Management
A Practical Introduction
Third Edition
Angelo Kinicki &
Brian K. Williams
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
Chapter 5: Planning
The Foundation of Successful
Management
Planning & Uncertainty
Fundamentals of Planning
The Planning/Control Cycle
Management by Objectives
Project Planning
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
2
5.1 Planning & Uncertainty
HOW CAN PLANNING HELP MANAGERS
DEAL WITH UNCERTAINTY?
 Planning: 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.
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
3
5.1 Planning & Uncertainty
HOW CAN PLANNING HELP MANAGERS DEAL
WITH UNCERTAINTY?
Planning is used together with strategic management and
evolves from the company’s mission and vision
Planning covers strategic planning (done by top
managers, tactical planning (done by middle managers), and
operational planning (done by first-line managers)
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
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5.1 Planning & Uncertainty
Figure 5.1: Planning and Strategic Management
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
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5.1 Planning & Uncertainty
WHY NOT PLAN?
Managers need to be cautious when planning for two
reasons:
1. Planning requires managers to set aside their
regular responsibilities to develop plans
2. Managers need to be flexible enough to react to
new events because there may not always be
enough time to plan
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
6
5.1 Planning & Uncertainty
HOW DOES PLANNING HELP?
There are four main benefits of planning:
1. Organizations can use plans to check their
progress toward their goals
2. Plans define the responsibilities of a firm’s
departments and coordinates their activities
3. Planning requires managers to consider what may
happen in the future
4. Planning for unpleasant contingencies helps
managers deal with uncertainty
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
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Why not plan?


Planning requires you to set
aside time to do it

Most managers are time-starved

Hard to set aside time to plan
You may have to make some
decisions without a lot of time
to plan

Even in today’s computer age, you
may not have time to plan a
decision

Plan need not be perfect to be
executable
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Kinicki/Williams, Management: A Practical Introduction ©
3e2006
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Companies, Inc. All rights reserved.
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The Benefits of Planning
1)
Planning helps you check on your progress
2)
Planning helps you coordinate activities
3)
Planning helps you think ahead
4)
Above all, planning helps you cope with uncertainty
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Kinicki/Williams, Management: A Practical Introduction ©
3e2006
©2008,
McGraw-Hill/Irwin
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Companies, Inc. All rights reserved.
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5.1 Planning & Uncertainty
There are three types of uncertainty:
1. State Uncertainty
2. Effect Uncertainty
3. Response Uncertainty
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
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Three Types of Uncertainty
“What possible harmful event could occur?”
 State Uncertainty: when the environment is
considered unpredictable.
 Example: the uncertainty regarding the
weather
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3e2006
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Companies, Inc. All rights reserved.
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Three Types of Uncertainty
“What possible harmful impact might an
environmental change have?”
 Effect Uncertainty: when the effects of
environmental changes are unpredictable.
 Example: losing the trail in a snowstorm and
risking hypothermia.
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Kinicki/Williams, Management: A Practical Introduction ©
3e2006
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McGraw-Hill/Irwin
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Companies, Inc. All rights reserved.
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Three Types of Uncertainty
“What possible harmful consequence
might a decision have?”
 Response Uncertainty: when the
consequences of a decision are uncertain.
 Example: you might have a cell phone in a
snowstorm, but someone has to receive
the call.
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Kinicki/Williams, Management: A Practical Introduction ©
3e2006
©2008,
McGraw-Hill/Irwin
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Companies, Inc. All rights reserved.
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Chapter 5: Planning
CLASSROOM PERFORMANCE SYSTEM
A firm that is analyzing what possible harmful event
