Chapter One

Fundamentals of
Management

1
1. Definition
 Several definitions:
• Management is the art of getting things done through and
with people in a formally organized group.
• Management is the art of knowing what you want to do in
the best and cheapest way.
• Management is the process of planning, organizing,
staffing, directing, and controlling the use of a firm’s
resources to effectively and economically attain its
objectives.

2
Cont’d
• Management may be defined as the art of securing
maximum results with a minimum of efforts so as to
secure maximum prosperity and happiness for both
employer and employee and give the public the best
possible service.
 Why many definitions:
 Management has various aspects, that all of which cannot
be represented by a single definition

3
2. Significance of Management
• Because Managers guide and direct the organizations that
provide goods and services up on which society depends.
In doing so managers serve a critical function.
• Because many individuals who are not trained as managers
often find themselves in managerial positions. Studying
Management better equips individuals to handle
managerial responsibilities.
• Because approaches and skills in management are needed
to manage productivity which is key to a country’s future
success.

4
3. IS Mgmt Art or Science?
• Both Science and art.
• Since management has a structured body of knowledge
with its own distinct concepts and principles that are
developed with reference to the general truths underlying
the management practice, management is a science.
• Like all other practices, management is an art. It is know-
how, it is the application of knowledge, and it is doing
things in the light of the realities of the situation.

5
4. Levels of Management & Types of Managers
 Three levels:
 Top level management
 Middle level management
 First level (operating level) management

6
Cont’d

Top level mgmt

Middle level mgmt

Lower level mgmt

Figure 1.1: Levels of management

7
Cont’d
 Functions of Top level manager:
• Establishing broad objectives,
• Designing major strategies,
• Outlining principal policies,
• Providing effective organizational structure that insures
integration,
• Providing overall leadership and direction,
• Making overall control of the organization,
• Dealing with external parties such as the government,
community, business, etc by representing the organization.
• Analyzing the changes in the external environment and
responding to it.
8
Cont’d
 Functions of middle level manager:
• Acting as intermediary between top and operating level
management,
• Translating long-term plans of top management in to
medium range plans,
• Developing specific schedules to guide actions and
facilitate control, and
• Coordinating inputs, productivity, and outputs of
operating level management.

9
Cont’d
 Functions of Operating (first) level manager:
• Planning daily and weekly activities and
accomplishments based on the monthly, quarterly, and
yearly plans
• Assigning operating employees to specific tasks
• Issuing instructions at the work place, following-up,
motivating and evaluating workers and reporting to their
superiors.

10
5. Types of Managers Based on Scope of Responsibility
 Two types:
1. Functional Managers
 Functional managers supervise with specialized skills in a
single area of operation, such as accounting, personnel,
finance, marketing and production.
2. General Managers
 General Managers are responsible for the overall operations
of a more complex unit, such as a company, or a division.
 In their jobs, general managers have to deal with major
uncertainties, great diversity, and a large volume of
information.

11
6. Basic Management Functions
1. Planning
 Planning is the process of choosing an organization's
mission (or purpose) and objectives, and then
determining the policies, projects, programs, procedures,
methods, systems, budgets, standards and strategies
needed to achieve them.
 It identifies the goals and alternatives.
 It maps out courses of action that will commit
individuals, departments, and the entire organization for
days, months, and years to come.

12
Cont’d
 Planning achieves these ends after setting in motion the
following processes:
(1) determination of what resources will be needed,
(2) identification of the number and types of personnel the
organization will need,
(3) development of the foundation for the organizational
environment in which work is to be accomplished, and
(4) determination of standard against which the progress
toward the objectives can be measured so that corrections
can be made if necessary.
13
Cont’d
2. Organizing
 It is the management function of determining how a task
is to be accomplished. Management must consider the
resources necessary to achieve the organization's
objectives and then assign responsibility and authority to
the appropriate people.
 Organizing as a management function is concerned with
(1) assembling the resources necessary to achieve the
organization's objectives and (2) establishing the activity-
authority relationships of the organization.
 Planning has established the goals of the company and
how they are to be achieved; now, organizing develops
the structure to reach these goals.

14
Cont’d
3. Staffing
 Staffing is concerned with locating prospective
employees to fill the jobs created by the organizing
process. Staffing initially involves the process of
recruiting potential candidates’ abilities.
 After the employment decision has been made - the
position is offered and accepted - staffing involves
orienting the new employee to the company
environment, training the new person for his/her
particular job, and keeping each employee qualified.

