POSDCORB PLANNING

By: Alberto D. Pena, PH.D

Associate Professor, Ret., University of Connecticut (USA)

Member of the Faculty, MDI, Illinois State University (USA)

• Planning can be defined as the process of listing the actions to be done in order to achieve the organizations objective’s.

• It also involves the identification of needed resources to carry out the actions as well as the methodologies for implementation.

• In the context of time, a plan is being made at the present time to be implemented in the future.

• The planning process is based on the realities of the present as well as the projections of future conditions.

• The future could be an immediate future, midterm, or long term.

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• The planning process is sandwiched inside and in-between the past, the present, and the future.

• The planners will use as references what has happened in the past (experience), the significance of the present conditions, as well as assumptions or forecast of the future condition.

• It builds a “virtual reality” of the future. Just like a chain the plan is just as strong as the weakest assumption.

• Although there are sophisticated forecasting techniques, the planners are simply treading into the unknown and uncertainties.

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• Uncertainties means risks. • As the planning process goes deeper into the future the

risks will multiply. • Risk management thus become a part of the planning

process. • In addition to identifying specific risks and systemic risks,

the planner is also determining the probability of a risk happening and what to do “just in case”.

• Forecasting and Sensitivity Analysis are good techniques for risk management.

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• In POSDCORB, the executive is determining the needed actions to achieve organizational objectives.

• In the private sector, the executive is determining the necessary actions to earn profit by becoming more efficient, effective, and economical. These are known as the 3-Es of management. The actions to be done therefore are the activities that will lead to be efficient, effective, and economical. Hopefully these actions will lead to profitability.

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• In the public sector, the executive is determining the actions to be done in order to carry out the mandate and functions of his agency by also being efficient, effective, and economical.

• In non-profit, non-governmental organizations (NGO) the executive is determining the actions to be done in order to carry out its social role to serve its clients and constituencies and to satisfy the demands of its sponsors.

• Again, the Association or NGO should do these actions through the most efficient, effective, and economical way.

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• There are three levels of planning namely:• strategic planning, • operational planning, • and action planning.

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• Strategic Planning is normally identified with the “whole organization” such as a private corporation, an Association or NGO, etc.

• The strategic planning is seldom done in different units of the whole organization.

• However, some people also believe that strategic planning is also done on different units of the organization in support of the strategic plan of the whole organization.

• As a matter of fact it is in the different divisions or units where the strategy is being implemented.

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• Strategic Planning is a process of determining the “game plan” of organizations (strategy) in order to achieve its long term objectives.

• Unlike the operational plan which is for one year, the time horizon for strategic plan is usually for 5 years.

• The planning beyond these period is normally called “Scenario Plan”.

• Some people are confused whether the term “vision” and “mission” belongs to scenario plan or strategic plan.

• To them it does not matter where you put your vision or mission since both strategic plan and scenario plans are both “dreams”.

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• In Strategic Planning management is just dreaming the state of affairs for their organization thru a time horizon.

• Pursuing that dream is the subject of both scenario and strategic planning.

• If the organization is serious it will align its resources, both financial and human, to pursue the dream.

• It is also important that the leadership and members of the organization are committed to the plan.

• It is the planning for the future which is the nature of both scenario and strategic plan. The only difference is time horizon.

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• The time horizon for strategic plan is shorter than that of the scenario plan.

• Many corporations and Associations don’t even bother to develop a scenario plan since the business cycle is only for 5-7 years.

• Some countries develop scenario plan to define a scenario of development.

• A country may develop a scenario plan such as “County Vision for 20 Years”. It defines the level of development after 20 years.

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• In POSDCORB the strategy can be for a long term or medium term since it just a game plan to pursue its vision and sustain it mission.

• In many cases, the organization will make changes in its game plan to meet challenges.

• In the private sector the challenges might be increased competition, changes in the technology,

• changes in the demand for its products, changes in the domestic and international financial condition, demands for diversification, and other challenges.

