PLANNING AND DECISION MAKING Functions / process of management In 1916, Henri Fayol provided a functional approach to management in his

s book, industrial and general management . Fayols list of managerial functions includes planning, organising, commanding, coordination and controlling. In 1930s, Luther Gullick coined the functions of management in one word POSDCORB Planning, Organising, Staffing, directing, Co-ordinating, Reporting and Budgeting. The important functions of management are briefly explained as follows:

Planning

Controlling

Objectives

Organising

Directing

Process of Management 1. Planning: James Stoner states planning is a process of establishing goals and a suitable course of action for achieving those goals. The main steps in planning are stated as follows: o Analysing the internal environment to identify strengths and weaknesses. o Analysing the external environment to identify the opportunities and threats. o Setting of clear and realistic goals. o Framing alternative plans. o Studying (evaluating) the alternative plans. o Selection of the best suitable plans(s). o Implementation of the plan(s). o Review of the plan(s). 2. Organising: Louis Allen states Organising is a process of identifying and grouping of the work to be performed, defining and delegating authority and responsibility, and establishing relationships to accomplish objectives. The main steps in organising are as follows: o Determining goals of the organisation.

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Identifying the activities to be performed to achieve into departments. Grouping of the related activities into departments. Making arrangement of resources. Defining authority and responsibility. Delegating authority to managers. Establishment superior-subordinate relationships. Coordinating of activates in the organisation.

3. Staffing: It is important element of organising. Since staffing is very vital, it needs to be given proper focus. A major aspect of staffing is to find out the right person for the right job. It also involves: o Placing the right person at right job. o Performance appraisal. o Promotion and transfers. o Training and development. o Motivating and rewarding the employees. 4. Directing: The plans may be best feasible ones, the activities may be systematically organised, the staff may be highly efficient, but the organisation will not succeed if there is no proper direction. Directing involves not only instructing people what to do, but also ensuring that they know what is expected of them. The manager should help, motivates and guide his subordinates. Most of all, directing involves development of high morale of the subordinates. Directing involves three sub-functions: o Communicating: It involves transfer of massages from one person to another. Effective communication taken place only. When the massage is clearly understood and a proper feedback is received o proper action is taken. o Leading: Leading is an act of influencing subordinates to work willing towards the attainment of desired objectives. o Motivating: The manager should motivate his subordinates by providing incentives so that they work with dedication and commitment to achieve goals of the organisation. 5. Controlling: In the words James Stoner Controlling is the process of ensuring that actual activities confirm to the planned activities. In controlling, the manger monitors actual performance, and takes corrective measures, if required. Controlling involves the following steps: o Setting of standards or targets. o Implementation of tasks. o Measuring actual performance. o Comparing actual performance with plans or targets. o Finding out causes of deviations if any. o Listing out various corrective measures. o Selecting the appropriate corrective measures. o Implementation and review of corrective measures. 6. Coordination: It refers to integration of activities or actions of the subordinates by the superiors. There is a need for coordination at all levels. o The top level coordinates the activities of the middle level.

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The middle level coordinates the activities of the lower level. The lower level managers coordinate the activities of the subordinates.

Meaning and definition of Planning Planning provides a sense of direction to business activities. If you dont know where you are going, no road will take you there. Planning bridges the gap from where we are and where we want to go. Knootz and ODonnell, Planning is deciding in advance what to do, how to do it, when to do it, and who is to do it. James Stoner defines Planning is the process of establishing goals and a suitable course of action for achieving those goals. Nature and Characteristics of Planning The nature and characteristics of planning can be explained as follows: 1. Planning is Goal Oriented: Planning is goal oriented in the sense that plans are developed and executed to achieve goals. At first the goods are set, and then plans are framed to accomplish them. Planning has no meaning, unless it contributed to the achievement of goals. For instance, the goal of the production department may be to produce 10,000 units of brand A during a particular year. Accordingly, plans are drawn to achieve the desired target . 2. Future Oriented: Planning is future related activity. Necessary forecasts are made about the future and accordingly plans are made. The future may relate to one week from now, or one year from now, or even ten years from now. In other words, plans are made or the future activities whether short term, medium term, or long term. 3. Continuous Activity: Planning is a continuous activity. It is an ongoing process. Effective planning request constant and continuous checking of events. Accordingly, plans are redrawn depending upon the situation or circumstances at the time of implementation. For instance, the marketing department may plan to spend Rs. 5 crore on advertising during the year 2006-07. This budget of Rs. 5 crore may have to be increased, if a competitor resorts to aggressive advertising during 2006-07. 4. Link between the past, present, and future: Planning acts as a link between the past, present and future. Although planning is a future related activity, yet, one cannot totally ignore the past and present events and achievements while planning for the future events or achievements. It is the past experience that helps in preparing realistic future plans. 5. Primacy of planning: Planning is the primary or basic function of management. Without planning, it would be difficult to organise, to direct, and to control. When the plans are well defined and clear, it would be easy to organise the resources, to provide necessary directions, and to take proper control measures.

