Maryland International College

MANAGEMENT THEORY AND

PRACTICE
By
Dr. Habtamu (Asst. Professor)

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 Chapter 1

Management:overview

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 Learning Objectives
After completing this chapter, you should be able to:
[Link] what management is all about
[Link] the nature and characteristics of management.
[Link] the significance of management
[Link] the objectives of management
[Link] who managers are and what they do.
6. Distinguish among skills, levels and roles of management
[Link] between managers and leaders.
[Link] the basic functions of Management
[Link] the art and science side of management.
[Link] the qualities of a good Manager
[Link] the universality of Management
12. Define and explain the context of an organization.
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 Definitions of Management
 Management has been viewed by
scholars as:
 a process,
 a discipline,
 a human activity, and
 a career
 Management has also been viewed as a
system of
 inputs (resources and factors of production),
 Throughputs/processes (managerial tasks
and activities), and
 outputs (products and/or services)
 
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 Definitions…Cont’d

What then is Management?

 Definition. 1
Management is the process of planning,
organizing, directing, and controlling
the work of organization members
and of the organization
using all available resources to
achieve organizational goals.
 

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 Definitions…Cont’d
Definition 1
 Recognizes that management is an
ongoing activity
 Entails reaching organizational goals
 Involves knowing how to perform the
functions of management-Planning,
organizing, Leading & Controlling
 

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 Definitions…Cont’d
Definition 2
Management is the process of achieving
results through the use of human, material,
and financial resources.
The process involves:
 Planning, leading, organizing & controlling
 The use of resources:- financial, material and
Human
 Coordinating resources toward achieving
goals/results
 
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 Definitions…Cont’d
Definition 3
Management is the process of getting things done,
effectively and efficiently, through and with
other people
Process
represents the primary activities
that managers perform
Efficiency
- doing the task right
- the relationship between inputs and outputs
Effectiveness
- doing the right task
- attaining organizational objectives 1-8
 Definitions…Cont’d
Definition 3 shows that
 All organizations have people who
are responsible for achieving goals
 These people coordinate the
activities of others to achieve
goals/results
so
Management
is what a manager does to get
things done through others.
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 Definitions…Cont’d
• Comprehensive/universal definition of
Management:
Management is a social process
involving coordination of human and
material resources through the functions
of planning, organizing, directing(leading)
and controlling in order to achieve stated
objectives. (Sherleker, S. A., et al.)

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Management Performance
Evaluation Criteria

EFFICIENCY(means)
Using resources wisely and
in a cost-effective way

AND

EFFECTIVEVENESS(end)
Making the right decisions and
successfully implementing them

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 SIGNIFICANCE OF MANAGEMENT
• The following points highlight the specific
significance/importance of management:
• Achievement of group goals;
• Optimum utilization of resources;
• Minimization of cost;
• Facilitation of survival and growth of
business(Continuity and prosperity of
business);
• Generation of employment; and
• Development of the nation. 12
 Nature/Characteristics of Management
• Management is an activity. It is a process of organized
activity concerned with efficient utilization of resources of
production like people, materials, machines, money, etc.
• Management is a purposeful activity. It is concerned with
the achievement of an objective through its functions.
• Management is concerned with the efforts of a group. It is
concerned with the management of people. It motivates
workers to contribute their level best.
• Management is getting things done. A manager is not
required to do operating works himself. S/he gets things
done through others.

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 Nature…
• Management involves decision- making. It is a
decision making process. The decisions are
involved in all the functions of management.
• Management coordinates all activities and
resources. It is concerned with the coordination of
all activities and resources to attain the specific
objectives.

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 Nature…
• Management is a universal activity. The
techniques and tools of management are
universally applicable.
• Management is an integrating process. It
integrates the people, materials, and
machines for achieving stated objectives.
• Management is concerned with direction and
control. It is concerned with direction and
control of human efforts to attain the specific
objectives.
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 Nature…
• Management is intangible. It is abstract and cannot
be seen.
It is evidenced by the quality of organization and
through its results.
• Management is both an art and a science.
As a science, it has certain universally applicable
principles. It contains a systematic body of theoretical
knowledge
As an art it involves the practical application of such
knowledge.

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 Nature…
• Management is a profession. It is a profession
because there are established principles of
management which are being applied in practice.
• Management is an interdisciplinary approach.
It is a body of discipline that takes concepts from
other disciplines, such as psychology, sociology,
economics, mathematics, etc.
Management is dynamic. It is not static.
It adopts itself to the social changes and also
introduces innovation in methodology.
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Management as a Science and an Art?
Science
• A body of systematized knowledge
accumulated through study and accepted
to understand the general truth.
• Uses operational definitions, careful
observation, systematic data collection
and analysis, and accurate measurement
carried on to determine the nature and
principles of the subject under study.

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Science as an Art….Con’d
Art
• A system of doing a particular work
in the best way in a specific time,
place, and condition tactfully, wisely,
and creatively.
• Characterized by using common
sense, personal feelings, beliefs,
impulses, etc.
• Tries to make adjustments based on
the possibilities through trial and
error method.
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 Objectives of Management
The objectives of Management can be examined from three perspectives, which include: organizational,
personal and social objectives.
1. Organizational objectives
(a). Reasonable profits – get a fair return on the capital invested in business
(b). Survival and solvency of the business – continuity of the business
(c). Growth and expansion of the enterprise
(d). Improving the goodwill or reputation of the enterprise

2. Personal objectives

(a). Fair remuneration for work performed

(b). Reasonable working conditions
(c). Opportunities for training and development
(d). Participation in management and prosperity of the enterprise
3. Social objectives

