Importance of Strategic Planning - Literature review Example

Running header: Literature Review: Planning Student’s Name: Name of Institution: Instructor’s Name: Course Code: Date of Submission: Introduction In recent times, strategic planning has become a prominent aspect of management. Unfortunately, strategic planning in the public sector does not bring the same positive outcomes as in the private sector. Moreover, according to self-reported data, strategic planning has since become ubiquitous in the public sector. Today, federal agencies and departments develop periodical strategic planning, in accordance with the Government Performance and Results Act of 1993. Equally, surveys show that state agencies have also adopted strategic planning (Brudney, Herbert and Wright, 1999, cited in Poister 2010). And according to Poiter and Streib (2005), a number of local governments have also followed suit (cited in Poister, 2010). Indeed, strategic planning has had great positive effect on the public sector. Case studies on the best practices of strategic planning in the US military (Frentzel, Bryson & Crosby, 2000 cited in poister, 2010), as well as other case studies on local government strategic planning ( Wheeland 2004, cited in Poister, 2010) show that strategic planning can bring meaningful change . In agreement, Kelman and Meyers (2009, cited in Poister, 2010) attributed significant changes in a number of federal agencies to strategic planning, and Bryson and Crosby (2009, cited in Poister, 2010) have observed that strategic planning has led to ‘beneficial changes’ in large enterprises created through regional collaboration. And in their study of US municipal governments, Poister and Streib (2005, cited in Poister, 2010) have credited strategic planning with improvements in both performance and organizational capacity strategic planning. Nonetheless, the question here is whether these changes are the best that the public sector can achieve through strategic planning. For example, Hatry (2002 cited in Poister, 2010) notes that most of these efforts strategic planning are meaningless as they do not even meet minimal criteria, e.g. identifying objectives in relation to desired outcomes and putting in place the appropriate strategies to meet them. And in 2004 and 2005, the US Government Accountability Office published reports (cited in Poister, 2010) showing that although strategic planning by federal agency had improved in relation to initial efforts, federal managers still faced difficulty in establishing goals based on expected outcome, addressing overall federal agencies issues, linking annual to long-term goals, etc. This literature review generally takes the perspectives that these strategic planning efforts face many limitations inherent within the very nature of the public sector: political power struggles, organizational bureaucracies, etc. Difficulties The public sector is characterized by certain distinct features that make effective and efficient strategic planning difficult. Melamid and Luck (1994) identified three main areas that they thought need to be addressed if the public sector/organizations are to adopt and benefit from the same management processes in the privates sector. These include: multiple and contradicting goals; financial, contractual, legal and organizational constraints; and difficulties in aligning the actions of individual members to the organizational goals. These same constrains apply in the attempts of the public organizations to adopt strategic planning in their management. Political influences stand in the way of sound judgment in cases where there are ambiguous goals. Many have debated on the diversity and ambiguity of goals in the public sector, and have generally argued that since goal setting in the public sector is mostly politically influenced, there is a tendency to include everyone’s feelings, i.e. be all things for everyone. Thus, substance/content is sidelined for the sake of political agreements and negotiations at the expense of crucial goals and objectives simply because they are ambiguous or conflicting, making implementation difficult (Melamid & Luck, 1994). On the other hand, Rainey (1991) found evidence that contradicted this assertion. For instance, the public managers they interviewed perceived their organizational goals and objectives as clearly as those in the private sector, and achievable. But even then, Rainey (1991) still noted that the clarity and achievability of such goals may largely depend on how public the organization is. In the end, they also noted that in a highly politicized environment, goal setting in the public sector can be of great difficulty for the public managers, especially in federal agencies where stakeholders vary highly. The financial, contractual, legal and organizational constrains in the public sector are manifest in many ways during the process of strategic planning. For example, obtaining funds in the public sector can be very difficult in comparison to market-based approaches since the allocation of resources are subject to political context and force therein (Miller, 1989). Even when there is a satisfactory customer demand, political support for the funding of strategic initiatives is not guaranteed. Rainey (1991), for instance, argue that the legal and formal environment in the government organizations are the reason for the limitations on the autonomy and flexibility of public managers and the departments or organizations they run. For instance, agencies are legally run and authorized institutions; their “purposes, methods and operation spheres and defined and constrained by law” (Rainey, 1991). Federal agency managers, therefore, have limited discretion to make strategic plans and ensure their implement as they must abide by the legal framework that governs agency operations and missions. Equally, implementation always faces bureaucratic hurdles relating to personnel rules and regulations, as well as over-scrutiny and delays of oversight bodies. The bureaucratic culture is based on the rule-based context in public organizations that tends to support actions that maintain the status quo through long-established and elaborate procedural and elaborate guidelines that define decisions and actions (Warwick, 1975 cited in Melamid & Luck, 1994). However, there does not seem to be a clear correlation between bureaucracy and rigid organizational culture in the public sector. Foster (1990), for instance, in his examination of empirical evidence, did not find support for the assertion that mechanistic bureaucracy leads to rule adherence. In addition, Roessner (2001), in a like study, concluded there is little proof that innovations