17.3 Types of Plans

Types of Organizational Plans

Organizational plans come in various types, each serving a different purpose. Some outline long-term strategy, others guide daily operations, and still others prepare the organization for unexpected events. Understanding these categories helps managers pick the right planning approach for their specific situation.

Categories of Organizational Plans

There are five main ways to categorize plans. These categories overlap on purpose: a single plan (like a strategic plan) can be described by its level in the hierarchy, its time frame, and its organizational scope all at once.

Hierarchical Plans (The Planning Hierarchy)

These three levels form a top-down chain where each level supports the one above it:

• Strategic plans are long-term, broad plans that define the organization's mission, vision, and overall direction. They're set by top management.
• Tactical plans are mid-term plans that outline specific strategies and actions to achieve strategic goals. Middle managers typically own these.
• Operational plans are short-term plans that spell out day-to-day activities and tasks needed to carry out tactical plans. Front-line managers handle these.

Frequency-of-Use Plans

This category splits plans based on whether they'll be used repeatedly or just once.

Standing plans provide ongoing guidance for recurring situations:

• Policies are general guidelines for decision-making and behavior. A dress code policy, for example, sets expectations for professional appearance without scripting every outfit.
• Procedures are step-by-step instructions for specific tasks. A customer complaint procedure ensures every complaint gets handled the same way, from initial contact through resolution.
• Rules are strict, specific requirements that must be followed with no room for interpretation. Safety regulations in a manufacturing facility are a classic example.

Single-use plans are created for a one-time purpose and retired once complete:

• Programs are comprehensive plans for a specific project or initiative, like coordinating the marketing, production, and distribution efforts for a new product launch.
• Budgets allocate financial resources for a defined time period, such as a quarterly marketing campaign budget.

Time-Frame Plans

• Long-term plans extend beyond three years (strategic plans fall here)
• Mid-term plans cover one to three years (tactical plans fall here)
• Short-term plans cover less than one year (operational plans fall here)

Organizational Scope Plans

• Corporate-level plans encompass the entire organization and its overall direction
• Business-unit plans focus on a particular division, department, or product line
• Functional-level plans target a specific functional area, such as marketing, finance, or human resources

Contingency Plans

Contingency plans are alternative strategies developed in advance to address potential disruptions or unforeseen circumstances, like natural disasters or economic downturns. Creating them often requires environmental scanning, which is the process of monitoring external conditions to identify threats and opportunities before they arrive.

Components of Strategic Plans

A well-built strategic plan typically includes four key components:

• Mission statement defines the organization's purpose, values, and primary stakeholders. It provides a foundation for all decision-making and goal-setting. Starbucks' mission is a good example: "To inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time."
• Long-term vision describes the desired future state of the organization. It gives everyone a clear direction to work toward. Southwest Airlines' vision: "To become the world's most loved, most flown, and most profitable airline."
• Operational strategies outline the specific actions and initiatives required to achieve the mission and vision. These include resource allocation decisions, competitive positioning, and key performance indicators. Examples: expanding into new geographic markets, developing innovative products, or improving operational efficiency.
• SMART objectives are goals that are Specific, Measurable, Achievable, Relevant, and Time-bound. They translate broad strategy into concrete targets that teams can actually track progress against.

Standing vs. Single-Use Plans

The distinction between standing and single-use plans comes down to reusability.

Standing plans handle recurring situations and create consistency across the organization:

Single-use plans are tailored to one-time projects or initiatives and are discarded or archived once complete:

Other single-use plan examples include an international market expansion plan or a project plan for implementing a new ERP software system.

Plan Development and Execution

Developing and executing any plan follows a basic cycle:

1. Goal-setting — Establish clear objectives aligned with the organization's mission and vision.
2. Plan implementation — Execute the strategies and actions outlined in the plan, assigning responsibilities and timelines.
3. Plan evaluation — Assess how well the plan is working by measuring results against the original objectives.
4. Plan adjustment — Adapt the plan as needed in response to changing circumstances, new information, or evaluation results.

This cycle is continuous. Evaluation findings feed back into revised goals and updated plans, which is why planning and control are so closely linked in management.