10 REASONS WHY PLANNING IS IMPORTANT

1. Provides direction: Planning provides a clear sense of direction to the activities of the organisation and to the job behaviour of managers and others. It strengthens their confidence in understanding where the organisation is heading and what for, how best to make the organisation move along the chosen path, and when should they take what measures to achieve the goals of the organisation.

2. Provides an opportunity to analyse alternative courses of action: Another source of importance of planning is that it permits managers to examine and analyse alternative courses of action with a better understanding of their likely consequences. If managers have an enhanced awareness of the possible future effects of alternative courses of action, for making a decision or for taking any action, they will be able to exercise judgement and proceed cautiously to choose the most feasible and favourable course of action.

3. Reduces uncertainties: Planning forces managers to shake off their inertia and insular outlook. It induces them to look beyond those noses, beyond today and tomorrow, and beyond immediate concerns. It encourages them to probe and cut through complexities and uncertainties of the environment and to gain control over the elements of change.

4. Minimises impulsive and arbitrary decisions: Planning tends to minimise the incidence of impulsive and arbitrary decisions and ad-hoc actions. It obviates exclusive dependence on the mercies of luck and chance elements. It reduces the probability of major errors and failures in managerial actions. It injects a measure of discipline in managerial thinking and organisational action. It improves the capability of the organisation to assume calculated risks. It increases the freedom and flexibility of managers within well-defined limits.

5. King-pin function: As stated earlier, planning is a prime managerial function which provides the basis for the other managerial functions. The organisational structure of task and authority roles is built around organisational plans. The functions of motivation, supervision, leadership and communication are addressed to the implementation of plans and achievement of organisational objectives. Managerial control is meaningless without managerial planning. Thus, planning is the king-pin function around which other functions are designed.

6. Resource allocation: Planning is a means of judicious allocation of strategic and scarce resources of the organisation in the best possible manner for achieving the strategic goals of the organisation. The strategic resources include funds, highly competent executives, technological talent, good contacts with government, exclusive dealer network, and so on. If the organisation enjoys a distinct advantage in possession of such resources, careful planning is essential to allocate them into those lines which would strengthen the overall competitive position of the organisation.

7. Resource use efficiency: For an ongoing organisation, planning contributes towards a more efficient functioning of the various work units. There is a better utilisation of the organisation’s existing assets, resources and capabilities. It prompts managers to close gaps, to plug loopholes, to rectify deficiencies, to reduce wastage and leakages of funds, materials, human efforts and skills so as to bring about an overall improvement in resource use efficiency.

8. Adaptive responses: Planning tends to improve the ability of the organisation to effectively adapt and adjust its activities and directions in response to the changes taking place in the external environment. An adaptive behaviour on the part of the organisation is essential for its survival as an independent entity. For a business organisation, for example, adaptive behaviour is critical in technology, markets, products and so on.

9. Anticipative action: While adaptation is a behaviour in reaction and response to some changes in the outside world, it is not enough in some situations. In recognition of this fact, planning stimulates management to act, to take bold initiatives, to anticipate crises and threats and to ward them off to perceive and seize opportunities ahead of other competitors, and to gain a competitive lead over others. For the purpose, some enterprises establish environmental scanning mechanism as part of their planning systems. Thereby such enterprises are able to direct and control change, instead of being directed and controlled by the pervasive external forces of change.

10. Integration: Planning is an important process to bring about effective integration of the diverse decisions and activities of the managers not only at a point of time but also over a period of time. It is by reference to the framework provided by planning that managers make major decisions on organisational activities, in an internally consistent manner.