CHAPTER ESTABLISHING ORGANISATIONAL GOALS & PLANS © 2003 McGraw-Hill Australia Pty Ltd PowerPoint Lecture outline • • • • • The planning process The nature of organisational goals How goals facilitate performance Linking goals & plans Management by objectives © 2003 McGraw-Hill Australia Pty Ltd PowerPoint The planning process • Mission The organisation’s purpose or fundamental reason for existence • Goal Future target or end result an organisation wishes to achieve • Plan Means devised for attempting to reach a goal © 2003 McGraw-Hill Australia Pty Ltd PowerPoint The planning process mission goals plans Goal attainment (organisational efficiency & effectiveness) © 2003 McGraw-Hill Australia Pty Ltd PowerPoint The planning process ‘Setting goals & developing plans leads to goal attainment and ultimately, to organisational efficiency & effectiveness.’ © 2003 McGraw-Hill Australia Pty Ltd PowerPoint Organisational mission ‘Essentially, planning builds on the organisation’s mission, the organisation’s purpose or fundamental reason for existence.’ © 2003 McGraw-Hill Australia Pty Ltd PowerPoint Organisational mission Mission statement may: • Be unwritten • Address customers, products/services, location, technology, concern for survival, philosophy, self-concept, concern for public image, concern for employees (David 1989) © 2003 McGraw-Hill Australia Pty Ltd PowerPoint Nature of organisational goals • Benefits of goals – – – – Increases performance Clarifies expectations Facilitates control Increases motivation • Levels of goals – Operational goals (base) – Tactical goals (mid) – Strategic goals (top) © 2003 McGraw-Hill Australia Pty Ltd PowerPoint Levels of goals • Top managers Organisational perspective strategic goals strategic plans • Middle managers Departmental perspective • 1st level managers Unit/individual perspective tactical goals operational goals tactical plans operational plans © 2003 McGraw-Hill Australia Pty Ltd PowerPoint Goals and performance Key aspects: • Goal content • Goal commitment • Work behaviour • Other process components • Possible problems © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 10 Goal content Content should be: • Challenging • Attainable • Specific/measurable • Time limited • Relevant © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 11 Goal commitment Influenced by: • Supervisory authority • Peer & group pressure • Public display • Expectations of success • Incentives & rewards • Participation © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 12 Goals & work behaviour Goals & commitment affect work behaviour: • Direction • Effort • Persistence • Planning © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 13 Goals & other process components Job process components affect performance: • Job knowledge & ability • Task complexity • Situational constraints © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 14 Goals & possible problems Possible problems with goals: • Excessive risk taking • Increased stress • Undermined self-confidence • Ignored non-goal areas • Excessive short-run thinking • Dishonesty & cheating © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 15 Linking goals & plans • • • • Levels of plans Extent of recurring use Time spans of goals & plans Plans & innovation © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 16 Linking goals & plans Levels of plans: • Strategic • Operational • Tactical Recurring use: • Single use • Standing planspolicies, procedures, rules Time span of goals /plans: • Short • Intermediate • Long range Innovation supported by: • Mission statement • Goal content & process • Planning content & process © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 17 Possible obstacles to planning Environmental change Manager hostility Pressure of day-to-day work Low levels of manager skill & knowledge Domination by specialists © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 18 Management by objectives ‘Process through which specific goals are set collaboratively for the organisation as a whole and every unit within it; the goals are then used as a basis for planning, managing organisational activities, and assessing and rewarding contributions.’ © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 19 Management by objectives Steps in the MBO process: • Develop organisational goals • Establish specific goals for departments • Formulate action plans • Implement & maintain ‘self-control’ • Review progress periodically • Appraise performance © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 20 Management by objectives Strengths: Weaknesses: • Helps link goals & plans • Clarifies priorities, expectations • Fosters organisational communication • Builds member motivation • Needs strong, enduring commitment • Requires training of managers • May be misused (i.e for punishment) • Risk of dominance of quantitative goals © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 21 Management by objectives MBO assessed: • Can heighten organisational performance • Short-term focus of US, Australian & NZ organisations limits application • 20–25% success rate © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 22 Lecture summary • The planning process – – Major components Organisational mission statement • The nature of organisational goals – – – – – – Benefits of goals Levels of goals Goals & performance Work behaviour Other work processes Possible problems with goals © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 23 Lecture summary • How goals facilitate performance – Direction, effort, persistence & planning • Linking goals & plans – Levels, recurrent use, time spans, promoting innovation – Possible obstacles to planning • MBO: Management by objectives – The key steps in MBO process – Strengths & weaknesses © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 24 [...]... manager skill & knowledge Domination by specialists © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 18 Management by objectives ‘Process through which specific goals are set collaboratively for the organisation as a whole and every unit within it; the goals are then used as a basis for planning, managing organisational activities, and assessing and rewarding contributions.’ © 2003 McGraw-Hill Australia... organisations limits application • 20–25% success rate © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 22 Lecture summary • The planning process – – Major components Organisational mission statement • The nature of organisational goals – – – – – – Benefits of goals Levels of goals Goals & performance Work behaviour Other work processes Possible problems with goals © 2003 McGraw-Hill Australia Pty Ltd... Australia Pty Ltd PowerPoint 19 Management by objectives Steps in the MBO process: • Develop organisational goals • Establish specific goals for departments • Formulate action plans • Implement & maintain ‘self-control’ • Review progress periodically • Appraise performance © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 20 Management by objectives Strengths: Weaknesses: • Helps link goals & plans • Clarifies... Increased stress • Undermined self-confidence • Ignored non-goal areas • Excessive short-run thinking • Dishonesty & cheating © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 15 Linking goals & plans • • • • Levels of plans Extent of recurring use Time spans of goals & plans Plans & innovation © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 16 Linking goals & plans Levels of plans: • Strategic • Operational... expectations • Fosters organisational communication • Builds member motivation • Needs strong, enduring commitment • Requires training of managers • May be misused (i.e for punishment) • Risk of dominance of quantitative goals © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 21 Management by objectives MBO assessed: • Can heighten organisational performance • Short-term focus of US, Australian & NZ organisations... Operational • Tactical Recurring use: • Single use • Standing planspolicies, procedures, rules Time span of goals /plans: • Short • Intermediate • Long range Innovation supported by: • Mission statement • Goal content & process • Planning content & process © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 17 Possible obstacles to planning Environmental change Manager hostility Pressure of day-to-day work...Goal content Content should be: • Challenging • Attainable • Specific/measurable • Time limited • Relevant © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 11 Goal commitment Influenced by: • Supervisory authority • Peer & group pressure • Public display • Expectations of success • Incentives & rewards • Participation © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 12 Goals & work behaviour Goals. .. commitment affect work behaviour: • Direction • Effort • Persistence • Planning © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 13 Goals & other process components Job process components affect performance: • Job knowledge & ability • Task complexity • Situational constraints © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 14 Goals & possible problems Possible problems with goals: • Excessive risk taking... McGraw-Hill Australia Pty Ltd PowerPoint 23 Lecture summary • How goals facilitate performance – Direction, effort, persistence & planning • Linking goals & plans – Levels, recurrent use, time spans, promoting innovation – Possible obstacles to planning • MBO: Management by objectives – The key steps in MBO process – Strengths & weaknesses © 2003 McGraw-Hill Australia Pty Ltd PowerPoint 24