A primary purpose of a five-year plan is to start with an evaluation of the current organizational situation. The idea is to understand the current position and to project where it should be five years from now. The five-year plan process also allows for annual reviews and sets clearly defined and measurable objectives.
Following the goals and objectives from the assessment, organizations can make specific plans for where they want to be a year from now and then identify benchmarks for subsequent years. By spelling out measurable results, the five-year plan serves the purpose of helping those involved stay on track. While it may not be as confrontational as the production rosters on the walls of the old Soviet factories, the five-year plan is a document that reminds individuals and organizations of where they want to be five years hence.
Another purpose of the five-year plan is to predict projected growth or change. For a government, it could be improving a social situation – such as reducing the crime rate – within the specified time. A corporation may have a project to increase production. An individual may set a mid-range target of being promoted within five years and identifying the measures – such as further education – she has to take to make that happen.
Five-year plans also provide a checklist of expectations. This helps employees, civil servants and individuals see the progress they are making and focus on where they are going in the future by checking off tasks that have been completed.
In drawing up a five-year plan, the annual and final review dates are identified from the beginning. This format helps individuals anticipate when and how they or the organization will be evaluated. Regular evaluations serve as a record for five-year plans.
Once a five-year plan is completed and evaluated, it serves as the basis for the next organizational development. Like building blocks, five-year plans serve as organizational records and help point the direction towards the next step.