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Importance of Planning Function of Management

Posted on the 24 March 2017 by Rinkesh @ThinkDevGrow

Planning can also be called forethought means thinking ahead and organizing future courses of action to be followed. It is a systematic and preparatory activity determining when, how and who for a particular job. Systematic planning precisely considers available & prospective resources of the organization to manage effective delineation, coordination, & execution.

As per Urwick, " Planning is a mental predisposition to do things in orderly way, to think before acting and to act in the light of facts rather than guesses". Planning is also about choosing right alternative amongst available options to perform different managerial duties in order to accomplish predetermined goals. "

Planning is the amongst the primary functions of management. It is required practically at all levels of management. With growing sizes of the organizations and increasing complexities in their structure, planning even becomes more crucial. Also, constantly changing and uncertain market further augments to the need of planning.

Importance of Planning Function of Management

The following lists the importance of planning for any business enterprise:

Planning Provides Direction

The apparent purpose of planning is to provide directions where the efforts should be channelized to achieve the desired results in the most efficient manner possible. The objectives of the organization are defined in simple and clear words during communicating the established plan.

For instance, a company sets a website launch date. Now all the concerned departments, e.g., content, design, development team, etc., need to timely decide their objectives in view of the set target.

With a proper plan in place, the efforts of all the managers and employees gain focus towards the attainment of their individual objectives, making the achievement of website launch target a certainty. However, in the absence of a concrete plan, otherwise would be a case.

Planning Reduces Risks of Uncertainty

Planning always carries future perspective and the future is uncertain. Planning should accommodate all anticipated future events and accordingly acknowledge them by assigning appropriate activity to all such events. It reduces (not eliminates) overall risk of future uncertainties.

For example, in order to set the website launch date, any dependence on third / outside parties should be determined and a buffer time should be allocated based on the reliability and past experiences on deliveries with them. By keeping such buffer in the time at planning stage can avoid missing the launch date.

Planning Reduces Overlapping and Wasteful Activities

As already discussed, planning aims at executing the future course of actions in most efficient manner possible. Since, the questions of when, where, how, what and why are already addressed, disorder and shocks can be taken care of beforehand. Effective planning would always prevent any overlapping and duplication of efforts and resources.

Subsequently, wastage reduces, efficiency increases and costs decline. For example, if a particular resource has been allocated to design the homepage of the website, it would not be attempted by anyone else. Even if someone really has an idea for the homepage, he/ she would communicate to the allocated person rather creating it on own. In absence of planning, if more than one resource designs the homepage, first of all, there has been the duplication of efforts and secondly additional efforts might be required to now adjudge the better homepage.

Planning Promotes Innovative Ideas

Today's world and markets are growing dynamic every day, in order to exceed competition, out of the box ideas are required to manage the functions of the enterprise. Not necessarily, does the enterprise need to discover a new product rather just the idea of differently managing operations resulting in a lot of cost saving/efficiencies.

For instance, Toyota is known to precisely plan and timely deliver its products and also managing costs uniquely. Even the CEO of General Motors from the US visited Toyota in Japan to identify GM's inefficiencies.

Sometimes, it may be about selecting the best alternative out of the available options. Still, these alternatives are not necessarily the obvious ones and the managers would need to discover creative options. With such efforts, newer ideas emerge which are studied intensively.

Planning Facilitates Decision Making

The planning helps in setting the target for decision making. Planning also helps in laying down the criteria for evaluating further courses of action and therefore, facilitating decision making.

Planning Establishes Standards for Controlling

Through planning all the departments are guided about 'when', 'what' and 'how' to do things. Standards are evaluated and finalized about their work, time and cost, etc. Measuring performance is necessary and it can be only done effectively if clear protocols/ benchmarks are available. These protocols are developed at the planning stage and thus aid in measuring and tracking performances. Deviations from the benchmark indicate relative performance and therefore act as standards to control.


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