Planning and economic departments (hereinafter PEO) are created for the efficient organization of the economies of organizations and enterprises. Although often the work of such departments is not clearly regulated. How, then, should they be organized, what structure should they possess, and what functions should be performed?
Introduction
In any textbook on economics, it is said that the PEO collects economic indicators of company detail, analyzes them and draws up development plans based on the findings of the analysis.
If it is a small business, then this function can be performed by the head of the company (or individual entrepreneur), as the scale of activity grows, these powers can be transferred to another person or even a group of persons. The larger the organization, the more people in it are responsible for economic planning. For the convenience of work, these people are combined in a PEO.
PEO structure
PEO has a standard structure. The head of this department is a person who directly reports to the financial manager, director of advertising and promotion, or even the general director. It all depends on the structure of the organization of the company as a whole.
There are two types of structural organization of PEO:
- An organization in which the jobs of PEO employees are within the department.
- An organization in which part of the employees work outside the department (collect information about the work of the company), and part inside (they analyze the information received and make plans).
The latter type of organization is characteristic of manufacturing companies.
The advantage of the first type of organization is that the work of such a structural unit of the company is easy to control. The disadvantage is that the information to the PEO employees does not always arrive in a timely manner.
If you use the first version of the organization of the planning and economic department and its functions, then the following functions should be assigned to its employees:
- receiving primary data from financial sources and structural units;
- the creation of planning methods, as well as management reporting;
- direct creation of management reporting;
- control and analysis of the work of the company as a whole.
The second method of organizing PEO is also used at least. In this case, the department should be entrusted with the following functions:
- monitoring the implementation of developed plans;
- control over the implementation of the budget of a particular unit;
- analysis of the effectiveness of a particular unit.
It is important that PEO employees working outside their unit are provided with everything necessary for further analysis and development of plans for the economies of organizations and enterprises.
PEO employees can be subordinated both directly to the head of the department and to the head of a production unit. In the first case, subordination is called functional, in the second - administrative. It looks like double submission.
The economist of the planning and economic department should be assigned the following functions:
- Development of methodologies for activities (both throughout the firm and in individual units of the organization).
- The development of basic directories containing indicators of the effectiveness of the departments of the company.
- Develop a company management policy.
- Development of planning and reporting forms.
- Development of methods for analysis and evaluation of the effectiveness of the company.
The advantages of this type of organization of the planning and economic department and its functions are that all the necessary information goes to the unit’s analysts without delay. The disadvantage is the weak control of the work of economists who work outside the department, as well as the fact of double subordination of employees.
This way of organizing work can significantly increase the staff of PEO to unjustified sizes.
An example of the structure of PEO at various enterprises
If we are talking about medium-sized companies, then most often the PEO in them has the following structure: the head is the head of the department, and three PEO specialists are subordinate to him.
If we are talking about a large enterprise, then the structure of the planning and economic department on it is as follows: the department is headed by the head of the PEO, he reports to the deputy PEO, who directly reports to the chief economist of the department and the leading economist of the department. The chief economist is subject to two PEO economists.
PEO objectives
The tasks of this division of the company include the preparation of the following documents and applications:
- company development plans and forecasts;
- reporting documentation of various nature (one-time and regular);
- necessary references and analytical explanations;
- economic calculations;
- investment projects, as well as business plans.
PEO also has certain functions, which should be clearly indicated in the regulatory documentation of the company.
PEO functions
The functions of the PEO are as follows:
- analysis of the effectiveness of the company;
- making forecasts regarding the results of the company;
- assessment of the financial condition of the organization;
- drawing up standards for production processes;
- control of the formation and changes in the cost of production;
- control of product pricing;
- management reporting;
- participation in the formation of budget units.
All PEO functions are interconnected with business processes taking place in the company. The following describes the relationship between these concepts.
The relationship between the functions of PEO and business processes in the company
The main business processes taking place in the company are:
- sales
- production;
- Purchasing
- research and experimental development.
For each of the stages of the company’s work, PEO has its own task.
When working with sales of products, PEO carries out sales planning, carries out their control and further analysis. In the production of products, the tasks of PEO are similar.
When the production process is at the stage of procuring the necessary resources, the PEO also engages in procurement planning, their monitoring and analysis of the acquired values and assets. The situation is the same with research and experimental development.
Planning, control and analysis are the three responsibilities of an economist in an enterprise when working with basic business processes. Why do this? To further optimize these same processes.
Business processes are also auxiliary. They are:
- production technology;
- quality of products;
- Engineering
- capital construction of facilities;
- logistics.
What are the challenges for PEO in this case? The same: planning, control and analysis. In the first case, work is being done on pilot production technology, in the second - on certification, licensing and metrology, in the third - on maintenance of equipment and energy supply, in the fourth - on the construction of buildings, in the fifth - on transportation costs.
The organizations serving business processes are distinguished, which include:
- work with staff;
- marketing;
- financial management;
- legal services;
- general administration.
In this case, the duties of the economist at the enterprise do not change.
Regulation of the PEO
Some companies create PEOs, but do not care at all about the regulation of the work of this structural unit. No provision is made for the economic planning department.
