Features, Importance and Limitations of Planning

What is Planning?

Planning is a blueprint of the course of action to be followed in the future. It is also a mental exercise that requires imagination, foresight, and sound judgment. It is thinking before doing. It is a preparatory step and refers to detailed programs regarding the future course of action. Simply put, planning is the basic management function that involves forecasting, laying down objectives, analyzing the different courses of action, and deciding the best alternative to perform different managerial functions to achieve pre-determined goals. Thus, it is a continuous process that involves decision-making; i.e., deciding the course of action for framing and achieving objectives. 

Planning is deciding in advance what to do, how to do it, when to do it, and who is to do it. Planning bridges the gap from where we are to where we want to go. It makes it possible for things to occur which would not otherwise happen.

-Koontz and O’Donnell

Geeky Takeaways:

• Planning is required by all individuals, businesses, and non-business organizations and is practised at all types of organizations, including small, medium, and large.
• It is a continuous process; i.e., once a plan is accomplished, a new plan if formed for the future course of action.
• Planning provides direction to the organisations by helping them make clear and specific goals.
• However, planning may not work in dynamic environment; therefore, it is essential to accurately forecast changes.
• Planning gives a standard to the organisation against which they can evaluate their actual performance.

Features of Planning

By analyzing the above meaning and definition, we can reveal the following features of planning:

1. Planning Focuses on Achieving Objectives: Planning is a goal-oriented work because its purpose is to achieve organizational objectives quickly and economically. These objectives are purposeful, as they provide basic guidelines for planning activities by identifying the actions which lead to desired results.

2. Planning is a Primary Function of Management: Planning is the primary function of management as it serves as a base for all other management functions because it provides the basic framework within which all other management functions are performed. We consider it to be a blueprint, as it provides the foundation for managerial actions.

3. Planning is Pervasive: It is pervasive as it is required at all levels of management and in all types of organizations. However, the scope of planning varies from one level to another, while supervisors at the lowest level formulate day-to-day operational programs and middle-level managers prepare departmental plans, and the top management plans for the organization as a whole.

4. Planning is a Continuous Process: Planning is an ongoing process. Plans are prepared for a specific period and at the end of that period, there is a need for a new plan based on the new situation. Since the future is uncertain, there are various assumptions about the future that may change. Therefore, the original plan may have to be revised in light of changing conditions.

5. Planning is Futuristic: Planning involves looking into the future, and it predicts the best advantage of an organization. Managers plan to manage future events to the best of their capacity. Planning also involves thinking about the future for doing in the present. It essentially involves scientific anticipation of future events; i.e., forecasting.

6. Planning involves Decision-Making: Planning is the process of making choices from various alternatives to achieve the specified objectives. The need for planning arises only when alternatives are available, and in actual practice, planning presupposes the existence of alternatives. Thus, decision-making is an integral part of planning, as it involves a choice from various alternative courses of action. But, if there is only one alternative, then there is no need for planning.

7. Planning is a Mental Exercise: Planning is an intellectual process that is related to thinking before doing involving imagination and creativity. It is an activity of thinking based on logical reasoning rather than guessing and doing work. The success of planning depends on the performance of a planner. So, a planner must have intelligent imagination and sound judgment capacity.

Importance of Planning

1. Planning Provides Direction: Planning is involved in deciding the future course of action. Fixing goals and objectives is the priority of any organization. By stating the objective in advance, planning provides unity of direction. Proper planning makes goals clear and specific. It helps the manager to focus on the purpose for which various activities are to be undertaken. It means planning reduces aimless activity and makes actions more meaningful.

2. Planning Reduces the Risk of Uncertainty: Every business enterprise has to operate in an uncertain environment. Planning helps a firm to survive in this uncertain environment by eliminating unnecessary action. It also helps to anticipate the future, and prepare for the risk by making necessary provisions.

3. Planning Reduces Overlapping and Wasteful Activity: Plans are formulated after keeping in mind the objective of the organization. An effective plan integrates the activity of all the departments. In this way, planning reduces overlapping and wasteful activities.

4. Planning Promotes Creativity and Innovative Ideas: Planning encourages creativity, and helps the organization in various ways. Managers develop new ideas and apply the same to create new products and services leading to overall growth and expansion of the business. Therefore, it is rightly said that a good planning process will promote more individual participation by throwing up various new ideas and encouraging managers to think differently.

