The way a company is run directly affects the successes and failures it will have. When the management team identifies solid long-term objectives for the organization, plus innovative ways to achieve them, then the organization as a whole has the motivation and drive to work towards that outcome.
Imagine working for an organization where the senior management team failed to acknowledge any growth plans or long-term goals. What would happen to that company? It may sustain itself for a few months, but the lack of planning or strategic intervention could lead to its demise. Similarly, not having any direction from senior management may cause the employees to lose trust in the company. Organization planning, which includes strategies for all levels of the company, is imperative to the success of the business.
Organization Planning Definition
Organization planning begins when the senior management team identifies the company’s short-and-long-term objectives. Once those goals have been defined and refined so that they are clear and attainable, it’s essential to formulate specific strategies and plans to achieve those objectives. Organization planning ensures that there is a vision for the business so that the employees know and understand how their day-to-day jobs contribute to the company as a whole.
The goals a company sets need to be realistic enough to be implemented within the organization’s resources. It’s good to reach for the stars, but at the same time, the goals need to be attainable as well. Not being able to hit targets that are way out of reach can be demoralizing for the company. A good goal should also be quantitatively measurable. This way, the company can track its progress throughout the fiscal year, checking to see how far they have come and how much further they have left to go. It’s also important to outline a time frame to achieve the goal, such as within a fiscal year or a quarter. This way the company can set project deadlines to keep everyone on track.
In addition to defining objectives and developing plans to achieve them, organization planning covers staffing and resource allocation. The right people have to be in place to perform their roles, and the necessary resources, including finances, need to be available for the organization so that they can successfully implement the plans in place.
As every organization is unique, no one structure or method of staffing will work for every company. However, certain factors should always be considered in planning an effective organizational structure. Companies need to research and evaluate the strengths and weaknesses of various organizational structure options, such as functional, divisional or matrix structures, and consider which one will set them up to best achieve their organizational objectives. The company will also need to predict their growth patterns, and how they fit in with their overall plans. In addition, the organization will need to see which structure will produce the most significant operational efficiency and worker satisfaction.
Organization planning can apply to any size of a company, whether it’s a small entrepreneurial business or a multi-national conglomerate. In any situation, it’s crucial for the management team to determine the goals of the company and lay out plans to achieve them, in addition to the resources it will take to meet those goals.
Types of Organization Planning
There are many ways to categorize types of organization plans, though many of them fall into four main categories: financial, strategic, contingency and succession. Each type of organization plan looks at the business as a whole, but through the lens of a particular area. This way, it’s easy to see how the business will fare in many different scenarios.
Financial planning in an organization aims to generate a greater income or increase the market share of the business. Also, financial planning can solve predictable financial issues the company may face in the future. The way a financial plan is structured depends on the level of the company and the goals it wants to achieve. An important factor of a financial plan is that it needs to be rooted in reality. Like effective goal-planning, the financial plan needs to take into account the true financial picture of the company, now and in the future. The plan also needs to be forward-looking, so that it can pick up on any potential issues the company may need to overcome.
Take a small business such as a digital marketing agency, for example. With a staff of five, the company is stalled at a plateau and doesn’t have enough human resources to grow the business. Increasing their sales is one of their organizational objectives. However, if they hire another employee, then they don’t have the finances to pay for them. Having a clear financial plan in place for this organization will not only help them figure out how to bring on an additional resource but also how to pay for them. Besides, having that new employee can then help them grow their sales and meet their organizational objective.
Another type of organization plan is strategic planning, which involves translating the company’s vision into goals and objectives, with steps to achieve them. Strategic planning doesn’t only look inwards at the company itself but also focuses on the market and the industry, as well as the competitors. This kind of planning involves analyzing the company’s future opportunities and possible incoming threats. It also requires knowing the organization’s strengths and weaknesses fully. Strategic planning also requires having an understanding of who the competitors are in the market, and precisely what their strengths and weaknesses are in comparison to the organization. Having a realistic view of the overall marketplace and economy is also imperative.
In the case of the digital marketing agency, for example, part of their strategic vision may be to offer a new service such as copywriting of lead generation materials. If the business has mostly been focusing on web design and online advertising up until that point, they will need to conduct thorough research into the copywriting field to understand how it fares in the industry. If their competitors offer copywriting as a service, then it may be prudent for them to offer it as well. They may also need a way to differentiate their copywriting services from their competitors.
