Planning is the management function of setting goals and determining how to meet them. For supervisors, this process includes figuring out what tasks the department needs to complete to achieve its goals, as well as how and when to perform those tasks. For action-oriented people, planning can seem time consuming and tedious. But the need for planning is obvious, especially if you consider what would happen in an organization in which no one plans. For example, if a store did not implement planning, customers would not know when the store would be open, and employees would not know what inventory to order or when to order it. The location of the store might be an accident, with no marketing research to determine where business would be sufficient to generate a profit. The managers would not know how many employees to hire, because they would have no idea how many customers they would be serving. Clearly, this business would fail in the mission of providing its customers with high-quality service and merchandise.
Supervisors and other managers plan for several reasons. Knowing what the organization is trying to accomplish helps them set priorities and make decisions aimed at accomplishing their goals. The act of planning forces managers to spend time focusing on the future and establishes a fair way to evaluate employee performance. It helps managers use resources efficiently, thus minimizing wasted time and money. Time spent in planning a project can reduce the time required to carry it out. The total time for planning and execution can actually be shorter for a thoroughly planned project than for one started in haste.
Many inexpensive software packages can help supervisors plan projects efficiently. Templates that supervisors can customize for their own purposes lead the way through the various planning steps and help establish project phases and the order in which they need to be accomplished, project goals and deadlines, people and departments involved in the project, anticipated obstacles and action plans for overcoming them, and budgets and other resources.
Finally, the other functions managers perform—organizing, staffing, leading, and controlling—all depend on good planning. Before supervisors and other managers can allocate resources and inspire employees to achieve their objectives, and before they can determine whether employees are meeting those objectives, they need to know what they are trying to accomplish.
Supervisors rarely have much input into the way an organization does its planning. Rather, they participate in whatever process already exists. To participate constructively, supervisors should understand the process.
Planning centers on the setting of goals and objectives. Objectives specify the desired accomplishments of the organization as a whole or of a part of it. According to one school of thought, goals are objectives with a broad focus. For example, an organization seeks to be the number one supplier of nursing home care by the end of next year. That would be considered a goal. In contrast, the accounting department seeks to have all invoices mailed within two weeks of a patient’s departure; this is more specific and therefore an objective. This text uses the term objectives in most cases and treats the terms objectives and goals as synonyms.
No matter which term is used, an organization’s goals identify what its people should be striving toward. At General Cable Corporation, management wanted to reduce an expensive problem: scrapped materials, which amounted to 4 percent of the company’s cost of materials. After analyzing where most of the scrap was occurring, General Cable made sure that all employees saw and understood the charts pinpointing the problem areas. Then employees began looking for ways to reduce scrap by setting goals to fix problems in the costliest areas. Four years later, the scrap rate was down to 1.1 percent with a goal of 0.85 for the following year. Because General Cable makes sure equipment operators have information about where problems are occurring, these employees can contribute to meeting the scrap reduction goals. For an example of how some banks are choosing their objectives, see the “Supervision across Industries” box.
Planning should begin at the top, with a plan for the organization as a whole. Strategic planning is the creation of long-term goals for the organization. These goals typically include the type and quality of goods or services the organization is to provide and, for a business, the level of profits it is to earn.
General Electric (GE), for example, has a broad strategy of seeking ways to innovate so that the company can sell more profitable new products rather than competing just by keeping prices low. The company has granted funding to the GE Lighting business group to develop a new technology called organic lightemitting diodes (OLEDs). Scientists at GE Lighting hope the company will be able to produce OLEDs in rolls of flexible material such as plastic that can be used to make light-up ceiling tiles or curtains. As this technology has improved, it has shown the potential to replace traditional light bulbs in the future. Management has determined that OLED development fits its overall Business Strategy. However, getting the products to market may take another 15 years.
Usually it is top managers who engage in strategic planning; in other cases, a planning department prepares objectives for approval by top management. Either way, the managers at the top decide where the organization should be going.