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 objectives…cont.
– 2. Personal objectives
• (a). Fair remuneration for work performed
• (b). Reasonable working conditions
• (c). Opportunities for training and
development
• (d). Participation in management and
prosperity of the enterprise
• (e). Reasonable security of service
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 Objectives …cont.
• 3. Social objectives
• Management is expected to fulfill the
objectives of the society which include the
following:
• (a). Quality of goods and services at fair price to
consumers
• (b). Honest and prompt payment of taxes to the
government
• (c). Conservation of environment and natural
resources
• (d). Fair dealings with suppliers, dealers and
competitors
• (E) Preservation of ethical values of the society.22
 Functions of Management

Planning
Select
goals &
ways to
Controlling Organizing
Monitor attain them
Assign
activities & responsibility
make for tasks
corrections
Leading
Use influence
to motivate

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 PLANNING

?
Planning enables managers to decide
• What is to be done
• Who is to do it
• How is to be done
• When is to be done
• Where is to be done
• Why is to be done

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 ORGANIZING
The process of arranging and allocating
work, authority, and resources among
an organization’s members so that they
can achieve the organization’s
objectives.
Determining:
•what tasks will be done,
•who will do them,
•how the tasks will be grouped,
•who will report to whom, and
•where decisions will be made.

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 DIRECTING

• The process of directing, influencing, and

motivating employees to perform tasks in
an organization.

Every organization contains people, and that

part of a manager's job is to direct and
coordinate the activities of these people.

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 CONTROLLING
 The process of measuring work
performance, comparing results to
objectives, and taking corrective action as
needed.
 Controlling function involves:
• establishing standards of performance;
• measuring current performance;
• comparing this performance to the
established standards;&
• taking corrective action if deviations are
detected.
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Levels of Managers
Top managers
Responsible for the attainment of
the overall goals of the organization.
Middle managers
Directly responsible for the work of managers at the
lower levels.
First-line Managers
Managers at the lowest level of the organizational
hierarchy who are directly responsible for the work of
operation (non-managerial) employee

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 Classification of Managers
• Based on the scope of the activities they manage,
managers can be classified into general and functional
mangers.
• General managers are responsible for the overall
operations of a more complex company or division.
• They usually coordinate two or more departments, and
hold functional managers accountable for their specialized
areas. They are responsible for managing a company or an
organization.
• Functional managers are managers appointed to supervise
single operations which require specialized skills. Example:
Marketing manager, Finance manager, Production
manager, etc. 30
 Robert Katz’s Management Skills
Technical skills
The ability to apply specialized knowledge or
expertise.

Human skills
The ability to work with, understand,
and motivate other people, both
individually and in groups.

Conceptual Skills
The mental ability to analyze and
diagnose complex situations.
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Mintzberg’s Managerial Roles

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Managerial Roles…Cont’d

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Managerial Roles…Cont’d
 Qualities of a Good Manager
• The following are the qualities required of an effective Manager.
 Education: A Manager must be well educated and qualified.
 Should have both general and specific education in business
administration.
 Training: The Manager must have the specific training for the job
he/she is required to perform.


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 Qualities…
• Leadership: The Manager cannot perform all the
activities of the business by himself/herself.
Therefore, he/she should have the quality of
leadership in order to extract the maximum
worth of all individuals.
• Personality: The Manager should have
 sound health
 Good manners and/or behaviors

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 Qualities…
 Pleasing personality
 Scientific outlook:
 Managerial decisions should not be made
based upon emotions, but on logical
considerations.
 Every important decision should be fair and
unbiased.

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 Qualities…
• Ability to do and get work done:
 The Manager must know the work he/she is
assigned.
 He/she should be well versed in the art and
technique of extracting the maximum
contribution of subordinates.
 Self confidence:
 The Manager has to be self confident about
his decisions.
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 Qualities…
 Honesty:
 Honesty is the best policy in the business.
 Technical proficiency:
 The Manager should be technically proficient
 He/she cannot effectively supervise what
he/she does not know.
 Human touch:
 Must honor the emotional and psychological
needs of employees a
 CHAPTER 2

MANAGEMENT
THOUGHT

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 Major Learning Outcomes
After this discussion, you should be able to:
 Describe management theories and relate
them to management practices
 Recognize the importance of management
and the skills needed in management
 Explain how management theory serves as
the basis for understanding contemporary
management practices
 Appreciate the importance and contribution
of management theory and practice towards
the success of organizations.

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 The Evolution of Management
Thought
In the development of our understanding of
Management theories, it is useful to look at the
following major management approaches.

•Classical Theory/Approach

•Neo-classical Theory/Approach

•Modern Management Theory/Approach

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 The Evolution…Cont’d
The Classical Theory
Assumption: People are rational
The classical theory includes three theories of
management. These are:
•Scientific Management Theory
Fredrick W. Taylor 
•Process Management Theory
(Administrative Theory)
Henri Fayol
•Bureaucracy Theory
Max Weber
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 Scientific Management (SM) Theory:
Getting the Most out of Workers
• SM theory arose in part from the
need to maximize profit and minimize
costs of production.
• SM management also known as [Link]

“Taylorism” was founded by Frederick W.

Taylor.
• Taylor was a mechanical engineer with a
background in steel production.
• Taylor reacted against the inefficiency and
resource waste of the post industrial
revolution era
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 Scientific Management….Cont’d
• Taylor proposed that management could be
a true science and that productivity could be
increased by systematic application of
scientific principles.
• SM is a systematic method of determining
the best way to do a job and specifying the
skills needed to perform it.
• SM is the systematic study of the
relationships between people and tasks to
redesign the work for higher efficiency.
– Taylor sought to reduce the time a worker
spent on each task by optimizing the way
the task was done.
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 The Four Principles of S. Mgt
Four Principles of Taylor to increase efficiency:
1. Develop for every job a “science” that
includes rules of motion, standardized
work implements, and proper working
conditions.
2. Scientifically select workers with the
right abilities for the job.
3. Carefully train workers to perform the
job and give them incentives to
cooperate with the job “science.”
4. Support workers by carefully planning
their work and by smoothing the way as
they go about their jobs.

