There are 4 major types of planning: 1) short-range or operational planning, 2) long range planning, 3) contingency planning and, finally, 4) strategic planning. Short term planning refers to the decisions and planning generally made by junior management on departmental or unit level. Decisions made within a short-range planning scope are related to day-to-day operations of the business.
Short-range planning generally builds on other levels of decision-making process, such as strategic planning, bringing into the picture tactical organizational objectives. With that in mind, short-range planning process is concise and follows standard setting process:
- Set the objective
- Make assumptions and delimit capabilities
- Build action plan
- Create measurement and evaluation criteria.
Use of short-range planning
As it was identified, short-range planning refers to day-to-day operations of the company and some of the basic examples of its use can be seen in managers planning their day schedule, or decisions taken by the department in regards to the weekly meeting to cover the urgent matters (Steiner, 2010, pp.293-295). Another example can be taken from operations, where employee has to make decisions on purchase volume of material. General characteristic that can be applied to all the examples is low level of responsibility and immediate importance of decisions within this planning method.
Long-range planning refers to the type of decision-making that can give an insight into relatively short period of time that can delimit half-way line in the project or fiscal year. Similar to short-range, long-range planning process, is generally seen as a part of organizational strategy. The process of long-range planning, however, involves more hierarchical levels and, thus, brings forward more decisions. The complexity in this planning type added by increased number of stakeholders. Standard example of long-range planning can be as follows:
- Identify operational needs of the company
- Identify primary and secondary stakeholders
- Determine objectives
- Set-up priorities
- Analyze risks and limitations
- Create communication strategy and training of the parties involved
- Set up responsibility and expectation map for all the stakeholders
- Set up appraisal and process follow-up system.
Use of long-range planning
Such planning type is often used by organizations for employee mid-year performance appraisals, financial forecasting with lower error levels or contingency planning of bottlenecks in operational management. For example, in an organization that have incorporated Key Performance Indicator System (KPIs) in its Human Resource (HR) structure, managers will use long-term planning to sit down with its direct reports to discuss the process on these KPIs and give feedback as well as agree on the way forward, generally limited by 6 months horizon.
Highest hierarchical stage of planning is strategic, where the decisions and forecasts are taken on corporate level. This planning generally covers such issues as long-term company development, financial multi-year forecasts, organizational missions, sustainability strategy and its vision on industry, suppliers and customer relations. While operational planning can cover from a day to generally weeks period of time, average planning horizon for strategic level ranges from 3 to 10 years (Camillus, 1986).
Strategic planning process is significantly more complex than any other due to the complexities of organizational behavior, number of stakeholders involved and communication channels to involve at times multinational and multicultural structure of organizations. While the basic process map from the surface is the same as it is presented in long-range planning, the scale and scope of this planning actually incorporates all the above mentioned elements.
Use of Strategic Planning
Strategic planning is the responsibility of each organization, where a company takes decisions on its concept, visual identity and mission. Some of good examples of strategic planning can be seen in the formulation of corporate strategy of such corporations as Apple, Siemens, Cheese Cake Factory. These companies look 10 years ahead to present to their internal and external stakeholders the answers to the questions like “Where we want to be?”, “Why is it important” and “How the company is planning to achieve it?”.
Contingency (Emergency) Planning
Each organization should be able to effectively respond to changes and unpredictable situations. For this companies develop contingency that takes care of the proactive as well as reactive measures to address extreme or simply non-routine situations. Organizational contingency planning is often used in operations to cover unpredictable flows of production and manufacturing. Contingency planning process is different in its structure from other types of planning due to its assumption nature. Process map for contingency planning can look as follows:
- Identify standard processes.
- Analyze risks associated with each of them and its probability.
- Make assumption about possible “go-wrongs”
- Build action plan B for each of the contingencies identified.
It is a fact that one cannot predict all the contingencies and, thus, probability analyses is critical to identify 1-2 major elements that will be included in emergency process and for which you organization prepares plan B.
Use of Contingency Planning
Contingency planning is used mostly on operational level. The necessity to make this planning, however, often depends on the nature of the business. Example of contingency planning in a shipping company include the analysis of the ports of call and planning of emergency deviation strategies for the ships in case of bottlenecks of no-call situation. Other example is the use of contingency planning in fire department, where the risks are clearly related to daily job of firemen. This type of planning map will include potential threats and clear instructions of how to act in case of emergency.
- Camillus C. John. Strategic Planning and Management Control. Systems for Survival and Success. New York: Lexington books, 1986. Print.
- Steiner George. Strategic Planning. What Every Manage Must Know. New York: Simon& Schuster Inc., 2010. Print.