ORGANIZATION AND MANAGEMENT
Chapter 1 – Nature and Concept of Management
1.
Definition and functions of management
1.1.
Management definition
is the co-ordination of all resources through the process of planning, organizing, directing, and controlling in
order to attain stated objectives
is the art of knowing what you want to do and then seeing that it is done in the best and cheapest way
is concerned with seeing that the job gets done; its tasks all centre on planning and guiding the operations that
are going on in the enterprise
is a multipurpose organ that manages a business and manages managers and manages workers and work
consists in guiding human and physical resources into dynamic, hard-hitting organization unit that attains its
objectives to the satisfaction of those served and with a high degree of morale and sense of attainment on the
part of those rendering the service
is an aspect of the business that doesn’t have the same specific duties some of the other parts of the business
have
is a process with a social element. It requires the efficient use of resources combined with the guidance of
people in order to reach a specific organizational objective. It involves responsibility to achieve the objectives and
to fulfil specific organizational purposes through economical and effective planning and regulation. It’s about
taking charge and ensuring focus is placed on the things and aspects of the business that help achieve the vision
and the goals.
Objectives of Management
a. Organizational Objectives – Reasonable profits, survival and growth of business, improving the goodwill of
the enterprise, etc.
b. Personal Objectives – Fair remuneration for work performed, reasonable working conditions, opportunities for
training and development, reasonable security of service, etc.
c. Social Objectives – Quality of goods and services at fair price to customers, honest and prompt payment of
taxes, conservation of environment and natural resources, preservation of ethical values of the society, etc.
Three key characteristics define the process of management
1. Management is a process of continuing and related activities. Each of the functions is related to each other and
the functions complement each other. It is hard to consider the functions in isolation, as management requires
each activity to complement one another. When you as a manager engage in one function, you in effect also
start the process of another function.
2. Management is about it involving and concentrating on organizational goals. Management is largely focused on
achieving the key mission of the organization, its vision. Whilst there are detailed objectives it might focus on,
management is mainly interested in identifying the wider organizational goals and using the different functions in
order to achieve the objectives. Each function takes the organization closer to achieving its vision.
3. Management achieves the organizational goals by working with people and organization resources. You might
use different financial resources or physical equipment as part of the process, while also directing and guiding
the staff towards the objectives. The manager is in charge of supporting the people and connecting the right
person with the right resources.
In essence, management is about a dynamic process, with a number of elements and activities as part of the
process. The dynamic and social element of management mean the functions of management are separate from
operational functions. Whilst operational functions refer to activities and processes such as marketing, finances and
purchases, the management functions differ depending on the organizational level at which they take place.
The functions remain the same, yet are essentially different depending on the organizational hierarchy. A manager at
the senior level will be involved in different activities than the manager at the junior level. The core concepts might
be the same, but they are dynamic in manifestation. On the other hand, operational function of marketing will change
according to the organization, the person in charge and the operational goals. For management functions, the
objective of the specific activity remains largely the same, even though the manifestation might be different
depending on the specific situation.
Management functions are the same, but the management processes people use can differ. A management style or
process can depend on the organization, the manager in question, and even the objectives. You’re likely to change
management style if you are directing a single person or being in control of a team.
1.2.
a.
The Five Functions of Management
Planning
The first managerial function involves planning. The function is about creating a detailed plan towards achieving a
specific organizational objective. When you are planning, you are identifying the tasks, which are required to achieve
the desired goals, outlining how the tasks should be performed, and identifying when and by whom they must be
performed. The focus of planning is about achieving the objectives and it does require knowledge of the
organization’s objectives and vision. You will need to look both at the short- and long-term success of the
organization as part of the plan.
An example of planning would be a situation where you have an objective, such as increasing the sales by 20% in the
following month. You will need to look at the different ways you and the team could achieve this goal. This might
include things like creating a new advertisement campaign, reducing prices or speaking to customers about their
shopping plans. Your role is to pick the processes that you find the most appropriate and to organize them into a
logical pattern. You must also identify the timeline for these processes.
As you might realize, planning is on on-going function. Management will regularly have to plan the future tasks and
adjust the plans based on the organizational situation and the achievement of previous goals. Furthermore, it
requires the whole organization to work together as the different departments or team plans need to link to each
other and align with the organizational objective. Henri Fayol called the function the most difficult to achieve! You
need a lot of knowledge and flexibility in order to plan activities effectively.
Why is planning essential?
Why is planning important? Planning provides the organization a better sense of what it wants to achieve and how it
can achieve this. You essentially have more focus when you plan for things. Think what would happen if you went
into a big job interview without any planning.
You might be OK, but you wouldn’t be able to focus on the details and it might take time for you conduct your
answers. But if you plan for the interview, you now exactly the points you want to make, you have enough
knowledge to respond to specific questions about the company and so on.
In effect, planning ensures the proper utilization of the available resources and the ability to understand how these
should be used in order to achieve the goal. In the example of the interview, the planning helps you take advantage
of information on company websites, research interview questions and to then use this information to outline
example answers.