could occur is looking at
A) response uncertainty
B) effect uncertainty
C) defense uncertainty
D) state uncertainty
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
14
Chapter 5: Planning
CLASSROOM PERFORMANCE SYSTEM
A firm that is analyzing what possible harmful event
could occur is looking at
A) response uncertainty
B) effect uncertainty
C) defense uncertainty
D) state uncertainty
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
15
5.1 Planning & Uncertainty
Raymond E. Miles and Charles C. Snow
suggested that firms will adopt one of four
strategies to respond to uncertainty:
1. Defenders
2. Prospectors
3. Analyzers
4. Reactors
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
16
Responding to Uncertainty
 Defenders: are expert
at producing and selling
narrowly defined
products and services.
 Prospectors: focus
on developing new
markets or services
and in seeking out new
markets rather than
waiting for things to
happen.
McGraw-Hill/Irwin
 Analyzers: let the
other organizations
take the risks of
product development
and marketing and
then imitate what
seems to work best.
 Reactors: make
adjustments only when
finally forced to by
environmental
pressures.
Kinicki/Williams, Management: A Practical Introduction ©
3e2006
©2008,
McGraw-Hill/Irwin
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Companies, Inc. All rights reserved.
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5.1 Planning & Uncertainty
Miles and Snow also argued that firms continuously
make 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
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
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5.2 Fundamentals Of Planning
WHAT IS INVOLVED WITH PLANNING?
Planning translates an organization’s mission
(purpose or reason for being) into objectives
The mission statement answers the question “what
is our reason for being?”
The vision statement answers the questions “what
do we want to become where do we want to go
strategically?”
Planning begins with the mission statement
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
20
Mission Statement
 Outline of the fundamental purposes of the
organization
 Should address:
 Organization’s self-concept
 Company philosophy and goals
 Long-term survival
 Customer needs
 Social responsibility
 Nature of company’s product or service
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Kinicki/Williams, Management: A Practical Introduction ©
3e2006
©2008,
McGraw-Hill/Irwin
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Companies, Inc. All rights reserved.
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The World Bank’s Mission
1)
In the last chapter, we learned about the World Bank.
2)
Go to http://web.worldbank.org
3)
Explore the “about us” section
4)
What is the World Bank’s mission?
5)
Does this mission statement meet the criterion laid
out in this chapter?
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Kinicki/Williams, Management: A Practical Introduction ©
3e2006
©2008,
McGraw-Hill/Irwin
The McGraw-Hill
Companies, Inc. All rights reserved.
22
5.2 Fundamentals Of Planning
Figure 5.2: Making Plans
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
23
5.2 Fundamentals Of Planning
Having clearly defined mission and vision statements
allows three things to happen:
1. strategic planning by top management where longterm goals are determined and available resources
are identified
2. tactical planning by middle management where
contributions their departments or similar work units
can make are determined
3. operational planning by first-line managers where
how specific tasks will be accomplished using
available resources is determined
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
24
Types of Planning
 Strategic planning: top managers
decide what the organization’s longterm goals should be for the next 1-5
years with the resources they expect
to have available.
 Tactical planning: middle managers
decide what contributions their
departments or similar work units can
make with their given resources
during the next 6-24 months.
 Operational planning: first-line
managers determine how to
accomplish specific tasks with
available resources within the next 152 weeks.
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Kinicki/Williams, Management: A Practical Introduction ©
3e2006
©2008,
McGraw-Hill/Irwin
The McGraw-Hill
Companies, Inc. All rights reserved.
25
5.2 Fundamentals Of Planning
Figure 5.3: Three Levels of Management, Three
Types of Planning
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
26
5.2 Fundamentals Of Planning
The purpose of planning is to set goals and then
formulate action plans
Specific commitments to achieve a measurable
result within a stated period of time are known as
goals or objectives
Goals are put in a means-end chain where the
achievement of objectives is the means to achieve
goals or ends
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
27
Types of Goals



