Lecture management a pacific rim focus chapter 6 establishing organisational goals and plans

CHAPTER 6
ESTABLISHING
ORGANISATIONAL GOALS &
PLANS

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Lecture outline
•
•
•
•
•

The planning process
The nature of organisational goals
How goals facilitate performance
Linking goals & plans
Management by objectives

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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.
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The planning process

mission

goals

plans

Goal attainment
(organisational
efficiency
& effectiveness)

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The planning process
‘Setting goals & developing plans leads to
goal attainment and ultimately, to
organisational efficiency & effectiveness.’

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Organisational mission
‘Essentially, planning builds on the
organisation’s mission, the organisation’s
purpose or fundamental reason for existence.’

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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).

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Nature of organisational goals
• Benefits of goals
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–
–
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Increases performance
Clarifies expectations
Facilitates control
Increases motivation

• Levels of goals
– Operational goals (base)
– Tactical goals (mid)
– Strategic goals (top)
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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

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Goals and performance
Key aspects:

• Goal content
• Goal commitment
• Work behaviour
• Other process components
• Possible problems

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Goal content
Content should be:
• Challenging
• Attainable
• Specific/measurable
• Time limited
• Relevant

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Goal commitment
Influenced by:
• Supervisory authority
• Peer & group pressure
• Public display
• Expectations of success

• Incentives & rewards
• Participation
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Goals & work behaviour
Goals & commitment affect work behaviour:
• Direction
• Effort
• Persistence
• Planning

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Goals & other process components
Job process components affect performance:
• Job knowledge & ability
• Task complexity
• Situational constraints

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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
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Linking goals & plans
•
•
•
•

Levels of plans
Extent of recurring use
Time spans of goals & plans
Plans & innovation

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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

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Possible obstacles to planning
Environmental change
Manager hostility
Pressure of day-to-day work

Low levels of manager skill & knowledge
Domination by specialists
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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.’

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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
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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

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Management by objectives

MBO assessed:
• Can heighten organisational performance
• Short-term focus of US, Australian & NZ
organisations limits application
• 20–25% success rate

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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

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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
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