Types of Plans
With the repetitiveness dimension as a guide, organizational plans are usually divided into two types: standing and single-use. A standing plan is used over and over again because it focuses on organizational situations that occur repeatedly. A single-use plan is used only once—or, at most, a few times—because it focuses on unique or rare situations within the organization. As Figure 5.2 illustrates, standing plans can be subdivided into policies, procedures, and rules, and single-use plans can be subdivided into programs and budgets.
Standing Plans: Policies, Procedures, and Rules
A policy is a standing plan that furnishes broad guidelines for taking action that is consistent with reaching organizational objectives. For example, an organizational policy relating to personnel might be worded as follows: “Our organization will strive to recruit only the most talented employees.” This policy statement is broad, giving managers only a general idea of what to do in the area of recruitment. However, the policy is intended to emphasize the extreme importance management attaches to hiring competent employees and to guide managers’ actions accordingly.
As another example of an organizational policy, consider companies’ responses to studies showing that one out of every four workers in the United States is attacked, threatened, or harassed on the job during a 12-month operating period. To deal with this problem, many managers are developing weapons policies. A sample policy could be: “Management strongly discourages any employee from bringing a weapon to work.” This policy would encourage managers to deal forcefully and punitively with employees who bring weapons into the workplace.13
Figure 5.2 Standing plans and single-use plans
As mentioned in a previous chapter, m any organizations today adopt sustainability policies. For example, consider H&M, a discount retailer of men’s, women’s, and children’s fashion apparel. H&M’s sustainability policy is closely linked to its business objective, which is to offer fashion and quality at the best price. That means H&M aims to sell only merchandise that has been produced using methods that are environmentally and socially sustainable. In addition, H&M commits to “clean and efficient” transportation as well as environmentally friendly production protocols throughout its global supply chain.14
A procedure is a standing plan that outlines a series of related actions that must be taken to accomplish a particular task. In general, procedures outline more specific actions than policies do. Organizations usually have many different sets of procedures covering the various tasks to be accomplished. Managers must therefore carefully and properly apply the appropriate organizational procedures for the situations they face.15
As an example, Apple changed its manufacturing procedures to integrate green principles into its operations. To eliminate lead in its computer displays, Apple eliminated cathode-ray tubes from its designs. Through innovation, the company also managed to eliminate two other deadly chemicals, arsenic and mercury, from its products.16
A rule is a standing plan that designates specific required actions. In essence, a rule indicates what an organization member should or should not do and allows no room for deviation. An example of a rule that many companies are now establishing is no smoking. The concept of rules may become clearer if one thinks about the purpose and nature of the rules in such games as Scrabble and Monopoly.
Although policies, procedures, and rules are all standing plans, they differ from one another and have different purposes within the organization. As Figure 5.3 illustrates, however, in order for the standing plans of an organization to be effective, policies, procedures, and rules must be consistent and mutually supportive.
Figure 5.3 A successful standing plan program with mutually supportive policies, procedures, and rules
Single-Use Plans: Programs and Budgets
A program is a single-use plan that is designed to carry out a special project within an organization. The project itself is not intended to exist over the entire life of the organization. Rather, it exists to achieve a purpose that, if accomplished, will contribute to the organization’s long-term success.
A common example is the management development program found in many organizations. This program exists to raise managers’ skill levels in one or more of the following areas: technical, conceptual, or human relations skills. Increasing managerial skills, however, is not an end in itself. Instead, the end or purpose of the program is to produce competent managers who are equipped to help the organization be successful over the long term. In fact, once managerial skills have been raised to the desired level, the management development program can be deemphasized. Skills on which modern management development programs commonly focus include understanding and using the computer as a management tool, handling international competition, and planning for a major labor shortage.18
A budget is a single-use financial plan that covers a specified length of time. It details how funds will be spent on labor, raw materials, capital goods, information systems, marketing, and so on, as well as how the funds will be obtained.19 Although budgets are planning devices, they are also strategies for organizational control. They are discussed in more detail in Chapter 18.
A stadium costs millions of dollars to build and requires a budget that plans how funds will be obtained and spent.
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