Importance of Planning in Management

One of the first and most important functions of management is planning. Planning consists of the process of evaluating the goals of an organization and creating a plan to meet these goals. Both Koontz and O’Donnell state that “planning is deciding in advance on what to do, when and how it will be done, and who will be doing it”. Therefore, planning is the foundation of the management role, and plays a critical part to the success of an organization by determining the means and the methods in order to achieve the objective. A key element and starting point of this process should include the development of a Mission and Vision Statement to which aids in the way an organization functions. The mission statement is the explanation of the organization’s existence, while the vision statement is the motivator in which defines the purpose and direction of the organization for not only the manager, but the employees as well.

Planning in management is important for several reasons the most important reason is it allows for management to make effective decisions. In addition, the importance of planning is that it plays a vital role to the survival and growth of an organization as it ensures accuracy, economy, and operational efficiency. Planning also has many different hats for it plays a positive role in the business environment, helps make uniform decisions, sets performance standards, and helps the organization solve problems and challenges that are present every day. Without planning, an organization can expect inefficiency, confusion, disorder, and wasting valuable resources in both human and material.

Planning is one of the most important function of management because of the following factors:

  1. Makes the objectives clear and specific: planning clearly specifies the objectives and the policies or activities to be performed to achieve these objective in other words what is to be done and how it is to be done are clarified in planning.
  2. Off setting the uncertainty and change: planning is necessary to look ahead towards future and to take decisions regard facing the expected changes/requirement of the future. E.g. before coming of summer session producers started production for the products to be used in summer.
  3. Plans facilitate decision-making: to achieve the objective predetermined under planning, business has to take various decisions by considering the available resources. If job may be completed by using various alternatives (e.g. manually or by machines) and the best alternative is decided by the management, which is more helpful in achieving the objective.
  4. Provides basis of control: under controlling actual performance is compared with the planed performance (target/objective). So planning is the base of controlling process.
  5. Leads to economy and efficiency: planning clarifies the work and its method of doing. Resultantly it reduces confusion and wastage of resources in the form of thinking at the time of doing. So efficiency of the worker will risen which will further result economy in production.
  6. Facilitates integration: under planning proper directions as per plane are provided to the subordinates. Resultantly they all make effort towards the achievement of preplanned objective. Such co-ordination of sub-ordinates and their departments will certainly help the organisation in achieving its objective.
  7. Encourages innovation and creativity: planning is the process of thinking in advance and so plans are made to achieve a target at future date by using latest methods and technology to perform the industrial/business activities and so plans lead to innovation.
  8. Facilitates control: planning facilitates the managers in performing their function of control. Planning and control are inseparable in the sense that unplanned action cannot be controlled because control involves keeping activities on the predetermined course by rectifying deviations from plans. Planning facilitates control by furnishing standards of control. It lays down objectives and standards of performance, which are essential for the performance of control function.
  9. Improves motivation: the effective planning system ensures participation of all managers, which improves their motivation. It improves the motivation of workers also because they know clearly what is expected of them. Moreover, planning also serves as a good training device for future managers.
  10. Improves competitive strength: effective planning gives a competitive edge to the enterprise over other enterprises that do not have planning or have ineffective planning. This is because planning may involve expansion of capacity, changes in work methods, changes in quality, anticipation of tastes and fashion of people and technological changes, etc.
  11. Encourages innovation and creativity: planning helps innovative and creative thinking among the managers because many new ideas come to the mind of a manager when he is planning. It creates a forward-looking attitude among the managers.
  12. Achieves better coordination: planning secures unity of direction towards the organisational objectives. All the activities are directed towards the common goals. There is an integrated effort throughout the enterprise. It will also help in avoiding duplication of efforts. Thus, there will be better coordination in the organisation.

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