Business planning -- a look at some major benefits

Among the critical benefits that can be derived from business planning, the most important has been its direct assistance to managerial problem solving. Yet the manifold benefits accrued from business planning do not stop at any particular point. The companies which are serious about their planning are able to find a number of byproduct benefits generating almost automatically. Perhaps the most important among them is the impact of planning upon managerial decision making.

In order to determine the corporate objectives of a company, the process of planning is of paramount importance so much so that it clarifies many hitherto vague points and misunderstanding. Once thought through and committed to writing, objectives provide the clearest kind of guidance to managers and others at all levels who must make decisions and take action in support of them.

It is a very true that a proper business plan makes management decisions far less opportunistic. Because planning forces the kind of prior analysis that downgrades the making of "seat of the pants" decisions. This is as it should be. Snap judgement decision making of the past by an astute manager has turned out nowadays to be a mind of luxury in today's highly competitive business atmosphere.

The cost of making a business decision has risen many times what it was just a scant 10 or 20 years ago. For example, the cost of new plant and equipment, of personnel development, developing of a new product and introducing it into the market-place, to name only a few areas where company expenditures have soared. Decisions affecting these areas now are for move consequential than they have been in the past partly because of the large sums of money that must be committed. In the presence of such kinds of factors at play, proper planning provides enough scope for analytical type of decision which is far more likely to be in the better interests of the business than any opportunistic decision. The reason is that it is based more closely upon fact and a systematic weighing of alternative actions. In any case planning should not be thought of as restrictive or as a retirement when it comes to making managerial decisions.

There is yet another significant byproduct of the planning process. It is the better communication that it affords. Indeed the plan turns out to be management's most effective communication tools because it contains a written account of everything that is vital to the business for the period covered by the plan. As such, it is irreplaceable in creating an intelligent understanding of what is expected at levels where it is exposed. Concurrently, it can virtually eliminate the kind of misunderstanding that a business normally faces when its plans are carried around in someone's head rather than recorded for the appropriate managers to read, understand, and work with.

Another most handy advantage that a well-designed and written business plan has, is its support to a far more realistic appraisal of an individual manager's work. This is because the plan contains a detailed outline of specific action assignments for the period covered. With this, the manager has a detailed measurement device which has been agreed to by the people who have been assigned work responsibilities as a part of the plan. Appraisal then becomes meaningful because the manager can compare results against the programmed action and never forced to rely upon vague appraisals.

It can also be expected that, with proper planning morale will be raised substantially, almost automatically. The plan as a communication tool tells what is to be done, how it is to be done and who will do it. Many the questions which introduce a high content of personal insecurity into any business are clarified. When security is ensured confidence is built which in turn, instills a desire in the individual manager/ employee to a better job since, by now a clearer understanding of what is to be done and why it is important is available to the concerned person(s). In a single word -- motivation, which, of course, is the essence of morale.

The presence of a comprehensive company plan, it is claimed, helps attract capable people. In the same manner, once an individual is part of the organisation and sees for himself exactly what his contribution is toward the achievement of the company's objectives, he develops a kind of satisfaction that he may very well doubt he will find elsewhere. All else being equal, it affords the employee a kind of personal opportunity, particularly if he is exposed to the planning process early in his business career.

Many a bright young man today is searching for the answer to the question: Where am I going? Interviews with this type of individual indicate that he is quick disenchanted with the business that has not found its own answer to the same sort of question. He soon wonders how he can intelligently find the answer in the kind of business climate where no such answers exist at a higher level. His attitude is understandable and even commendable.

Planning encourages better use of time at all levels. All efforts are targeted on meaningful activities and through integration of work, redundancy and useless wheel spinning are virtually eliminated.

In fact, these by products of effective planning are formidable and they are very real. It is such added benefits that have made many a business enthusiastic about the kind of process we are discussing here. We may yet try another personal bit of pulse taking. Mentally list those businesses which have a clear understanding of what they are trying to achieve, an atmosphere that attracts and retain capable individuals, a management that is purposeful and not opportunistic, an effective system of communication, and a realistic method of appraising work. Far more likely than not, the business you pinpoint as having made serious headway in each of these area has done so because it has taken a planned approach to its management.

Kazi Alauddin Ahmed is an industrial consultant.