• It might even involve rebranding of the corporation to improve its image.

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• In the public sector challenges might involve • new mandates, political pressures both domestic and international,

demands for regional political and economic integration, • demands for changes in the important policies of the government

such as fiscal policy, monetary policy, investment policy, diplomatic policy and other challenges.

• It might even involve rebranding for tourism, investment destination, and other strategies to improve the image of the country.

• In Associations and NGO challenges might involve demands from sponsors, new demands from its clientele, improve fund raising, integration with other organizations with similar mission, and other challenges.

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• In strategic planning challenges are usually in the form of perceived changes in the future that may affect the political, financial, and economic wellbeing of the organization.

• The challenges might be in the form of opportunities for the organization to improve its financial condition, creation of new market, to improve its reputation to the communities, and other challenges.

• Before taking advantage of opportunities, the organization should analyze its strength and weaknesses, and threats.

• This is what is known as SWOT Analysis: Strength, Weaknesses, Opportunities, and Threats.

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• For private sector businesses, its strength is manifested in its significant market share,

• ability to compete, • ability to be efficient, effective, and economical thus leading

to greater productivity and profitability, • ability to project a good image to the communities and

clientele, ability to maintain and improve financial leverage, • and other strengths to maintain a stable and sustainable

operation.

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• Its weakness might involve its inability to further expand its market share,

• inability to engage in diversification since its assets are already engaged in the production of one product,

• and other weaknesses that may jeopardize its ability to take advantages of further opportunities.

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Its threats might include:• entrance of new player in the industry, rapid changes in the

technology, • changing preferences in its market thus decreasing demands for

its product, and other threats that may reduce its market share. • In strategic planning, future opportunities are perceived and

subsequent analysis of its present strength, weaknesses, and perceived threats are considered.

• This is the basis for formulating the vision and mission of the organization.

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• In the public sector, the strategies of the government is manifested in the development plan which is normally for a 5-year period.

• The overall strategy is to increase the rate of economic growth by increasing the per capita gross national product (GNP/P) or per capita gross domestic product (GDP/P).

• In formulating the strategy to increase economic growth the government is capitalizing on its ability to align the fundamental structure of it economy consisting mainly of investment policies, fiscal policies, and monetary policies.

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• This is where the politics of economic development comes in. • Some sectors of population (usually the business sector) might

favor infusion of more capital since it is pivot for increasing GNP or GDP.

• This strategy might involve low taxes for businesses so it can accumulate more and more capital for reinvestment.

• Lower taxes means lower subsidies to the poor segment of the population and increasing foreign debt.

• In politics of development, the strength of the government (normally identified with the Executive Branch) is manifested in its political will.

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• The weakness of government is its inability to develop a strong political will in favor of the chosen strategy.

• In some cases the strategy chosen is a compromise between economic growth and subsidy to the poor known as inclusive growth.

• Inclusive growth might include regional inclusion but it normally means balancing economic growth with subsidy to the poor.

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• The threat to its chosen strategy might include sudden changes in the international financial market manifested mainly in the so-called financial crisis.

• The strategy could also be changed midway due to regional market integration and international agreement.

• Examples include the proposed integration of the ASEAN market and agreements on climate changes.

• These phenomena might offer both opportunities and threat for the economy. 

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• In the NGOs their strength lies on their ability to sustain its operation by maintaining its service to their clients in their chosen niche.

• As an example, the Girls Scout and Boys Scout associations are aptly positioned in this niche since it is institutionally recognized as the main focal point for developing the characters of young people in support of other educational institutions.

• Although there are other NGOs serving the young people it is these two institutions that is the center of gravity.

• The strength of other organizations with similar mandate should be their ability to synchronize their services with each other.

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• Weaknesses of Associations or NGOs might involve their ability or inability to raise funds and inability to attract volunteers.

• This might lead to reduced services to their clients. • These situation can be caused by another weakness such

as lack of “visibility” or branding. • These two weaknesses combined might reduce

“institutional support” either from sponsors or general public.