in the private sector differ from those in the public sector. Another factor has to do with organizational alignment. There are two dimensions of organizational alignment: internal and external. On one hand, internal alignment, focusing on integrating individual goals to those of the organization, is significant in the sense that it mediates between agency leaders who align with the political process and bureaucrats who sympathize with the agency clients’ needs. On the other hand, external dimension mediates between agency strategies and the political authority preferences, as well as those of other stakeholders. Indeed, such diversity and dispersion of stakeholders can be a big source of conflict in an agency’s attempt to accommodate all views of the public and interest groups (Melamid & Luck, 1994). In the process of formulating and implementing strategic objectives and goals, political actors continue to weigh if their objectives and wishes are met. Perhaps, Allison (2001, cited in Luck, 1994) notes, this is the reason for the relatively short tenure served by political appointees; maybe due to their hunger to implement administration agendas quickly. Lack of meaningful measures of performance and an overall averseness to risk and change are also two other important factors that limit strategic planning in the public sector (Luck, 1994). Most businesses do have a ‘bottom line’ against which meaningful performance is measured. Unfortunately, public organizations generally lack such a ‘bottom line’, so that weighing their performance is difficult. This difficulty in measuring the performance of agencies’ strategic initiatives is especially due to the aforementioned ambiguity of objectives. Luck (1994) notes that mostly, public organization performance is generally determined by how well it meets it legal mandates, and the responsibilities of its mission and program objectives as set by the executive and legislative arms of government. Equally, the expectations for public organizations are mostly unclear and vague, especially due to their multiple diverse sources (Backoff & Nutt, 1990 cited in Luck, 1994). In the end, lack of clear framework for measuring progress affects make strategic planning difficult as developing incentives and control mechanisms equally becomes hard. Equally, public sector bureaucracy is generally averse to change and risk-taking. According to Poister (2010), strategic planning, by its own virtue, is change-oriented and continually call upon managers to establish objectives that lead to modifications of traditional/conventional organizational practices. However, as Luck (1994) points out, the bureaucratic nature of public organizations tends to inhibit change as an effort to minimize risk. Luck (ibid) further observes that there are generally few incentives to promote change. Instead rule and regulations limit managerial discretion, resulting in a conservative stance toward change. Risk-taking in public sectors may lead to the violation of fiduciary role or tamper with a public organization’s legal mission and responsibilities (Lorvich, 1981 cited in Luck, 1994). Conclusion Looking into the future, and in the face of rapid changes in the world, Poister (2010) asserts the significant role that strategic planning must play in the future, and more significantly, he points at 2020 onwards. His main argument is based on the prediction that the rapidity of change in 2020 will be faster than it is now. This situation will require public managers to be in a position to predict, anticipate and manage & address the newly emerging issues fast and effectively. He suggests that such an aim will depend on the transition of strategic planning into the broadened scope of strategic management. This also requires a change of psychology that at the moment mainly puts emphasis on performance measurement. Poister (2010) feels that this emphasis should turn to performance management, which involves taking proactive actions toward the achievement of set strategic goals and objective, including viewing performance as an ongoing process, rather than as an episodic event. In a nutshell, Poister (2010) suggests that strategic management should be linked with an ongoing process of performance management in a way that the two complement each other toward defining and strengthening overall process of performance and monitoring, which inform the strategy on relevant changes along the way. References: Foster, J.L. (1990). Bureaucratic rigidity revisited. Social Science Review, vol. 71, no. 2, pp. 223-238 Melamid, E. & Luck, J. (1994). Reinventing government or reinventing wheels using new management practices in public organizations. Paper presented at the Association for Public Policy Analysis and Management, Chicago, IL. Miller, G.F. (1989). Unique public sector strategies. Public productivity and Management review, vol. 13, no. 2, pp. 133-144 Poister, T.H. (2010). The Future of Strategic Planning in the Public Sector: Linking Strategic Management and Performance. Public Administration Review, vol. 70, no. 1, pp. 246–254, http://onlinelibrary.wiley.com/doi/10.1111/j.1540- 6210.2010.02284.x/full, viewed April 9, 2012 Rainey, H.G. (1991). Understanding and managing public organizations. San Francisco: Jossey-Bass. Roessner, J.D. (2001). Incentives to innovate in public and private organizations. In J.L. Perry & K.L. Kraemer (5th Edn.), Public management: public and private perspectives. Palo Alto, CA: Mayfield. Author/Date Relevant Topics Description of Study Scales Measured Significant Results Method Future Research Poister/2010 Strategic planning in the public sector The future of strategic planning From strategic planning to strategic management Strategic planning and management links with performance management processes in order to define and strength overall performance Reciprocating relationship between strategic planning and outcomes It has been realized that strategic planning plays a key role in strengthening overall performance in organizations. Survey undertaken in a some organizations Effective strategy in future requires transitioning from strategic planning to the broader process of strategic management involving managing an agency’s overall strategic agenda Foster/ 1990 June Organizational structure Bureaucracy Employment Private Sector It uses empirical research on the rule of rigidity that accumulates in past decades. Impact on behavior Internal organizational control struggles Physical proximity and personal contact have greater impact on behavior than organizational rules and procedure. Interviews and surveys undertaken in organizations Personal insecurity and relation with lack of education, Read More