15
Cont’d
4. Leading/Directing
 The management functions of influencing employees to
accomplish objectives, which involves the leader's
qualities, styles, and power as well as the leadership
activities of communication, motivation, and discipline.
 Directing is aimed at getting the members of the
organization to move in the direction that will achieve its
objectives.
 Directing builds a climate, provides leadership, and
arranges the opportunity for motivation.
16
Cont’d
5. Controlling
 It is the process of devising ways and means of ensuring
that planned performance is actually achieved.
 Controlling deals with establishing standards for
performance, measuring performances against
established standards, and dealing with deviations from
established standards.
 It attempts to prevent problems, to determine when
problems do exist, and to solve the problems that occur
as quickly and effectively as possible.
 In essence, control involves five basic steps:

17
Cont’d
1. Setting performance standards
2. Determining methods for measuring performance
3. Measuring actual performance
4.Comparing performance with established standards
5.Taking corrective action when necessary to bring actual
performance in to conformity with the standard

18
Managerial Roles
Three major roles:
Interpersonal
Roles

Informational
Roles

Decisional
Roles
19
Cont’d
1. Interpersonal Roles
 Their roles focus on interpersonal relationships.
 The three roles of figurehead, leader, and liaison result
from formal authority.
 By assuming them, the manager is able to move in to the
informational roles that in turn lead directly to the
decisional roles.

20
Cont’d
 Figurehead role: In this role, the manager represents
the organizations at ceremonial and symbolical roles.
 The president who greets a touring dignitary, the mayor
who presents a key to the city to a local hero, the
supervisor who attends the wedding of machine
operator, a college dean hands out diplomas at
graduation – all are performing ceremonial duties
important to the organization’s image and success.
 These duties (roles) are expected of managers, because
they symbolize management’s concern for employees,
customers, and the community.

21
Cont’d
• Leadership role: This role involves directing and
coordinating the activities of subordinates in order to
accomplish original objectives.
• Some aspects of the leadership role have to do with
staffing: hiring, training, promoting, dismissing.
• Still other aspects involve motivating subordinates to
create a vision that company employees can identify
with.
• It also involves controlling – making sure that things are
going according to plan.

22
Cont’d
• Liaison role: The liaison role gets managers involved in
interpersonal relationships outside of their area of
command.
• This may involve contacts both within and outside the
organization.
• People outside the organization include clients,
government officials, customers and suppliers while
people inside organizations include managers in other
departments, staff specialists and other departments’
employees.
23
Cont’d
2. Informational roles
 This set of roles establishes the manager as the central
focus for receiving and sending non routine information.
 Through the three interpersonal roles discussed earlier,
the manager builds a network of contacts.
 The interpersonal contacts aid the manager in gathering
and receiving information in the monitor role and
transmitting that information in the disseminator role and
spokesperson role.

24
Cont’d
• The monitor role: The monitor role involves seeking
out, receiving, and screening information.
• Just as a radar unit scans environment, managers scan
their environments for information that may affect their
organization.
• Since much of the information received is oral (from
gossip and hearsay, as well as formal meetings managers
must evaluate and decide whether to use this information.

25
Cont’d
• Disseminator Role: This involves providing important
or privileged information to subordinates that they might
not ordinarily known about or be able to obtain.
• In a lunch conversation, the president of a firm hears that
a large customer of the firm is on the verge of
bankruptcy.
• On returning to the office, the president contacts the vice
president of marketing, who in turn instructs the sales
force not to sell anything on credit to the troubled
company.

26
Cont’d
Spokesperson Role: In this role the manager represents
the department to other people.
Managers transmit information to others, especially those
outside the organization, as the official position of
decision making.
The manager is person who speaks for his or her work or
organization to people outside the work unit or
organization.

27
Cont’d
3. Decisional roles
 Although developing interpersonal relationships and
gathering information are important, these two activities
are not ends in themselves.
 They serve as the basic inputs to the process of decision
making.
 In fact, some people believe that the decisional roles-
entrepreneur, disturbance handler, resource allocator and
negotiator are a manager’s most important duties.

28
Cont’d
Entrepreneurial Role: This role involves designing and
initiating planned change in order to improve the
organization’s position.
Managers play this role when they initiate new projects,
launch a survey, test a new market, or enter a new
business.

29
Cont’d
• Disturbance handler role: Managers make decisions or take
corrective actions in response to pressure that is beyond their
control.
• Because when there are disturbances, the decisions usually
must be made quickly, which means that this role takes
priority over other roles.
• The immediate goal is to bring about stability.
• When an emergency room supervisor responds quickly to a
local disaster, a plant supervisor reacts to a strike, a first line
manager responds to a break down in a key piece of
equipment- each is dealing with disturbances in the
environment.
• These responses must be quick and must result in a return to
stability

30
Cont’d
• Resource allocator role: This role places a manager in
the position of deciding who gets which resources
including money, people, time, and equipment.
• There are never enough resources toward numerous
possible ends.
• A first line manager must decide whether an overtime
schedule should be established or whether par time
workers should be hired; a college dean must decide,
based on available faculty, which courses to offer next
semester.