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 Process Management/ Administrative Theory:
Getting the most out of management

• Henri Fayol (1841-1925) [Link]

– General and Industrial Management
– Principles and Elements of Management -
how managers should accomplish their
managerial duties.
– Primary Focus: Management
– More Respect for worker than Taylor
• Workers are motivated by more than
money
• Equity in worker treatment

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 Administrative …Cont’d

Five Elements of Management

[Link]
[Link]
3. Commanding
4. Coordination
5. Controlling

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 Fayol’s 14 Principles
Henri Fayol, developed a set of 14 principles:
[Link] of Labor: makes each task simpler and results in
greater efficiency.
2. Authority and Responsibility:
Authority is the right of a superior to give orders to
subordinates, take decisions, use the sources of org.
Responsibility is obligation with respect to the performance and
achieving goals in a satisfactory manner.
3. Unity of Command: Employees should receive orders and
be accountable to one and only one manager.
Should have only one superior.
4. Scalar Chain: There should be a clear line of authority from
top to bottom linking managers at all levels.
5. Centralization: the degree to which authority
rests at the very top.
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 Principles…Cont’d
6. Unity of Direction: The efforts of all the members
of the org. should be directed towards common goals. One
plan of action to guide the organization.

7. Equity: Treat all employees fairly in justice and

respect.
8. Order: Each employee and other resources is put where
they have the most value.
9. Initiative: Encourage workers to act on their own, to
take initiative that benefits the organization.
10. Discipline: Means obedience, proper conduct in
relation to others and complying with rules and regulations
of the organization.

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 Principles…Cont’d
11. Remuneration of Personnel: The
payment system should be fair and reasonable. It
should be decided based on achieved results, cost of
living, financial position of the org.,…
12. Stability of Tenure: Long-term
employment helped employees develop the skills they
need to make contributions to the org.
13. Subordination of individual
interest to the general interest :
What is in the interest of the organization as a whole
must take precedence over the interest of individual.
14. Esprit de corps: Team-spirit that is harmony
in work group and mutual understanding among
workers.
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 Bureaucracy Theory of Management
Max Weber (1864-1920)
• The German sociologist Max Weber (1864-1920)
developed a theory of
bureaucratic management Max Weber
• Weber stressed the need for a hierarchy governed by
regulations and line of authority.
• Weber considered the ideal organization to be a
bureaucracy:
-whose activities and objectives were
rationally thought out and
-whose divisions of labor were spelled out.
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 Bureaucracy…Cont’d
Bureaucracy refers to:
• Organization with a legalized formal and
hierarchical structure.

• A formal system of organization and

administration to ensure effectiveness and
efficiency.

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 Bureaucratic Principles
• Division of Labor
Jobs are broken down into simple, routine, and well-
defined tasks.
• Authority Hierarchy
Offices or positions are organized in a hierarchy, with
each lower one controlled and supervised by a higher
one.
• Formal Selection
All organizational members are to be selected on the
basis of technical qualifications.

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 Principles….Cont’d
• Impersonality
Rules and controls are applied uniformly, avoiding
involvement with personalities and personal
preferences of employees.
• Formal Rules and Regulations
To ensure uniformity and to regulate the actions of
employees, there is, dependence on rules and
regulations
• Career Orientation
Managers should be professionals devoted to the
career of management

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 Neo-classical Theory
Human Relations School:
Elton Mayo (1880-1949) e
• Recognized employees as individuals with concrete,
human needs, as parts of work groups, and as members
of a larger society
• Emphasizes enlightened treatment of workers and
power sharing between managers and employees.
• Emphasized satisfaction of employees’
social/psychological needs as the key to increased
worker productivity.
• Supported by Hawthorne Studies
The study was aimed at determining the effect of
illumination on productivity.
But it failed to establish a consistent relationship between
illumination and productivity.
Elton Mayo began his experiments to find out real factors
other than working conditions that influence output.
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 The Hawthorne Studies
• Study of worker efficiency at the
Hawthorne Works of the Western
Electric Co. during
1924-1932.
– Worker productivity was measured at various
levels of light illumination.
– Researchers found out that regardless of
whether the light levels were raised or
lowered, productivity rose.
• Actually, it appears that the workers
enjoyed the attention they received as
part of the study and were more
productive.
• If employees have opportunity to
interact with each other then high
morale and productivity will result.
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 Hawthorne Studies…Cont’d
• It emerged from these researches that
productivity, motivation to work and morale
are related to the social organization of work
and psychological factors, and not to the
physical factors
Mayo Concluded that
 Individual behavior and sentiments/feelings are closely
related.
 Group influences significantly affected individual
behavior.
 Group standards established individual output.
 Money was less a factor in determining output.
 Group standards, group sentiments and security provided
by the group were responsible for higher productivity.
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 Hawthorne…
• Prior to the Hawthorne studies no
consideration was given to the importance of
the human factor .
• What is particular of Mayo and his associates
is that they underscored the need for greater
and deeper understanding of the social and
behavioral aspects of management.

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 The Behavioral Science Approach
Behavioral scientists began studying people at work.
Their approach was distinct from the Human Relations
Approach.
They underscored that individuals are motivated to
work for various reasons in addition to making
money and forming social relationships.
They concentrated on the nature of the work itself,
and the degree to which it can fulfill the human
need to use skills and abilities.

