What is Planning and its Nature, Importance and Types

We have already been introduced to five essential managerial functions, namely, planning, organizing, staffing, leading and controlling. This is also the widely accepted conceptual framework of management.

Planning is the most basic of all managerial functions. It 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.

– Weihrich and Koontz

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 about a future course of action. It may also be treated as a process of thinking before doing.

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 arrangement for 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. Its contribution to objectives,
  2. Its primacy among the manager’s tasks.
  3. Its pervasiveness, and
  4. The efficiency of resulting plans.

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 execution of 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 plan is meaningless, because 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. Effectiveness of a plan relates to the extent to which it accomplishes the objectives.

The efficiency of 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 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 safeguard. Some organizations do this job better than others partly because of their differing 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 co-ordinated, systematic road map 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.

3 Types of Plan

There are many 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 in these three levels are;

    • Strategic plan
    • Administrative or Intermediate plan
    • Operational plan
  2. Frequency-of-use Plans:
    Plans can also be categorized according to frequency or repetitiveness of use. They are broadly classified as;

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

      • Mission or purpose
      • Strategy
      • Policies
      • Rules
      • Procedures
    • 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
  3. 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.