31
Cont’d
• The Negotiator role: In this role, managers must bargain
with other departments and individuals to obtain
advantages for their own units.
• The negotiations may be over work, performance,
objectives, resource or anything influencing the
department.
• A sales manager may negotiate with the production
department over a special order for a large customer; first
line supervisor may negotiate for new typewriters; a top
manager may negotiate with a labor union representative.

32
Management Level & Management Roles
• A manager’s level in the organization influences which
managerial role are emphasized.
• Obviously, top managers spend much more time in the
figurehead role than first line supervisors do.
• The liaison roles of top and middle managers involve
individuals and groups outside the organization, while the role
at first-line level is outside the unit but inside the
organization.
• Top managers monitor the environment for changes likely to
influelence the particular function that they manage (for
example marketing).
• And the first line supervisor is concerned about what
influences his or her department.
• However, while both the amount of time in the various roles
and the activities performed in each role may differ; all
managers perform interpersonal, informational, and decisional
roles.
33
9. Managerial Skills
• Skill is ability to do something expertly and well.
• It is meant ability related to performance that is not
necessarily in born but which can be developed or
acquired.
• For the purpose of discussion, managerial skills are
classified into four distinct categories: technical,
interpersonal, conceptual and communication skills.
• However, in practice these skills are closely related and it
may be difficult to tell where one begins and the other
ends.

34
Cont’d
 Technical Skills
Technical skills involve the ability to apply specific
methods, procedures, and techniques in a specialized field.
 It is easy to visualize the technical skills of design
engineers, market researchers, accountants, musicians, and
in on-the-job training programs.

35
Cont’d
 Interpersonal Skills
Interpersonal skills include the ability to lead,
motivate, manage conflicts, and work with others.
Whereas technical skills emphasize working with
things (techniques or physical objects), interpersonal
skills focus on working with people.
In long run organizations have only one resource:
people.
Thus, interpersonal skills are a vital part of every
manager’s job regardless of level or function.
36
Cont’d
Conceptual Skills
Conceptual skill involves the ability to view the organization
as a whole and recognize its relationships to the environment
(business world).
In other words, conceptual skills involve visualizing the
different parts of an organization as one big whole and
understand the whole’s interaction with its relevant
environment. More specifically:
 How the organization’s various parts and functions depend on
each other and thus, how changes in one area can affect other
areas?
 How each part contributes to the achievement of the overall
organizational goal?
37
Cont’d
 Communication Skills
Communication Skills reflect a managerial ability to
send and receive information, thoughts, feelings, and
attitudes.
Middle and operating level managers spend a large
portion of their time communicating.
The basic communication skills are classified into
writing, oral and non-verbal (facial expressions, body
posture, etc.).
Communication skills are very crucial to all
managers.
38
Relative Importance of Managerial Skills
While the above skills are all important, the relative
importance of each will vary according to the level of
the manager in the organization.
Communication skills are equally important at all
levels; interpersonal skills are more important to top
and middle level managers than first level managers;
conceptual skills, like interpersonal skills, are more
important at upper levels of management.
Technical skills are very important at the operating
level since the person at this level is responsible for
the technical issues.
39
40
Definition of Planning
Planning involves:
 Determination of objectives,

 Formulation of programs and courses of

action for their attainment,

 Development of schedules and timing of

action and
 Assignment of responsibilities for their

implementation.
41
Cont’d
Planning encompasses defining:
 the organization’s objectives or goals,

 establishing an overall strategy, and

 developing a comprehensive hierarchy of

plans to integrate and coordinate.

 It is concerned with ends (What is to be

done) and with means (how it is to be done).

42
Nature and Importance of Planning
The essential nature of planning:
A. The Contribution of Planning to
Purpose and Objectives:-
 Every plan and its supporting plans in an

organization contribute to the

achievement of organizational purpose
and objectives.
 Planning is justified when It enables to
achieve the objectives and purpose.
43
Cont’d
B. Primacy of Planning
 Planning precedes all other managerial
functions.
 Other managerial functions are performed to
facilitate the achievement of goals set in the
planning process,
C. The pervasiveness of planning: -
Planning is the function of all managers/regardless

of the levels/
Performed by every manager
 the scope and its importance varies from level
to level.
44
Cont’d
D. Efficiency of plans
The efficiency of a plan is measured by:
 The amount it contributes to the
achievement of purpose and objectives
 Costs and unsought consequences of
formulating and implementing the plan.
Plans are efficient if:
They achieve their purpose at a
reasonable cost
 time or money or production
Can be also measured in terms of
individual and group satisfaction.
45
Importance of planning
A. Minimizes risk and uncertainty
providing a more rational, fact –based procedure for
making decisions,
B. Leads to success
Planning does not guarantee success,