A key part of planning is also the vital role it plays in reducing risks. When management plans for the tasks ahead,
they are looking at the situation and detailing the possible pitfalls ahead. As with your interview, the risk of not
knowing anything about the company or giving an incoherent answer is higher than if you had planned your answers
a little.
How to plan?
Planning is an intellectual activity that doesn’t always require a lot of visible labor and effort, as much of it is about
thinking creatively about the issues at hand. When you need to come engage in planning, you should focus on the
following steps:
a.1. Gain knowledge of the issues – You need to understand the organizational objectives, the different components
they involve, and the available resources you and the team have. You also need to be knowledgeable of the
topic at hand. In terms of increasing sales, you need to have an understanding of how the sales industry works
and what different methods can effectively boost company sales.
a.2. Look into the future – The function is about understanding the short- and long-term objectives the organization
wants to achieve. You need to consider not just these different elements, but also be able to make predictions
about the future conditions for achieving these. Perhaps you have noticed changes in customer behavior due to
the downturn in the economy. When you are planning, you need to take into account these little nuances.
a.3. Determine the objectives – Once you are aware of the organizational objective, the resources available, and the
future outlook to achieving the objectives, you need to identify the specific processes and detailed goals that are
required to achieve the bigger goal. You might want to create a marketing campaign to increase sales, which
requires the team to conduct market research and to come up with ideas. The more detailed objectives and
processes you can set, the better the plan is.
a.4. Create flexible structures – However, your planning needs to be flexible and take into account things don’t
always go according to plan. Your management plan must take into account the other departments and their
specific organizational goals. Perhaps the financial team has to cut down costs for the sales team and you need
to be aware of the impact this would have on your new marketing campaign.
b.
Organizing
The next function of management follows planning and it is about organizing. It’s about using the plan to bring
together the physical, financial and other available resources and use them to achieve the organizational goal. If your
task were to increase sales, you would look at the plan and determine how to divide the resources you have in order
to put your plan in place.
The marketing campaign would be handed out the Becky and you would provide them with the financial resources
available and needed to give birth to the campaign. You would also need to ensure the team has access to the
customer files in order to utilize vital information. You’d then direct Danny and his team to calculate the possible
reductions you can make, help them have the resources to determine which products are best to discount and so on.
You’d use the above plan and information about the resources you have or which you need, and arrange the
resources to the right tasks. As the example shows, this can be about arranging the finances, ensuring the right
equipment is used and appointing the personnel to the specific tasks.
Your objective as the manager is to provide your team or department the resources it needs to turn the plan into
reality. The organizing function is about the overall structure of the specific managerial level. You are creating the
foundations to everyday operations by organizing the resources. This function is closely linked to the hierarchy of
management.
Depending on your management level, you will have different responsibilities and resources to organize. The top-level
managers need to organize the teams below them, while the lower-level managers will be partly taking orders for
effective organizing from the managers above. Organizing is a vital part of ensuring the company can function
effectively and it concerns the day-to-day activities.
Why is organizing essential?
While it might be difficult to work without a plan, it can be impossible for an organization to function without
organizing. The function is vital because it ensures there is structure to the operations. You are aware of the
resources and you ensure they are used in a manner that best helps the company to achieve its targets.
In terms of finances, organizing can guarantee you don’t waste money on functions that don’t provide the right
results. If you don’t organize the right persons to do the right jobs, you might damage productivity. If you know
Sarah is talented in accounting, you don’t want to put her in charge of marketing. By organizing the resources, you
ensure operational efficiency and structure. The company’s day doesn’t start in chaos, with people trying to figure out
what they are supposed to do. Organizing puts the plan in action.
Without organizing, resources wouldn’t necessarily work towards the operational goals. While you might have the
team still doing tasks, the tasks might not be the correct ones for the situation. Consider you are a manager of a
team in a café. When you organize the team to perform the tasks required to boost coffee sales, you have each
person working towards the goal. Jerry might be greeting customers and telling them about the new coffee flavour,
while Dina and Jack are working to make the sale and the coffee as quickly as possible.
If you hadn’t organized them, you might end up with a situation where Jerry is wiping the floors (although they are
clean) and Dina is working alone at the counter.
How to organize?
When done efficiently, organizing tends to follow the pattern and steps outlined below:
b.1. Identify activities and classify them – The step is straightforward enough because you already have a plan. Your
objective is to identify the different roles, processes, and activities required to achieve the objectives. These
would be the roles for the team members, the different tasks each role would need to perform and the specific
processes the tasks would include.
b.2. Assign the duties and resources–Once you’ve identified the above, you would begin organizing the resources.
You would assign the specific tasks for the persons you feel are the most qualified and provide the resources to
the processes, which most need them.
b.3. Delegate authority and create responsibilities–Managers shouldn’t behave like dictators. Although the power is
concentrated to your as the manager, it doesn’t mean you should have all the authority. In order the get the
marketing campaign working properly, you might want to ensure the person in charge of the team has the
authority to make decisions. You need devolution of responsibility, as it can ensure the plan works efficiently.
b.4. Co-ordinate authority and responsibilities–As well as delegating authority, you also need to co-ordinate it to
match the overall functionality of the organization and the structure of the objectives. For example, you might
want two people to share the responsibility of organizing the price reductions, with each having the ability to
respond to supplier queries. Furthermore, if you have other managers above you, it’s important to co-ordinate
the authority to ensure the functionality doesn’t suffer as a result of different plans
c.