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Modern Management Theory
Systems Theory
System is defined as an organized, unitary
whole composed of two or more
interdependent parts, components, or sub
systems and delineated by identifiable
boundaries from its environmental - supra-
system.

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 Point of Reflection

Discuss the implications of

system’s definition in the
context of an organization

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 Synopsis of our Discussion
 A system has several parts. These are dynamic in nature
and therefore, interact with each other.
 The parts or sub-systems are interdependent and
interrelated.

 The interdependence is required due to the nature of job,

division of labor, sharing of limited resources and
scheduling of activities.

 Work is carried out by teams who performed task to

accomplish overall organizational objective.

 Change in one department affects the other departmental

work.
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 Systems Considerations
• Systems theory provides an analytical
framework for viewing an organization as
ORGANISM.
• An open system interacts with the
environment.
• A closed system is self-contained.
– Closed systems often undergo entropy and
lose the ability to control itself, and fails.
• Synergy: performance gains of the whole
surpass the components i.e. the whole is
greater than sum of its parts
– Synergy is only possible in a coordinated
system. 1-64
The Organization as a System

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 Contingency Mgt Theory
• Approaches depend on
the variables of the situations
• Draws on all past theories in attempting
to analyze and solve problems
• Summarized as an “it all depends”
device
• Tells managers to look to their
experiences and the past and to
consider many options before choosing
• Encourages managers to stay flexible
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 Contingency….Cont’d
• Assumes there is no one best way to
manage.
– The environment impacts the
organization and managers must be
flexible to react to environmental
changes.
– The way the organization is
designed, control systems selected,
depend on the environment.
• Technological environments change
rapidly, so must managers.
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 The Quantitative Approach
• According to the proponents of this
approach, since managing is a logical and
rational process, it can be expressed in terms
of mathematical relationships and models.
• This will lend exactness to management
process and substitute certainty for guess
work, knowledge for judgment, and hard
facts for experience.
• The management scientists introduced
various 68
 Quantitative…
mathematical tools for solving problems of
management in the areas of quality control,
inventory control, warehouse operations resource
allocation, etc.
They made mathematical tools available to
practitioners of management.
THE DECISION THEORY/APPROACH
Looks upon the management process as a decision
making process.
According to this theory, the entire field of
management can be studied from the study
of the decision making process.
 Chapter 3

Planning as a
Management
Function

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 Planning…

“If you don’t know where you are

going,
you’ll end up someplace else.”
Yogi Berra,

“ Failing to plan is planning to

fail.”

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 Planning

Planning involves
Planning
figuring out the the act or process of
resources that are creating goals and
needed and the objectives as well as
strategies to meet them
standards that must
be met.

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 PLANNING…Cont’d
• Planning is the process of coping with uncertainty
by formulating future courses of action to achieve
specified results.

• A plan is a set of activities intended to achieve goals,

whether for an entire organization, department, or
an individual.

• Planning is deciding in advance what to do, how to

do it, who to do it, when to do it, where to do it, and
why to do it
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 Purpose of Planning
Clarity of Purpose
• stimulate forward thinking and
• clarifying future direction
• Set priorities

Unity of Purpose
• Build team work/Coherence
• Participation
• building Knowledge

•  
•

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 Purpose of Planning
Achievement of Purpose
• Improve performance
• Build Transparence and Accountability

Frame work for Day-to-day Decisions

• Encourage delegation and commitment
• Develop indicators for monitoring and evaluation;
• Be pro-active

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 Nature of Planning
Planning is a continuous process:
• Planning deals with the future and the future is full
of uncertainties.
• Effective plans have no end points. It is always
subject to a revision.
• Planning involves interdependent set of decisions
and concerns all managers:
• Planning commits the organization into the future
• Plans are arranged in a hierarchy
• Corporate (strategic) Plans
• Tactical plans
• Operational plans

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 Types of Plans
• Strategic planning is the process of determining
how to pursue the organization's long-term goals
with the resources expected to be available.

• Intermediate planning is the process of

determining the contributions subunits can make
with allocated resources.

• Operational planning is the process of

determining how specific tasks can best be
accomplished on time with available resources.

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 Levels of Planning
 Corporate-Level Plan
– Top management’s decisions pertaining to the
organization’s mission, overall strategy, and
structure.
– Provides a framework for all other planning.
 Business-Level Plan
– Long-term divisional goals that will allow the
division to meet corporate goals
 Functional-Level Plan
– Goals that the managers of each function will
pursue to help their division attain its business-
level goals
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Types of action plans that guide
organizations

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 Functional plans
• Are source of answers to the
question “what should we do in our
area or department to implement the
business strategy?”
• A functional plan describes the
specific actions to be taken in the
immediate future by people
responsible for that particular
functional area such as HRM,R&D,
Finance,…
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 One-time Plan
 One-time plans are developed to guide the
carrying out of activities that are not intended
to be repeated. There are two types of one-
time plans: program plans and project plans.
– A program plan is a one-time plan designed to
coordinate a diverse set of activities that are
necessary to carry out a complex endeavor such as
restructuring a department, opening new
facilities, etc.
– A project plan is made to guide and control
completion of a one-time activity that is typically
less involved and complex than a program.
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 Standing plans
• Standing plans are predetermined course
of action that are used again and again,
focusing on situations that recur
repeatedly.
• Standing plans speed the decision-
making process and allow managers to
handle similar situations in a consistent
manner. Policies, procedures, and rules
are all forms of standing plans .