C. Focuses attention on the organization’s goal

Help to focus  on organization’s goals and
activities.
Coordinate the resources of the organization more

efficiently.
The whole organization  embrace identical goals
46
Cont’d
D. Facilitate control
In planning the manager:
 gets goals and
 develops plans to accomplish these
goals.
These goals and plans then become:
 standards or benchmarks against
which performance can be
measured.
The function of control is to ensure the
activities conform to the plans.
47
Types of plan
Plans can be classified on:
 Repetitiveness

 Time dimension, and

 Scope/breadth dimension

48
Classification of plan based on repetitiveness
Standing plans: - are established set of decisions used by
managers to deal with recurring or organizational activities.
Whenever organizational activities occur repeatedly a single
decision or set of decisions can effectively guide those
activities.
One established, standing plans allow managers to conserve
time used for planning and decision making because similar
situations are handled in a predetermined, consistent manner.
For example , bank managers can more easily approve or
reject a loan requests if criteria are established in advance to
evaluate credit ratings, collateral assets, and related
application information

49
Cont’d
The standing plans include the
following:
Mission, Objectives, strategies,
Policies, Procedures, methods &
rules
50
Cont’d
2. Single- use Plans
Detailed courses of action that probably will not
be repeated in the same form in the future.
They are plans which are prepared for a
particular situation.
Example:
 Plan to Expand firms,
 Grand Millennium Dam on Nile river

 construction costs,
 labour availability, location
 The major type of single use plans include:

Programs, Projects & Budgets

51
Cont’d
programs :-They are complex of:
goals, policies, procedures, rules,
task assignments, resources to be
employed and
 other elements to carry out a given course
of action.
Projects: - Projects are smaller, separate
portions of programs limited in scope and
distinct directives concerning assignments
and time.
Budgets: - A budget is a single use plan that
states projected income and expenditures for
specific period of time.
52
Cont’d
Based on Time
They are classified as:
a. Long range
 Time frames extending beyond three
years
b. Intermediate range
 B/n long range and short range
c. Short range
 Time frames of one year or less
53
Cont’d
Based on Scope/Breadth
1. Strategic planning: -
 It is the process of analyzing and deciding
on:
 the organizations mission, objectives,
 major course of actions or strategies
and
 major resource allocations.
 It deals with:
 Broad issues and performed by top level
managers.
 It is general plan.
It is a long-range planning that focuses on
the organization as a whole.
54
Cont’d
2. Tactical planning
 Process of developing action
plans
 Converting the strategic plans
into action.
 Developing annual budget for
each department, division and
project,
 Choosing specific measures of
implementing strategic plans.
55
Cont’d
3. Operational planning
 Most specific and detailed action plan.

 Made at the operating level and

 Concerned with the day to day, week

to week execution of the

organizational activities.
 What should be done in the short

range.
56
Planning in the Hierarchy of
Organizations

Strategic
Planning Top
Executives

Middle-Level
Managers

First-Level
Operational Managers
Planning

57
The planning process (Steps in planning )

58
Cont’d
1. Understanding of the existing
situation
 External environment
 its opportunities and threats
2. Forecasting: Planning is deciding
what is to be done in the future.
 Future is full of uncertainties, but we
must make certain assumptions
 The assumptions  based on
forecasts of the future.
59
 Cont’d

3. Establishing objectives
 Establish objectives for the entire
enterprise and each subordinate work unit.
4. Determine alternative courses of action
 Search for alternative course of action,
 Examine alternative course of action,
 Often an alternative that is not obvious
proves to be the best.

60
Cont’d
5. Evaluating alternative course of
action
Examining alternatives:
 their strong and weak points,
 evaluate the alternatives by
weighing them in light of premises
and goals
 Profitable, Cash, payback, risk

 Long-Range objectives Vs.

Short-Range Objectives
6. Selecting Course of Action
61
Cont’d
7. Formulating Derivative Plans
Derivative plans are almost invariably

required to support the basic plan.

8. Numberizing plans by Budgeting
To number them by converting them

into budgets.

62
Cont’d
9. Implementing the plan
The manager must decide these issues:
 both human and material, will the
tasks be initiated and completed
 What resources, both human and
material.
 How will the plan he evaluated?
 What reporting procedures are to be
used?
 What type and degree of authority
will be granted to achieve these ends?
63
Cont’d
10. Controlling and evaluating the results.
 monitor the progress that is being made,

 evaluate the reported results, and

 make any modifications necessary.

The environment that a plan is constructed in

is constantly changing, so plans may need

modification.
Modification maybe required because a plan was

not quite “perfect” when it was implemented.