Staffing
The staffing function is an increasingly important function of management, although it is sometimes left out when the
core functions are discussed. It can be seen closely related to organizing, with both focused on ensuring the
resources are directed to the right processes and tasks. For staffing, the focus is on people and their labor in relation
to the organizational objectives.
The function aims to ensure the organization always has the right people in the right positions and the organizational
structure isn’t hindered by lack or excess of personnel. You would essentially be looking at the tasks ahead of you
and determining who should do what and if you have the right manpower to achieve the objectives you want.
In terms of hitting your sales targets, you would need to analyze if the current staff is capable of performing the
tasks and whether you have enough employees to ensure the integrity of the organization. You might find the
marketing team to be too small and consider hiring a temporary or even full-time worker.
The reason staffing is included as a separate function and why it’s a crucial part of management is due to the
changing nature of the workforce and the organization. Today’s companies are much more complex in terms of
where and when they operate – companies aren’t confined between national boundaries anymore. Technology has
also had a huge impact on company structures, requiring new positions and destroying others.
Whereas your car sales company might have mainly relied on face-to-face sales in the past, today you might also do
business online, which would mean you need people for IT-specific roles and perhaps fewer salespersons.
Management has also become more focused on the human behavioral aspect of leadership. Finding the right
company fit, ensuring employees are satisfied, and guaranteeing emotional wellbeing as well as physical work safety
have emphasized the importance of staffing as a function.
Why is staffing essential?
As the above showed, staffing’s importance as a core function of management has increased in the past few decades.
But having the right amount of staff and the right people doing the required roles isn’t just crucial because of
changing technology of enhanced focus on complex human behavior. Staffing is essential to guarantee the
operational functionality of the organization.
If you don’t have the right amount of people working in your organization, you make achieving organizational goals
harder. You might either be in a situation where you can’t increase the sales, as you don’t have the manpower to
respond to company queries. On the other hand, you might be wasting resources by having too many employees
with not enough tasks to perform. The numbers do matter.
Staffing also guarantees the staff you have is qualified to perform the tasks and that they are adequately supported
in those roles. This will further deepen the organizational efficiency, since people are motivated and qualified to work
towards the common objective. You can’t hire a plumber if you are hoping to fix the roof. Furthermore, even the
most qualified of employees need the occasional help and support. The staffing function helps create these
development opportunities.
How to staff?
According to Koontz & O’Donell, staffing “involves manning the organisation structure through proper and effective
selection, appraisal and development of personnel to fill the roles designed on the structure”. It consists of a number
of separate functions, which are:
c.1. Manpower planning – You need to stay on top of staffing, as manpower requirements can change from season
to season. Planning would see you make estimations of the number of employees you need, searching for the
right kind of employees, and hiring the perfect employees to the roles in front of you.
c.2. Recruitment, selection and placement – Another key function is the actual recruitment process, with its various
steps.
c.3. Training and development – Staffing also includes the creation of structures, which ensure the employees are
always on top of the latest skills in the position and the industry. You should also consider training programs in
terms of succession, as you need to ensure the next generation of managers and leaders is coming through
your organization.
c.4. Remuneration – A big part of the function is the financial aspect. Staff remuneration is key in terms of attracting
the right talent without damaging the organization’s finances. If you aren’t offering a competitive remuneration
package, the applicants will go to your competitors.
c.5. Performance appraisal – You must also create structures of feedback within the organization. Feedback can play
a crucial role in motivating and developing employees; with the reward structures ensuring good behavior is
supported and noticed.
c.6. Promotions and transfers of roles – Related to the above two points, promotions are essential for staffing
operations. You can reward and motivate the staff by offering enough opportunities to climb up the career
ladder. Creating structures for role transfers and promotions also ensure the talent and knowledge you’ve
attracted doesn’t leave elsewhere.
d.
Directing
The fourth function is known as directing, sometimes also referred to as the influencing or the leading function of
management. Directing is about the actuation of the methods to work efficiently to achieve the set organizational
objectives. The function goes beyond organizing the employees to their specific roles and involves ensuring they are
able to perform the tasks through a variety of means. Directing in essence is looking after productivity and ensuring
productivity is going up instead of decreasing.
The function delves deeper inside human interaction, making the manager motivate, communicate and inspire his or
her personnel. At this stage, you are meeting and connecting with your employees to find out how the tasks are
going. You would talk to them about the new marketing program, get their feedback on the project and spend time
inspiring them with new ideas. The directing function is all about the day-to-day interaction between the
management and the staff.
The function of directing has strong links to things such as leadership. A good manager will be able to inspire the
workforce to work towards the goals not because they have to do it, but because they are driven to achieve these
objectives. The manager’s role is not just about ensuring the workplace has the right resources and employees know
what they are doing; it’s also important to create an environment of friendship. The manager wants to be someone
who can encourage and motivate the personnel and not fear them into submission. With proper directing, you are
able to set in motion the processes you’ve prepared with the above three functions.
