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Lesson#13

FUNCTIONS OF MANAGEMENT

Objectives:
This lecture provides all the information regarding what are the core functions of management in a business
firm.

Functions of management
Planning:

Planning is the:
. Start of the process
. Bridge between present and future
. Increases likelihood of achieving desired results

The only thing certain about the future of any organization is change, and planning is the essential bridge
between the present and the future that increases the likelihood of achieving desired results. Planning is the
process by which one determines whether to attempt a task, works out the most effective way of reaching
desired objectives, and prepares to overcome unexpected difficulties with adequate resources. Planning is
the start of the process by which an individual or business may turn empty dreams into achievements.
Planning enables one to avoid the trap of working extremely hard but achieving little.
Planning is an up-front investment in success. Planning helps a firm achieve maximum effect from a given
effort. Planning enables a firm to take into account relevant factors and focus on the critical ones. Planning
helps ensure that the firm can be prepared for all reasonable eventualities and for all changes that will be
needed. Planning enables a firm to gather the resources needed and carry out tasks in the most efficient way
possible. Planning enables a firm to conserve its own resources, avoid wasting ecological resources, make a
fair profit, and be seen as an effective, useful firm. Planning enables a firm to identify precisely what is to be
achieved and to detail precisely the who, what, when, where, and why needed to achieve desired objectives.
Planning enables a firm to assess whether the effort, costs and implications associated with achieving
desired objectives are warranted. Planning is the cornerstone of effective strategy formulation. But even
though it is considered the foundation of management, it is commonly the task that managers neglect most.
Planning is essential for successful strategy implementation and strategy evaluation, largely because
organizing, motivating, staffing, and controlling activities depend upon good planning.

The process of planning must involve managers and employees throughout an organization. The time
horizon for planning decreases from two to five years for top-level to less than six months for lower-level
managers. The important point is that all managers do planning and should involve subordinates in the
process to facilitate employee understanding and commitment.
Planning can have a positive impact on organizational and individual performance. Planning allows an
organization to identify and take advantage of external opportunities and minimize the impact of external
threats. Planning is more than extrapolating from the past and present into the future. It also includes
developing a mission, forecasting future events and trends, establishing objectives, and choosing strategies
to pursue.
An organization can develop synergy through planning. Synergy exists when everyone pulls together as a
team that knows what it wants to achieve; synergy is the 2 1 2 5 5 effect. By establishing and communicating
clear objectives, employees and managers can work together toward desired results. Synergy can result in
powerful competitive advantages. The strategic-management process itself is aimed at creating synergy in an
organization. Planning allows a firm to adapt to changing markets and thus shape its own destiny. Strategic management
can be viewed as a formal planning process that allows an organization to pursue proactive rather than
reactive strategies. Successful organizations strive to control their own futures rather than merely react to
external forces and events as they occur. Historically, organisms and organizations that have not adapted to
changing conditions have become extinct. Swift adaptation is needed today more than ever before because
changes in markets, economies, and competitors worldwide are accelerating.

Organizing:

. Achieve coordinated effort
. Defining task and authority relationships
. Departmentalization
. Delegation of authority
The purpose of organizing is to achieve coordinated effort by defining task and authority relationships.
Organizing means determining who does what and who reports to whom. There are countless examples in
history of well-organized enterprises successfully competing against, and in some cases defeating, much
stronger but less-organized firms. A well-organized firm generally has motivated managers and employees
who are committed to seeing the organization succeed. Resources are allocated more effectively and used
more efficiently in a well-organized firm than in a disorganized firm.
The organizing function of management can be viewed as consisting of three sequential activities: breaking
tasks down into jobs (work specialization), combining jobs to form departments (departmentalization), and
delegating authority. Breaking tasks down into jobs requires development of job descriptions and job
specifications. These tools clarify for both managers and employees what particular jobs entail.
Combining jobs to form departments’ results in an organizational structure, span of control, and a chain of
command. Changes in strategy often require changes in structure because new positions may be created,
deleted, or merged. Organizational structure dictates how resources are allocated and how objectives are
established in a firm. Allocating resources and establishing objectives geographically, for example, is much
different from doing so by product or customer.
The most common forms of departmentalization are functional, divisional, strategic business unit, and
matrix.
Organizing

Organizational design
Job specialization
Job descriptions
Job specifications
Span of control
Unity of command
Coordination
Job design
Job analysis
Job specifications
Span of control
Unity of command
Coordination
Job design
Job analysis


Organizing
Organizational design
Job specialization
Job descriptions
Job specifications
Span of control
Unity of command
Coordination
Job design
Job analysis

57
Delegating authority is an important organizing activity, as evidenced in the old saying "You can tell how
good a manager is by observing how his or her department functions when he or she isn't there."
Employees today are more educated and more capable of participating in organizational decision making
than ever before. In most cases, they expect to be delegated authority and responsibility, and to be held
accountable for results. Delegation of authority is embedded in the strategic-management process.

