Planning is the first and most important function of management. It is needed at every level of management. In the absence of planning all the business activities of the organisation will become meaningless. The importance of planning has increased more in view of the increasing size of organisations and their complexities.
Planning has gained importance because of uncertain and constantly changing business environment. In the absence of planning, it may be possible but certainly difficult to guess the uncertain events of future.
The following facts show the advantages of planning and its importance for a business organisation:
(1) Planning Provides Direction:
Under the process of planning the objectives of the organisation are defined in simple and clear words. The obvious outcome of this is that all the employees get a direction and all their efforts are focused towards a particular end. In this way, planning has an important role in the attainment of the objectives of the organisation.
(2) Planning Reduces Risks of Uncertainty:
Planning is always done for future and future is uncertain. With the help of planning possible changes in future are anticipated and various activities are planned in the best possible way. In this way, the risk of future uncertainties can be minimized.
(3) Planning Reduces Overlapping and Wasteful Activities:
Under planning, future activities are planned in order to achieve objectives. Consequently, the problems of when, where, what and why are almost decided. This puts an end to disorder and suspicion. In such a situation coordination is established among different activities and departments. It puts an end to overlapping and wasteful activities. Consequently, wastage moves towards nil, efficiency increases and costs get to the lowest level.
(4) Planning Promotes Innovative Ideas:
It is clear that planning selects the best alternative out of the many available. All these alternatives do not come to the manager on their own, but they have to be discovered. While making such an effort of discovery, many new ideas emerge and they are studied intensively in order to determine the best out of them.
In this way, planning imparts a real power of thinking in the managers. It leads to the birth of innovative and creative ideas.
(5) Planning Facilitates Decision Making:
Decision making means the process of taking decisions. Under it, a variety of alternatives are discovered and the best alternative is chosen. The planning sets the target for decision making. It also lays down the criteria for evaluating courses of action. In this way, planning facilitates decision making.
(6) Planning Establishes Standards for Controlling:
By determining the objectives of the organisation through planning all the people working in the organisation and all the departments are informed about when, what and how to do things.
Standards are laid down about their work, time and cost, etc. Under controlling, at the time of completing the work, the actual work done is compared with the standard work and deviations are found out and if the work has not been done as desired the person concerned are held responsible. Thus, in the absence of planning controlling is not possible.