Why is directing essential?
Directing has an important role in an organization as it helps strengthen the operational capability of the organization.
It does so by ensuring the different parts of the organization are working better. Directing is a bridge between the
operational needs and the human requirements of its employees. You essentially create a link between the necessity
of turning in a profit, with the need of keeping employees motivated and interested. Since directing aims to improve
productivity, you are strengthening how well the organisation succeeds.
Research has pointed out how important human-focused management is in today’s organization. When objectives are
approached from a human perspective that aims to ensure people’s opinions are listened to, the goals are met faster
than in task-oriented environments. The management’s ability to listen to the workforce, support and inspire them
will boost the productivity and profitability of the organization.
If you listen to your team’s concerns and perhaps provide them inspiration with quotes, films or the occasional days
out of the office, you can refresh their resolve to achieve the goal. If you just throw a blank paper in front of them
and tell them to write a story, they are less likely to remain interested.
How to direct?
You can direct and lead your team by utilizing four key methods based on the findings of human behavioral studies.
These are:
d.1. Supervision – You need to oversee the work your employees are doing. The method requires watching and
monitoring the performance, but also supporting and guiding the employees when things are not going as
planned. You could use evaluation reports, examine the quality of work, and be present during certain parts,
such as team meetings or when the person is talking to clients. In terms of support, you want to discuss the
work and how it’s moving along. You also want to provide materials that can help the employee perform better.
d.2. Communication – Directing is built around effective communication. As a manager, you need to create an
environment that supports different communication methods from passing information to exchanging opinions.
The important thing is to ensure these different communication channels are not just between manager and
subordinate, but also between employees and different management levels.
d.3. Motivation – As mentioned above, big part of directing is about inspiring and motivating your employees. You
need them to get behind the objectives to ensure there is enthusiasm to achieve the goals. Motivating as a
manager includes positive and negative feedback, provision of ideas and the opportunities to develop skills
further. Directing might also have an element of monetary or non-monetary incentives, such as the introduction
of bonuses.
d.4. Leadership – Managers must essentially act more like leaders when directing the workforce. This means that
you need to occasionally motivate and inspire by setting an example, instead of simply telling the subordinates
what they need to do. You want to get hands on with the work and be part of the process of achieving the
objectives. Although managers and leaders tend to differ, leadership skills are something a good manager
should keep in mind.
The function might seem rather complex and getting it right might be harder than any of the other functions of
management. You should watch the video of Jim White, professor emeritus at North Lake College, explaining
directing as a function and giving his take on what he thinks are the three key elements of directing: leading,
motivating and communicating.
e.
Controlling
The final function of management is controlling. The function ensures the other four functions are followed correctly
and the flow of work is moving the organization towards the objectives it has set itself. As Theo Haimann has put it,
controlling is “the process of checking whether or not proper progress is being made towards the objectives and
goals and acting if necessary, to correct any deviation”.
In our example of having the objective to increase sales in a particular month, controlling would be the function that
measures whether the sales are increasing and helps to correct the situation if the specified target is not getting
closer. As a manager, you would examine the processes you set forward and take note whether they are enhancing
your sales records. The marketing campaign’s effectiveness would be evaluated and measured. If you find the price
reductions being inefficient during the process, you might consider swapping the products on sale, reduce the
reduction, or abort the discount campaign altogether as inefficient.
Controlling requires you to examine the objectives in a measurable manner. You essentially need to set standards,
which guarantee you know exactly what you want to achieve and what counts as success or failure. But controlling is
also a function that due to the set of standards will ensure you have the ability to correct behaviors when they
deviate from the standards. In essence, controlling is about quality monitoring. You are looking at the processes and
ensuring they achieve the right things for the organization.
Why is controlling essential?
Controlling’s most important function is the risk-reduction ability. Since you are essentially monitoring the
performance of the team and comparing it against the objectives you’ve set, you can react to problems more easily.
Instead of realizing at the end of the month that you’ve missed your sales target by a huge margin, you can keep on
eye on the situation during the process.
If you notice the marketing campaign, for example, is not producing any new customers or leading to increased
sales, you can re-tweak it to better attract customers. With the re-tweak, you might be able to change the
campaign’s attractiveness and recover the situation. This could end up guaranteeing you meet the sales target at the
end of the month.
Even if you miss the target, you might not miss it by as much and you’ve at least had the chance of correcting the
situation. With controlling, you are reducing the risk of failure and the impact of failing to meet your objectives. As
mentioned, even if you happen to fail, you’re prepared for it and you can start analyzing the reasons behind it
immediately.
In the business world, measuring performance can be the difference between the successful and the failing
companies. Think about a start-up. If the management doesn’t have a set of standards to measure its performance
against, they don’t have any idea what success or failure looks like. Even when they have a set of objectives and they
know whether they met them or not, they don’t have anymore information to go by.
Let’s say they want to earn $100,000 in the first three months. Without standards and proper control, after three
months all they know is whether they earned it or not. They won’t know the why. Was the success down to the
product? Did the marketing help? How much did their social media strategy push sales? Was it all about the saving
mechanisms they put in place? In the end, understanding the reasons behind success or failure will help the business
perform better.
