ESTABLISHING GOALS

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Chapter 3

• ESTABLISHING GOALS

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Planning defined

• Formal planning specific goals are formulated,
  committed to writing, and made available to
  organizational members.
• Informal planning Planned in the head, but not
  written down. There is little or no sharing of
  these plans with others.

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What Is Productivity?

• Levels
• Individual.
• Group.
• Organization.
• Economy
• Creates jobs.
• Enhances production-dominance.
• Encourages job security.
• Affords increased RD to continue to find new
  ways to increase productivity.

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Productivity

• Productivity
• Output /
• Labor Capital Materials

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EXHIBIT 31 Industries in which the United States
is number one in productivity.
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Types of plans

• Strategic plan
• Tactical plan
• Short-Term plan
• Intermediate-Term plan
• Long-Term plan
• Standing plan
• Single-use plan

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Planning in the Organization

• Strategic Planning
• Organizational planning that includes the
  establishment of overall goals and positioning of
  organizations products or services against the
  competition.
• Tactical Planning
• Organizational planning that provides details
  plans as to how to achieve the organizational
  goals as defined in the strategic plan.

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What Is the Breadth of Planning?

• Strategic planning
• Covers the entire organization and overall goals.
• Positions the organizations products or services
  against the competition.
• Focus is on the big picture.
• Planning generally done by top managers.
• Tactical planning
• Specific plans on how overall goals are to be
  achieved.
• Focus is on the picture within the big picture.
• Planning generally done by supervisors.

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How Do Planning Time Frames Differ?

• Short-term plans
• Less than one year in length
• Supervisory-level planning horizon.
• Intermediate-term plans
• Cover from one to three years.
• Realm of middle-level managers.
• Long-term plans
• Longer than three years.
• Done by top-level managers.

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How Are Plans and Supervisory Levels Linked?

• Long-term strategic planning
• Sets the direction for all other planning.
• Overall strategy defined by top management.
• Once done, other levels of the organization
  develop plans.
• Intermediate-term tactical planning
• Developed by mid-level managers to carry out
  top-level plans.
• Short-term tactical planning
• Developed by supervisors to facilitate mid-level
  managers plans.

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Continuous improvement

• Process
• Benchmarking
• ISO 9000 Series
• Sigma Six

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Can Continuous-Improvement Programs Be a Help in
Planning?

• Continuous-Improvement Programs
• Can be used to enhance planning efforts.
• Requires recognizing customer wants and needs.
• Requires strategic innovation.
• Can apply to organizations worldwide, public and
  private, in their planning efforts.
• Benchmarking
• Search for the best practices among competitors
  and non-competitors that lead to superior
  performance.
• Compare actual results to what is expected.
• ISO 9000
• Designed by the International Organization for
  Standardization.
• Assures customers that specific quality
  guidelines are used to test products.
• ISO certification indicates adherence to
  international quality standards.

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Six Sigma

• Six Sigma Defined
• A philosophy and measurement process that
  attempts to design in quality as a product is
  being made or a service is being delivered.

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How Can Attaining Six Sigma Signify Quality?

• Six Sigma
• Developed at Motorola in the 1980s.
• Premise behind Six Sigma is to design, measure,
  analyze, and control the input side of
  production.
• Measures quality before the product is made
  defects may be reduced before production
  processes have been completed.

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EXHIBIT 33Six sigmatwelve process steps.
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Key Planning Guides

• Once an organization's strategy and overall goals
  are in place, supervisors and managers in the
  company design additional plans to help guide
  decisions and handle plan and unplanned
  situations.

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Standing plans

• A plan that can be used over and over again by
  managers faced with recurring activities
• Policies
• Broad guidelines for managerial actions.
• Define the limits within which managers must stay
  as they make decisions.
• Typically established by top management.
• Allow managers to save time by handling similar
  situations in a predetermined and consistent
  manner.
• Procedures
• Standardized procedures to handle repetitive
  problems.
• Once a problem is made clear, so is the procedure
  to handle it.
• As with policies, must be consistent.
• Can be created by supervisors to adapt to
  changing conditions which bring new or recurring
  problems.
• Rules
• Explicit statements that tell the supervisor what
  he/she ought to ought not to do.
• Frequently used to confront recurring problems.
• Simple to follow.
• Ensure consistency.
• Permit supervisor to make discipline decisions
  rapidly and with a high degree of fairness.

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What Are Single-Use Plans?

• Programs
• Single-use sets of plans for specific
  undertakings.
• Are developed for undertakings that are
  nonrecurring and require a set of integrated
  plans.
• Budgets
• Numerical plans.
• Typically anticipate results in dollar terms for
  a specific time period.
• Used as control tools when they provide standards
  against which resource consumption can be
  measured and compared.
• Important for supervisors to be involved in their
  preparation.