64
 Chapter 3
Organizing Function

65
Definition of Organizing
Organizing is the process of:
• Identifying and grouping tasks to be
performed,
• Assigning responsibility and delegating
authority and
• Establishing relationships for the purpose

of enabling to work together in the

accomplishment of objectives.
66
Cont’d
Four distinct Activities:
o It determines what work activities have
to be done to accomplish
organizational objectives.
o It classifies the type of work needed
and groups the work in to manageable
units.
o It assigns the work to individuals and
delegates the appropriate authority.
o It designs a hierarchy of decision-
Making Relationships.
67
FORMAL AND INFORMAL
ORGANIZATION
 Formal organization is an
organization that is deliberately
and rationally designed and
approved by management

 Informal organization refers to

people in group associations, but
these associations are not
specified in the structure of the
formal organization.
68
Cont’d
Informal organizations are:
 Natural groupings of people in the
work situation based on their
behavioral patterns, interests,
beliefs, objectives, etc.
 They appear in response to the
social needs.
 The need of people to associate

with others.
69
Characteristics of Informal
Organization
1. Group Norms:
 These are unwritten laws
governing the behavior of
members

2. Group Cohesiveness:
 The members of an informal
organization stick together.
70
Cont’d
3. Group Leadership:
Informal organization has a leader
The informal leader.
This person is the most active one
4. Communication Network:
This organization has a
communication network called
grapevine.

71
Types of Groups in the Informal
Organization
Horizontal Groups:
 Include persons whose positions are
on the same level of the
organization i.e. they are groups that
are formed by peers.
 The groups can consist of all the
members in the same work areas or
Membership developed across
departmental lines.
 Members may be all management
or non-management personnel.
72
Cont’d
Vertical Groups:
 Include people on different
levels of the formal
organization’s hierarchy.
 These people always come
together within the same
department (work areas).
 A vertical group can consist of a
supervisor and one or more of
his/her employees.
73
Cont’d
 It
may also be formed through skip -
level relationships.
a top-level manager

associate with

a first level manager
 Their relationships can be the result
of outside interests or various
employment relationships.
74
Cont’d
Mixed Group
It is a combination of two or more
persons whose positions are on
different levels of the formal
organization and in different work
areas.
E.g. a Vice-President in close
relationship with the director of
computer services
Mixed groups often form because of
common bonds outside work.
75
Why people form informal
groups?
a. Need for Satisfaction:
Needs not met by Formal

Organization
security, affiliation, esteem, and

sometimes self-actualization
b. Proximity and Interaction:
E.g. Horizontal informal groups are
prime examples of this.
c. Similarity:
 People may join informal groups because
they are attracted to other people who
are similar to themselves having similar
attitudes or beliefs 76
Cont’d
Other factors of similarity can be :
Personality,

 Race,
Sex,

Economic position,

Age,

Educational background, etc

77
The Impact of Informal
Organization on the
Formal Organization

The Negative Impacts:

 Resistance to change
 Conflict
 Rumor
 Pressure to conform
78
Cont’d
Positive Impacts:
Makes the total system effective
Provides support to management
Provides a useful communication
channel
Encourages better management
Provides stability in the work
environment

79
The Organizing process
1. Identify the Work/Consider
plans and goals
 Organization is to Achieve goal

 Total work necessary to

achieve objectives
2. Grouping the work
 For smooth flow of work all
closely related and similar
activities grouped together.
80
Cont’d
3. Establishing Relationships
To secure compliance to organizational
directives, reporting Relationships must be
specified.
Once formal relationships are
established, it will help individuals know:
what must be done,
how it must be done,
to whom the matters must be referred
and
how particular jobs relate to one another

81
Cont’d
4. Delegating Authority
Authority is the right to issue

orders and exact obedience

from others.
Clear specification of authority

and responsibility limits

82
Cont’d
5. Providing for Coordination and
Control
 Interrelationships between various positions

 Performance must be measured,

evaluated and controlled
 Appropriate remedial steps should be

taken immediately in case if there is

any deviation
83
Major Elements in Organizing
Function
1. DIVISION OF LABOR
The degree to which the grand
task of the organization is broken
down and divided into smaller
component parts is referred to as
division of labor.
It begins by determining (sub
tasks) called jobs that are
necessary to accomplish the
identified objectives.
84
Cont’d
The sub-task assigned to the sub
task performer is called job.
Labor division also includes the
determination of job description
and job specification.

85
 Advantages & Disadvantages of
Labor Division
Advantages of Disadvantages of
Labor Division Labor Division
High proficiency in • Boredom and fatigue
work in
Less wastage in performing routine
learning process task
• Specialization
Ease of
(limited
supervision knowledge)
Less training cost • Creates
communication
barriers 86
Cont’d
2. Departmentalization
Departmentation is the
process of combining jobs
into groups.
A manager must have a
basis, or rationale, for
combining jobs.

