While some organisations use informal planning (usually smaller companies), it is for the most part, formal planning that is used. The purpose of formal planning in organisations is to give clear guidelines of what a company hopes to achieve and to provide direction and a timescale for these achievements to be accomplished. Plans also give a purpose to the people within in organisations (i.e. management and employees) as they provide what is expected from those involved and give them targets to work towards. Effective planning can help the organisation run smoothly as they provide a step by step approach to what needs to be done.Planning in organisations is normally done at management level and according to Henri Fayol (1916) it is one of 5 major functions that management should undertake.According to Boddy there are four main benefits of planning (2005). These are; plans can clarify direction, motivate people, help use resources efficiently and provide a way to measure progress. However planning has many more benefits such as it allows managers within organisations to establish where the organisation is at, at any given time. Plans also promote teamwork within managers and employees as the plan may specify that certain groups of people are required to work on a task, when in the absence of a plan those people might have undertaken tasks individually, this will also see that targets and goals are met quicker.