Question

Answer the following.

What is planning? Explain its importance.

Answer 1

Planning is a basic function of management. Every function of management is based on planning. Planning is an intellectual process of logical thinking and rational decision making. According to James Stoner, "Planning is the process of establishing goals and a suitable course of action for achieving these goals."

The importance of planning can be explained with the help of following points:

1. Helps to set clear objectives: Planning deals with setting objectives, targets, and formulating plans in order to achieve the set targets. Planning helps in making the objectives more clear and specific. This enables the employees to work efficiently towards achieving the goals.

2. Provides path of action: Planning not only involves setting of goals or objectives but also involves preparation of an action plan to achieve the goals. It serves as a guide for doing the right things at the right time in right way. Thus, planning provides a path of action to employees and makes their role in the organization more clear.

3. Planning improves performance: Planning enables managers to improve future performance of employees. They can do so by establishing objectives, selecting proper course of action and providing timely guidance to employees. It results in efficient working patterns and thereby, contributes to achievement of targets. In this way, improved performance results into higher organisational profitability. In short, planning is the basic requirement for the survival, growth and success of any organisation. Planning also plays important role in the day-to-day life of individuals by enabling them to minimize risks and uncertainties.

4. Minimizes the risk: Planning involves looking into the future and anticipating future changes. It is based on the technique of forecasting. Planning enables organisation to deal with uncertain events by deciding in advance the tasks to be performed in such instances. Although future changes or risks cannot be controlled or eliminated, planning helps to minimize the risk.

5. Planning leads to optimum utilization of resources: Planning consider the availability of resources in the organization and various uses to which they can be put. Planning ensures that resources are properly allocated and optimally utilized. It helps to avoid wastage of resources. Hence, it results in higher organisational efficiency and improved results.

E.g.: When an IT company gets a new project and starts planning for it, it will not hire new people. It will first check if any other project is going to be completed soon so that the people on that project can be utilized for this new project. Thus, the resources are utilized optimally.

6. Helps in decision making: There are many alternative ways for achieving any goal. Planning helps the management to select the best alternative by considering all positive and negative aspects of different alternatives. It also helps managers to take rational decisions.

7. Useful in setting the standards for controlling: Controlling involves comparison of actual performance with the standard performance. Planning involves setting the standards for performance. So, it enables managers to compare actual performance with standard performance and find out the deviation, if any. In case of such deviation, controlling steps can be taken. Hence, planning provides basis for control and helps in maintaining work discipline.

8. Facilitates Coordination of all activities: Planning facilitates the co-ordination of all activities. It reduces overlapping among activities. All activities of the organisation are closely linked with each other which is considered in the process of planning. Various departments work as per the overall plan and co-ordination is achieved.

E.g.: When you are planning a party, you and your friends may distribute the tasks to be done. If there is no planning, two people may end up doing the same task i.e. there may be overlapping. Thus, planning helps in co-ordination of all activities.

9. Facilitates other management functions: Planning facilitates all other functions of management such as organising, staffing etc. The various goals of organisation are set at the planning stage. Only when the plan is ready, other management functions can be undertaken.

10. Promotes innovative ideas: Planning is the most challenging activity for the management as it guides all future actions. At times, the goals of the organization are very ambitious and require out-of-the box-thinking. Therefore, it involves promotion of innovative ideas after critical thinking. The innovative plans enable the organisation to attain its goals, leading to organisational growth and prosperity.