How to control?
For controlling to be effective, you need to take the four steps of this specific function of management:
e.1. Establish standards of performance – You first need to establish the standards of performance you are aiming
for. These must be set with the organizational objectives in mind. You look at the objectives and the plan you
have set, creating a set of measurements that would tell you are on the right path. For example, let’s say you
want the manufacturing team to make 10 more shoes every day to boost productivity. Your first measurement
would be the team creating 10 shoes, but you could include other factors to the set of standards. You might
look to reduce the downtime by ensuring problems are fixed within 30 minutes and add a new person in the
chain to fasten the process by 10 minutes.
e.2. Measure the actual performance – Once you’ve set the standards and you’ve set the new processes in motion,
you can start monitoring the actual performance. The monitoring process will depend on your standards and the
ease of measurement. Part of the process can be performance reviews, actual quantifiable data and so on. The
key is to start collecting the information from the start.
e.3. Compare the actual performance with the expected standards – As you receive performance data, you can start
comparing it with the standards you’ve set. The comparison helps you to identify the problem areas or notice
patterns that are actually working more efficiently.
e.4. Take corrective action – With the data you’ve collected and the information you have about performance, you
can take any necessary corrective action. If the recovery team is not repairing the machinery quick enough, you
can look deeper into it and find ways to boost the performance. On the other hand, you might notice the team
is producing more shoes than you expected, which could help you revise your objectives.
FINAL THOUGHTS
Henri Fayol developed his ideas regarding the functions of management and his theory has largely shaped the current
understanding of the core elements any management would have to perform. The functions are key to management in all
levels, from the entry positions to higher roles of management.
Furthermore, each five functions – planning, organizing, staffing, directing and controlling – are linked to each other. In
order to use one function, you typically need to follow with another or have established one beforehand. While certain
theorists and experts might disagree whether there are three, four, five or six functions, the consensus agrees on the
detailed representations of the above skills, processes and structures.
The question is often more about how broadly you want to define each function. If one of the functions is missing,
management is operating insufficiently and the organizational efficiency might suffer. A good manager has to be able to
keep an eye on all of the five functions, often at the same time, to guarantee productivity and profitability.
The functions of management are crucial to understand if you want to succeed as a manager. Knowing the above will
guide you as a manager to focus on the right aspects when doing the job and give you confidence in your ability. It also
helps provide more clarity in terms of the skills and characteristics you need to possess to be a good manager.
2.
Evolution of management theories
The simplest definition of management is getting things done through people. It implies that an organization, whether small,
medium, or large, is composed of people. A business organization exists for a purpose.
Management is a function that directs and coordinates the efforts of the people to accomplish goals and objectives by using
available resources efficiently and effectively. It is also a process of accomplishing the organization’s goals by working with
and through people. Its task includes planning, organizing, staffing, leading or directing, and controlling.
1910s-1940s: Management as Science
Management as Science was developed in the early 20 th century and focused on increasing productivity and efficiency through
standardization, division of labor, centralization, and hierarchy. A very ‘top-down’ management with strict control over people
and processes dominated across industries.
1950s-1960s: Functional Organizations
Due to growing and more complex organizations, the 1950s and 1960s saw the emergence of functional organizations and the
Human Resource (HR) movement. Managers began to understand the human factor in production and productivity and tools
such as goal-setting, performance reviews, and job descriptions were born.
1970s: Strategic Planning
The focus is from measuring function to resource allocation and tools like Strategic Planning, Growth Share Matrix, and SWOT
(identification and analysis of the company’s Strengths, Weaknesses, Opportunities, and Threats) were used to formalize
strategic planning process. After several decades of ‘best practice’ and ‘one size fits all’ solutions, academics began to develop
contingency theories.
1980s: Competitive Advantage
As the business environment grew increasingly competitive and connected, and with a blooming management consultancy
industry. Competitive Advantage became a priority for organizations in the 1980s. Tools like Total Quality Management (TQM),
Six Sigma, and Lean Management were used to measure processes and improve productivity. Employees were more involved
by collecting data, but decisions were still made at the top, and goals were used to manage people and maintain control .
1990s: Process Optimization
Benchmarking and business process reengineering became popular in the 1990s, and by the middle of the decade, 60% of
Fortune 500 companies claimed to have plans for or have already initiated such projects. TQM, Six Sigma, and Lean remained
popular and more holistic, organization-wide approach and strategy implementation took the stage with tools such as Strategy
Maps and Balance Scorecards.
2000s: Big Data
Largely driven by the consulting industry under the banner of Big Data, organizations in the 2000s started to focus on using
technology for growth and value creation. Big data is a broad term for data sets so large or complex that traditional data
processing applications are inadequate. Accuracy in big data may lead to more confident decision-making. And better decisions
can mean greater operational efficiency, cost-reductions, and reduced risk.
After several decades of trying to manage people through the different management theories, one has to realize that what
worked before just simply is not enough anymore. Traditional Management is fine if one wants compliance, but if one wants
innovation and growth, management has to engage its people on a whole new level. Top down control is a thing of the past.