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 Standing plans…Cont’d
– A policy provides a broad guideline for
managers to follow when dealing with
important areas of decision making.
– A procedure is a set of step-by-step
directions that explains how activities or
tasks are carried out.
– A rule is an explicit statement that tells an
employee what he or she can and cannot
do.
Rules are “do” and “don’t” statements put
into place to promote the safety of
employees and the uniform treatment and
behavior of employees
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 Contingency plans
Contingency planning involves
identifying alternative courses of
action that can be implemented
if and when
the original plan proves inadequate
because of changing circumstances.

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 The planning process
The following are the major steps that a
planning process should follow:
Step 1: Understanding the existing situation
[Link] environment: The influence of the
external environment is of great concern in
planning. It is essential to be aware of the
external opportunities and threats that can
affect the planning process.

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 Planning process…
 The organization is required to analyze the
following environmental situations while
involving in the planning process:
 The economic situation (competition, price,
demand, supply, etc.)
 The political situation (taxation, government
policies, peace and stability, etc.)

86
 Planning process…
• The social and cultural situations (culture of
the society, direction of culture change,
attitude of the society towards different
products)
B. Internal situations
• The organization is also required to examine
the internal situations and determine the
existing strengths and weaknesses of the
organization.
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 Planning process…
 In summary, planning requires a realistic
diagnosis of the existing strengths,
weaknesses, opportunities and threats of the
organization.
Step 2: Forecasting
 Planning is deciding about what is to be done
in the future.
 Therefore, it is essential to have information
about what the future would look like.
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 Planning process…

• To this end, managers are required to make

certain assumptions based on forecasts of
the future in order to plan properly.

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• Step 3: Establishment of Objectives
– The actual planning activity starts with the
setting of goals and objectives to be achieved.
– Objectives provide a rationale for undertaking
various activities as well as indicate direction of
efforts.
– Objectives focus the attention of managers on
the end results to be achieved.
– Objectives provide nucleus to the planning
process.
– Objectives should be measurable, practical,
acceptable, workable and achievable. 90
 Process…Cont’d
Step 4: Determine and evaluate alternative plans
(course of actions)

 Next to establishment of objectives,

alternative plans are developed;
 Thoroughly evaluated against such factors
like cost, risks, benefits, organizational
facilities, etc.

91
 Process…Cont’d
• Step 5: Selecting the plan (course of action) and
formulating derivative plans

 This step involves selection of the most

desirable plan and the development of
derivative plans.
 Once a choice is made and a master plan
prepared, derivative plans should be
prepared to support it.

92
 Planning process…
• Thus, within the framework of the basic plan,
derivative plans are formulated in each
functional area.
• The division of the master plan into
departmental, sectional and individual plans
provide a realistic picture of things to come in
the future.
• In order to be effective, the planning process
should also provide for feedback mechanism.
93
 Process…Cont’d
Step 6: Implementing the plan
• After the optimum alternative plan is selected,
action plan is developed to implement it.
 At this stage of the planning process, decision is
made on the following issues:
 Who is going to do what?
 When will the tasks be initiated and completed?
 What resources will be available for the process?

94
 Planning…
• How will the plan be evaluated?
• What are the reporting procedures to be
used?
• What type and degree of authority will be
granted to achieve these ends?

95
 Planning process…
• Step 7: Controlling and evaluating the results
 Once the plan is implemented, the progress
made should be monitored and evaluated.
• Modifications may be made based on the
evaluation results.

96
 Chapter 4

Organizing as a
Management
Function

1-97
 Organizing as a Management
Function
 Organizing and Organization Structure
– Organizing
• The process of identifying the activities to be
performed, grouping these activities into
work units, assigning tasks to the various
job position, defining rules and establishing
the relationship of authority and
responsibility among them.
• The process of arranging people and other
resources to work together to accomplish a goal.
98
 Organizing…

– Organization Structure
The system of
tasks,
workflows,
reporting relationships, and
communication channels that
link together diverse individuals and groups.

99
Organizing viewed in relationship with the
other management functions.

100
 The Process of Organizing
• Determine the essential jobs to be done by dividing the
total organizational task into work assignment each of
which can logically be done by one person.

• Group the individual tasks into meaningful units that can

work together effectively.

• Decide who should be responsible for managing each

of the groups of activities and delegate those
responsibilities.

• Provide the means to integrate the work of each group

or department into a coordinated effort designed to
achieve the organization’s objectives.

101
 Organizing…Cont’d
 Formal structures 
– The structure of the organization in its
official state.
– An organization chart is a diagram
describing reporting relationships and
the formal arrangement of work
positions within an organization.
– An organization chart identifies the
following aspects of formal structure:
• The division of work.
• Supervisory relationships.
• Communication channels.
• Major subunits.
• Levels of management.
102
 Organizing…Cont’d

 Informal structures 
– A “shadow” organization made up of the
unofficial, but often critical, working relationships
between organization members.
– Potential advantages of informal structures:
• Helping people accomplish their work.
• Overcoming limits of formal structure.
• Gaining access to interpersonal networks.
• Informal learning.
103
 Organizing(Informal structures )…
Cont’d
Potential disadvantages of informal structures:
• May work against best interests of entire
organization.
• Susceptibility to rumor.
• May carry inaccurate information.
• May breed resistance to change.
• Diversion of work efforts from important
objectives.

104
 Major Types of Organization
Structures
 Functional structures
– People with similar skills and performing similar
tasks are grouped together into formal work
units.
– Members work in their functional areas of
expertise.
– Are not limited to businesses.
– Works well for small organizations producing few
products or services.

105
Functional Structures (Examples)

106
 Types of Structures…Cont’d
 Potential advantages of functional
structures:
– Task assignments consistent with expertise and
training.
– High-quality technical problem solving,
– In-depth training and skill development.
– Clear career paths within functions.

107
 Types of Structures….Cont’d

 Potential disadvantages of functional

structures:
– Work might be routine and non-motivating
– Not ideal ground for training managers.
– Sense of cooperation and common purpose break
down.
– Excessive upward referral of decisions.