6. Pervasiveness of planning: Planning is the functional of every manager. The need for planning exists at all levels of managements. Planning is required not only in business organisations, but also in non-business organisations, such as government organisations, educational institutions, charitable trusts, etc. 7. Intellectual Process: The success of plans depends upon to a great extent on the intelligence of the manger. A great deal of imagination and intelligence is needed to prepare sound plans. 8. Integrated process: Every plan needs to be integrated with other plans. The plan of a section of a department needs to be integrated with those of other sections in the department to achieve departmental goals. Again, the plan of one department needs to be integrated with those of other departments in order to achieve organisational goals. Advantages of planning 1. Minimizes Risks: Planning helps to minimize or reduce risks. Potential risks are forecasted and necessary protective devices are directed well in advance. If the risks occur, then the protective devices are put into practice. The protective devices are the contingency plans that help to reduce risks. 2. Facilitates Coordination: The plans of one department are coordinated with the plans of all other concerned departments. This brings in unity among the various departments of the organisation. In other words, the concerned departments work in close harmony in the implementation of the plans. 3. Facilitates Organising: Planning enables a manager to organise the resources properly. If required, he may make arrangement for additional resources in order to achieve the planned targets. Depending upon the targets, the manager will make proper arrangement of resources. 4. Facilitates proper direction: Planning provides proper schedules or time or to when the activities need to be conducted. This facilitates the manger to direct his subordinates as and when required. Clear directions can be given to the subordinates so that they undertaken the right tasks at the right time. 5. Facilitates Control: A plan provides a yard sticks (target) against which actual performance can be compared. Such comparison will enable to find out the deviations from the plans. If deviations are noticed, the manager may take the right corrective steps at the right time. 6. Generates Efficiency: Planning enables optimum unitisation of resources. All the resources i.e., physical, financial and human resources are put to their best use. The optimum utilisations of resources enable a company to achieve highest possible returns at lowest possible costs. 7. Encourages Innovation: The planning process encourages creative thinking on the part of managers. They strive to come out with innovative ways to achieve the results as per the plans even during the tough times. The innovative ideas often bring best result to the organisation.

8. Focus on goals: Planning is goal oriented in the sense that plans are developed and executed to achieve certain goals. Every activity is directed towards the attainment of goals. Activities are conducted in a systematic and smooth manner. There is hardly any scope for haphazard activities. 9. Facilitates Decision-Making: normally, a manager frames alternative plans. After necessary analyses of the plans, the best is selected. Thus, planning facilities the choice of the best plan. Accordingly, managers take decisions to organise, to direct, and to control the activities. 10. Motivates Personnel: Professional managers frame the plans in consultation with the subordinates. When there is active involvement of the subordinates in planning, then they become highly committed to the achievement of the goods. Also, plans provide a challenge for the superiors and subordinates to achieve the targets. Thus, planning develops a motivated and dedicated work force in the organisation. Disadvantages / Constraints of Planning The constraints or limitation of planning are as follows: 1. Time Consuming: There is a need to collect and analyse data before framing plans. The subordinates and the concerned departments may have to be consulted. There may be a need to get approved from higher authorities. All this takes a good amount of time. 2. Paper Work: Planning required a good deal of paper work. Quite often, plans are drawn and re-drawn. Necessary reports are required to be collected from subordinates to prepare the final plans. Paper work is also involved in taking approval of the plans from the top management. 3. Expensive: A good amount of money is spent on collecting and analysing data which is required to frame the plans. The company may consult professionals before finalising the plans, for which consultancy fees need to be paid. 4. Generates Rigidity: Managers may tend to achieve only what has been planned. Even if the situation permits them to achieve on the higher side, they may not put extra efforts. However, managers and their subordinates can be motivated to put in their best efforts and not just to stick to planned targets. 5. Generates Frustration: At times, managers may not be able to achieve the planned targets, despite their best efforts. This may generates frustration and loss of initiative on the part of the mangers and others. However, necessary motivation and training may be given so that the managers and others can easily over come the frustration and stress. 6. Dangers of Over targeting: There are cases, where functional managers plan the targets on the higher side. This is more so on the part of the over enthusiastic managers. Again, the managers may get wrong data, or their may be wrong interpretation of data and as such over-targeting.

7. Danger of Under-targeting: There are cases, where the managers deliberately frame the plans with lower targets. This is because they can easily attain such targets and receive complaints for the same. This is more so in government and public sector organisations. There may be genuine cases of under-targeting due to wrong data collection and interpretation. 8. Danger of human Error: Plans are based on forecasts. A good deal of experience and judgment is necessary to forecast and frame the plans. There are cases where even the intelligent managers failed to judge certain factors and as such the plans were unrealistic. Thus, planning is subjective to human error or poor judgment. 9.