4 types of plans that managers create and apply to direct business operations, monitor and control organizational activities for achieving set goals.
Types of Plans are;
- Hierarchical plans,
- Standing plans,
- Single-use plans, and
- Contingency plans.
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-
- Administrative and,
- Operational respectively.
The strategic plan generally involves planning at the top institutional level of an organization. Strategic plans define the organization’s long-term vision and how the organization intends to make its vision a reality.
In short, strategic planning is the determination of the basic long-term objectives of an enterprise and the adoption of courses of action and allocation of resources necessary to achieve these goals.
Strategies do not attempt to outline exactly how the enterprise is to accomplish its objectives since this is the task of countless major and minor supporting programs. But they furnish a framework for guiding ‘.linking and action.
Administrative or Intermediate plan
Administrative or intermediate planning is done at the level of middle management.
It is cone to allocate organizational resources and co-ordinate internal subdivisions of the organization. It is also a process of determining the contributions that sub-units can make with allocated resources.
Finally, operational planning is the process of determining how specific tasks can best be accomplished on time with available resources.
This is also done to cover the day-to-day operations of an organization. As such, many operational plans are designed to govern the workings of the organization’s technical core.
2. Standing Plans
Standing plans are drawn to cover issues that managers face repeatedly.
For example, managers may be facing the problem of late- coming quite often.
Managers may, therefore, design a standing plan to be implemented automatically each time an employee is late for work. Such a standing plan may be called standard operating procedure (SOP).
Mission or purpose, strategies, policies, procedures, rules are some of the most common standing plans.
- Mission or purpose
Mission or purpose, often used interchangeably, identifies the basic task of an organization for which it is created.For example, the mission of a University is to impart higher education. The mission of garments factory is to produce and sell ready-made garments and so on.
The strategy is another type of broad-based standing plan which helps the determination of the basic long-term objectives of an enterprise and adoption of courses of action and allocation of resources necessary to achieve these objectives.
Policies are, in most cases, standing plans. As a matter of fact, policies provide guidelines for repetitive actions.They define an area or provide limits within which decisions are to be made and ensure that the decision will be consistent with, and contribute to, an objective.Policies are types of plans that allow decision-makers some discretion to carry out a plan. Otherwise, there will be no difference between policies and rules.
Policies must allow for some discretion. Policies help decide issues before they become problems and make it unnecessary to analyze the same situation every time it comes up.It permits managers to delegate authority and still maintain control over subordinates about the matter.
There are many types of policies. Instances are found in the policies of hiring only university-trained engineers, promotion from within, encouraging an employee suggestion system for improved organizational performance, setting competitive prices etc.
Some policies could originate from customary and general ways of behavior in an organization. Some of them are put in place through verbal statements or in writing.
For example, there might be a policy in an organization that “except for token gifts of very nominal value or advertising value, no employee shall accept any gift from any supplier.” Such formal policies are usually written down in company manuals or regulations for employees.The policy is a means of encouraging discretion and initiative but within limits. The amount of discretion usually depends on the policy and the position and authority occupied in the organization.
Since policies are general in nature, they provide guidelines as to how the employees will carry out their jobs.
While policies provide managers with some flexibility in approaching various organizational problems, this generality again makes policies rather vague.
Control becomes difficult when people start interpreting policy meaning and purpose differently.
Rules Like policies, rules, too, are standing plans that guide action. Rules spell out specifically what employees are supposed to do or not to do.For example, the no-smoking campaign launched by some organizations is supported by some organizational rules. As opposed to policies, rules do not permit the exercise of individual discretion.
Instead, rules specify what actions will be taken (or not taken) and what behavior is permitted or not. Policies, on the other hand, tell people how to think about decisions to be made about actions.
Procedures Like rules, procedures are standing plans that provide guidance for action rather than speculation.They are plans that establish a required method of handling future activities. Procedures establish customary ways for handling certain activities like hiring a clerk, promoting employees, obtaining a loan from a bank. The major characteristic of a procedure is that it represents a chronological sequencing of events.
It specifies a series of steps that must be taken to accomplish a task. Specified series of steps that are required to be taken for admission into the MBA program of AUB is an example of the procedure.
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/goals, programs, projects, and budgets.
- Objectives or Goals
Objectives or goals, often used interchangeably, are the ends toward which activity is aimed. They represent not only the end point of planning but also the end toward which all other managerial functions are aimed.In fact, objectives are set in relation to a particular time period and thus the same objective is not repeated year after year, month after month or day after day. Objectives are 3 types.
Programs are plans of action followed in proper sequence according to objectives, policies, and procedures.Thus a program lays down the major steps to be taken to achieve an objective and sets an approximate time frame for its fulfillment.Programs are usually supported by budgets. A program may be a major or a minor one or long, medium or short-term one. Since it is not used in the same form once its task is over it belongs to single-use plan category.
A project is a particular job that needs to be done in connection with a general program. So a single step in a program is set up as a project.A project has a distinct object and clear-cut termination. “Projects have the same characteristics as programs but are generally narrower in scope and less complex. Projects are frequently created to support or complement a program.”
A budget is a statement of expected results expressed in numerical terms.” It is sometimes called enumerated program and most commonly expressed in terms of money i.e. Rupee, Euro, Dollar etc.They may also be expressed in terms of any measurable unit like an hour, metric ton etc. It covers a particular period of time, and once the period is over, a new budget comes into being. It not only a planning tool but also works as a controlling tool.
4. Contingency Plans
As we already know, the process of planning is based on certain assumptions about what is likely to occur in the environment of an organization.
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.
A contingency plan allows management to act immediately if such unforeseen events as strikes, boycotts, natural disasters or major economic changes render existing plans inoperable or unsuitable.