108
 Types of Structures…Cont’d
 Divisional Structures
– Group together people who work on the same
product or process, serve similar customers,
and/or are located in the same area or
geographical region.
– Common in complex organizations.

109
Types of (Divisional structures
(Examples))…Cont’d

110
 Types of (Divisional structures )…
Cont’d
 Potential advantages of divisional structures:
– More flexibility in responding to environmental
changes.
– Improved coordination.
– Clear points of responsibility.
– Expertise focused on specific customers, products,
and regions.
– Greater ease in restructuring.

111
 Types of (Divisional structures )…
Cont’d
 Potential disadvantages of
divisional structures:
– Duplication of resources and efforts across divisions.
– Competition and poor coordination across divisions.
– Emphasis on divisional goals at the expense of
organizational goals.

112
Types of (Divisional structures )…
Cont’d
 Types of divisional structures and
how they group job and activities:
– Product structures focus on a single product or
service.
– Geographical structures focus on the same location
or geographical region.
– Customer structures focus on the same customers or
clients.
– Process structures focus on the same processes.
113
 Types of Structures …Cont’d
 Matrix Structure
– Combines functional and divisional
structures to gain advantages and
minimize disadvantages of each.
– Used in:
• Manufacturing
• Service industries
• Professional fields
• Non-profit sector
• Multi-national corporations
114
Types of Structures (Matrix Structure)
…Cont’d

115
Types of Structures (Matrix Structure) …
Cont’d
 Potential advantages of matrix structures:

– Better cooperation across functions.

– Improved decision making.
– Increased flexibility in restructuring
– Better customer service.
– Improved strategic management.

116
 Types of Structures (Matrix Structure)
…Cont’d

 Potential disadvantages of matrix

structures:
– Two-boss system is susceptible to power struggles.
– Two-boss system can create task confusion and conflict
in work priorities.
– Team meetings are time consuming.

117
Organizing Trends that Change the Workplace

 Contemporary organizing trends

include:
– Shorter chains of command.

– Less unity of command.

– Wider spans of control.

– More delegation and empowerment.

– Decentralization with centralization.

– Reduced use of staff.

118
 Organizing Trends….Cont’d
 Shorter Chains of Command
– The line of authority that vertically links
all persons with successively higher levels
of management.
– Organizing trend:
• Organizations are being “streamlined”
by cutting unnecessary levels of
management.
• Flatter structures are viewed as a
competitive advantage.

119
 Organizing Trends….Cont’d
 Less unity of command
– Each person in an organization should report
to one and only one supervisor.
– Organizing trend:
• Organizations are using more cross-
functional teams, task forces, and
horizontal structures.
• Organizations are becoming more
customer conscious.
• Employees often find themselves working
for more than one boss.

120
 Organizing Trends….Cont’d
 Wider spans of control
– The number of persons directly reporting to
a manager.
– Organizing trend:
• Many organizations are shifting to wider
spans of control as levels of management
are eliminated.
• Managers have responsibility for a larger
number of subordinates who operate
with less direct supervision.
121
 Organizing Trends….Cont’d

Spans of Control in ‘flat” Vs “tall” Structure

122
 Organizing Trends…
 More delegation and Empowerment
– Delegation is the process of entrusting
work to others by giving them the right
to make decisions and take action.
– The manager assigns responsibility,
grants authority to act, and creates
accountability.
– Authority should commensurate with
responsibility.

123
 Organizing Trends….Cont

 Guidelines for Effective Delegation:

– Carefully choose the person to whom you
delegate.
– Define the responsibility; make the
assignment clear.
– Agree on performance objectives and
standards.
– Agree on a performance timetable.
– Give authority; allow the other person to
act independently.
124
Organizing Trends(Guidelines for )….Cont

– Show trust in the other person.

– Provide performance support.
– Give performance feedback
– Recognize and reinforce progress.
– Help when things go wrong.
– Don’t forget your accountability for
performance results.

125
 Organizing Trends(Delegation and
Empowerment )….Cont’d

– A common management failure is

unwillingness to delegate.
– Delegation leads to empowerment.
– Managers are delegating more and finding
more ways to empower people at all levels.

126
 Chapter 5

Directing/Leading
as a Management
Function

1-127
 Directing Function of Management

Learning objectives
After completing this chapter you should be
able to :
 Describe directing
 Identify the features of directing
 Discuss the importance of directing
 Identify and apply the elements of directing

128
 Meaning of directing
Directing is telling the subordinates what to do, how to do, and
seeing that they do it to the best of their abilities.
Directing comprises:
• Issuing orders and instructions by a superior to his/her
subordinates

• Motivating subordinates to solve their work problems to

contribute to the best of their capabilities for the achievement of
organizational objectives

• Providing leadership to subordinates to influence group activities

towards the achievement of certain goals

• Observing the subordinates at work to ensure that they are

working according to plans and policies of the organization

• Helping subordinates to solve their work problems

129
 Features of directing function
1. Activating link: It is a process around which all
performance revolves. It converts plans into results.
2. Performance oriented: It coverts plans into
performance.
3. Pervasive function: It exists at every level,
location, and operation through out the
organization
4. Continuing function: It is required on continuous
basis
5. Involves human behavior: A superior is required
to understand the needs, aspirations, and
expectations of his/her subordinates in order to
lead them effectively

130
 Importance of directing
• 1. Initiates action: Without direction, other
managerial functions remain ineffective.
• 2. Integrates employees’ efforts: It integrates
individual and group goals with
organizational goals.
• 3. It is means of motivation: It motivates
employees to contribute to the best of their
abilities.
• 4. Provides stability and balance in the
organization:
131
 Directing…
5. Facilitates changes: Enables the organization
to cope with the changing conditions of the
environment through effective
communication and persuasive leadership.
6. Works as a nucleus: Works as a nucleus
around which all other management
functions revolve.

