Tactical and Operational Planning

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Tactical and Operational Planning

• OUTLINE
• 1. The Nature of Tactical and Operational
  Planning
• 2.Tactical Planning
• 3. Operational Planning
• 4. Contingency Planning
• 5. Managing the Planning Process
• 6. Using MBO to Implement Plans

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1. The Nature of Tactical and Operational Planning

• Organizations can have more than one strategic
  plan, but they usually don't have large numbers
  of them. In contrast, tactical plans are
  generally located in the middle of the
  organization, have an intermediate time horizon,
  and are less broad in scope. Several tactical
  plans are likely to be developed during the
  course of carrying out a strategic plan. Finally,
  operational plans are located at the lower levels
  of the organization, have a short time horizon,
  and are relatively narrow in scope.
• The various plans are interrelated.
• Tactical plans tend to be derived from strategic
  plans. They also affect one another and may
  provide feedback into the original strategy.
  Operational plans derive primarily from tactical
  plans and, to a lesser degree, from strategic
  plans. Operational plans, too, are interrelated
  and provide feedback to higher-level plans.

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Relationship among Strategic, Tactical and
Operational Plans
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2.Tactical Planning

• Strategy focuses on resources, environment, and
  mission, whereas tactics deal primarily with
  people and action.

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Developing and Executing Tactical Plans

• Developing Tactical Plans
• Effective tactical planning depends on many
  factors that vary from one situation to another,
  but there are some guidelines. First, the manager
  needs to recognize that tactical planning must
  address a number of tactical goals derived from a
  broader strategic goal. An occasional situation
  may call for a stand-alone tactical plan, but
  most of the time tactical plans flow from and
  must be consistent with a strategic plan.
• Second, although strategies are often stated in
  general terms, tactics must deal more with
  specific resource and time issues. A strategy can
  call for being number 1 in a particular market or
  industry, but a tactical plan must specify
  precisely what activities will be undertaken to
  achieve that goal.
• Finally, tactical planning requires the use of
  human resources. Managers involved in tactical
  planning spend a great deal of time working with
  other people. They must be in a position to
  receive information from others in and outside
  the organization, process that information in the
  most effective way, and then pass it on to others
  who might make use of it.

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Developing Tactical Plans

• Implementing Tactical Plans
• First the manager needs to evaluate every
  possible course of action in light of the goal it
  is intended to reach.
• Next he or she needs to make sure each decision
  maker has the information and resources necessary
  to get the job done.
• There also need to be vertical and horizontal
  communication and integration of activities in
  order to minimize conflict or inconsistent
  activities.
• And finally, the manager must monitor ongoing
  activities derived from the plan to make sure
  they are achieving the desired results. This
  monitoring typically takes place within the
  context of the organization's ongoing control
  systems.

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Tactical Planning
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3. OPERATIONAL PLANNING

• The two most basic forms of operational plans
  are
• single-use plans
• standing plans.

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OPERATIONAL PLANNINGSingle-use plans

• Single-use plans are developed to carry out a
  course of action that is not likely to be
  repeated in the future. Most organizations find
  it necessary to develop single-use plans on a
  regular basis for a wide range of activities. The
  activities being planned may be fairly
  unimportant or extremely important to the
  organization.

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OPERATIONAL PLANNINGSingle-use plans

• The two most common forms of single-use plans
  are programs and projects.
• A program is a single-use plan for a large set
  of activities. It could consist of identifying
  procedures for introducing a new product line,
  opening a new facility, or changing the
  organization's mission. Guidelines for effective
  program development include the following
• 1. Divide the total set of activities into
  meaningful steps.
• 2. Study the relationships among steps,
  taking special note of any required sequence of
  steps.
• 3. Assign responsibility for each step to
  appropriate managers or units, or both.
• 4. Determine and allocate the resources needed
  for each step.
• 5. Estimate the starting and completion dates
  for each step.
• Assign target dates for the completion of each
  step.
• A project is similar to a program but is
  generally of less scope and complexity. A project
  may be a part of a broader program, or it may be
  a self-contained single-use plan.
• Projects are also used to introduce a new
  product within an existing product line or to add
  a new benefit option to an existing salary
  package.

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OPERATIONAL PLANNINGStanding Plans

• Developed for activities that recur regularly
  over a period of time
• Three kinds of standing plans are
• Policies.
• Standard operating procedures.
• Rules and regulations.

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OPERATIONAL PLANNINGStanding Plans

• Policies. As a general guide for action, a
  policy is the most general form of standing plan.
  It specifies the organization's general response
  to a designated problem or situation. A policy is
  also likely to describe how exceptions are to be
  handled.
• Standard operating procedure (SOP). An SOP is
  more specific than a policy in that it outlines
  the steps to be followed in particular
  circumstances.
• The narrowest of the standing plans, rules and
  regulations, describe exactly how specific
  activities are to be carried out. Rather than
  guiding decision making, rules and regulations
  actually take the place of decision making in
  various situations.