Many organizations also create contingency plans for outcomes that are outside of the realm of normal. This kind of organization planning helps to mitigate potential risks to the company and can even potentially help them avoid events that may have catastrophic effects. A robust contingency plan is well-researched and presents realistic scenarios that can take place that may have negative repercussions on the company, and it provides a step-by-step solution that the company can implement in that scenario. Contingency planning can save an organization from downfall and can help it grow in times of transition.
A possible catastrophic scenario for the digital marketing agency may be that their biggest client, which provides over 50 percent of their revenue, decides to sign with one of their competitors. In this case, the company would lose a large part of their income. If they can’t figure out a way to replace it, they may have to declare bankruptcy. A contingency plan, in their case, would provide possible solutions for this problem, which may include ways of bringing that client back with the company, increasing their revenue through other channels or even taking out a loan for short-term relief. By having a plan already in place if their biggest client leaves, the digital marketing agency can then get right to work trying to solve their problem, instead of wasting time trying to figure out a plan while they are in crisis mode.
Succession planning is another effective way of organization planning. This involves developing a strategy to put into place when a key player in the organization leaves. If someone in a decision-making management role leaves the organization for whatever reason, planned or unplanned, the company as a whole can be set off track. They may not be able to meet their organizational objectives if they don’t have the right leadership in place. Succession planning involves more than just naming a successor. It means training and grooming that person to fill the leadership position before the need arises. This way, there is no lag time for the successor to get up to speed, and the organization can continue with business as usual.
If the lead web developer of the digital marketing agency left suddenly, for example, the company might not be able to complete their existing projects or any new projects until they had a replacement in place. For a small business, this could mean they may have to close their doors. With a succession plan, they may have been training a junior developer to take on the role. If that person was already groomed for the chief decision-making position, then the agency could continue with servicing their clients without any hiccups.
Why You Need to Use Organization Planning
Proper organization planning enables the company to reach its full potential. By using a systematic approach, companies can establish where they want to go, and then implement the steps they can use to get there. If an organization is interested in growth and doesn’t quite know how to get there, then organization planning can help to establish the steps they need to take, both to define their goals and to reach them.
Organization planning helps companies to be strategic in the way they make key decisions. When there are larger company objectives in place, then it’s easier to come to certain decisions when using a strategic method. Similarly, organization planning can help companies to build on their strengths. If there are specific areas where the organization excels, it would be prudent to play on those more to grow the business. On the other end of the spectrum, an organization’s weaknesses can be improved using organization planning. Elements of financial and contingency planning can play a significant role in overcoming a business’s weaknesses.
Setting the company up for success is one of the main reasons why they should use organization planning. Through developing plans and processes, the company can work to improve procedures that are put in place continuously. Improving the way the company operates helps to give them a competitive advantage as well, which can also increase their business.
How to Improve Organization Planning
No one method of organization planning works for a company. Many times, a company has to apply different ways of organization planning to find what works well for them. Improving organization planning is a continuous job, because as the company grows and changes, the way the company plans needs to change to meet new requirements.
Honesty and openness are important aspects of organization planning. It’s vital to have a clear and objective view of how the organization is doing. This way, it becomes easier to identify potential issues or threats the organization is facing, or specific weaknesses that are apparent within the company. Removing internal roadblocks employees are facing helps them to then focus on the task at hand. Once internal roadblocks, such as some procedures or policies, are removed, employees can work towards improving the weaknesses of the organization.
When looking to improve organization planning, it’s imperative to have a set of metrics to gauge the performance of the plan. Metrics can provide great value and act as a guide to making decisions about key elements of the business. Management can use the data to pinpoint areas where the organization needs to focus its efforts and then develop strategies to fine-tune the operations, leading the company to better its overall performance.
- Business Dictionary: Organizational Planning
- The Great Game of Business: 4 Types of Planning for Sustainable Business Success
- KM Consulting & Training: Organizational Planning
- Study.com: Three Levels of Organizational Planning
- Community Tool Box: Improving Organizational Management and Development
- Strategy and Management Services: Strategic Planning to Improve Organizational Performance
- Business.com: 6 Steps to Improve Organization Performance