87
Bases of
Departmentalization
1. Functional:
 A business firm includes such
functions as
production marketing, finance,
accounting, and
personnel.
2. Territorial (Geographic):
 All activities in a geographic area
are assigned
to a particular manager.
88
 Cont’d
Example: Functional Dept

89
 Cont’d
Example: Territorial Dept

90
Cont’d
A business firm that is dispersed
geographically often will use
territory as departmentalization
basis.
3. Product:
Activities and personnel are
grouped on the basis of
product.

91
Cont’d
 As a firm grows, coordinating its
various functional departments
become more difficult, and product
departmentation can ease
coordination problems
 The need for coordinating production,
engineering, sales, and service
cannot be overestimated.
92
 Cont’d
Example: Product Dept

93
Cont’d
 Each division also must have
accountants, lawyers, engineers,
market researchers, and scientists
assigned to it .
 Therefore, the product based
organization runs the danger of
duplication of effort among its
divisions.
94
Cont’d
4. Customer:
Grouping activities so that reflect a
primary interest in customers is
common in a variety of enterprises.

95
 Cont’d
Example: Customer Dept

96
Cont’d
5. Departmentalization on
Combined Base
It is a base in which multiple
bases are used at different
organizational levels of a
particular organization.
Most of the time organizations
use combined structure.
97
Cont’d
3. Delegation of Authority
Authority - is the right to commit
resources (that is, to make decisions
that commit an organization’s
resources), or the legal (legitimate)
right to give orders (to tell someone to
do or not to do something).
It is the right to make decisions, carry
out actions, and direct others in
matters related to the duties and goals
of a position.
98
Cont’d
Higher-level managers have greater
authority, with ultimate power resting
at the top.
Authority decreases all the way to the
bottom of the chart, where positions
have little or none.
 Authority is vested in a manager
because of the position he/she
occupies in the organization, that is
why we say, “authority comes with
the territory.”
99
Cont’d
Delegation of Authority is the downward
pushing of authority from superiors to
subordinates to make decision within their
area of responsibilities.
 It is the process of allocating tasks to
subordinates, giving them adequate
authority to carry out those assignments,
and making them obligated to complete
the tasks satisfactorily.
Delegation is a concept describing the
passing of formal authority to another
person.
100
Cont’d
In delegating authority a
manager doesn’t surrender his
power because he does not
permanently dispose of it;
delegated authority can always
be regained. This is called
recovery of delegated
authority.
101
Cont’d
The Process of Delegation

Four Major tasks:

Assignment of tasks
Delegation of authority
Acceptance of responsibility
Creation of accountability

102
Cont’d
Importance of Delegation
It relieves the manager from his/her heavy
workload
It leads to better decisions
It help subordinates to train and
build moral
It encourages the development of
professional managers
It helps to create the
organizational structure
103
Cont’d
Factors Determining Delegation
The history and culture of the
organization
 The nature of the decision
Availability and ability of managers
(Lower level managers)
Management philosophy
Size and character of the organization
Geographic dispersion of operations
Environmental uncertainty
104
Cont’d
Problems in Delegation
Managers’ reluctance to
delegate:
Fear of loss of power
“I can do it better myself” fallacy
Lack of confidence in
subordinates
Fear of being exposed
Difficulty in briefing
105
Cont’d
Subordinates’ Reluctance to accept
delegation
Fear of failure and criticism
Subordinate may believe that the delegation
increases the risk of making mistakes but
doesn’t provide adequate rewards for
assuming greater responsibility
Lack of adequate information and resources
If subordinates are already overworked

106
Cont’d
Lack of self-confidence
Believing / Thinking that decision-making is
the boss’s job

107
Cont’d
Overcoming the barriers in
delegation
The most basic prerequisite to
effective delegation is the willingness
of managers to give their subordinates
real freedom to accomplish delegated
tasks
Subordinates must be allowed to
develop their own solutions to
problems and learn from their
mistakes.
108
Cont’d
The solution to subordinates
mistake is not for the manager to
delegate less, but to train or
otherwise support subordinate more.
Improved communication between
managers and subordinates.
Managers who know the abilities of
their subordinates can more
realistically decide which tasks can
be delegated to whom.
109
Cont’d
Subordinates who are
encouraged to use their abilities
and who feel their managers will
“back them up” will in turn be
more accepting of responsibility.

110
Cont’d
4. Centralization and
Decentralization
Centralization is the extent to which
power and authority are systematically
retained by top managers.
 If an organization is centralized
decision making power remains at the
top
 The participation of lower level
managers in decision-making is very
low
111
Cont’d
 Decentralization is the extent to
which power and authority are
systematically dispersed/ delegated
throughout the organization to
middle and lower level managers.
 It is the tendency to disperse
decision making authority in an
organized structure.
112
Cont’d
When decentralization is
greater:
The greater is the number of decisions
made at lower level of the
organization; the more functions are
affected by decisions made at lower
levels; the less a subordinate has to
refer to his/her manager prior to a
decision and the less checking required
as decisions are made at the lower
level.
113
Cont’d
5. Span of Management
The term span of management is
also referred to as a span of control,
span of supervision, span of
authority or span of responsibility.
Span of management refers to
the number of subordinates who
report directly to a manager, or the
number of subordinates who will be
directly supervised by a manager.
114
Cont’d
Types of span of
management