The objectives for divisions, departments, and work groups support the goals developed in strategic planning. These objectives, developed through operational planning, specify how the group will help the organization achieve its goals. Operational planning is performed by middle managers and supervisors. Table 6.1 summarizes the characteristics of strategic and operational planning.
Middle managers set objectives that will enable their division or department to contribute to the goals set for the organization. Supervisors set objectives that will enable their department or work group to contribute to divisional or increase profits by 8 percent next year, the goal of a branch located in a highgrowth area might be to increase its own profits by 9 percent. At this branch, the vice president (supervisor) in charge of lending operations might have the objective of increasing loans to businesses by 15 percent. The head teller might have the objective of keeping customer waits to five minutes or less. (The good service is designed to support organizational objectives by attracting new customers to the bank.)
Operational objectives should get all employees focused on their role in supporting the company’s strategy. Fire departments have established specific operational objectives for the group such as bringing a fire under control within 10 minutes after arrival of the first fire company and having all firefighters wear full personal protective equipment. Along with these objectives, goals for individual performance include such detailed measures as ensuring all firefighters are wearing seat belts, carrying the proper tools, and using hose lines.
Notice in these examples that the objectives become more specific at lower levels of the organization, and planning tends to focus on shorter time spans. This is the usual pattern for planning in an organization. Thus, top managers spend a lot of their time thinking broadly over several years, whereas much of the supervisor’s planning involves what actions to take in the current week or month.
In addition to planning for the department as a whole, each supervisor should apply good planning practices to his or her individual efforts. This includes determining how to help the department meet its objectives, as well as how to meet the supervisor’s own career objectives. Another important application of planning is effectively managing the use of one’s time.
Characteristics of Effective Objectives
For objectives to be effective—that is, clearly understood and practical—they should have certain characteristics. They should be written, measurable or observable, clear, specific, and challenging but achievable (see Figure 6.1).
Putting objectives in writing might seem like a nuisance, but doing so gives them importance; employees can see they are something to which managers have devoted time and thought. The people required to carry out the objectives can then look them up as a reminder of what they are supposed to be accomplishing, and they can take time to make sure they understand them. Finally, writing down objectives forces the supervisor to think through what the objectives say.
Making objectives measurable or at least observable provides the supervisor with a way to tell whether people are actually accomplishing them. Measurable objectives might specify a dollar amount, a time frame, or a quantity to be produced. Examples are the number of sales calls made, parts manufactured, or customers served. The words maximize and minimize are tip-offs that the objectives are not measurable. If the objective is to “maximize quality,” how will anyone know whether maximum quality has been obtained? Instead, the objective might call for a defect rate of no more than 2 percent or for no customer complaints during the month. Other objectives that are difficult to measure are those that simply call for something to “improve” or “get better.” The person writing the objective should specify a way to measure or observe the improvement.
When the supervisor needs other people to play a part in accomplishing objectives, those people must understand the objectives. Thus, it is easy to see why objectives should be clear. The supervisor can make sure the objectives are clear by spelling them out in simple language and asking employees whether they understand them.
Making objectives specific means indicating who is to do what and by what time to accomplish the objective. Specific objectives describe the actions people are to take and what is supposed to result from those actions. For example, instead of saying, “Computer files will be backed up regularly,” a specific objective might say, “Each word-processing operator will back up his or her files at the end of each workday.” Being specific simplifies the job of ensuring that the objectives are accomplished; the supervisor knows just what to look for. Also, specific objectives help employees understand what they are supposed to be doing.
Objectives that are challenging are more likely to stimulate employees to do their best than those that are not. However, the employees have to believe they are capable of achieving the objectives. Otherwise, they will become frustrated or angry at what seem to be unreasonable expectations. Most of us have had the experience of tackling a challenging job and enjoying the sense of pride and accomplishment that comes with finishing it. In setting goals, the supervisor should remember how stimulating and confidence building such experiences can be.