Succeeding in today’s environment requires a management style that inspires and is participatory.
The Famous Theories on the Functions Of Management
Since management involves solving the problems within an organization in order to reach the desired objectives, the focus is
on understanding the functions that make up the process. As experts began studying and theorizing the essence of
management, different ideas and concepts regarding the functions were born.
Although the theories about the functions of management lead to rather similar results, it can be helpful to study the
differences as well as the historical journey to our current understanding of the functions. Here are a few of the most
influential theories and theorists, who’ve outlined their ideas about the functions of management.
a. Henri Fayol
Henri Fayol was the first to attempt classifying managerial activities into specific functions. The French engineer
established the first principles of the classical management theory at the start of the last century. Fayol is considered the
founding father of concepts such the line and staff organization. When Fayol developed his strategies and ideas,
managers in organizations didn’t have any kind of formal training and therefore Fayol’s ideas were ground-breaking. As
well as setting out 14 general principles of management, Fayol also defined the five core functions of management, which
are still used and which form the basis of much of the later theories. To Fayol, manages is a process, which includes
forecasting, planning, organizing, commanding and controlling. These are the foundation of setting the relationship
between the subordinates and the superior and the five core functions help the management to solve problems in the
relationship or within the organization in a creative manner.
Henri Fayol is claimed to be the real father of modern management. He was a Frenchman born in 1841 and was working
as an engineer with a mining company. He improved the condition of the company from virtual bankruptcy to high
success. From his practical experience, he developed some techniques. He brought out some 14 basic management
principles, which he felt, could be used in all management situations, irrespective of the organizational framework.
He wrote a book entitled, General and lndustrial Management, in French that was later on translated into English. It is
now considered as one of the classics of management literature. The book mainly covers the aspects of the immutable
and repetitive character of the management process and the concept that management can be taught in the classroom or
the workplace. He also laid down the principles of management, which he deemed important for any organization.
Henri Fayol’s 14 Principles of Management
1. Division of Work: This is the principle of specialization, which is very well expressed by economists as being a
necessary factor for efficiency in the utilization of labor.
2. Authority and Responsibility: In this principle, Fayol conceives authority as a combination of official authority
deriving from a manager’s official position and personal authority, which is compounded of intelligence, experience,
moral worth, past services etc.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
b.
Discipline: Holding the notion that discipline is ‘respect for agreements which are directed as achieving obedience,
application, energy and the outward marks of respect’, Fayol declares that discipline requires good superiors at all
levels, clear and fair agreements and judicious application of penalties.
Unit of Command: This is the principle, which states that on employee should receive orders from one superior
only.
Unity of Direction: According to Fayol, the unity of direction principle implies that each group of activities having
the some objectives must have one head and one plan. As distinguished from the principle of unity of command,
Fayol perceives unity of direction as related to the functioning of personnel.
Subordination of Individual Interest to General Interest: In any group, the interest of the group should
supersede that of the individual. When the interests differ, it is the function of the management to reconcile them.
Remuneration of Personnel: Fayol perceives that remuneration and methods of payment should be fair and also
should be able to afford the maximum satisfaction to employee and employer.
Centralization: Although Fayol does not use the term, Centralization of Authority, his principle definitely refers to
the extent to which authority is concentrated or dispersed in on enterprise. Individual circumstances determine the
degree of centralization that gives the best overall yields.
Scalar Chain: Fayol thinks of the scalar chain as a line of authority, a chain of superiors from the highest to the
lowest ranks. And, because it is an error of a subordinate to depart needlessly from the lines of authority, the chain
should be short-circuited.
Order: Breaking this principle into material order and social order, Fayol thinks of it as a simple edge for everything.
This organization is the principle, which refers to arrangement of things and persons in an organization.
Equity: Fayol perceives this principle as one of eliciting loyalty and devotion from personnel with a combination of
kindliness and justice in managers while dealing with subordinates.
Stability of Tenure of Personnel: Finding that instability is both the cause and effect of bad management, Fayol
points out the dangers and costs of unnecessary turnover.
Initiative: Initiative is conceived as the process of thinking out and executing a plan. Since it is one of the keenest
satisfactions for an intelligent man to experience, Fayol exhorts managers to sacrifice personal vanity in order to
permit subordinates to exercise it.
Esprit de corps: This principle implies that union is strength and an extension of the principle of unity of command.
Fayol here emphasizes on the need for teamwork and the importance of communication in obtaining it.
George R. Terry
After Fayol, many theorists have looked at the functions and crafter their own ideas, deviating only slightly from Fayol’s
core functions. George R. Terry wrote a book Principles of Management in 1968 and outlined his view on the principles.
Terry believed there to be four core functions, each function posing and responding to a specific question the
management must solve. The question, the fundamental function and the resulting action are outlined in the below
graph:
The Question
The Function
The Result
What is the need?
Planning
Objectives, policies, procedures and methods
Where should actions take place and
Organizing
Work division, work assignment, and authority utilization
who should do what work?
Why and how should group members
Actuating
Leadership, communication, development, and incentives
perform their tasks?
