In an organisation, planning is important in the following manner
- To Offset Uncertainty and Change:Uncertainty and changes of future make planning a necessity. Future is uncertain to the extent it is not known. Planning is based on estimate of the future which enables the management to anticipate opportunities and challenges. It makes necessary changes in its technology, products, policies, strategies and practices to take maximum advantage of new opportunities, and minimize its losses caused by favorable situations.
- To Focus Attention on Objectives:Because all planning is directed towards achieving enterprise objectives, the very act of planning focuses attention on these objectives. All the activities are performed to achieve those objectives. However, planning makes these objectives more concrete and tangible by focusing attention on these.
- To make Economical Operation Possible:Planning minimizes costs because of its emphasis on efficient operation and consistency. The reason is that planning involves the selection of most profitable course of action that would lead to the best results at the least costs. By providing consistency and balance in the efforts, planning introduces continuous and even flow of work without any friction or loss of energy.
- To Facilitate Control:Managers cannot check on their subordinate’s accomplishments without having planned goals against which to measure. Planned objectives and its instruments including policies, procedures, methods, standards, budgets etc., serve as instruments of control. Objectives provide the overall criteria for measuring performance. Policies provide the basis of evaluating decisions, and standards provide measures of efficiency of operations. Budgets provide the basis of financial control. Thus, planning serves as a basis of coordinated operations as well as control.
- To Increase Organisational Effectiveness:Planning promotes efficient utilization of organisational resources in many ways. It provides a basis for the allocation of resources among programmes, projects and activities. Budgets, methods and standards promote maximum utilization of resources and minimize cost. Procedures and rules also save time and effort by regulating random behavior and systematizing the process of performance of activities.
- To Facilitate Control:Managers cannot check on their subordinate’s accomplishments without having planned goals against which to measure. Planned objectives and its instruments including policies, procedures, methods, standards, budgets etc., serve as instruments of control. Objectives provide the overall criteria for measuring performance. Policies provide the basis of evaluating decisions, and standards provide measures of efficiency of operations. Budgets provide the basis of financial control. Thus, planning serves as a basis of coordinated operations as well as control.
- To Increase Organisational Effectiveness:Planning promotes efficient utilization of organisational resources in many ways. It provides a basis for the allocation of resources among programmes, projects and activities. Budgets, methods and standards promote maximum utilization of resources and minimize cost. Procedures and rules also save time and effort by regulating random behavior and systematizing the process of performance of activities.