Strategic Goals: are set by and
for top management and focus on
objectives for the organization as a
whole.
Tactical Goals: are set by and for
middle managers and focus on the
actions needed to achieve strategic
goals.
Operational Goals: are set by and
for first-line managers and are
concerned with short-tem matters
associated with realizing tactical
goals.
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Kinicki/Williams, Management: A Practical Introduction ©
3e2006
©2008,
McGraw-Hill/Irwin
The McGraw-Hill
Companies, Inc. All rights reserved.
28
Chapter 5: Planning
CLASSROOM PERFORMANCE SYSTEM
Goals set by top management that focus on
objectives for the organization as a whole are
A) tactical goals
B) operational goals
C) strategic goals
D) organizational goals
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
29
Chapter 5: Planning
CLASSROOM PERFORMANCE SYSTEM
Goals set by top management that focus on
objectives for the organization as a whole are
A) tactical goals
B) operational goals
C) strategic goals
D) organizational goals
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
30
5.2 Fundamentals Of Planning
Once goals are set, the firm makes an action plan which
defines the course of action needed to achieve stated goals
An operating plan defines how the firm will conduct
business based on the action plan - it identifies clear targets
such as revenues, cash flow, and market share
Plans developed for activities that occur repeatedly over a
period of time are called standing plans
Standing plans consist of policies (a standing plan that
outlines the general response to a designated problem or
situation), procedures (a standing plan that outlines the
response to a particular problem or circumstance), and rules
(a standing plan that designates specific required action)
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
31
Chapter 5: Planning
CLASSROOM PERFORMANCE SYSTEM
“No smoking anywhere in the building” is an example
of a
A) policy
B) procedure
C) rule
D) request
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
32
Chapter 5: Planning
CLASSROOM PERFORMANCE SYSTEM
“No smoking anywhere in the building” is an example
of a
A) policy
B) procedure
C) rule
D) request
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
33
5.2 Fundamentals Of Planning
Plans developed for activities that are not likely to
be repeated in the future are called single-use plans
Single-use plans can be either programs
(encompass a range of projects or activities) or
projects (have less scope and complexity than a
program)
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
34
5.2 Fundamentals Of Planning
WHAT ARE SMART GOALS?
Good goals are SMART:
they should be stated in specific terms
they should be measurable or quantifiable
they should be challenging but attainable
they should be results-oriented and support the
organization’s vision
they should specify target dates by which they should be
accomplished
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
35
Chapter 5: Planning
CLASSROOM PERFORMANCE SYSTEM
Good goals should have all of the following
characteristics except
A) results-oriented
B) target date
C) supportive
D) attainable
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
36
Chapter 5: Planning
CLASSROOM PERFORMANCE SYSTEM
Good goals should have all of the following
characteristics except
A) results-oriented
B) target date
C) supportive
D) attainable
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
37
5.3 The Planning/Control Cycle
WHY HAVE PLANNING AND CONTROL?
Once an organization has a plan, it needs to make sure it
stays on track
The planning/control cycle has two planning steps, and two
control steps:
planning steps: make the plan, and carry out the plan
control steps: control the direction by comparing results with
the plan, and control the direction by taking corrective actions
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
38
Chapter 5: Planning
Figure 5.5: The Planning/Control Cycle
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
39
5.4 Promoting Goal Setting:
Management By Objectives
HOW CAN MANAGERS PROMOTE GOAL
SETTING?
Peter Drucker developed a system called Management by
Objectives (MBO) designed to motivate employees to achieve
goals
MBO has four steps:
1. Managers and employees jointly set objectives for the
employee
Goals should include improvement objectives, personal
development objectives, and maintenance objectives
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
40
5.4 Promoting Goal Setting:
Management By Objectives
2. Managers develop action plans
Action plans should be developed at each level describing
how goals will be attained
3. Managers and employees periodically review the
employee’s performance
Formal and informal meetings are used to review progress
and provide feedback
4. The manager makes a performance appraisal and rewards
the employee according to the results
Performance that meets objectives should be rewarded, and
poor performance should be addressed
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
41
5.4 Promoting Goal Setting:
Management By Objectives
If MBO is to be successful, three things must occur:
1. Top management must be committed
Commitment translates to productivity gains
2. It must be applied organization-wide
To be successful, MBO must be applied in all
divisions and departments
3. Objectives must cascade
MBO works by cascading objectives down through
the organization
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
42
Three Types of Objectives Used in
MBO
 Improvement objectives: Increase sport
utility sales by 10%
 Personal development objectives: attend
five days of leadership training
 Maintenance objectives: continue to
meet the increased sales goals specified
last quarter
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Kinicki/Williams, Management: A Practical Introduction ©
3e2006
©2008,
McGraw-Hill/Irwin
The McGraw-Hill
Companies, Inc. All rights reserved.
43
5.5 Project Planning
WHAT IS PROJECT PLANNING?
The preparation of single-use plans or projects is
called project planning
Project management involves achieving a set of
goals through planning, scheduling, and maintaining
progress of the activities that comprise the project
Project planning reduces the risk of uncertainty and
speeds up the process of getting things done
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
44
Why Project Planning Is Important
Today
1. Project Planning
1. Preparation of single-use plans or projects,
followed by…
2. Project Management
1. Achieving a set of goals through planning,
scheduling, and maintaining progress of the
activities that comprise the project
2. Fastest way of getting things done
3. Works outside usual chain of command
4. Brings people with different skills together
on a temporary basis
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Kinicki/Williams, Management: A Practical Introduction ©
3e2006
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McGraw-Hill/Irwin
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Companies, Inc. All rights reserved.
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5.5 Project Planning
Figure 5.6: The Project Life Cycle
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
46
5.5 Project Planning
All projects go through a life cycle:
1. In the definition stage, the problem is stated,
assumptions and risks are identified, goals and
objectives are determined, and the budget and
schedule are set
2. In the planning stage, facilities and equipment are
identified, people and their duties are selected, and
the schedule is considered
3. During the execution stage, the management style
and control tools are established
4. Closing occurs when the client accepts the project
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
47
The Project Life Cycle: The
Predictable Evolution of a Project
1. Definition
1. State the problem and identify goals
and objectives
2. Planning
1. Identify resources needed and
schedule of activities required
3. Execution
1. Actual work stage
2. On time and under budget
4. Closing
1. Client accepts project
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Kinicki/Williams, Management: A Practical Introduction ©
3e2006
©2008,
McGraw-Hill/Irwin
The McGraw-Hill
Companies, Inc. All rights reserved.
48
Chapter 5: Planning
CLASSROOM PERFORMANCE SYSTEM
At what stage in the project life cycle is the budget
determined?
A) definition
B) planning
C) execution
D) closing
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin
49
5.5 Project Planning
WHY IS PROJECT PLANNING IMPORTANT?
Deadlines are an essential component in the
project planning process
Deadlines help keep managers on track and
provide feedback
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50