Are the actions being performed
according to plan?
c.
3.
Controlling
Reports, comparisons, costs and budgets
Harold Koontz and Cyril O’Donnell
In 1976, Harold Koontz and Cyril O’Donnell published an essay Management: A Systems and Contingency Analysis of
Managerial Functions. They felt the previous studies have been effective in describing the functions, but believed the
division should be more detailed. Koontz and O’Donnell believed there to be five key functions of management: Planning,
Organizing, Staffing, Directing/Leading,and Controlling. These five functions of management have become perhaps the
most cited and they are explained further in the following section. Overall, the quick outlook would hopefully have
highlighted the alignment of the functions of management in different management theories.
Functions, roles, and skills of a manager
Managers just don't go out and haphazardly perform their responsibilities. Good managers discover how to master five basic
functions: planning, organizing, staffing, leading, and controlling.
Planning: This step involves mapping out exactly how to achieve a particular goal. Say, for example, that the
organization's goal is to improve company sales. The manager first needs to decide which steps are necessary to
accomplish that goal. These steps may include increasing advertising, inventory, and sales staff. These necessary
steps are developed into a plan. When the plan is in place, the manager can follow it to accomplish the goal of
improving company sales.
Organizing: After a plan is in place, a manager needs to organize her team and materials according to her plan.
Assigning work and granting authority are two important elements of organizing.
Staffing: After a manager discerns his area's needs, he may decide to beef up his staffing by recruiting,
selecting, training, and developing employees. A manager in a large organization often works with the company's
human resources department to accomplish this goal.
Leading: A manager needs to do more than just plan, organize, and staff her team to achieve a goal. She must
also lead. Leading involves motivating, communicating, guiding, and encouraging. It requires the manager to
coach, assist, and problem solve with employees.
-
Controlling: After the other elements are in place, a manager's job is not finished. He needs to continuously
check results against goals and take any corrective actions necessary to make sure that his area's plans remain
on track.
All managers at all levels of every organization perform these functions, but the amount of time a manager spends on
each one depends on both the level of management and the specific organization.
Roles performed by managers
A manager wears many hats. Not only is a manager a team leader, but he or she is also a planner, organizer, cheerleader,
coach, problem solver, and decision maker — all rolled into one. And these are just a few of a manager's roles.
In addition, managers' schedules are usually jam‐packed. Whether they're busy with employee meetings, unexpected
problems, or strategy sessions, managers often find little spare time on their calendars. (And that doesn't even include
responding to e‐mail!)
In his classic book, The Nature of Managerial Work, Henry Mintzberg describes a set of ten roles that a manager fills.
These roles fall into three categories:
a. Interpersonal: This role involves human interaction.
b. Informational: This role involves the sharing and analyzing of information.
c. Decisional: This role involves decision making
Table 1 contains a more in‐depth look at each category of roles that help managers carry out all five functions described
in the preceding “Functions of Managers” section.
Not everyone can be a manager. Certain
skills, or abilities to translate knowledge into
action that results in desired performance,
are required to help other employees
become more productive. These skills fall
under the following categories:
a.
Technical: This skill requires the
ability to use a special proficiency or
expertise to perform particular tasks.
Accountants, engineers, market researchers,
and computer scientists, as examples,
possess technical skills. Managers acquire
these skills initially through formal education
and then further develop them through
training and job experience. Technical skills
are most important at lower levels of
management.
b.
Human: This skill demonstrates the
ability to work well in cooperation with
others. Human skills emerge in the
workplace as a spirit of trust, enthusiasm,
and genuine involvement in interpersonal
relationships. A manager with good human
skills has a high degree of self‐awareness
and a capacity to understand or empathize
with the feelings of others. Some managers are naturally born with great human skills, while others improve their skills
through classes or experience. No matter how human skills are acquired, they're critical for all managers because of the highly
interpersonal nature of managerial work.
c.
Conceptual: This skill calls for the ability to think analytically. Analytical skills enable managers to break down problems into
smaller parts, to see the relations among the parts, and to recognize the implications of any one problem for others. As
managers assume ever‐higher responsibilities in organizations, they must deal with more ambiguous problems that have long‐
term consequences. Again, managers may acquire these skills initially through formal education and then further develop them
by training and job experience. The higher the management level, the more important conceptual skills become.
Although all three categories contain skills essential for managers, their relative importance tends to vary by level of
managerial responsibility.
Business and management educators are increasingly interested in helping people acquire technical, human, and
conceptual skills, and develop specific competencies, or specialized skills, that contribute to high performance in a
management job. Following are some of the skills and personal characteristics that the American Assembly of Collegiate
Schools of Business (AACSB) is urging business schools to help their students develop.









Leadership — ability to influence others to perform tasks
Self‐objectivity — ability to evaluate yourself realistically
Analytic thinking — ability to interpret and explain patterns in information
Behavioral flexibility — ability to modify personal behavior to react objectively rather than subjectively to
accomplish organizational goals
Oral communication — ability to express ideas clearly in words
Written communication — ability to express ideas clearly in writing
Personal impact — ability to create a good impression and instil confidence
Resistance to stress — ability to perform under stressful conditions
Tolerance for uncertainty — ability to perform in ambiguous situations
Chapter 2 – The Firm and its Environment
1.