132
133
 COMMUNICATION
 The purpose of communication in organizations is to
convey orders, instructions, or information to
bring desired changes in the performance.
 Communication is a basic organizational
function, which refers to the process by which
a person (known as sender) transmits
information or messages to another
person(known as receiver).
 In an organization, supervisors transmit
information to subordinates.
 Proper communication results in clarity and
securing the cooperation of subordinates.
134
 COMMUNICATION….Cont’d
 Faulty communication may create problems
due to misunderstanding between the superior and
subordinates.
 The subordinates must correctly understand the
message conveyed to them.
 Communication does not always flow from supervisor
to subordinate.
 Communication can also be from a subordinate to a
supervisor.
 Communication helps employees to understand their
role clearly and perform effectively.
135
 SUPERVISION
 After the employees have been instructed
regarding what they have to do and how to do,
it is the duty of the manager to see that they
perform the work as per instructions. This is
known as supervision.
 Managers play the role of supervisors and
ensure that the work is done as per the
instructions and the plans.
 Supervisors clarify all instructions and guide
employees to work as a team in co-operation
with others.
 Supervisors solve most of the routine job-
related problems of subordinates.
136
 Role of Supervisor
• 1. Acts as a mediator
• [Link] as medium of communication
• 3 Acts as convertor
• 4. Acts as inspirer
• 5. Acts as a leader
• 6. Acts as a guide and friend

137
 MOTIVATION
• Motivation is one of the important elements of
directing.
• Motivation is a force that inspire a person at work to
intensify his/her willingness to use the best of his
capability for achievement of specific objectives.
• Motivation may be in the form of incentives like
financial (such as bonus, commission etc.) or, non-
financial (such as appreciation, growth etc.),or it could
be positive or negative.
• Basically, motivation is directed towards goals and
prompt people to act.
 
138
 The process of Motivation
• Common steps followed in the motivation
process:
• 1. Identification of the basic necessity of
motivation
• 2. Identification of possible methods of
motivation
• 3. Selecting of the best motivating tool
• 4. Making follow-up, evaluating the results
139
 LEADERSHIP
 What is the nature of leadership?
 What are the important leadership traits
and behaviors?
 What are the contingency theories of

leadership?
 What is transactional and transformational

leadership?
 What are current issues in leadership
development?
140
 The Nature of Leadership
 Leadership
• The process of inspiring others to work hard to
accomplish important tasks.
• Leadership is the ability to persuade and motivate
others to work in a desired way for achieving the
goal.
• Manager who is able to influence others and make
them follow his/her instructions is called a leader.

141
Leading Viewed in Relationship to the other
Management Functions.

142
 Leadership….Cont’d
Power and leadership
– Ability to get someone else to do
something you want done or make
things happen the way you want.
 Power should be used to influence and
control others for the common good rather
than seeking to exercise control for
personal satisfaction.
 Two sources of managerial power:
– Position power.
– Personal power.
143
 Leadership….Cont’d
 Position power
– Based on a manager’s official status in
the organization’s hierarchy of
authority.
 Sources of position power:
– Reward power
• Capability to offer something of value.
– Coercive power
• Capability to punish or withhold positive outcomes.
– Legitimate power
• Organizational position or status confers the right to
control those in subordinate positions.

144
 Leadership….Cont’d
 Personal power
– Based on the unique personal qualities
that a person brings to the leadership
situation.
 Sources of personal power:
– Expert power.
• Capacity to influence others because of one’s
knowledge and skills.
– Referent power.
• Capacity to influence others because they admire you
and want to identify positively with you.

145
Sources of Position Power and Personal Power
Used by Managers

146
 Leadership….Cont’d
 Turning power into influence …
– Successful leadership relies on acquiring and
using all sources of power.
– Use of reward power or legitimate power
produces temporary compliance.
– Use of coercive power produces, at best,
temporary compliance, often accompanied by
resentment.
– Use of expert power or referent power has the
most enduring results and generates
commitment.
147
 Leadership….Cont’d
 Keys to building managerial power:
– There is no substitute for expertise.
– Likable personal qualities are very
important.
– Effort and hard work breed respect.
– Personal behavior must support
expressed values.

148
 Leadership….Cont’d
Leadership and empowerment
– Empowerment
• The process through which managers enable
and help others to gain power and achieve
influence.
– Effective leaders empower others by
providing them with:
• Information.
• Responsibility.
• Authority.
• Trust. 149
 Leadership….Cont’d
How leaders can empower others:
– Involve others in selecting their work assignments
and task methods.
– Create an environment of cooperation, information
sharing, discussion, and shared ownership of
goals.
– Encourage others to take initiative, make decisions,
and use their knowledge.
– Find out what others think and let them help design
solutions.
– Give others the freedom to put their ideas and
solutions into practice.
– Recognize successes and encourage high
performance. 150
 The important Leadership Traits and
Behaviors

 Traits that are important for leadership success:

– Drive
– Self-confidence
– Creativity
– Cognitive ability
– Business knowledge
– Motivation
– Flexibility
– Honesty and integrity
151
Leadership Traits & Behaviors…Cont’d
Leadership behavior
 Leadership behavior theories focus on
how leaders behave when working with
followers.
– Leadership styles are recurring patterns of
behaviors exhibited by leaders.
– Basic dimensions of leadership behaviors:
• Concern for the task to be accomplished.
• Concern for the people doing the work.
152
 Leadership Traits & Behaviors…Cont’d

 Task Concerns  People Concerns

– Plans and defines work – Acts warm and
to be done. supportive toward
– Assigns task followers.
responsibilities. – Develops social rapport
– Sets clear work with followers.
standards. – Respects the feelings of
– Urges task completion. followers.
– Monitors performance – Is sensitive to followers’
results. needs.
– Shows trust in followers.