If the organization does not regulate the work of the PEO, you urgently need to prepare a document that will solve this defect. This document will become the basis for creating job descriptions for employees working in the POE, which will solve the problems described at the beginning of the article.
The standard regulatory document of the planning and economic department and its functions contains the following points:
- General Provisions
- Department structure.
- The main tasks of the department.
- Department functions.
- Rights.
- Work with other structures of the enterprise.
- Responsibility.
- The criteria for evaluating the activities of the department.
Next, the structure of the document regulating the work and tasks of the planning and economic department will be described in more detail.
The structure of the document governing the work of the PEO
The General Provisions section contains general information about this unit. It is indicated:
- the purpose of creating a department in accordance with the economic policy of the enterprise;
- basic terms;
- person appointed by the manager;
- documents that guide this department in the exercise of its duties.
The section “Department Structure” contains information on the structure of PEO and its quantitative composition.
The section “Main tasks of the department” describes the key tasks of the PEO, as well as lists of reports and plans that its employees should submit to management.
The main objectives of the PEO
The main tasks of the planning and economic department, which should be indicated in the regulatory document, include:
- Work on economic planning, streamlining business operations.
- Development of a development strategy for the company in order to quickly adapt business activity to constantly changing market conditions.
- Conducting a comprehensive economic analysis of the financial and economic activities of the enterprise.
- Statistical accounting of all indicators of the functioning of the company.
- Technical and economic planning of activities of other departments of the company.
The main functions of the PEO
The main functions of the PEO, which are usually indicated in the regulatory documentation, include:
- Economic planning of the company, aimed at streamlining business activities.
- Preparation of draft action plans for other departments of the company. The preparation also includes the justification for concluding certain contracts, supported by calculations.
- Drawing up plans for the production, financial and commercial activities of the company for different periods (short, medium and long term).
- Informing the company about current plans.
- Conducting a comprehensive analysis of the company in all areas.
- Monitoring the implementation of units of current plans, as well as timely reporting.
- Creation of rational accounting documentation, which slightly increases the bureaucratic burden on employees.
This is not a complete list of the main functions that the planning and economic department is required to perform.
PEO Rights
A specialist of the planning and economic department, as part of his job description, has the right:
- request from authorized representatives of other divisions of the company the data necessary for monitoring and analysis of their activities;
- create expert working groups whose task is the economic planning of the organization;
- within its competence, participate in business negotiations with representatives of other companies and organizations, sign contracts;
- organize an analysis of new programs and scientific projects of the company for their effectiveness and appropriateness of development;
- make proposals on issues that fall within the competence of the PEO in the form of projects.
Interaction, responsibility, assessment
The regulatory documents governing the work of PEOs often indicate sections that describe the interaction of PEOs with other structures of the organization; responsibility for all actions committed by department employees; assessment of PEO.
In the section “Working with other enterprise structures”, only an introduction is made according to the template: “In the process of activity, the department interacts with the following structural units (these units are listed below)”. When listing, it all depends on how broad the authority is planned to give PEO employees.
In the section "Responsibility" it is indicated that the head of the PEO assumes the full responsibility for the work of the department; the degree of responsibility of employees is established in accordance with their job descriptions; All employees and the head of the PEO are personally responsible for the documents they draw up and the operations carried out in accordance with the legislation of the Russian Federation.
In the section "Criteria for evaluating the activities of the department" two criteria are prescribed:
- Timely and high-quality implementation of tasks.
- High-quality performance of immediate duties.
You can specify other evaluation criteria.
This completes the drafting of the regulatory document. Naturally, it should be executed in accordance with the rules for processing such papers: all data must be sealed with a signature and seals, as well as dated.
PEO operation control
Monitoring the work of the PEO is one of the following employees:
- Head of financial services of a company (in a large company);
- CFO (in a small or medium company);
- chief economist (in production).
The monitoring of PEO activities is carried out for the following purposes:
- Prompt performance of one-time tasks.
- Compliance with reporting and workflow, according to the internal regulations of the company.
- Ensuring the accuracy of the provided calculations and reporting documentation.
- Analysis of work in order to identify the effectiveness of the PEO.
Conclusion
Each textbook on economics says that PEO is really a necessary structural unit of the company. Without it, the efficiency of many enterprises and organizations is significantly reduced. Although not all companies operate PEO correctly.
Somewhere the functions of the department are not clearly defined, somewhere - the tasks of employees. Some firms have a difficult situation with the subordination of PEO employees. Although planning in a market economy is the most important process.
To resolve the problem, it is necessary that the head of the company clearly understand the answers to the following questions:
- What is PEO?
- What is its structure?
- Is this company needed or can one person perform its functions?
If the decision on the creation of a PEO is unambiguously made, then it is worth immediately proceeding to the preparation of regulatory documentation, which in addition to the general provisions will be spelled out:
- department structure;
- rights and functions;
- responsibility;
- work with other structures of the company.
If you adhere to these recommendations when designing the planning and economic department and its functions, then the company will have an effective structural unit.
Indeed, if the work of this unit is clearly established, then its specialists are able to optimize all production processes without harm to the activity. Translating into the language of money, this means that having an effectively working PEO allows you to spend less resources and earn more.