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• How can I support you when I do not even know you and what you do?

• How can I support you when you have not proven that you are really helping your clients?

• On the other hand how can an Association or NGO increase its visibility and prove that it is really helping its clients when it has limited funds.

• In this case the strategy is how to break this vicious cycle.

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SOME FACTORS THAT TRIGGER THE DEVELOPMENT OF NEW STRATEGIES:• New or expanded role or mission• Need to diversity or stabilize funding• Impending financial crisis• Desire to grow and expand services• Changes in the memberships in the oversight group (board

of trustees, council of advisers, etc.)

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SOME FACTORS THAT TRIGGER THE DEVELOPMENT OF NEW STRATEGIES• Changes in leadership (change of director for example).• Changes in laws governing fundraising• Expanded role thrust to an organization• Demands for integration • Coordination of action• Political threats• Visions of the future

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• The second level of planning is the Operational Plan. It is the “working” translation of the Strategic Plan.

• If the Strategic Plan has a time horizon of 5 years the Operational Plan will transform the first year (or subsequent years) into a one-year operational plan.

• This one-year period is usually known as “accounting year” which is always for a 12-month period. Some countries use the calendar year which is from January 1-December 31 of any given year.

• Some countries use the fiscal which normally starts in July of a given year and ends at the end of June the following year.

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• It is called accounting year since the financial books of an organization will be closed for determining the profit during year for the private business to be reported to the tax authorities,

• Or determining the “Results of Operation for the government and NGOs for the purpose of estimating if there are surpluses or deficits during the operation period.

• The operational plan will list all activities that will be implemented within a one-year period.

• It will serve as a guide for “Management” to operate the organization in support of the Strategic Plan.

• The experiences during the operating period may trigger refinements or revisions of the Strategic Plan which is normally on a 5-year “rolling basis”.

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• Operational planning defines what an organization intends to accomplish, how and when the set of objectives will be accomplished, and who will be accountable.

• It is a means by which the strategic plan of the organization is implemented.

• While the strategic plan is primarily the arena of upper management, every manager and key employees must understand the operational plan and determine the specific results for which he or she will be accountable.

• Each major organizational unit will develop its own operational plan in support of the operational plan of the whole organization and the strategic plan for the whole organization.

• This is called the “top-down” approach.

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• In some cases the organization will wait for the development of operational plan of major units before compiling them into the operational plan of the whole organization.

• This called the “bottom-up” approach.• Each department's operational plan must be linked vertically

(to strategic plan) and horizontally (to other department's operational plan).

• Strategic plan requires visionary and directional thinking, operational plan requires short term, specific thinking.

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• A strategic plan is unlikely to have much impact without a supporting operational plan to serve as an implementation vehicle.

• An operational plan is a document identifying specific results to be achieved within a given period of time, usually a year.

• It includes the specific actions and resource required to accomplish these results. Operational planning depends largely on teamwork and commitment from the planning participants.

• This process gives the participants a sense of ownership and responsibility in carrying out the plan.

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PURPOSES OF OPERATIONAL PLAN: • To achieve short term results. These results are more specific and

detailed than those identified in the strategic plan.• To implement the current year's portion of the strategic plan.• Because operational plans are the primary vehicles to implement the

strategic plan, these two documents much be integrated.• To ensure that all parts of the organization is pulling together. • The operational plan of each department should not be in conflict

with the operational plan of other departments. • Instead, these operational plans should be integrated.

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• To involve, and get commitment of, all key people in the meeting organizational objectives.

• The planning process is dependent on the contributions of key people at all levels of the organizational and operational planning facilitates communication and teamwork between different levels (vertical) and across different departments and units in the same level (horizontal).

• Strategic planning requires extensive external analysis while operational planning tends to internally oriented.

• The focus of strategic plan is concept and direction, the focus of operational plan is implementation and results.