153
Leadership Traits & Behaviors…Cont’d
 Blake and Mouton Leadership Grid
– Team Management
• High task concern; high people concern.
– Authority-obedience Management
• High task concern; low people concern.
– Country Club Management
• High people concern; low task concern.
– Impoverished Management
• Low task concern; low people concern.
– Middle of the Road Management
• Non-committal for both task concern and people
concern.

154
Managerial Styles in B&M’s Leadership
Grid.

155
Leadership Traits & Behaviors…Cont’d
Classic Leadership Styles
– Autocratic Style
• Emphasizes task over people, keeps authority and information
within the leader’s tight control, and acts in a unilateral
command-and-control fashion.
– Laissez-faire Style
• Shows little concern for task, lets the group make decisions, and
acts with a “do the best you can and don’t bother me” attitude.
– Democratic Style
• Committed to task and people, getting things done while
sharing information, encouraging participation in decision
making, and helping people develop skills and competencies.

156
 Leadership…

 Transactional Leadership
– Someone who directs the efforts of others
through tasks, rewards, and structures
 Transformational Leadership
– Someone who is truly inspirational as a
leader and who arouses others to seek
extraordinary performance
accomplishments.

157
 Current issues in
Leadership Development
 Emotional Intelligence.
– The ability of people to manage themselves
and their relationships effectively.
– Components of emotional intelligence:
• Self-awareness.
• Self-regulation.
• Motivation.
• Empathy.
• Social skill.

158
– Future leadership success will depend
on a person’s capacity to lead through :
• Openness.
• Positive relationships.
• Support.
• Empowerment.

159
 Chapter 6

Controlling as a
Management
Function

1-160
161
 Controlling….Cont’d
• Controlling is directly related to planning.
• The controlling process ensures that plans
are being implemented properly.
• In the functions of management cycle -
planning, organizing, directing, and
controlling - planning moves forward into all
the other functions, and controlling reaches
back.
• Controlling is the final link in the functional
chain of management activities and brings
the functions of management cycle full circle.
 
1-162
163
 Controlling ….Cont’d

• Control is the process through which standards for

performance of people and processes are set,
communicated, and applied.
• Effective control systems use different mechanisms
to monitor activities and take corrective action, if
necessary.
• The supervisor observes what happens and
compares that with what was supposed to happen.
• The supervisor must correct below-standard
conditions and bring results up to expectations.
• Effective control systems allow supervisors to know
how well implementation is going.
1-164
 Controlling ….Cont’d
Control Process
•The control process is a continuous flow
between measuring, comparing and action.
•There are four steps in the control process:
establishing performance standards,
measuring actual performance,
comparing measured performance against established
standards, and
taking corrective action.

1-165
 Controlling ….Cont’d
Step 1. Establish Performance Standards
Standards are created when objectives are set during
the planning process.
A standard is:
any guideline established as the basis for
measurement.
a precise, explicit statement of expected results from
a product, service, machine, individual, or
organizational unit.
usually expressed numerically and is set for quality,
quantity, and time.  
In a business operating at 70%-90% of capacity, this capacity
might become our Standard Operating Procedure (SOP).
1-166
 Controlling ….Cont’d
Step 2. Measure Actual Performance
•Supervisors collect data to measure actual
performance to determine variation from standard.

•Written data might include time cards, production

tallies, inspection reports, and sales tickets.
•Personal observation, statistical reports, oral reports
and written reports can be used to measure
performance.

•Oral reports allow for fast and extensive feedback.

 
Measure objectives attained such as products made,
services completed. And quality levels attained
1-167
 Controlling ….Cont’d
Step 3. Compare Measured Performance Against
Established Standards
 Comparing results with standards determines
variation.
 Some variation can be expected in all activities and
the range of variation - the acceptable variance -
has to be established.
Calculate differences between actual performance
measurements and those of the planned performance

 Deviations or differences that exceed this range

would alert the supervisor to a problem. 1-168
 Controlling ….Cont’d
Step 4. Take Corrective Action
•The supervisor must find the cause of deviation from
standard.
•Then, supervisor takes action to remove or minimize
the cause.
•If the source of variation in work performance is
from a deficit in activity, then a supervisor can take
immediate corrective action and get performance
back on track.
•The supervisors can opt to take basic corrective
action, which would determine how and why
performance has deviated and correct the source of
the deviation.
1-169
170
 Controlling(Types) ….Cont’d
Feed-forward control
•Feed-forward controls focus on operations
before the process begin.
•Their goal is to prevent anticipated
problems. An example of feed-forward
control is scheduled maintenance on
automobiles and machinery.
•Regular maintenance feeds forward to
prevent problems.
•Other examples include safety systems,
training programs, and budgets.
1-171
 Controlling (Types) ….Cont’d
Concurrent Control
•Concurrent controls apply to processes as they
are happening.

•Concurrent controls enacted while work is

being performed include any type of steering or
guiding mechanism such as direct supervision,
automated systems, and organizational quality
programs.

1-172
 Controlling (Types) ….Cont’d
Feedback Controls
•Feedback controls focus on the results of
operations.
•Feedback controls guide future planning,
inputs, and process designs.
•Examples of feedback controls include
timely (weekly, monthly, quarterly, annual)
reports so that almost instantaneous
adjustments can be made.

1-173
Controlling (Characteristics) ….Cont’d

174
1-175