5. Planning Facilitates Decision-Making: Decision-making means searching for various alternatives and selecting the best one. Planning helps the manager to look into the future, and choose among various alternative forces of action. Planning provides guidelines for sound and effective decision-making.

6. Planning Establishes a Standard for Controlling: Planning lays down the standards against which actual performance can be evaluated and measured. Comparison between the actual performance and pre-determined standards help to point out the deviation, and take corrective actions to ensure that events confront plans. In case of any deviation, the management can take remedial measures to improve the results.

Limitations of Planning

 Following are the limitations of planning:

1. Rigidity: Planning brings rigidity to work as employees are required to strictly follow pre-determined policies. There is a tendency that by strictly following these predetermined policies, people become more concerned about complying with these plans rather than achieving the goals. Sometimes planning discourages individual initiative and creativity. It restricts their freedom and new opportunities are ignored.

2. Planning may not Work in a Dynamic Environment: Planning has to operate in an external environment, such as government policies, technology, etc., which is beyond the control of the organization. In any situation, changes in the environment make the plan inoperative and ineffective. So planning does not provide a positive result when such changes are not accurately forecasted.

3. Planning Reduces Creativity: Planning involves the determination of policies and procedures in advance. Employees are required to strictly follow them, and deviations are considered to be highly undesirable. As a result, employees do not show their skills, and it reduces their initiative and creativity.

4. Planning Involves Huge Costs: Planning is an expensive process because a lot of money is spent on gathering and analyzing information. It also involves the cost of experts, as experts are paid for planning. Efforts should be made to benefit from the analysis and ensure that benefits derived from planning should be more than their cost. If the cost of planning does not justify the benefit, then planning should be avoided.

5. Planning is Time-Consuming: It takes a lot of time in collecting, analyzing, and interpreting information relevant to planning. This causes a delay in decision making. Therefore during crises and emergencies, which call for an immediate decision, planning does not work. Sometimes, advance planning may lead to a delay in actions making, which may result in the loss of profitable opportunities.

6. Planning does not Guarantee Success: Planning may create a false sense of security in the organization. Managers tend to adopt previously tested plans, but it is not necessary that a plan which has worked before will work again in this competitive environment. So, we cannot say that planning guarantees success.

7. Resistance to Change: The employee becomes familiar with the method of doing work. So they resist change and do not want to adopt a new method of doing work. Such unwillingness may lead to the failure of the plan.

One of the reasons why we need planning is again the 18/20 rule. It is well established that for unplanned activity, 80% of the effort is less than 20% of the outcomes. One should spend much time deciding what to do, when to do and how to do it. Otherwise, it may result in taking many unnecessary, unfocused and inefficient steps. Limitations of planning indicate the problems in the planning process, but with limited careful steps, these limitations of planning can be overcome. It is much easier to adjust a plan to avoid a coming rise rather than to deal with the crisis when it comes.

Planning – FAQs

Why is planning considered as a fundamental function of management?

As planning provides direction, minimizes risk, reduces uncertainty, and enhances the effeciency of the organisation, it is considered as a fundamental function of management.

What are the three levels of planning?

The three major levels of planning in an organisation include Strategic, Tactical, and Operational. Strategic Planning focuses on setting up long-term goals and detrmining direction; Tactical Planning includes implementation of strategic plans and achievement of objectives; whereas, Operational Planning consist of day-to-day activities and resource allocation to fulfill immediate organisational goals.

How can a manager make sure that the plans are effectively implemented in the organisation?

To effectively implement plans, a manager has to make sure there is clear communication of goals and expectations, tasks are properly delegated to the employees or teams, the employee or team has all the required resources, their progress should be monitored regularly, they should get timely feedback, and must be flexible to the changes.

What are the common obstacles to effective planning?

Some of the common obstacles to effective planning include:

• Resistance to Change
• Inadequate Information
• Conflicting Objectives
• Lack of Coordination among different Departments
• Unrealistic Expectations
• Insufficient Resources
• External Factors

What is the role of forecasting in planning process?

Forecasting means predicting future events or trends for the organisation, on the basis of market research, historical data, and expert advice. It helps in planning process by providing valuable insight to the managers so they can make decisions properly, set relaistic goals, allocate resources accordingly, and anticipate potential obstacles they may face.

Also refer to Planning Process: Concept and Steps and Types of Plans: Standing Plan and Single-use Plan