Chapter 3.

Planning
What is Planning and its Nature, Importance, and Types

Planning is the first of essential managerial functions. Planning is important as by nature it

Planning is the process by which managers establish goals and define the methods by which
these goals are to be attained. Planning involves selecting missions and objectives and the
actions to achieve them; it requires decision making, which is choosing from among
alternative future courses of action.

It is, therefore, a rational approach to achieving pre-selected objectives.

Planning is thus taken as the foundation for future activities. Newman has thus defined it
as, “Planning is deciding in advance what is to be done; that is a plan is a projected course of
action.”

So, planning can be thought of as deciding on a future course of action. It may also be treated
as a process of thinking before doing it.

Management has to plan for long-range and short-range future direction by looking ahead into
the future, by estimating and evaluating the future behavior of the relevant environment and
by determining the enterprise’s own desired role.
Planning involves determining various types and volumes of physical and other resources to be
acquired from outside, to allocate these resources in an efficient manner among competing
claims and to make arrangements for the systematic conversion of these resources into useful
outputs.

As it is clear from the above discussion, plans have two basic components: goals and action
statements.

Goals represent an end state — the targets and results that managers hope to achieve.

Action statements represent the means by which an organization goes ahead to attain its goals.
Planning is a deliberate and conscious act by means of which managers determine a course of
action for pursuing a specific goal.

Planning to a manager means thinking about what is to be done, who is going to do it, and how
and when he will do it. It also involves thinking about past events (retrospectively) and about
future opportunities and impending threats (prospectively).

Planning enquirers about organizational strengths and weaknesses and involves decision
making about desired ways and means to achieve them.

There are, however, differences between decision making and planning. Decisions can be made
without planning but planning cannot be done without making decisions.

Nature of Planning

The nature of planning can be understood by examining its four major aspects. They are;

1. It is a contribution to objectives,

2. It is primacy among the manager’s tasks.

3. It is pervasiveness, and

4. The efficiency of resulting plans.

The contribution of Planning to the Attainment of Objectives

Since plans are made to attain goals or objectives, every plan and all its support should
contribute to the achievement of the organization’s purpose and objectives.

An organized enterprise exists to accomplish group objectives through willing and purposeful
co-operation.
Primacy of Planning

That planning is the prime managerial function is proved by the fact that all other functions
such as organizing, staffing, leading and controlling are designed to support the
accomplishment of the enterprise’s objectives.

Planning quite logically, therefore, comes first before executing all other managerial
functions as it involves establishing the objectives necessary for all group efforts. Also, all the
other managerial functions must be planned if they are to be effective.

Likewise, planning and controlling are inextricably bound up. Control without a plan is
meaningless because the plan provides the basis or standard of control.

Pervasiveness of Planning

Planning is a unique and universal function of all managers.

The character and scope of planning may vary with each manager’s authority and with the
nature of the policies and plans outlined by superiors, but all managers must have some
function of planning.

Because of one’s authority or position in the managerial hierarchy, one may do more or less
planning, but some kind or amount of planning a manager must do.

According to Weihrich and Koontz; “All managers, from presidents to first-level supervisors –
plan.”

The Efficiency of Plans

Plans should not only be effective, but also efficient. The effectiveness of a plan relates to the
extent to which it accomplishes the objectives.

The efficiency of the plan, however, means its contribution to the purpose and objectives,
offset by the costs and other factors required to formulate and operate it.

Plans are efficient if they achieve their objective at a reasonable cost when such a cost is the
measure not only in terms of time, money or production but also in terms of satisfaction of the
individual or group.

Both conceptual and practical reasons are put forward in support of planning. Two conceptual
reasons supporting systematic planning by managers are limited resources and an uncertain
environment.
Meeting the Challenge of Resource Scarcity

Resource scarcity is a very important consideration for any organization today. There would be
no need for planning if material, financial and human resources were unlimited and cheap.

Planners in both private business and public agencies are challenged to stretch their limited
resources through intelligent planning.

Otherwise, wasteful inefficiencies would give rise to higher prices, severe shortages, and great
public dissatisfaction.

Facing Environmental Uncertainty

The second most important conceptual reason is that organizations continually face
environmental uncertainty in the course of accomplishing the tasks.

Organizations meet this challenge largely through planning safeguards.

Some organizations do this job better than others partly because of their different patterns of
response to environmental factors beyond the organization’s immediate control.

Besides, managers have several practical reasons for formulating plans for themselves, their
employees, and various organizational units, viz.,

1. to offset uncertainty and change;

2. to focus organizational activity on a set of consciously created objectives;

3. to provide a coordinated, systematic roadmap for future activities;

4. to increase, economic efficiency via efficient operation; and

5. to facilitate control by establishing a standard for subsequent activities.

Planning and Performance

Although organizations that use formal planning do not always outperform those that do not
plan, most studies show positive relationships between planning and performance.

Effective planning and implementation play a greater part in high performance than does the
amount of planning done.
Studies have shown that when formal planning has not led to higher performance, the external
environment is often the reason.

The Role of Goals and Plans in Planning

Planning is often called the primary management function because it establishes the basis for
all other functions.

Planning involves two important elements: goals and plans. Goals (often called objectives) are
desired outcomes for individuals, groups, or entire organizations.

4 Types of Plan

There are main 4 types of plan;

1. Hierarchical Plans:
These plans are drawn at three major hierarchical levels, namely, the institutional, the
managerial and the technical core. The plans for these three levels are;

 Strategic plan.

 Administrative or Intermediate plan.

 Operational plans can also be categorized according to frequency or

2. Standing Plans:
Standing plans are drawn to cover issues that managers face repeatedly. Such a standing plan
may be called a standard operating procedure (SOP). Generally, five types of standing plans are
used;

 Mission or purpose

 Strategy

 Policies

 Rules

 Procedures

3. Single-use Plans:
Single-use plans are prepared for single or unique situations or problems and are normally
discarded or replaced after one use. Generally, four types of single-use plans are used. These
are;

 Objectives or Goals

 Programs

 Projects

 Budgets

4. Contingency Plans:
Contingency plans are made to deal with situations that might crop up if these assumptions
turn out to be wrong. Thus contingency planning is the development of alternative courses of
action to be taken if events disrupt a planned course of action.