Planning is the first management function and for good reason. It is a crucial and essential part of management. Planning is important for the following reasons:
- Planning provides direction to all of the organization’s human resources—both managers as well as employees. If they know what their firm or their work unit is trying to achieve and what activities they should engage in to be able to contribute to the achievement of the firm’s set goals, they would coordinate their actions and collaborate well with one another.
- Planning is important because it reduces uncertainty; it compels managers to consider future events that may affect their company. Anticipating changes and their impact will help managers and other workers to react to such changes appropriately.
- Minimizing of wastes will result if there is proper coordination of activities due to planning; negative practices, ineffectiveness, and inefficiencies could be easily detected and can be corrected or eliminated.
- Establishing goals and standards during planning may be used for controlling, another necessary managerial function.
Without planning, goals and standards will be absent and controlling will not be possible since there will be no standard to compare or assess work effort with.
Relationship of Planning to Individual or Organizational Performance
Is there a clear relationship between planning and performance? Although numerous researchers have shown a generally positive relationship between planning and performance, it would not be advisable, however, to judge that organizations or individuals who formally plan have better performance compared to those who do not plan. This is because there are other environmental factors that also affect individual or organizational performance and, thus, result in reducing the impact of planning on performance. It is, therefore, safer to say that the relationship between planning and performance is mainly due to systematic planning’s association with the excellent financial status of the organization and higher return of investments, higher income, and profit that could be traced to the excellent performance of its human resources.
Finally, the planning-performance relationship could also be associated with the time spent in preparing and executing a formal organizational or individual plan. A well-thought-out plan requires a longer period of preparation; its execution or application must also be done for a certain period of time—months or years—before it begins to affect performance.
Difference between Goals and Plans
Goals are the targets or desired ends that management wants to reach, while plans are the actions or means that administrators/managers intend to use to achieve organizational goals. In short, goals serve as the foundation of planning; goals precede plans because knowing the desired targets is a must before establishing plans for reaching them.