What are the Elements of Planning

Elements of Planning

Planning as a managerial process consists of the following Elements or Planning or Components of Planning:

  • 1. Objectives: The important task of planning is to determine the objectives of the enterprise. Objectives are the goals towards which all managerial activities are aimed at. When planning action is taken, these objectives are made more concrete and meaningful. For example, if the organisational objective is profit earning, planning activity will specify how much profit is to be earned looking into all facilitating and constraining factors.
  • 2. Forecasting:The Forecasting is the second most important elements in planning. As per the organizational pre decided goals, planning forecasts the different aspects such as the man power needed, finance required and amount to be produced and many more issues.
  • 3. Policies: Policies should never be too rigid because that excessively limits functioning. Policy-makers must also ensure they explain policies to employees clearly. This will prevent any ambiguities that may arise. Policies must also change with time to suit new challenges and circumstances.
  • 4. Procedures: Policies provide guidelines to thinking and action, but procedures are definite and specific steps to thinking and action. For example, the policy may be the recruitment of personnel from all parts of the country; but procedures may be to advertise and invite applications, to take interviews and offer appointment to the selected personnel. Thus, procedures mean definite steps in a chronological sequence within the area chalked out by the policies. In other words, procedures are the methods by means of which policies are enforced. Different procedures are adopted in different areas of business activities. There may be production procedure, sales procedure, purchase procedure, personnel procedure etc.
  • 5. Rules: The set of rules prescribe a definite and rigid course of action to be followed in different business activities without any scope for deviation or discretion. Any deviation of rule entails penalty. Rule is related to parts of a procedure. Thus, a rule may be incorporated in respect of purchase procedure that all purchases must be made after inviting tenders. Similarly, in respect of sales procedure, rule may be enforced that all orders should be confirmed the very next day.
  • 6. Programmes: Programmes must be closely integrated with the objectives. Programming involves dividing into steps the activities necessary to achieve the objectives, determining the sequence between different steps, fixing up performance responsibility for each step, determining the requirements of resources, time, finance etc. and assigning definite duties to each part.

Elements of Planning

  • 7. Budgets: Budget means an estimate of men, money, materials and equipment in numerical terms required for implementation of plans and programmes. Thus, planning and budgeting are inter-linked. Budget indicates the size of the programme and involves income and outgo, input and output. It also serves as a very important control device by measuring the performance in relation to the set goals. There may be several departmental budgets which are again integrated into the master budget.
  • 9. Strategies: Koontz and O’Donnell consider this as an important planning element. “Strategy concerns the direction in which human and physical resources will be deployed and applied in order to maximize the chance of achieving a selected objective in the face of difficulties”. In corporate planning strategy serves as a master plan which the company adopts for the realization of the objectives. It provides skill and judgment to the management to predict and foresee what difficult and complex situations are likely to arise and they can take timely action to avert them or at least to minimize the risk and uncertainty.