant surprises, of course, are invariably welcome.) That’s why trying to plan for unpleasant contingencies is necessary.
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Raymond E Miles & Charles C Snow
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Scholars Raymond E. Miles and Charles C. Snow suggest that organizations adopt one of four approaches when responding to uncertainty in their environment. They become Defenders, Prospectors, Analyzers, or Reactors
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How Organizations Respond to Uncertainty – 4 Basic Strategy Types
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Defenders—”Let’s Stick with What We Do Best, Avoid Other Involvements” Whenever you hear an organization’s leader say that “We’re sticking with the basics” or “We’re getting back to our core business,” that’s the hallmark of a Defender organization. Defenders are expert at producing and selling narrowly defined products or services. They devote most of their attention to making refinements in their existing operations, such as slashing prices. (Kodak, Macy’s, JC Penny) Prospectors—”Let’s Create Our Own Opportunities, Not Wait for Them to Happen” A company described as “aggressive” is often a Prospector organization. Prospectors focus on developing new products or services and in seeking out new markets, rather than waiting for things to happen. Like 19th-century gold miners, these companies are “prospecting” for new ways of doing things. The continual product and market innovation has a price: Such companies may suffer a loss of efficiency. Nevertheless, their focus on change can put fear in the hearts of competitors. (Gap & Apple) Analyzers—”Let Others Take the Risks of Innovating, & We’ll Imitate What Works Best” Analyzers take a “me too” response to the world. By and large, you won’t find them called “trendsetters.” Rather, Analyzers let other organizations take the risks of product development and marketing and then imitate (or perhaps slightly improve on) what seems to work best. (Microsoft) Reactors—”Let’s Wait Until There’s a Crisis, Then We’ll React” Whereas the Prospector is aggressive and proactive, the Reactor is the opposite—passive and reactive. Reactors make adjustments only when finally forced to by environmental pressures. In the worst cases, they are so incapable of responding fast enough that they suffer massive sales losses and are even driven out of business. (Kmart & Walmart)
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Defenders
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Defenders are expert at producing and selling narrowly defined products or services.
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Prospectors
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Prospectors focus on developing new products or services and in seeking out new markets, rather than waiting for things to happen.
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Analyzers
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Analyzers let other organizations take the risks of product development and marketing and then imitate (or perhaps slightly improve on) what seems to work best.
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Reactors
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Reactors make adjustments only when finally forced to by environmental pressures. In the worst cases, they are so incapable of responding fast enough that they suffer massive sales losses and are even driven out of business.
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The Adaptive Cycle
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Miles and Snow also introduced the idea of the adaptive cycle, which portrays businesses as continuously cycling through decisions about three kinds of business problems: (1) entrepreneurial (selecting and making adjustments of products and markets (2) engineering (producing and delivering the products (3) administrative (establishing roles, relationships, and organizational processes). Thus, a business that makes decisions in the entrepreneurial area that take it in the direction of being a Prospector will in a short time also begin making Prospector-oriented decisions in the engineering area, then the administrative area, and then even more so in the entrepreneurial area, and so on. Thus, as one scholar points out, “With enough cycles and insight, a given business becomes a very good, comprehensively aligned Prospector, Analyzer, or Defender. If a business lacks insight, or if it fails to take advantage of alignment opportunities afforded by the adaptive cycle, it will be an incongruent, poorly performing Reactor.”
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Approach to Planning
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Mission Statement Vision Statement Strategic Planning Tactical Planning Operational Planning “Everyone wants a clear reason to get up in the morning,” writes journalist Dick Leider. “As humans we hunger for meaning and purpose in our lives.” And what is that purpose? “Life never lacks purpose,” says Leider. “Purpose is innate—but it is up to each of us individually to discover or rediscover it.” An organization has a purpose, too—a mission. And managers must have an idea of where they want the organization to go—a vision. The approach to planning can be summarized in the following diagram, which shows how an organization’s mission becomes translated into action plans.
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Mission Statement
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The planning process begins with two attributes: a mission statement (which answers the question “What is our reason for being?”) and a vision statement (which answers the question “What do we want to become?”). A mission statement, which expresses the purpose of the organization. “Only a clear definition of the mission and purpose of the organization makes possible clear and realistic… objectives,” said Peter Drucker. Whether the organization is for-profit or nonprofit, the mission statement identifies the goods or services the organization provides and will provide. Sometimes it also gives the reasons for providing them (to make a profit or to achieve humanitarian goals, for example).