1. Narrow Span of
Management
2. Wide Span of Management

115
Cont’d
1. Narrow Span of Management:
 This means superior controls few
numbers of subordinates or few
subordinates report to a superior.
 When there is narrow span of
management in an organization,
we get:

116
Cont’d
A. Tall organization structure with
many levels of supervision between
top management and the lowest
organizational level.
B. More communication between
superiors and subordinates.
C. Managers are underutilized and their
subordinates are over controlled.
D. More trained managerial personnel
and centralized authority.

117
Cont’d
Advantages of Narrow Span of
Management:

i. Close supervision and control

ii. Fast communication between subordinates
and superiors.
iii. Easy to coordinate and control activities.

118
Cont’d
Disadvantages of Narrow Span of
Management:
i.Superiors tend to get too involved in the
subordinates work
ii.The problem of getting more trained
managerial personnel
iii.Excessive distance between lowest level
and top level management. This kills intuition
for top level positions.
iv.High costs due to many levels

119
Cont’d
2. Wide Span of
Management
This means many subordinates
report to a superior or a superior
supervises many subordinates.

If the span of management is

wide, we get:

120
Cont’d
I. A flat organization structure with
fewer management levels
between top and lower level
II. Many number of subordinates and
decentralized authority
III. Managers are overstrained and
their subordinates receive too
little guidance and control
IV. Fewer hierarchal level

121
Cont’d
Advantages of Wide Span of
Management

Superiors are forced to delegate

It initiates the development of clear
policies

122
Cont’d
Disadvantages of Wide Span of
Management:

1.Tendency of overloaded superiors to

become decision bottle necks
2.Danger of superior’s loss of control
3. Require exceptional quality of
managers
123
Cont’d
Relationship of centralization to span of
control
The company’s philosophy of centralization or
decentralization in decision-making can influence
the span of control of subordinate managers.
A philosophy of decentralized decision-making
generally means that the span of management
should be wider for each manager.
This is so because decision-making is forced down
to subordinates, thus feeling up a manager’s time
commitments.
This situation also generally means fewer level of
management in an organization.

124
Cont’d
 Conversely, a philosophy of centralized decision
making should result in a narrower span of
control
and more levels of management.
 If it is the philosophy of the company to have
managers make the majority of decisions, the
managers will closely supervise their
subordinates
and delegate little.
 Contacts with subordinates should increase in
number and in length, thus narrowing the span
of
control.
125
Cont’d
Factors Determining an
Effectiveness of Span of
Management
Ability of the manager
Manager’s personality
The abilities of subordinates
Motivation and commitment
Need for autonomy
Type of work
Geographic dispersion of subordinates
126
Cont’d
The availability of information &
control systems
Levels of management
Economic Factor

127
 Authority Relations in
Organization (Line, Staff,
Functional)

Line Authority

 Line authority defines the relationship

between superior and subordinate.
 It is a direct supervisory relationship.
 It exists in all organizations as an
uninterrupted score or series of steps.

128
Cont’d
Staff Authority
 Is advisory in nature.
The function of people in a pure
staff capacity is to give advice,
expertise, technical assistance, and
support to help line managers to
work more effectively in
accomplishing objectives
Staff authority is advisory and
normally flows upward.
129
Cont’d
Line and Staff Departments
Line departments, headed by line
managers, are the departments
established to meet the major
objectives of the organization.
Staff departments provide assistance
to the line departments and to each
other.
They can be viewed as making money
indirectly for the company through
advice, service and assistance.
130
Cont’d
Staff departments are created on the
basis of the special needs of the
organization.
As an organization develops, its need
for expert, timely, ongoing advice
becomes critical. Examples could be
legal, personnel, computer service,
etc.
131
Cont’d
Functional Authority:
It is the right which is delegated to
an individual or a department to
control specified process, practices, or
provinces or other matters relating to
activities undertaken by persons in
other departments.

132
Cont’d
Functional authority is not to
restricted
managers of a particular type of
department.
It may be exercised by line, derive or
staff department heads, more often
the latter two, because they are
usually composed of specialists whose
knowledge becomes the basis for
functional controls.
133
Cont’d
Example:
The Finance Manager can give direct
command to the marketing manager
of the same level about financial
affairs.

134
Cont’d
Conflict between Staff and Line
Managers
Demographic factor
Threats to Authority
Dependence on knowledge
Staff managers may exceed their
authority and attempt to give
direct command to the line
managers
135
Cont’d
Staff managers may attempt to take credit
for ideas implemented by line managers;
conversely line managers may not
acknowledge the role of staff managers.
Staff departments are
organizationally placed in a relatively
high position to top management.