Policies, Procedures, and Rules
To meet his objective of staffing his information systems department with topquality employees, Bruce Frazzoli hired some people he used to work with at his former job. He was later embarrassed to be called on the carpet for violating his employer’s policy that managers must work with the personnel department in making all hiring decision. Frazzoli learned that supervisors and other managers must consider the organization’s policies, procedures, and rules when setting objectives. The content of the objectives and the way they are carried out must be consistent with all three.
Policies are broad guidelines for how to act; they do not spell out the details of how to handle a specific situation. For example, a firm might have a policy of increasing the number of women and minorities in its workforce. Such a policy does not dictate whom to hire or when; it merely states a general expectation. Figure 6.2 summarizes a dress code policy for a Wisconsin bank.
Procedures are the steps that must be completed to achieve a specific purpose. An organization might specify procedures for hiring employees, purchasing equipment, filing paperwork, and many other activities. Publishing company McGraw-Hill’s management guidelines include suggested procedures for how to conduct Performance Appraisals and employment interview. A supervisor may be responsible for developing the procedures for activities carried out in his or her own department. For example, a restaurant manager might spell out a cleanup procedure or a maintenance supervisor might detail the shutdown procedure for a piece of machinery. Procedures free managers and employees from making decisions about activities they carry out repeatedly.
Rules are specific statements of what to do or not do in a given situation. Unlike policies, they are neither flexible nor open to interpretation. For example, one rule at Opto Technology is that employees must wear safety goggles whenever they handle chemicals and when they weld, solder, drill, or cut wires. Restaurants have rules stating that employees must wash their hands before working. Rules of this kind are often imposed by law.
Objectives serve as the basis for action plans and contingency plans (see Figure 6.3). An action plan is a plan for how to achieve an objective. If you think of objectives as statements of where you want to go, then an action plan is a map that tells you how to get there. For a successful trip, you need both kinds of information.
The supervisor creates an action plan by answering the questions what, who, when, where, and how:
• What actions need to be taken? Do sales calls need to be made, customers served in a certain way, goods produced? The supervisor should outline the specific steps involved.
• Who will take the necessary steps? The supervisor may perform some tasks, but many activities will be assigned to specific employees or groups of employees.
• When must each step be completed? With many types of processes, certain steps will determine when the whole project is completed. The supervisor should be particularly careful in scheduling those activities.
• Where will the work take place? Sometimes this question is easy to answer, but a growing operation may require that the supervisor plan for additional space. Some activities may require that the supervisor consider the arrangement of work on the shop floor or the arrangement of items in a warehouse or supply room.
• How will the work be done? Are the usual procedures and equipment adequate, or does the supervisor need to innovate? Thinking about how the work will be done may alert the supervisor to a need for more training.
A lot of people believe in Murphy’s law: “If anything can go wrong, it will.” Even those who are less pessimistic recognize that things don’t always go as planned. A delivery may be delayed by a strike or a blizzard, a key employee may take another job, a “foolproof” computer system may crash. The sign of a good supervisor is not so much that the supervisor never has experienced these nasty surprises but that he or she is prepared with ideas about how to respond.
Planning what to do if the original plans don’t work out is known as contingency planning. The wise supervisor has contingency plans to go with every original plan. One useful technique for contingency planning is to review all objectives, looking for areas where something might go wrong. Then the supervisor determines how to respond if those problems do arise.
During the summer of 2003, a power company blackout cut off electricity to much of the northeastern United States, as well as parts of the Midwest and Canada. More than half the manufacturers in Ohio were affected, costing them an estimated $1.1 billion. Ford Motor Company was forced to shut down almost two dozen factories in Michigan, Ohio, and Ontario. However, the company was prepared. Teams of employees quickly switched the most important operations to batteries and generators to preserve data and maintain customer service. Others worked to repair damage. Ford was prepared for such a contingency, but many companies are not. A survey by Robert Half Management Resources found that more than one-third of companies lacked a plan for continuing operations following a storm, fire, blackout, terrorist strike, or other catastrophe.
Contingency planning is not always formal. It would be too time-consuming to create a written contingency plan for every detail of operations. Instead, the supervisor simply has to keep in mind how to respond if some details of the operation do not go as planned.