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• THE INTEGRATED PLANNING PROCESS: The integrated planning process consists of three major areas with their sub-components, as follows: 

• STRATEGIC PLAN: :Organization Mission, Strategic Analysis, Long term objectives, Integrated Programs, Financial Projections

• OPERATIONAL PLAN: Operational Analysis, Key Results Areas, Indicators of Performance, Operational Objectives, Action Plans, Budgets

• RESULTS MANAGEMENT: Control Systems, Management Reports, Organization Results, Unit/Department Results, Individual Results, Corrective Action, Reward System

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• ELEMENTS OF OPERATIONAL PLAN:• OPERATIONAL ANALYSIS: • Review and assessment of current status of organization's

performance and identifying issues and / or problems that would impact the current operational planning. Operational Analysis will:

• Establish an information base from which objectives and action plans are developed.

• Ensures continuing focus on critical issues• Integrates the long-term strategic needs with short term

operational requirements.• Provides understanding and agreement on major issues facing

the organization.

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KEY RESULTS AREAS: • These are priority areas where results are deemed

critical.• Examples include financial targets, • community support, • quantity and quality of services, • staff development, etc.

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Guidelines in determining KRAs:• Few major areas (4 to 6) that are deemed critical for the

organization's performance during the coming year.• Although financial areas are very critical, KRAs also include

non-financial areas.• Areas that in direct support of the strategic plan.• Areas that affect the whole organization and are considered to

be of high priority.• Areas that require the most cross-functional effort among

departments.

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OPERATIONAL OBJECTIVES: • These are the specific measurable results to be accomplished

with the time span of the operational plan. • This is where integration is paramount. • Example, if the target of the fund raising department is to sell

100,000 cans of popcorn within the 3-month fund raising campaign, each of the volunteer groups will set their own targets that would amount to the target of the fund raising department.

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Guidelines for formulating operational objectives:• It involves the use of "accomplishment verb" such as to

complete, to acquire, to produce, to increase, to reach a certain level of accomplishment, etc.

• It specifies a single measurable result to be accomplished. • Some objectives will produce a variety of results, but the focus

is on a single indicators of performance deemed to be most important.

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Guidelines for formulating operational objectives….• It specifies a target date of time span of completion.• It specifies maximum cost factors. It implies that should be

within the financial and other resource capability of the organization.

• It specifies only the "what" and "when". It avoids venturing into the "why" and "how".

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• The third level of planning is Action Planning. • These represent the specific actions required to accomplish

each of the operational objectives. • These can be stated as specific activities or events that are

not necessary interrelated or a series of small objectives or interconnected events.

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Guidelines for preparing action plans:• Specific steps or actions required• Who is accountable• When the steps or actions are to be carried out• What resources are needed to carry them out

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• Budgeting is a part of operational plan. As a matter of fact it the “financial version” of the operational plan.

• The primary purpose of the budget is to indicate the level of financial resources required to achieve operational objectives.

• The budget should be integrated within the operational plan. As a matter of fact it is the "financial picture" of the operational plan.

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• The budget indicates the cost of carrying out the activities designed to achieve operational objectives thereby leading to the "total cost" of the operational plan.

• The total cost will provide signals to management whether the operational plan is within the financial capability of the organization and whether some operational objectives should be dropped.

• The process of budgeting will optimize the use of limited financial resources

• The budgeting process will determine the most cost effective means of achieving operational objectives

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BENEFITS OF INVOLVEMENT AND COMMITMENT IN OPERATIONAL PLANNING:• Involvement and commitment will produce consistent results. • A plan produced by one person and handed to another for

implementation might lead to minimal compliance. • A plan developed by those who will be involved in the

implementation will most likely lead to maximum compliance.• Involvement and commitment will produce more realistic

plans.

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• When key people are encouraged to make honest and realistic assessments of what is achievable, the plans will be more realistic leading to a more successful implementation.

• Improved communication and coordination. • Involvement in the planning process will facilitate communication

among key units of the whole organization as to their individual objectives and capabilities.

• Increased accountability. Acceptance of accountability is higher among those who are involved in the planning process.

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