Goals and Plans

Planning is often called the primary management function because it

establishes
the basis for all the other things managers do as they organize,
lead, and control. It involves two important aspects: goals and plans.
Goals (objectives) are desired outcomes or targets.4 They guide management
decisions and form the criterion against which work results are measured. That’s why
they’re often described as the essential elements of planning. You have to know the
desired target or outcome before you can establish plans for reaching it. Plans are
documents that outline how goals are going to be met. They usually include resource
allocations, schedules, and other necessary actions to accomplish the goals. As managers
plan, they develop both goals and plans.
Types of Goals
It might seem that organizations have a single goal. Businesses want to make a
profit and not-for-profit organizations want to meet the needs of some constituent
group(s). However, a single goal can’t adequately define an organization’s success.
And if managers emphasize only one goal, other goals essential for long-term
success are ignored. Also, as we discussed in Chapter 6, using a single goal such
as profit may result in unethical behaviors because managers and employees will
ignore other aspects of their jobs in order to look good on that one measure. 5 In
reality, all organizations
have multiple goals. For instance, businesses may want to
increase market share, keep employees enthused about working for the organization,
and work toward more environmentally sustainable practices. And a church
provides a place for religious practices, but also assists economically disadvantaged
individuals in its community and acts as a social gathering place for church
members.
We can classify most company’s goals as either strategic or financial. Financial
goals are related to the financial performance of the organization, while strategic
goals are related to all other areas of an organization’s performance. For instance,
Volkswagen states that its financial target (to be achieved by 2018) is to sell 10 million
cars and trucks annually with a pretax profit margin over 8 percent.6 And here’s an
example of a strategic goal from Uniqlo, Asia’s biggest apparel chain: It wants to be
the number-one apparel retailer in the United States.7
The goals just described are stated goals—official statements of what an
organization
says, and what it wants its stakeholders to believe, its goals are. However,
stated goals—which can be found in an organization’s charter, annual report, public
relations announcements, or in public statements made by managers—are often conflicting
and influenced by what various stakeholders think organizations should do.
For instance, Nike’s goal is “delivering inspiration and innovation to every athlete.”
Canadian company EnCana’s vision is to “be the world’s high performance benchmark
independent oil and gas company.” Deutsche Bank’s goal is “to be the leading
global provider of financial solutions, creating lasting value for our clients, our
shareholders and people and the communities in which we operate.”8 Such statements
are vague and probably better represent management’s public relations skills than
being meaningful guides to what the organization is actually trying to accomplish. It
shouldn’t be surprising then to find that an organization’s stated goals are often irrelevant
to what actually goes on.9
If you want to know an organization’s real goals—those goals an organization
actually pursues—observe what organizational members are doing. Actions define
priorities. For example, universities may say their goal is limiting class sizes, facilitating close student-
faculty relations, and actively involving students in the learning process,
but then they put students into 300+ student lecture classes! Knowing that real and
stated goals may differ is important for recognizing what you might otherwise think
are management inconsistencies.
Types of Plans
The most popular ways to describe organizational plans are breadth (strategic versus
operational), time frame (short term versus long term), specificity (directional versus
specific), and frequency of use (single use versus standing). As Exhibit 8-1 shows,
these types of plans aren’t independent. That is, strategic plans are usually long term,
directional, and single use whereas operational plans are usually short term, specific,
and standing. What does each include?
Strategic plans are plans that apply to the entire organization and establish
the organization’s overall goals. Plans that encompass a particular operational area
of the organization are called operational plans. These two types of plans differ
because strategic plans are broad while operational plans are narrow.
The number of years used to define short-term and long-term plans has declined
considerably because of environmental uncertainty. Long-term used to mean anything
over seven years. Try to imagine what you’re likely to be doing in seven years,
and you can begin to appreciate how difficult it would be for managers to establish
plans that far in the future. We define long-term plans as those with a time frame
beyond three years.10 Short-term plans cover one year or less. Any time period in between would be an
intermediate plan. Although these time classifications are fairly
common, an organization can use any planning time frame it wants.
Intuitively, it would seem that specific plans would be preferable to directional, or
loosely guided, plans. Specific plans are clearly defined and leave no room for interpretation.
A specific plan states its objectives in a way that eliminates ambiguity and
problems with misunderstanding. For example, a manager who seeks to increase his
or her unit’s work output by 8 percent over a given 12-month period might establish
specific procedures, budget allocations, and schedules of activities to reach that goal.
However, when uncertainty is high and managers must be flexible in order to
respond
to unexpected changes, directional plans are preferable. Directional plans
are flexible plans that set out general guidelines. They provide focus but don’t lock
managers into specific goals or courses of action. For example, Sylvia Rhone,
president of Motown Records, said she has a simple goal—to “sign great artists.”11
So instead of creating a specific plan to produce and market 10 albums from new
artists this year, she might formulate a directional plan to use a network of people
around the world to alert her to new and promising talent so she can increase the
number of new artists she has under contract.
Keep in mind, however, that the flexibility
of directional
plans must be weighed
against the lack of clarity of specific plans.
Some plans that managers develop are
ongoing while others are used only once. A
single-use plan is a one-time plan specifically
designed to meet the needs of a unique
situation. For instance, when Walmart wanted
to expand the number of its stores in China,
top-level executives formulated a single-use
plan as a guide. In contrast, standing plans
are ongoing plans that provide guidance for
activities performed repeatedly. Standing
plans include policies, rules, and procedures,
which we defined
in Chapter 2. An example
of a standing plan is the nondiscrimination
and anti-harassment policy developed by the
University of Arizona. It provides guidance to
university administrators, faculty, and staff as
they make hiring plans and do their jobs.