The Importance of Planning in an Organization

The Importance of Planning in an Organization

Planning helps an organization chart its course for the achievement of its goals and bottom-line targets. The process begins with reviewing the current operations of the organization. It also has to identifying what needs to be improved operationally in the next coming year.

Thereafter, planning involves realizing the results the organization wants to achieve, and determining the steps necessary to arrive at the intended success, whether that is measured in financial terms, or goals and objectives that include being the top rated organization in customer satisfaction.

The Efficient Use of Resources

All organizations, whether they be large or small, might often have limitation in their resources. The planning process provides the information that top management needs to make effective decisions about how to allocate the resources in a way that will enable the organization to reach its objectives. Through planning productivity is maximized and resources are not wasted on projects with little chance of success.

Establishing Goals

Setting goals that challenge everyone in the organization to strive for better performance is one of the key aspects of the planning process. Goals must be achievable and realistic. Organizations cannot allow themselves to become too satisfied with how they are currently doing or they are likely to lose ground to competitors.

The goal setting process can be signals or wake-up calls for managers that have become complacent. The other benefit of goal setting comes when forecast results are compared to actual results. Through planning organizations can analyze significant variances from forecast and take the action to remedy situations where revenues are lower than planned or expenses get higher.

Managing Risk & Uncertainty

Managing risk is essential to an organization’s success. Even the largest corporations cannot control the economic and competitive environments around them. Unforeseen events that occur must be dealt with quickly, before negative financial consequences from these events become severe.

Planning encourages the development of “what-if” scenarios, where managers attempt to envision possible risk factors and develop contingency plans to deal with them. The pace of change in business is rapid, and organizations must be able to rapidly adjust their strategies to these changing conditions.

Building a Good Team

Planning promotes team building, spirit of cooperation and most importantly - ownership. When the plan is completed and communicated to members of the organization, everyone knows what their responsibilities are, and how other areas of the organization need their assistance and expertise in order to complete assigned tasks. They see how their work contributes to the success of the organization as a whole and can take pride in their contributions. Thus building ownership to the plan.

Potential conflict can be reduced when top management solicits department or division managers’ input during the goal setting process. Individuals are less likely to resent budgetary targets when they had a say in their creation.

Creating Competitive Advantages

Planning helps organizations get a realistic view of their current strengths and weaknesses relative to major competitors. The management team sees areas where competitors may be vulnerable and then formulate marketing strategies to take advantage of these weaknesses. Observing competitors’ actions can also help organizations identify opportunities they may have been overlooked, such as emerging international markets or opportunities to market products to completely different customer groups.

Reference :

Brian Hill - author of: "The Making of a Bestseller," "Inside Secrets to Venture Capital," "Attracting Capital from Angels" and his latest book, published in 2013, "The Pocket Small Business Owner's Guide to Business Plans."

RAMLI BARDIN | PLANNING WORKS | 26^TH DECEMBER 2016

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