Environmental forces and environmental scanning environmental scanning
The business environment may be classified into two types:
a. EXTERNAL BUSINESS ENVIRONMENT - refers to the forces/factors outside the organization which my affect, either
positively or negatively, the performance of the organization.
GENERAL EXTERNAL BUSINESS ENVIRONMENT includes:
•
Economic
•
Socio-cultural
•
Politico-legal
•
Demographic
•
Technological
•
World and ecological situations
SPECIFIC EXTERNAL BUSINESS ENVIRONMENT includes:

Stakeholders

Customers

Pressure groups

Investors

Employees
b.
2.
INTERNAL BUSINESS ENVIRONMENT - refers to the forces/factors within the organization which my affect, either
positively or negatively, the performance of the organization.
INTERNAL BUSINESS ENVIRONMENT includes:
•
The organizations’ resources
•
Research and development
•
Production
•
Procurement of supplies
•
Products and services offered
The local and international business environment of the business environment of the firm
ENVIRONMENTAL SCANNING
 Involves the seeking for and sorting through data about the organization’s environment.
 is a process of gathering, analyzing, and dispensing information for tactical or strategic purposes.
 It is monitoring and interpreting sweep of social, political, economic, ecological, and technological events to spot
budding trends that could eventually impact industry
COMPONENTS OF ENVIRONMENTAL SCANNING
 The development of a competitive mind-set
 Considering of future business scenarios
 Business prediction/forecasting
 Benchmarking - The process of measuring or comparing one’s own products services and practices with those of the
recognized industry leaders in order to identify areas for improvement
CULTURAL INTELLIGENCE
 Is an individual’s ability to favorably receive and adjust to an unfamiliar way of doing things.
MONOCHRONIC CULTURE
 Is a culture where people tend to do one thing at a time.
POLYCHRONIC CULTURE
 Is a culture that is more flexible on time and it is used to accomplish many different things at one time
3.
Phases of economic development
ECONOMIC DEVELOPMENT
 Is a total process which includes not only economic growth or the increase in the amount of goods and services
produced by the country’s economy but also consider the social, political, cultural and spiritual aspects of the
country’s growth.
ECONOMIC DEVELOPMENT PHASES/STAGES
 Economic growth
 Improvement of human development index
 Availability of benefits provided by science and technology
 Societal improvement of the opportunities and
 General welfare of its members.
4.
Forms of business organizations
BUSINESS ORGANIZATION
 Is a collection of people working together to achieve a common purpose related to their organization’s mission,
vision, goals and objectives and sharing a common organizational culture.


ORGANIZATIONAL CULTURE
Is the set of beliefs and values shared by organization members and which guide them as they work together to
achieve their common purpose.
Chapter 3 – Planning
1.
Definition and nature of planning
2.
Types of plans
3.
Planning at different levels in the firm
4.
Planning techniques and tools
5.
Application of planning tools and techniques
6.
Decision making
1.
Nature of organizations
2.
Types of organization structures
3.
Organization theories and application
4.
Delegation
5.
Formal & informal organizations
1.
Definition and nature of staffing
2.
Recruitment
3.
Selection
4.
Training and development
5.
Compensation/wages and performance evaluation/appraisal
6.
Employee relations
7.
Employee movements
8.
Rewards System
1.
Definition
Chapter 4 – Organizing
Chapter 5 – Staffing
Chapter 6 – Leading
2.
Motivation
3.
Leadership theories
4.
Communication
5.
Management of change and diversity
6.
Filipino and foreign Culture
1.
Definition and nature of management control
2.
The link between planning and controlling
3.
Control methods and systems.
4.
Application of management control in accounting and marketing concepts and techniques
5.
Role of budgets in planning and control
Chapter 7 – Controlling
a.
Chapter 8 – Introduction to the Different Functional Areas of Management
Human Resource Management
b.
Marketing Management
c.
Operations Management
d.
Financial Management
e.
Information & Communication Technology Management
1.
Chapter 9 – Special Topics in Management
Small Business Management and Entrepreneurship
2.
Family Business Enterprise
3.
Starting a Business: Legal Forms and Requirements
References:
https://www.cleverism.com/functions-of-management-planning-organizing-staffing/
https://www.managementstudyhq.com/henri-fayol-principles-of-management.html
http://www.mindtools.com/pages/article/henri-fayol.htm
https://www.managementstudyhq.com/advantages-and-disadvantages-of-MBO.html
https://www.managementstudyhq.com/what-is-organization-culture.html
https://www.cliffsnotes.com/study-guides/principles-of-management/the-nature-of-management/functions-of-managers
http://instructor.mstc.edu/instructor/ctomski/Presentation%20LP1Functions,%20Roles,%20and%20Skills%20of%20managers.pptx
https://www.slideshare.net/ramoj14/abm-organization-and-management/2
http://www.ncert.nic.in/ncerts/l/lebs104.pdf