IMPORTANCE/SIGNIFICANCE OF PLANNING
- Planning Gives Direction
Planning is mainly about deciding that the organization will follow a particular course of action. As a result, it provides employees with a sense of the direction in which the firm is going. This helps both managers at various levels of the company and their subordinate employees with knowing how to channel their effort towards promoting the firm’s objectives. Specifically, it helps them to know what to do, how to do it, when to do it and who should be responsible for doing which aspect of the job. This helps to achieve unity of direction. Without planning every employee could be working in different direction and the firm would find it impossible to achieve its goal.
- Planning Reduces the risk and uncertainties
Managing a business usually calls for dealing with unexpected situations or uncertainties. Planning ahead of time, allows the manager to make assumptions concerning problems that can happen in the future and devise ways of solving them when they occur, using his experience of how he dealt with such or similar problems in the past. In addition to his/her past experience, the manager may also consider carefully what is happening in the business environment presently before deciding on a plan to follow. This way the manager is able to reduce uncertain situation which can prevent the business from reaching its objectives. Planning is also done to take care of unexpected risks such as fire, flood, theft and so on. Money or resources put aside for such uncertainties are called contingency reserves.
Planning reduces duplication of efforts and wasteful activities:
Planning is done to let the company know what every department is expected to be doing to help the business achieve its aims. The departments must plan how they would be able to promote the plan of the entire organization. However, where there are no plans, every department could find themselves repeating what other department would have done already. This could lead to duplication of effort and a waste of scare resources. On the other hand, if employees and managers follow what is prescribed by the firms, then there would be unity of purpose and work would be done in a smooth manner.
- Planning Promotes innovative ideas
Because there is a lot of high thinking and analysis involved in planning, it is highly possible that managers doing this critical thinking would chance on better ways of solving problems that might confront the business or a more convenient way of satisfying customers. It forces managers think differently in order to to come up with new and better ideas or methods of doing a particular job. So planning makes managers innovative and more creative problem solvers.
- Planning Facilitates Decision Making
Planning allows business managers and organizational leaders to take decisions on issues such as what goals to set for the firm in advance, how is the company going to achieve those goals, and what resources does the company need to achieve those goals. In doing these the manager makes some predictions as what can happen or may not happen in the course of working towards achieving its goals. These predictions and goals help the manager to take fast decisions, instead of waiting to take those decisions sometime in the future.
- Planning helps to establish standard for controlling
Controlling is a process of comparing what is planned with what has been achieved at a given point in time, and finding out if there is a difference between the two. If there is a difference, then managers must find out what caused the difference, and taking measures to address the causes so that moving on from there, actual output can match with the planned output. Put another way, if the manager did not have a planned output, he/she cannot notice whether the output actually produced matches the planned output or not. This will make it impossible for him to control the businesses operation.
Take for instance, a company plans to produce 1000 units of goods per week. By the end of the week the company produces only 800 units. The manager must control the production process so the output could be increased to 1000 a week. In the absence of a plan it will be difficult if the 800 units is ok or not. So planning provides the manager and his employees the bases for comparing their performance.