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EXHIBIT 34 Department expense budget.
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EXHIBIT 35 A sample Gantt chart.
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Planning Tools

• Schedules Detailed planning of activities to be
  done, the order n which they are to be done, who
  is to do each activity, and when the activities
  are to be completed
• Determine what activities have to be done, the
  order in which they are to be done, who is to do
  each, and when they are to be completed.

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Planning Tools(Continued)

• Gantt chart A bar chart with items on the
  horizontal axis and activities to be scheduled on
  the vertical axis, shows when tasks are supposed
  to be done and compares actual progress on each
  task.
• Shows planned and actual activities.
• Planning comes in deciding what activities need
  to be done, the order in which they need to be
  done, and the time that should be allocated to
  each.
• Becomes a control device when manager looks for
  deviations from the plan.
• Best when activities being scheduled are few in
  number and independent of each other.

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Planning Tools(Continued)

• PERT chartUsed for scheduling complex projects.
• Depicts the sequence of activities need to
  complete a project, and the time or costs
  associated with each.
• Makes it easy to compare what effect alternative
  actions will have on scheduling and costs.
• Allows supervisors to monitor a projects
  progress, identify possible bottlenecks, and
  shift resources as necessary to keep on schedule.
• PERT events
• End-points on a PERT chart that represent the
  completion of major activities.
• PERT activities
• Time or resources required to progress from one
  event to another.
• PERT critical path
• The longest sequence of events and activities in
  a PERT chart.

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Developing a PERT chart

• Identify every significant activity that must be
  achieved for a project to be completed.
• Determine the order in which these events must be
  completed.
• Diagram the flow of activities from start to
  finish
• Compute a time estimate.
• Determine a start and finish date for each
  activity and the entire project.

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EXHIBIT 37 PERT chart for the furnace
modernization project.
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EXHIBIT 3-8What may happen in traditional
objective setting.
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Management by objectives

• Concept defined
• Key to effectiveness
• Goal specificity
• Participation
• Time limits
• Performance feedback

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MBO

• Management by objectives (MBO)
• Is a system by which employees jointly determine
  specific performance objectives with their
  supervisors progress towards objectives is
  periodically reviewed, and rewards are allocated
  on the basis of this progress.

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Effective goal-setting

• Identify an employees key job tasks.
• Establish specific and challenging goals for each
  task.
• Specify deadlines for each goal.
• Allow the employee to actively participate.
• Prioritize goals.
• Rate goals for difficulty and importance.
• Build in feedback mechanisms to assess goal
  progress.
• Commit rewards contingent on goal attainment.

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How Were Objectives Set in Years Past?

• Control imposed by top management traditionally
• Traditional objective setting was done at the
  top, then broken down into sub-goals for each
  level in the organization.
• Traditional objectives were largely
  non-operational defined broadly and then turned
  into specific at lower levels of the organization.

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What Is the Key to Making MBO Effective?

• Goal specificity
• Wherever possible, goals should be quantified,
  tangible, and measurable.
• Participation
• Supervisor and subordinates jointly determine
  goals.
• Time limits
• Objectives should be time-frame specific.
• Performance feedback
• Should be ongoing to allow employee to monitor
  and correct his

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EXHIBIT 3-9Comparison of entrepreneurs and
traditional supervisors.
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Why Might MBO Work for You?

• MBO
• Gives both managers and employees clarity and
  direction.
• Increases employee involvement and commitment.
• Morale builder as employees feel empowered to
  choose the means for obtaining their objectives.
• More equitable reward allocation simulates
  employee motivation.

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The Entrepreneurial Supervisor

• What Is Entrepreneurship?
• Entrepreneurs
• See an opportunity and go for it.
• Innovative.
• Bold.
• Venturesome
• Risk-Taking
• Entrepreneurs vs. small-business supervisors
• Not all entrepreneurs are small-business
  supervisors.

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Do Entrepreneurs Possess Similar Characteristics?

• Common characteristics
• Hard work.
• Self-confidence.
• Optimism.
• Determination.
• High energy level.
• Good luck.
• Business plan
• Written document that lays out the entrepreneurs
  vision.

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How Do Entrepreneurs Compare with Traditional
Supervisors?

• Primary Motivation
• For traditional supervisor, promotion and
  corporate rewards.
• For entrepreneur, independence, and opportunity
  to create.
• Time orientation
• For traditional supervisor, achievement of
  short-term goals.
• For entrepreneur, achievement of long-range
  goals.
• Risk propensity
• For traditional supervisor, low.
• For entrepreneur, moderate.