Planning in uncertain Environments

If managers performed their jobs in organizations that never faced changes in the environment, they would have little need for planning. What a manager did today, and well into the future, would be precisely the same as it was decades ago. Managers would no need to think about what to do. It would be spelled out in some manual. In such a world, planning efforts would be unnecessary. But as we saw, that world doesn’t exist. Technological, social, political, economic, and legal changes are ever present. The environment that managers face is too dynamic and has too great an effect on an organization’s survival to be left to chance. Accordingly, contemporary managers must plan and plan effectively.

Why should Managers formally plan?

Managers should engage in planning for at least four reasons. Planning provides direction, reduces the impact of change, minimizes waste and redundancy, and sets the standards to facilitate control
Reasons for planning:

Because of Changes in the environment

Managers engage in planning to:

1) set the standards to facilitate control
2) Provide direction
3) Minimize and redundancy
4) Reduce the impact of change

Planning establishes coordinated effort. It gives direction to managers and non managers alike. When all organizational members understand where the organization is going and what they must contribute to reach the objectives, they can begin to coordinate their activities, thereby fostering cooperation and teamwork. On the other hand, a lack of planning can cause various organizational members or their units to work against one another. Consequently the organization may be prevented from moving efficiently toward its objectives.

By forcing managers to look ahead, anticipate change, consider the impact of change, and develop appropriate responses, planning reduces uncertainty. It also clarifies the consequences of the actions managers might take in response to change. Planning then is precisely what managers need in a chaotic environment.

Planning also reduces overlapping and wasteful activities. Coordination before the fact is likely to uncover waste and redundancy. Furthermore, when means and ends are clear, inefficiencies become obvious.

Finally, planning establishes objectives or standards that facilitate control, if organizational members are unsure of what they are attempting to achieve how can they determine whether they have achieved it? In planning objectives are developed. In the controlling function of management performance is compared against the established objectives. If and when significant deviations are identified corrective action can be taken. Without planning then a control process cannot be truly effective.

What are some criticisms of formal planning?

Formal planning by managers makes intuitive sense. An organization needs direction. After all, as the Cheshire cat said to Alice the way you ought to go depends a good deal on where you want to get to. But critics have challenged some of the basic assumptions underlying planning. Let’s look at the major arguments that have been offered against formal planning.

Planning may create rigidity: Formal planning efforts can lock an organization into specific goals to be achieved within specific timetables. When these objectives were set, the assumption may have been made that the environment wouldn’t change during the time period the objectives cover. If that assumption is faculty, managers who follow a plan may have trouble rather than remaining flexible and possibly scrapping the plan, managers who continue to do what is required to achieve he original objective may not be able to cope with the changed environment. Forcing a course of active planning when the environment is fluid can be a recipe for disaster.

Plans can’t be developed for a dynamic environment: As we mentioned a few sentences ago, most organizations today face dynamics change in their environments. If a basic assumption in making plans that the environment won’t change is faulty then how can one make plans? We have described today’s business environment as chaotic; by definition that means random and unpredictable. Managing chaos and turning disasters into opportunities require flexibility and that may mean not being tied to formal plans.