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The Organizations Mission
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An organization’s mission is its purpose or reason for being.
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Vision
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A vision is a long-term goal describing “what” an organization wants to become. It is a clear sense of the future and the actions needed to get there. “[A] vision should describe what’s happening to the world you compete in and what you want to do about it,” says one Fortune article. “It should guide decisions.”
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The Vision Statement
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After formulating a mission statement, top managers need to develop a vision statement, which expresses what the organization should become, where it wants to go strategically.
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Three Types of Planning
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Inspiring, clearly stated mission statements and vision statements provide the focal point of the entire planning process. Then three things happen:
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Strategic Planning
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Strategic planning by top management. Using their mission and vision statements, top managers do strategic planning—they determine what the organization’s long-term goals should be for the next 1-5 years with the resources they expect to have available. “Strategic planning requires visionary and directional thinking,” says one authority. It should communicate not only general goals about growth and profits but also ways to achieve them. Today, because of the frequency with which world competition and information technology alter marketplace conditions, a company’s strategic planning may have to be done closer to every 1 or 2 years than every 5. Still, at a big company like Boeing or Chrysler or Amazon, top executives cannot lose sight of long-range, multiyear planning.
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Tactical Planning
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Tactical planning by middle management. The strategic priorities and policies are then passed down to middle managers, who must do tactical planning—that is, they determine what contributions their departments or similar work units can make with their given resources during the next 6-24 months.
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Operational Planning
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Operational planning by first-line management. Middle managers then pass these plans along to first-line managers to do operational planning—that is, they determine how to accomplish specific tasks with available resources within the next 1-52 weeks.
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Goals “Objectives”
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Whatever its type—strategic, tactical, or operational—the purpose of planning is to set a goal and then to formulate an action plan and an operating plan. A goal, also known as an objective, is a specific commitment to achieve a measurable result within a stated period of time. As with planning, goals are of the same three types—strategic, tactical, and operational. Also, like planning, goals are arranged in a hierarchy known as a “means-end chain” because in the chain of management (operational, tactical, strategic) the accomplishment of low-level goals is the means leading to the accomplishment of high-level goals or ends.
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Strategic Goals
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Strategic goals are set by and for top management and focus on objectives for the organization as a whole.
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Tactical Goals
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Tactical goals are set by and for middle managers and focus on the actions needed to achieve strategic goals.
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Operational Goals
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Operational goals are set by and for first-line managers and are concerned with short-term matters associated with realizing tactical goals.
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The Action Plan
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The goal should be followed by an action plan, which defines the course of action needed to achieve the stated goal, such as a marketing plan or sales plan.
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The Operating Plan
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The operating plan, which is typically designed for a 1-year period, defines how you will conduct your business based on the action plan; it identifies clear targets such as revenues, cash flow, and market share.
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Types of Plans
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Plans are of two types—standing plans and single-use plans.
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Standing Plans
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Standing plans are plans developed for activities that occur repeatedly over a period of time. Standing plans consist of policies, procedures, and rules. -Policy -Procedure -Rule
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Policy
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A policy is a standing plan that outlines the general response to a designated problem or situation. Example: “This workplace does not condone swearing.” This policy is a broad statement that gives managers a general idea about what is allowable for employees who use bad language, but gives no specifics.
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Procedure
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A procedure (or standard operating procedure) is a standing plan that outlines the response to particular problems or circumstances. Example: White Castle specifies exactly how a hamburger should be dressed, including the order in which the mustard, ketchup, and pickles are applied.
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Rule
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A rule is a standing plan that designates specific required action. Example: “No smoking is allowed anywhere in the building.” This allows no room for interpretation.
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Single-Use Plans
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Single-use plans are plans developed for activities that are not likely to be repeated in the future. Such plans can be programs or projects. -Program -Project
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Program
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A program is a single-use plan encompassing a range of projects or activities. Example: The U.S. government space program had several projects, including the Challenger project, the Hubble Telescope project, and the space shuttle project.
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Project
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A project is a single-use plan of less scope and complexity than a program. Example: The space shuttle project, one of several projects in the government’s space program, consisted of three shuttles: Discovery, Endeavour, and Atlantis.