Management by Objectives
Many organizations use a formal system for planning known as Management by Objectives (MBO), a process in which managers and employees at all levels set objectives for what they are to accomplish. Their performance then is measured against those objectives. Basically, MBO involves three steps:
1. All individuals in the organization work with their managers to set objectives, specifying what they are to do in the next operating period (such as a year).
2. Each individual’s manager periodically reviews the individual’s performance to see whether he or she is meeting the objectives. Typically, these reviews take place two to four times a year. The reviews help the individual and the manager decide what corrective actions are needed, and they provide information for setting future objectives.
3. The organization rewards individuals on the basis of how close they come to fulfilling the objectives.
Figure 6.4 shows examples of objectives for employees at several levels of an organization using MBO. Notice that the sample objective for the nonmanagement employee supports the achievement of the supervisor’s objective, which in turn supports the achievement of his or her manager’s objective, and so on up the hierarchy. (In practice, of course, each person in the organization would have several objectives to meet.)
For the effective use of MBO, managers at all levels (especially top management) must be committed to the system. Also, the objectives they set must meet the criteria for effective objectives. For example, a salesperson would not be expected merely to “sell more” but to help develop specific objectives, such as “make 40 sales calls a month” and “sell 50 copiers by December 31.” Finally, managers and employees must be able to cooperate in the objectivesetting process.
Some people dislike MBO because setting and monitoring the achievement of objectives can be time-consuming and requires a lot of paperwork. However, the organization can benefit from involving employees in setting goals, which may lead to greater commitment in achieving them. Also, the employees can benefit from a system of rewards that is rational and based on performance rather than personality. In light of these advantages, a supervisor may want to use the MBO principles with the employees in his or her own department even if the organization as a whole has not adopted a formal MBO system.
SUPERVISION ACROSS INDUSTRIES
DATABASE MARKETING AGENCY HELPS BANKS AIM FOR PROFITS
When banks set objectives, they want to achieve profits, but what makes a bank profitable? A lot of banks consider objectives for increasing the number of customers or the number of accounts. But according to Rich Weissman, chief executive of Database Marketing Agency, this focus on volume has important drawbacks.
Through his experience helping banks build profitability, Weissman has found that a small subset of a bank’s customers bring in most of the profits. If these customers leave or even take just part of their business elsewhere, the bank’s profits can all but disappear.
Sometimes banks counter that risk by setting volume objectives related to cross-selling, that is, selling more products to existing customers. But Weissman says this objective too can be unprofitable.
Weissman advises banks to look at what he calls “share of wallet” and “profit dynamics.” His company helps banks break down their Customer Data to identify which customers are most profitable in terms of their total relationship with the bank. Then they look at dynamics: what branches and employees are doing to cultivate these successful relationships. Finally, the bank sets objectives related to doing more of what builds profitable relationships.
FIGURE 6.2 Dress Code Policy for a Wisconsin Bank
Professional attire, neatness, cleanliness, and good personal health habits are important to the impression we make on our customers. Clothing should fit appropriately (i.e., not snugly). Hair, makeup, and jewelry styles should be suitable for business and not excessive or distracting.
Supervisors are responsible for the professional appearance and image of their areas.
For All Employees
• Visual body piercing other than the norm (i.e., the ears) is not allowed unless the jewelry is removed while at work.
• Tattoos must be covered at all times.
• Low-rise pants are not acceptable.
• Dresses, skirts, and coordinated pant outfits are acceptable.
• Shorts, golf skirts, miniskirts, sundresses, backless dresses, and dresses with low necklines are not allowed.
• Tube tops, halter tops, tank tops, and T-shirts are not allowed.
• Businesslike shoes are to be worn to work.
• Employees with public contact or supervisory or professional responsibilities are expected to wear a suit or sport coat, slacks, and tie. Apparel for employees in nonpublic areas should be clean, neat, and moderate in style.
• Jeans, sweatshirts, tank shirts, T-shirts, sandals, tennis shoes, and similar items of casual wear do not present a businesslike appearance.
• Hair length should not extend beyond the shirt collar.