Importance of Planning
The importance of planning function can be discussed as follows:
1) Provides Direction
Planning provides a clear sense of direction to the activities of the organisation and the job behaviour of managers and others. It strengthens their confidence in understanding where and for what the organisation is heading, how best to make the organisation move along the chosen path, and when should they take what measures to achieve the objectives of the organisation.
2) Provides an Opportunity to Analyse Alternative Courses of Action
Another 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 improved awareness of the possible future effects of alternative courses of action, for taking any action, or for making a decision, they will be able to exercise judgment and proceed cautiously to choose the most favourable and feasible course of action.
3) 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 main errors and failures in managerial actions. It injects a measure of discipline into managerial thinking and organisational action. It improves the ability of the organisation to assume calculated risks. It increases the flexibility and freedom of managers within well-defined limits.
4) 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 & authority roles is made 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 kingpin function around which other roles and functions are designed.
5) Resource Allocation
Planning is the 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 the government, an exclusive dealer network and so on.
6) Increases 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 resources, assets, and capabilities. It prompts managers to close gaps, plug loopholes, rectify deficiencies, to reduce wastage and leakages of funds, materials, human efforts and skills to bring about an overall improvement in resource use efficiency.
7) Adaptive Responses
Planning tends to improve the ability of the organisation to effectively adapt/adjust its activities and directions in response to the changes taking place in the external environment. Adaptive behaviour on the part of the organisation is important for its survival as an independent entity. For an organisation, for example, adaptive behaviour is critical in technology, markets, products, etc.
8) Anticipative Action
While adaptation is 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, take hold of initiatives, anticipate crises and threats and ward them off, perceive and seize opportunities ahead of other competitors, and gain a competitive lead over others. For this purpose, some enterprises establish environmental scanning mechanisms as part of their planning systems, thereby such enterprises can direct and control change, instead of being directed and controlled by the pervasive external forces of change.
Planning is an important process to bring about effective integration of the diverse decisions and activities of the managers not only at a point in time but also over some time. It is by reference to the framework provided by planning that managers make significant decisions on organisational activities, in an internally consistent manner.