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SMART Goals
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Anyone can define goals. But the five characteristics of a good goal are represented by the acronym SMART. A SMART goal is one that is Specific, Measurable, Attainable, Results-oriented, and has Target dates. -Specific Goals should be stated in specific rather than vague terms. The goal “As many planes as possible should arrive on time” is too general. The goal that “Ninety percent of planes should arrive within 15 minutes of the scheduled arrival time” is specific. -Measurable Whenever possible, goals should be measurable, or quantifiable (as in “90% of planes should arrive within 15 minutes…”). That is, there should be some way to measure the degree to which a goal has been reached. Of course, some goals—such as those concerned with improving quality—are not precisely quantifiable. In that case, something on the order of “Improve the quality of customer relations by instituting 10 follow-up telephone calls every week” will do. You can certainly quantify how many follow-up phone calls were made. -Attainable Goals should be challenging, of course, but above all they should be realistic and attainable. It may be best to set goals that are quite ambitious so as to challenge people to meet high standards. Always, however, the goals should be achievable within the scope of the time, equipment, and financial support available. If too easy (as in “half the flights should arrive on time”), goals won’t impel people to make much effort. If impossible (“all flights must arrive on time, regardless of weather”), employees won’t even bother trying. Or they will try and continually fail, which will end up hurting morale. Results-oriented Only a few goals should be chosen—say, five for any work unit. And they should be results-oriented—they should support the organization’s vision. In writing out the goals, start with the word “To” and follow it with action-oriented verbs—”complete,” “acquire,” “increase” (“to decrease by 10% the time to get passengers settled in their seats before departure”). Some verbs should not be used in your goal statement because they imply activities—the tactics used to accomplish goals (such as having baggage handlers waiting). For example, you should not use “to develop,” “to conduct,” “to implement.” Target dates Goals should specify the target dates or deadline dates when they are to be attained. For example, it’s unrealistic to expect an airline to improve its on-time arrivals by 10% overnight. However, you could set a target date—3 to 6 months away, say—by which this goal is to be achieved. That allows enough time for lower level managers and employees to revamp their systems and work habits and gives them a clear time frame in which they know what they are expected to do.
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MBO & Peter Drucker
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Do you perform better when you set goals or when you don’t? What about when you set difficult goals rather than easy ones? These are the kinds of matters addressed in the activity known as management by objectives. First suggested by Peter Drucker in 1954, MBO has spread largely because of the appeal of its emphasis on converting general objectives into specific ones for all members of an organization.
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4 Step Process of MBO
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Management by objectives (MBO) is a four-step process in which (1) managers and employees jointly set objectives for the employee (2) managers develop action plans, (3) managers and employees periodically review the employee’s performance (4) the manager makes a performance appraisal and rewards the employee according to results The purpose of MBO is to motivate rather than to control subordinates.
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Jointly Set Objectives
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1. Jointly Set Objectives You sit down with your manager and the two of you jointly set objectives for you to attain. Later you do the same with each of your own subordinates. Joint manager/subordinate participation is important to the program. It’s probably best if the objectives aren’t simply imposed from above (Don’t say, “Here are the objectives I want you to meet”). Managers also should not simply approve the employee’s objectives (“Whatever you aim for is okay with me”). It’s necessary to have back-and-forth negotiation to make the objectives practicable. One result of joint participation, research shows, is that it impels people to set more difficult goals—to raise the level of their aspirations—which may have a positive effect on their performance.43 The objectives should be expressed in writing and should be SMART. There are three types of objectives, 1. Improvement Objectives 2. Personal Development Objectives 3. Maintenance Objectives
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Improvement Objectives
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Purpose Express performance to be accomplished in a specific way for a specific area Examples “Increase sport utility sales by 10%.” “Reduce food spoilage by 15%.”
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Personal Development Objectives
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Purpose Express personal goals to be realized Examples “Attend five days of leadership training.” “Learn basics of Microsoft Office software by June 1.”
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Maintenance Objectives
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Purpose Express the intention to maintain performance at previously established levels Examples “Continue to meet the increased sales goals specified last quarter.” “Produce another 60,000 cases of wine this month.”
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Develop Action Plan
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2. Develop Action Plan Once objectives are set, managers at each level should prepare an action plan for attaining them. Action plans may be prepared for both individuals and for work units, such as departments.
