Organizational Planning
(Note: This Chapter Outline corresponds to Chapter 9 within Management: Comprehension, Analysis,
and Application, Gatewood, Taylor & Ferrell, 1st edition, 1995. Numbers at right are the corresponding
page numbers for your use in referencing.)
Executive Summary: Performance is improved through the use of "well-formed" goals: goals that are
highly specific, that challenge the limits of ability, and that clearly state the action desired, the
measurement to be used and the completion date required. MBO (Management by Objectives) and
mission statements are two approaches that organizations employ to support effective development of
individual goals. MBO (Management by Objectives) disaggregates (eg, 'breaks down') organizational
goals through all levels of the hierarchical structure into 'smaller and smaller' well-formed goals in order to
improve organizational performance. The "MBO" approach is more classical and behavioral in nature. On
the other hand, management may rely on a "mission statement" that directly expresses organizational
goals to every individual, thereby removing ambiguity and so improve their ability to properly select their
own goals in order to improve organizational performance.
The "mission statement" approach is more
modern and systematic in nature.
Forming, Stating and Setting Goals
Goal Specificity
High specificity goals have higher levels of performance
(246, 476)
Example: "Can we have some quiet in here, please?"
Goal Difficulty
Low difficulty goals have lower levels of performance
(246, 477)
Lack of challenge "invites" error
Example: Copying random numbers
High difficulty goals have lower levels of performance
(246, 477)
If it looks like it can't be done, why bother?
Example: Go move a mountain!
Highest performance when difficulty of goal challenges the limits of ability
"A man's reach should exceed his grasp"
Example: Weight lifting
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high
level of
performance
low
low
ability
high
level of difficulty
Three components of a well-formed goal
(250)
Action desired
Measurement
Completion date
Example: You will the region's total sales by 20% by the end of the year. Uh, do
you mean 20% more units or 20% more dollars? Uh, do you mean the end of the
fiscal year or calendar year?
Statement of purpose is NOT included, however research shows that performance
improves if the statement includes a "because" clause, even when the reason makes little
sense!
Question:
Would this advice about components pass "the orchestra test?"
While the
information about goals and MBO given in the chapter is quite true, the approach is classical,
hierarchical and behavioral in nature, and should be "absorbed" accordingly.
Areas for Organizational Goals
(per Peter Drucker)
Some usual goals
Market standing -- share
Productivity -- units shipped
Physical & financial resources -- PP&E, cash flow
Profitability
Worker performance -- efficiency, etc.
Some less than usual goals
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(250-251)
Innovation -- new products, continual improvement
Public responsibility
Three Levels of Goals
(251-253)
Strategic goals
Long term
Tactical goals
Medium term, derived from strategic goals
Operational goals
Short term, derived from tactical goals
(If you understand what the three types of managers within a hierarchy do, there's no new
news here. This whole idea assumes a classical, hierarchical approach to management.)
MBO (Management by Objectives)
(263-265)
disaggregates organizational goals through the hierarchical structure
(265)
into well-formed, lower-level goals in order to improve organizational
performance
First developed by Sloan at General Motors and first described by Peter (263)
Drucker
Relies heavily on measurable results and strict time frames
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(265)
... just as it was said that well-formed goals should.
Evidence supports effectiveness of MBO in improving organizational
(265)
performance
MBO can have detrimental effects in terms of adapting to necessary
(265)
change
(I read these two statements to mean, that, in a static
environment, MBO is pretty good at ensuring the organization
hits the bullseye that it is aiming at)
Mission statements
(247-249)
A broad, well considered statement of the organization's highest
level goals; its mission
Purpose is to to reduce employee ambiguity and so improve their
decision making towards higher levels of performance
Example: Ben & Jerry's Ice Cream -- "To make, distribute, and sell the finest quality,
all-natural ice cream and related products in a wide variety of innovative flavors made
from Vermont dairy products. To operate the company in a way that actively recognizes
the central role that business plays in the structure of society by initiating innovative ways
to improve the quality of life of a broad community -- local, national, and international. To
operate the company on a sound financial basis of profitable growth, increasing value for
our shareholders, and creating career opportunities and financial rewards for our
employees." What action did management take when the price of milk in the open
market dropped below what was profitable for Vermont dairy farmers? What action would
management likely have taken with no mission statement?
Many are given lip service; they are framed, hung, and never looked
at again
Not a recently developed management tool
Example: Ford's "I will build a car..."
Turn out better when a broad crossection of stakeholders are involved
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(247)
An approach more modern and systematic in nature towards
developing goals
Miscellaneous
Before planning, the extent of the organization's resources must be
(249)
considered. These are constraints on any possible decision.
Contingency plan -- Plan for an alternate course of action should (263)
conditions change; "Plan B;" backup plans; disaster recovery
plans.
Relevant Readings
"Forging the Mission," in The Soul of A Business: Managing for Profit and the Common Good, Tom
Chappell, 1993, pp. 20-37.
"Living the Mission," in The Soul of A Business: Managing for Profit and the Common Good, Tom
Chappell, 1993, pp. 38-58.
Say It and Live It: The 50 Corporate Mission Statements That Hit the Mark, Patricia Jones and Larry
Kahaner, 1995.
The Practice of Management, Peter F. Drucker, 1954. (ties to GTF at pp. 250-251, 263-265)
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