Planning as a system

What is a system?

A system is comprised of many processes. These processes have ins and outs. Processes have starts and stops. They can be mature, or developing. Some of them work smooth and some have multiple broken links. It can be helpful to look upon management work as running a complex system. For example, let’s say, you manage a call center, which takes hundreds of calls a day from customers. One day 4 employees call in sick. As a manager this shortage of 4 people will impact the system. Perhaps customers will have longer wait times or lunch schedules will need to be adjusted. As the manager you make these changes to the overall system to minimize the impact to customers. A message is placed in the phone system alerting customers that due to call volume, calls will be answered today in 6 minutes vs. the usual 2 minutes. When managing, it is important to understand the most important processes, which are required to meet business objectives, and then make necessary changes.

Management as a planning system

The management planning system has multiple important processes. They are divided between setting strategic and tactical plans, people development, and operational processes. Prior to establishing strategies it is important to define an organizational vision and ensure all employees understand the vision and have an opportunity to contribute towards it. This vision starts with a described end state. The Best Manager needs to explain what the organization will be like in 1-2 years or the timeframe of the planning horizon. It is important for management to define other elements of this end state. For example, what will the customers say? What will the employees say? What goals do you expect to be achieved? This ensures that everyone on the team understands and works in the same direction towards implementation and development of the vision. Next is mission. It should describe what the organization does and how to help everyone understand the main purpose and objective of the organization.

Values and behavior

What is most important in this environment? Values should be clear, communicated, and role modeled. For example, perhaps one of the organization values is customer service quality. This should be defined clearly. Managers must role model organizational values. 3-5 values are quite enough, if defined clearly, and people are able to follow.

For example, defined values might be around customer service, employee risk taking, creativity, working together, and so on. What are the expected behaviors in the organization? They should align nicely under each value. Behaviors aligned to core values, which are taught and role modeled throughout the organization, give a powerful lesson and template for people to follow. Without this consistency in organizational life, decisions are made in an unstructured way without paying attention to the overall goals of the organization.

Environmental analysis

Once the organization has defined the basic framework for how it will operate then it is time to collect data for the planning process. This should be at a minimum an annual process to review but driven by routine processes throughout the year. It’s important to collect organizational assumptions. What are the overall assumptions that will drive the planning activities that everyone can agree on? For example, the company will grow 10% in the next year, add 8 locations, and hire 67 people. They will phase out some technology and bring in another technology. With clearly listed assumptions, management can make plans that make sense. Every plan must have customer input. Too many times organizational leaders find what they are doing well, measure it, and decide to do more of it. This is a backwards approach. First of all, managers should survey their customers and understand what is most important especially among products and services currently being offered. Then, managers should measure how the organization is performing according to what is important to the customer. This leads to the better planning system.

Customer trends

It’s also important to look at customers, and their objectives. What services and or products do they appear to be using more of or less of? What other factors of customer behavior can be explained and written down to help the planning process? What kind of customers are fading out, buying less, and what customer base is growing? These questions should understand the reasons why? In any plan the external economy must be taken into consideration. Where is the growth, decline and why? How will new laws, policies, and external factors affect the organization? There should be a clear statement in the plan around the economy, and how it affects the organization in a positive or negative way.

Competition?

Who are the competitors of the organization? What do they do better or worse? What are the most important processes in the company needed to achieve organizational goals? For example if your company exports shoes, then shipping is major process. A shoe manufacturer might review the process they use to ship shoes to distributors and compare this to how their competitors handle their shipping process? How do others outside the industry handle shipping finished products to their distributors? How do other excellent working firms handle their relationships with their distributors? Once you take time doing this kind of research it pays off later improving all processes in the organization and its planning system!

Now look inside

How are the skills of the current employee base matching up to the new plans? Which skills are emerging and will require new educational plans and tools? Which skills are declining and will require re-training for people to shift to new areas of higher return. Managers should create a database to understand the strengths and areas of interests of their people. This will help when the process of reviewing emerging and declining skills is underway. Matched with a database this enables a powerful knowledge resource about the organization’s most critical resource! It’s important at this point of the plan to survey all people and understand their ideas, and what they feel is going right vs. wrong. The data should be available to everybody and, more importantly, the action steps and recommendations always visible. Following this overall process based planning approach, the budget can be set. Too many budgets get set prior to any planning and as a result new goals are established without clear basis. The budget should be set as a result of customer feedback, strategic direction, and available funding!

A nested planning system

The above enables the development of a companywide set of 1- 3 year strategies, 1 year tactics, and quarterly plans, which can be set and shared. Each plan element should have an owner and clear metrics should be established, which describe what the goal is, when it is expected, and what metric will represent success? Managers should make sure as many people as possible contribute to the annual plans. Plan leaders should hold regular update meetings open to all employees. When people know both plans and status on a regular basis, it will open up communications and will enable people to feel more vested at work. At the same time it will help to move plans forward.

When The Best Manager looks at the management planning process as a system it helps to prevent decisions made without data and, as important, includes everyone in the process from customer to company leadership.

Learning summary and next steps

Management is a system and it is important to understand that when a decision is made, the entire system gets affected. It is important to understand also what processes drive work in the organization. This leads to the importance of planning. In this process all possible data should get collected, and all team members should be involved. The organization can produce new objectives for the following plan period clearly defined with metrics and owners assigned. This will be as a result of key customer input, which has been collected around importance and performance. It is important for management to give visibility to progress through the year via operational reviews while making them a routine process. Finally, placing an emphasis on people development in the plan process will ensure that people are moving forward and in alignment with organizational plans. Management planning takes discipline, quality thinking, and involvement. As a result, the chances are greater that business goals will be achieved!

Craig Nathanson