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Periodically Review Performance
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3. Periodically Review Performance You and your manager should meet reasonably often—either informally as needed or formally every 3 months—to review progress, as should you and your subordinates. Indeed, frequent communication is necessary so that everyone will know how well he or she is doing in meeting the objectives. During each meeting, managers should give employees feedback, and objectives should be updated or revised as necessary to reflect new realities. If you were managing a painting or landscaping business, for example, changes in the weather, loss of key employees, or a financial downturn affecting customer spending could force you to reconsider your objectives.
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Give Performance Appraisal & Rewards
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4. Give Performance Appraisal & Rewards, If Any At the end of 6 or 12 months, you and your subordinate should meet to discuss results, comparing performance with initial objectives. Deal with results, not personalities, emotional issues, or excuses. Because the purpose of MBO is to motivate employees, performance that meets the objectives should be rewarded—with compliments, raises, bonuses, promotions, or other suitable benefits. Failure can be addressed by redefining the objectives for the next 6- or 12-month period, or even by taking stronger measures, such as demotion. Basically, however, MBO is viewed as being a learning process. After step 4, the MBO cycle begins anew.
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Cascading Objectives of MBO
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For MBO to be successful, the following three things have to happen. 1. Top Management Must Be Committed “When top-management commitment [to MBO] was high,” said one review, “the average gain in productivity was 56%. When commitment was low, the average gain in productivity was only 6%.”45 2. It Must Be Applied Organizationwide The program has to be put in place throughout the entire organization. That is, it cannot be applied in just some divisions and departments; it has to be done in all of them. 3. Objectives Must “Cascade” MBO works by cascading objectives down through the organization; that is, objectives are structured in a unified hierarchy, becoming more specific at lower levels of the organization. Top managers set general organizational objectives, which are translated into divisional objectives, which are translated into departmental objectives. The hierarchy ends in individual objectives set by each employee.
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The Importance of Deadlines
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As we saw under the “T” (for “has Target dates”) in SMART goals, deadlines are as essential to goal setting in business as they are to your college career. Because the whole purpose of planning and goals is to deliver to a client specified results within a specified period of time, deadlines become a great motivator, both for you and for the people working for you. In general, however, deadlines can help you keep your eye on the “big picture” while simultaneously paying attention to the details that will help you realize the big picture. Deadlines can help concentrate the mind, so that you make quick decisions rather than put them off. Deadlines help you ignore extraneous matters (such as cleaning up a messy desk) in favor of focusing on what’s important—realizing the goals on time and on budget. Deadlines provide a mechanism for giving ourselves feedback.
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The Planning/Control Cycle
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Once you’ve made plans, how do you stay in control to make sure you’re headed in the right direction? Actually, there is a continuous feedback loop known as the planning/control cycle. (The “organizing” and “leading” steps within the Planning-Organizing-Leading-Controlling sequence are implied here.) -The planning/control cycle has two planning steps (1 and 2) and two control steps (3 and 4), as follows: (1) Make the plan. (2) Carry out the plan. (3) Control the direction by comparing results with the plan. (4) Control the direction by taking corrective action in two ways—namely (a) by correcting deviations in the plan being carried out or (b) by improving future plans. The planning/control cycle loop exists for each level of planning—strategic, tactical, and operational. The corrective action in step 4 of the cycle (a) can get a project back on track before it’s too late or (b) if it’s too late, it can provide data for improving future plans.
