Methods of Planning in Management
Managers based on the organization’s nature, beliefs, culture, interests, situations, availability of information, and resources need to make different plans.
There are many methods of planning managers can adopt to make plans.
All of these methods have one thing in common: they all aim to bring effectiveness in planning and achievement of desired goals.
Following are the well-known and most practiced methods of planning and relevant examples of each:
Top-Down Method
Top-level management creates plans using the top-down approach, with little or no input from lower-level management. It is a centralized planning approach.
The implementation of plans created by top management is then transmitted to middle-level and lower-level management.
By using this approach, the Executive officers and the Board of Directors often define the mission, aims, and objectives of the firm as plans.
This approach assumes that senior managers have the necessary expertise, power, and knowledge in planning.
They can produce sufficient resources and the necessary expertise to make use of those resources in centralized planning processes.
Example: A multinational company decides to expand into a new region. The Board of Directors defines the objectives, such as entering five new markets within a year.
They create the plan and allocate resources, leaving middle and lower-level managers to execute the tasks as per the directives.
Bottom-Up Method
Lower-level managers and operating-level personnel set the plans under the bottom-up approach. They communicate their plans to high management during this course.
Top-level management puts the finishing touches on the ideas after getting their feedback.
This approach, which places a strong emphasis on lower levels’ involvement in the planning process, is commonly used by organizations with a decentralization ideology.
This approach makes it easier for every employee to comprehend their objectives, which aids in the plan’s effective implementation.
Plans that were created independently make it simple to inspire employees.
The main disadvantage of the bottom-up approach is that each unit is free to pursue or choose its objectives, which could lead to confusion and require more time.
This approach might not always be useful, especially given the scarcity of qualified personnel.
Example: A software development firm encourages its teams to pitch their project ideas for the next fiscal year.
Teams create detailed plans for app development, which are reviewed and integrated by senior management to align with the company’s overall strategy.
Composite Method
This approach combines the principles of top-down and bottom-up approaches. Each unit and branch of the organization may be asked to submit its goals after top-level management has set the tentative plan.
The strategy is then developed by middle and lower-level management and sent to top-level management.
Once more, top-level management evaluates and approves consolidation plans.
This plan is regarded as the ultimate one. Plans created in this manner are simple to carry out since employee suggestions are incorporated.
Example: A retail chain’s top management sets a tentative goal to increase annual sales by 20%.
Regional managers and store teams develop specific sales strategies and promotional plans for their locations, which are then consolidated and approved by the executive team.
Management By Objectives (MBO) Method
MBO and the composite technique of planning are very similar. The correct alignment of the organization’s goals and subordinates’ objectives is the main goal of MBO.
As a result, everyone in the organization strives to fulfill the same organizational objective.
The senior management typically uses methodologies like GQM to determine the company goals (Goals, Questions, and Metrics).
The MBO approach involves four parts of the planning process, which include goal-setting, creating action plans, conducting periodic reviews, and evaluating performance.
The MBO method fosters self-control and self-motivation by involving the most staff possible in the planning process.
In MBO, management places more emphasis on the outcome than on the operations.
This approach can be used in both modern and huge enterprises. It works best in knowledge-based firms with staff members who are highly skilled at what they do.
Example: A marketing agency uses the MBO approach where the CEO sets the goal to increase client retention by 15%.
Each team, such as content, social media, and client relations, creates specific action plans to achieve this target. Progress is reviewed quarterly to ensure alignment with the objective.
Team Method
For planning purposes, a work team comprised of expert member employees from line managers at various levels is organized under the team approach of planning.
To create a plan, the task of planning is given to that group.
With this, the team could carry out research and create a management draft plan. The plan is then reviewed and finalized by top management.
This approach is effective and can inspire workers at all organizational levels. However, planning skills are a must for both line managers and staff using the team approach.
Example: A manufacturing company creates a task force of engineers, production managers, and marketing staff to design a plan for launching a new product line.
The team conducts research, drafts a proposal, and submits it to top management for approval.
Hence, these are 5 common planning methods in business with their relevant examples.
Read Next: Types of Planning in the Workplace
Sajan Kushmi is a content writer with more than 4 years of experience. He holds BIM Degree. He write on the topics related to Management, Marketing, and Entrepreneurship.