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4. CONTINGENCY PLANNING

• Contingency planning is the determination of
  alternative courses of action to be taken if an
  intended plan of action is unexpectedly disrupted
  or rendered inappropriate.

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5. MANAGING THE PLANNING PROCESS
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Barriers to Effective Planning

• Dynamic and Complex Environments
• Reluctance to Establish Goals
• Resistance to Change
• Constraints
• Time and Expense

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Barriers to Effective PlanningDynamic and
Complex Environments

• The nature of an organization's environment is
  often a major barrier to effective planning.
  Rapid change, technological innovation, intense
  competition, and similar factors can each make it
  difficult for an organization to accurately
  assess future opportunities and threats.

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Barriers to Effective PlanningReluctance to
Establish Goals

• Another barrier to effective planning is the
  reluctance of some managers to establish goals
  for themselves and their units of responsibility.
  The reason for this reluctance may be lack of
  confidence or fear of failure. If a manager sets
  a goal that is specific, concise, and time
  related, then whether he or she attains it is
  obvious. Managers who consciously or
  unconsciously try to avoid this degree of
  accountability are likely to hinder the
  organization's planning efforts.

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Barriers to Effective PlanningResistance to
Change

• Almost by definition, planning involves changing
  one or more aspects of the organization's current
  situation. Managers resist change for any number
  of reasons, including fear of the unknown, a
  preference for familiar goals and plans, and
  economic insecurity.

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Barriers to Effective PlanningConstraints

• Common constraints include a lack of human
  resources, a lack of financial resources, a lack
  of physical resources, government restrictions,
  strong competition, and a lack of information.

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Barriers to Effective PlanningTime and Expense

• Some managers also fail to plan effectively
  because good planning is both time consuming and
  expensive. It's easy to say, "I'm too busy to
  plan today I'll do it tomorrow," or to put off
  good planning for lack of funds. Effective
  planning takes hours and hours of time, enormous
  energy, and an unwavering belief in its
  importance. And planning may involve substantial
  financial outlays.

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Overcoming the Barriers

• Start at the Top
• Recognize the Limits to Planning
• Communication
• Participation
• Revision and Updating
• Contingency Planning

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Overcoming the BarriersStart at the Top

• Perhaps the most critical factor in overcoming
  barriers to planning is starting at the top. Top
  management must take the lead in establishing the
  importance of planning in determining the mission
  and strategy that the organization is to follow.
  Such action sets the stage for subsequent
  planning at lower levels and also reinforces the
  importance of planning to everyone in the
  organization.

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Overcoming the BarriersRecognize the Limits to
Planning

• Planning is not a panacea that will solve all of
  an organization's problems, nor is it an
  iron-clad set of procedures to be followed at any
  cost. Managers should recognize that good
  planning does not necessarily ensure success and
  that adjustments and exceptions are to be
  expected as the plan unfolds.

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Overcoming the BarriersCommunication

• Not only must planning be initiated at the top,
  but it must also be communicated to others in the
  organization. Everyone involved in the planning
  process should know what the overriding
  organizational strategy is, what the various
  functional strategies are, and how they are all
  to be integrated and coordinated.

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Overcoming the BarriersParticipation

• It is important that people responsible for
  implementing plans have a voice in developing
  them from the outset. These individuals almost
  always have valuable information to contribute,
  and because they will be implementing the plans,
  their involvement is critical People are
  usually more committed to plans that they have
  helped to shape. Even when an organization is
  somewhat centralized or uses a planning staff,
  managers from a variety of levels in the
  organization should be involved in the planning
  process.

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Overcoming the BarriersRevision and Updating

• The manager should recognize that planning is a
  dynamic process in which long-range and
  intermediate plans are frequently revised and
  updated in response to new information and the
  completion of short-range plans.

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Overcoming the BarriersContingency Planning

• Contingency planning is especially useful when
  environmental turbulence is likely. Proper
  contingency planning enables the organization to
  avoid crisis management. When a contingency event
  occurs, the prepared organization is able to make
  a smooth transition to the appropriate
  contingency plan rather than having to react
  hastily by throwing a new plan together on short
  notice.

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6. USING MBO TO IMPLEMENT PLANS

• A well-developed and widely used method for
  implementing organizational plans is called
  management by objectives, or MBO. Although some
  experts view MBO as merely a technique for
  systematizing the goal-setting process, it
  actually serves to communicate and implement a
  wide range of organizational plans across a
  number of different organizational levels.

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The Nature and Purpose of MBO

• A manager and a subordinate collaborate in
  setting goals and developing plans for the
  subordinate, with the understanding that the
  extent to which these goals are attained will be
  a major factor in evaluating and rewarding the
  subordinate's performance.
• MBO, then, is concerned with goal setting and
  planning for individual managers and their units
  or work groups, as opposed to the overall
  organization. However, goal setting and planning
  in an MBO system should start at the top of the
  organization, and the goals of top management
  should reflect the organization's overall goals.
• The purpose of MBO is to give subordinates a
  voice in the goal-setting and planning process
  and to clarify for them exactly what they are
  expected to accomplish in a given time span.

