Management Functions and Theories: An Overview, Summaries of Business

Download Management Functions and Theories: An Overview and more Summaries Business in PDF only on Docsity! 1. ORGANIZATION AND MANAGEMENT Chapter 1 - Nature and Concept of Management Definition and functions of management 1.1. 1.2. 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. 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. 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 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. 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. 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" 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 1. into action that results in desired performance, are required to help other employees become more productive. These skills fall under the following categories: 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. 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. 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 vVvVv VV VVV Chapter 2 - The Firm and its Environment 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. 4 GENERAL EXTERNAL BUSINESS ENVIRONMENT includes: * Economic * — Socio-cultural * Politico-legal * Demographic * Technological * World and ecological situations 4 = =SPECIFIC EXTERNAL BUSINESS ENVIRONMENT includes: * Stakeholders * Customers * Pressure groups ¢ Investors * Employees b. INTERNAL BUSINESS ENVIRONMENT - refers to the forces/factors within the organization which my affect, either positively or negatively, the performance of the organization. 4 INTERNAL BUSINESS ENVIRONMENT includes: * The organizations’ resources * Research and development * Production * Procurement of supplies * Products and services offered 2. 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 vVVVV CULTURAL INTELLIGENCE > Is an individual's ability to favorably receive and adjust to an unfamiliar way of doing things. MONOCHRONIC CULTURE > Is aculture where people tend to do one thing at a time. POLYCHRONIC CULTURE > Is aculture 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. VVVVV 4. Forms of business organizations BUSINESS ORGANIZATION > Is acollection 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 Chapter 4 - Organizing 1. Nature of organizations 2. Types of organization structures 3. Organization theories and application 4. Delegation 5. Formal & informal organizations Chapter 5 - Staffing Definition and nature of staffing Recruitment Selection Training and development Com pensation/wages and performance evaluation/appraisal Employee relations Employee movements Rewards System Chapter 6 - Leading Definition Motivation Leadership theories Communication Management of change and diversity Filipino and foreign Culture Chapter 7 - Controlling Definition and nature of management control The link between planning and controlling Control methods and systems. Application of management control in accounting and marketing concepts and techniques Role of budgets in planning and control Chapter 8 - Introduction to the Different Functional Areas of Management a. Human Resource Management b. Marketing Management c. Operations Management d. Financial Management e. Information & Communication Technology Management Chapter 9 - Special Topics in Management Small Business Management and Entrepreneurship Family Business Enterprise Starting a Business: Legal Forms and Requirements