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GM’s Focus
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Will GM’s Strategic Plan Lead to Future Success? Bailed out by the federal government just three years ago, General Motors Co. has set its sights on a once-unthinkable goal: making more than $10 billion a year. It already is headed in that direction. On Feb. 16 [2012], GM is likely to report 2011 net income of about $8 billion, its highest ever, according to people who have seen the figures. Behind the gain to nearly twice 2010’s $4.7 billion are growth in China and strong profits in North America, where GM has shed billions of dollars of costs and lately has been able to command higher prices. GM has loftier ambitions still. It aims over the next several years to raise its profit margin—the portion of revenue left after paying expenses—to 10%, Daniel Ammann, chief financial officer, said in an interview. That would be a significant jump from the current margin of about 6% and would be among the highest in the auto industry…. The bailout and restructuring helped GM to shed nearly $40 billion in obligations to become debt-free. It was a contrast with Ford Motor Co., which didn’t have a bailout and is still paying off $23 billion it borrowed to survive. GM will pay almost no federal corporate taxes for years as one condition of the bailout…. Now, “we are targeting our best-in-class peers,” said GM’s Mr. Ammann, referring to South Korea’s Hyundai Motor Co. and Germany’s BMW AG, both of which are estimated to have had a 10% return on sales for 2011…. Mr. Ammann acknowledged that GM has a ways to go, particularly when it comes to leveraging the company’s global scope to generate savings. “We have gaps when it comes to our best-in-class peers, and we are clear that we know where those gaps are,” he said. Adam Jonas, an auto analyst at Morgan Stanley, expressed skepticism that GM can achieve higher margins in their near future because of troubles in Europe and stiffer competition at home, as well as likely lower pickup-truck production…. In South America, where GM’s models are outdated, the company is struggling to avoid losses. “Consumers are demanding very good, up-to-date product there and GM is behind,” said Brian Johnson, an analyst at Barclays Capital. In Europe, where GM is weighed down by high labor costs, the company has been losing money for more than a decade. The company still has bloated costs in its engineering and manufacturing operations there. “Clearly we have more work to do,” Mr. Ammann said. GM also faces what promises to be a tougher 2012 in its home market. Toyota and Honda Motor Co. are back to full production after struggling with shortages last year after the Japanese earthquake and tsunami. Mr. Ammann is setting out to cut billions more in costs while boosting revenue through global sales growth and reduced incentives on some models, he says. One goal is fewer auto “platforms.” GM aims to build vehicles all over the world that are made from the same basic parts and assembled in plants that use the same type of tooling—thus wringing savings out of its massive engineering budget. GM in 2010 had 30 auto platforms. It aims to reduce this total to 24 by 2014 and to 14 by 2018…. Volkswagen and Ford are further down this road. Ford plans to rely on just five common platforms to deliver 75% of sales by the middle of the decade. Globally, Ford made roughly $300 more profit per vehicle sold than GM through September. “Ford is light years ahead of GM, [which is] just at the beginning,” said Morgan Stanley’s Mr. Jonas. The process “is expensive and disruptive and will hurt profits for the next couple of years. There is a reason GM had not attacked this before.” Though GM’s bankruptcy helped it shed debt and excess models, it didn’t help the company consolidate vehicle architectures. Besides cutting costs, GM needs to change its culture. For decades the company focused on selling as many cars as possible, and propping up its U.S. market share, sometimes at the expense of the bottom line. At the beginning of 2011, GM executives wanted to get sales off to a quick start, and offered plump incentives on Chevrolet trucks, Cadillacs, and GMC sport-utility vehicles. Sales jumped 20%, but soft profit in North America disappointed investors and caused some to fret that GM was back to its old ways. In December 2011, GM’s North American chief, Mark Reuss, huddled with top sales executives to discuss a strategy for the beginning of this year. The group knew it couldn’t go heavy on incentives again, but worried that holding the line on them would displease dealers, turn off some customers, and mean a weak monthly sales performance. “We all had to sit back and think about it and decide how comfortable we were with what was going to happen,” recalled sales chief Don Johnson. In the end, GM chose to cut incentives. On Jan. 30, the night before auto makers would report their January sales totals, Mr. Johnson barely slept, knowing GM would be the only major auto maker to show a decline from a year ago. The next day, Chrysler said its sales had risen 44% in January from the year before, and Ford had a 7.3% rise. GM’s sales fell 6%. “It is so important for the company to guard against focusing on [market] share over profitability,” said Harry Wilson, who was a member of the Obama administration’s automotive task force when it oversaw the restructuring of GM. Losing that focus, he said, would be one of the biggest threats to GM’s profitability…. Amid the turnover, GM slimmed down dramatically. It cut its global work force to 208,000 from 263,000 in 2008. The number of union workers in the U.S. fell to 49,000 from 62,000. GM closed 15 plants in the U.S., shed four of its eight brands and trimmed its model line to 49 cars and trucks from 86. According to GM executives, achieving a healthier margin is becoming the company’s main focus. For salaried executives, for example, annual bonuses are based largely on the company’s margin. Recently, when GM released global sales figures showing it had regained from Toyota the title of world’s largest auto maker, Mr. Akerson was asked about his feelings on reclaiming the crown. GM, he replied, needs to focus “on profits and margins and not necessarily try to post numbers on the board.”

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