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The MBO Process
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The MBO ProcessStarting an MBO Program

• For an MBO program to be successful, it must
  start at the top of the organization. Top
  managers must communicate why they have adopted
  MBO, what they think it will do, and the fact
  that they have accepted and are committed to MBO.
  Employees must also be educated about what MBO is
  and what their role in it will be.

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The MBO Process Establishment of Organizational
Goals and Plans

• Having adopted the MBO philosophy, managers must
  develop overall organizational goals and plans.
  (This is probably already being done as a part of
  the organization's normal planning process.)
  Goals and plans are developed by top management
  and flow from the organization's basic mission
  and strategy. Some of the goals and plans will
  coincide with the organization's budgeting cycle
  others will involve a longer time. The idea is
  that goals set at the top will cascade down
  throughout the organization in a systematic way.

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The MBO Process Collaborative Goal Setting and
Planning

• The collaboration involves a series of distinct
  steps
• 1. Superiors tell their subordinates what
  organizational and unit goals and plans have been
  established. Subordinates are asked to think
  about how they can help achieve these goals.
• 2. Superiors meet with their subordinates on a
  one-to-one basis. The purpose of these meetings
  is to arrive at a set of goals and plans for each
  subordinate that both the subordinate and the
  superior have helped develop and to which both
  are committed.
• 3. Each goal should be as verifiable
  (quantitative) as possible and should specify a
  time frame for its accomplishment. In general,
  the goals should meet the three criteria of
  specificity, conciseness, and time-relatedness,
  and they should be expressed in writing. Further,
  the plans developed to achieve the goals need to
  be as clearly stated as possible and relate to
  each goal in a direct way.
• 4. Superiors must play the role of counselors
  in the goal-setting and planning meeting.
• 5. The meeting should spell out the resources
  that the subordinate will need in order to
  implement his or her plans and work effectively
  toward goal attainment.

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The MBO Process Periodic Reviews

• During the course of time specified for goal
  attainment, it is usually advisable to conduct
  periodic reviews. If the goals and plans are
  established for a one-year period, it may be a
  good idea for subordinate and supervisor to meet
  quarterly to discuss progress to date. Additions
  to, deletions from, and notes regarding the goals
  and plans of a particular employee may be
  appropriate, especially if organizational goals
  and plans have changed or if necessary resources
  are unavailable.

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The MBO Process Evaluation

• At the end of the MBO cycle, the manager meets
  with each subordinate again to review the degree
  of goal attainment. They discuss which goals the
  employee was able to meet and which were not met
  in the context of the original plans. The reasons
  for both success and failure are explored. (This
  is the diagnostic phase.) Finally, the employee
  is rewarded (praise, a pay increase, or
  promotion) on the basis of his or her goal
  attainment. In an ongoing MBO program, the
  evaluation meeting may also serve as the
  collaborative goal-setting and planning meeting
  for the next time period.

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The Effectiveness of MBO

• In fact, approximately 40 percent of the
  companies on Fortune's list of the 500 largest
  industrial firms in the United States use some
  form of MBO.
• Strengths
• A primary benefit of MBO is improved employee
  motivation. By clarifying exactly what is
  expected, by allowing the employee a voice in
  determining expectations, and by basing rewards
  on the achievement of those expectations,
  organizations create a powerful motivational
  system for their employees.
• Communication is also enhanced through the
  process of goal and plan discussion and
  collaboration. And performance appraisals may be
  done more objectively, with less reliance on
  arbitrary or subjective assessment.
• MBO focuses attention on appropriate goals and
  plans, helps identify superior managerial talent
  for future promotion, and provides a systematic
  management philosophy that can have a positive
  effect on the overall organization.
• MBO facilitates control - the process of
  monitoring progress toward goal attainment. The
  periodic development and subsequent evaluation of
  individual goals and plans helps keep the
  organization on course toward its own long-run
  goals and plans.

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The Effectiveness of MBOCriticisms

• Perhaps the major problem that can derail an MBO
  program is lack of top-management support. Some
  organizations decide to use MBO, but then its
  implementation is delegated to lower management.
  This limits the program's effectiveness, because
  the goals and plans cascading throughout the
  organization may not actually be the goals and
  plans of top management and because others in the
  organization are not motivated to accept and
  become committed to them.
• Another problem with MBO is that some firms
  overemphasize quantitative goals and plans and
  burden their systems with too much paperwork and
  record keeping. Some managers will not or cannot
  sit down and work out goals and plans with their
  subordinates. Rather, they "suggest" or even
  "assign" goals and plans to people. The result is
  resentment and a lack of commitment to the MBO
  program.