Motivating

. Influencing people to accomplish specific objectives
. Communication is a major component
Motivating
can be defined as the process of influencing people to accomplish specific objectives. Motivation
explains why some people work hard and others do not. Objectives, strategies, and policies have little
chance of succeeding if employees and managers are not motivated to implement strategies once they are
formulated. The motivating function of management includes at least four major components: leadership,
group dynamics, communication, and organizational change.
When managers and employees of a firm strive to achieve high levels of productivity, this indicates that the
firm's strategists are good leaders. Good leaders establish rapport with subordinates, empathize with their
needs and concerns, set a good example, and are trustworthy and fair. Leadership includes developing a
vision of the firm's future and inspiring people to work hard to achieve that vision. Kirkpatrick and Locke
reported that certain traits also characterize effective leaders: knowledge of the business, cognitive ability,
self-confidence, honesty, integrity, and drive.

Research suggests that democratic behavior on the part of leader’s results in more positive attitudes toward
change and higher productivity than does autocratic behavior.
Group dynamics play a major role in employee morale and satisfaction. Informal groups or coalitions form
in every organization. The norms of coalitions can range from being very positive to very negative toward
management. It is important, therefore, that strategists identify the composition and nature of informal
groups in an organization to facilitate strategy formulation, implementation, and evaluation. Leaders of
informal groups are especially important in formulating and implementing strategy changes.
Motivating


Motivating

Leadership
Communication
Work groups
Job enrichment
Job satisfaction
Needs fulfillment
Organizational
change
Morale

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Communication,
perhaps the most important word in management, is a major component in motivation. An
organization's system of communication determines whether strategies can be implemented successfully.
Good two-way communication is vital for gaining support for departmental and divisional objectives and
policies. Top-down communication can encourage bottom-up communication.

The strategic-management
process becomes a lot easier when subordinates are encouraged to discuss their concerns, reveal their
problems, provide recommendations, and give suggestions. A primary reason for instituting strategic
management is to build and support effective communication networks throughout the firm.

Staffing

. Personnel management
. Human resources management
The management function of staffing, also called personnel management or human resource management, includes
activities such as recruiting, interviewing, testing, selecting, orienting, training, developing, caring for,
evaluating, rewarding, disciplining, promoting, transferring, demoting, and dismissing employees, and
managing union relations.
Staffing activities play a major role in strategy-implementation efforts, and for this reason human resource
managers are becoming more actively involved in the strategic-management process. Strengths and
weaknesses in the staffing area are important to identify.
The complexity and importance of human resource activities have increased to such a degree that all but the
smallest organizations now need a full-time human resource manager. Numerous court cases that directly
affect staffing activities are decided each day. Organizations and individuals can be penalized severely for
not following federal, state, and local laws and guidelines related to staffing. Line managers simply cannot
stay abreast of all the legal developments and requirements regarding staffing. The human resources
department coordinates staffing decisions in the firm so that an organization as a whole meets legal
requirements. This department also provides needed consistency in administering company rules, wages,
and policies.
Human resources management is particularly challenging for international companies. For example, the
inability of spouses and children to adapt to new surroundings has become a major staffing problem in
overseas transfers. The problems include premature returns, job performance slumps, resignations,
discharges, low morale, marital discord, and general discontent.
Staffing

Staffing

Wage & salary admin
Employee benefits
Interviewing
Hiring
Firing
Training
Management development
Safety
Affirmative action
EEO
Labor relations
Career development
Discipline procedures

Management

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Strategists are becoming increasingly aware of how important human resources are to effective strategic
management. Human resource managers are becoming more involved and more proactive in formulating
and implementing strategies. They provide leadership for organizations that are restructuring or allowing
employees to work at home.

Controlling

. Ensure actual operations conform to planned operations
The controlling function of management includes all those activities undertaken to ensure that actual
operations conform to planned operations. All managers in an organization have controlling responsibilities,
such as conducting performance evaluations and taking necessary action to minimize inefficiencies. The
controlling function of management is particularly important for effective strategy evaluation. Controlling
consists of four basic steps:
1. Establishing performance standards
2. Measuring individual and organizational performance
3. Comparing actual performance to planned performance standards
4. Taking corrective actions

Measuring individual performance is often conducted ineffectively or not at all in organizations. Some
reasons for this shortcoming are that evaluation can create confrontations that most managers prefer to
avoid, can take more time than most managers are willing to give, and can require skills that many managers
lack. No single approach to measuring individual performance is without limitations. For this reason, an
organization should examine various methods, such as the graphic rating scale, the behaviorally anchored
rating scale, and the critical incident method, and then develop or select a performance appraisal approach
that best suits the firm's needs.

Management Audit Checklist of Questions

The checklists of questions provided below can help determine specific strengths and weaknesses in the
functional area of business. An answer of no to any question could indicate a potential weakness, although
the strategic significance and implications of negative answers, of course, will vary by organization, industry,
and severity of the weakness. Positive or yes answers to the checklist questions suggest potential areas of
strength.
1. Does the firm use strategic-management concepts?
2. Are company objectives and goals measurable and well communicated?
3. Do managers at all hierarchical levels plan effectively?
4. Do managers delegate authority well?
5. Is the organization's structure appropriate?
6. Are job descriptions and job specifications clear?
7. Is employee morale high?
8. Are employee turnover and absenteeism low?
9. Are organizational reward and control mechanisms effective?

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