Human being and the nature of human being is unpredictable because human beings although do not know what will happen in next minute they always tend to make plans for future as planning is an integral part of human nature. In the case of the corporate world also companies tend to make plans about the future so that all interested parties whether its owners, creditors, employees, shareholders, and so on can have an idea about where the company is headed in the future. In order to understand the concept of planning better let’s look at some of the advantages and disadvantages of planning –
Advantages of Planning
Planning Leads to Clarity
The first and foremost advantage of planning is that it helps the company in laying specific objectives or goals for the employees of the company and hence there is no confusion about the roles and responsibilities among the employees as everybody has an idea about what is excepted from them. In simple words, just like in a game of football if there is no goal post then players playing the football match will not be able to give a good performance as there is no motivation because of lack of goal post in the same way in case of companies if there is no goal or objective than workers will have no motivation to work towards the betterment of the company.
Helps in Controlling
Planning helps the company in evaluating the actual performance of the company with plans set by the company and if there is any deviation then the company can easily identify where the loopholes were and take corrective measures so that actual performance matches with the plan. Hence in a way planning helps the other important management function that is controlling in carrying out the control function of the management.
Better Preparation for Future
Planning reduces the risks and uncertainties in the sense that plans are made after taking into account various risks factors like the risk of fire, theft, competitor’s actions, contingent liabilities etc… Hence in a way company that has made plans is better equipped to handle uncertainties as and when the uncertainties arise as opposed to those companies which have no plans in place. In simple words, just like in the rainy season a person who has an umbrella is better prepared for rains as opposed to a person who has no umbrella in the same way a company that has made plans is better prepared to tackle uncertainties associated with doing a business.
Reduces Overlapping
Another advantage of planning is that it reduces overlapping and duplication of activities of the employees of the company as every task is assigned to a specific department which reduces the chances of the same task going to different departments which in turn saves a lot of time and energy of the company.
Disadvantages of Planning
Kills Creativity
Planning kills creativity and innovation because employees have to work according to plan and if an employee has some innovative idea or way of working then it is not easy for the employee to implement that as any deviation even if it leads to the benefit of the company will not be implemented leading to a loss for the company. In simple words just like a lion in a cage feel suffocated and frustrated in the same way employee feels suffocated and frustrated when they just have to follow the plans even when they have better way or plan in their mind resulting in demotivation as far as employees are concerned.
Dynamic Nature of Business Environment
When it comes to the corporate world in today’s times where technology and consumer taste change so rapidly planning may not be fruitful as every assumption about the plan may not be turn out to be valid due to the dynamic nature of the business environment and economic environment.
Expensive
Planning is expensive in the sense that it requires detailed analysis about the future which involves a lot of manpower, money, and other running expenses leading to financial strain on the company, hence before going for extensive planning a company should take the financial aspect also into consideration as sometimes the expenses of planning outweigh its benefits which is the reason why planning is not always recommended for every situation.
Inaccurate
Lack of accuracy is another major limitation of planning because no matter how accurate the data is but since the nature of planning is such that it is always dependent on the future and we all know that future is always uncertain which in turn leaves the scope of planning being inaccurate.
As one can see from the above that planning has both benefits and limitations but the majority of companies have a planning department as planning is considered to be one of the most important aspects of management.