136
Cont’d
Resolving Conflict b/n Line &
Staff Managers
Understanding authority
relationships
Making line listen to staff
Keeping staff informed
Requiring completed staff work
Clear areas of responsibility and
accountability for results.
137
 Organizational Structure
 Organization structure is the structural
framework for carrying out the
functions of planning, decision-making,
controlling, communication, motivation,
etc.
 Organization structure is the formal
pattern of interactions and coordination
designed by a manager to link the
tasks of individuals and groups in
achieving organizational goals.
138
Cont’d
 The word “formal” in this content
refers to the fact that organization
structures typically are created by
management for specific purposes
related to achieving organizational
goals, and, hence, are official, or
formal outcomes of the organizing
function.
 Organization structure is the
arrangement and interrelationship of
the component parts, and positions of
an organization.
139
Cont’d
The process of developing an
organization structure is sometimes
referred to as organization design.
The formal structure of an
organization is of two-dimensional:
The horizontal dimension and
vertical dimension.
The horizontal dimension identifies
departments, units, and divisions on
the same level of a management.
140
Cont’d
Whereas the vertical dimension refers
to the authority relationships between
superiors and subordinates and it also
identifies who is responsible and
accountable for whom.
One aid to visualizing organization
structure is the organization charts.

141
Organizational Chart
It is the means through which we
depict the organization structure.

Organization chart is a line diagram

that depicts the broad outlines of an
organization’s structure.

142
Cont’d
 It shows the flow of authority,
responsibility, and communication
among the various departments
which are located at different
levels of the hierarchy.
An organization chart is a visual
representation of the way in which
an entire organization and each of
its components fit together.

143
Cont’d
The organization chart
can tell us:
Who reports to whom (chain of
command)
The number of managerial levels
How many subordinates work for each
manager (the span of control)
Channel of official communication
through the solid lines that connect
each job (box)
144
Cont’d
How the organization is structured-by
function, territory, customer, etc.
The work being done in each job- the
labels on the boxes
The hierarchy of decision making-
where a decision maker for a problem
is located
How current the present organization
is (if a date is on the chart)
Type of authority relationships- line
authority, staff authority, and
functional authority.
145
 Organizational Chart
(Example)
President

V-P V-P
Marketing Production

GM GM GM GM GM
Sales Advertising Research Manufacturin Quality
g Control

Division Division Manager Manager

Sales Sales Product Consumer
Manager Manager Research Research
Appliances Electronics
Manager Manager Manager
Operations Manufacturi Shipping
ng 146
 Chapter 4
Staffing Function

147
Staffing: Definition
 Staffing is a process of securing
and developing people to
perform the jobs created by the
organizing function.
 The goal of staffing is to obtain
the best available people,
develop the skills and abilities
of those people & attract,
maintain and utilize efficient
and effective workforce.
148
Cont’d

149
Staffing functions
Major functions of staffing
are:

Procurement
Training/development
 Maintenance and utilization
 Separation
150
1.The procurement function
 It concerned with determining and
obtaining the proper kind of
personal both In quality and
quantity.
Human Resource Planning:
 It is getting the right number of
qualified people into the right job
at the right time.

151
Cont’d
Reasons for human resource
planning:
Scarcity of personnel in some
specialized areas
High expenses involved in
hiring

152
Cont’d
The Demand and Supply Aspect
of Human resource Planning:
Causes for human resource
demand:
External challenges
 economic,

 social and

 technologies competition
153
Cont’d
Internal decisions:
strategic plans on growth,
production, marketing, etc;
work force factors such as
retirement, resignation,
termination, and death.

154
Cont’d

 Demand forecasting is an
essential part of human
resource planning process.
 It is an attempt to predict an
organization future demand
for employees.

155
Cont’d
The process of personnel
Planning
1.Analyzing organizational
objectives and plans
2.Determining overall human
resources

156
Cont’d
Human resource supply/source:
Internal supply
Present Employees
Promotion or Transfer
External Supply
Labour Market Analysis

157
Cont’d
3. Taking inventory of existing
personnel
To determine: Promotion, transfers,
retirements, death, quits and
resignation
4. Determining net new personnel
requirements
D/c between Overall Personnel
requirement and personal Inventory
5. Developing action plans
158
Cont’d
Action for human resource
surplus:
o Hiring freeze
o Reassignment of existing
employees for openings
o Voluntary departures
o Lay offs
o Early retirement
159
Cont’d
Action for Human Resource
Shortage:
In the short run, external
source will be used
In the long run staff
development efforts will serve
to fill the vacancies
160
Cont’d
Recruitment:
 Seeking and attracting a
supply of people from which
qualified candidates for the
vacancies can be selected.
Internal recruitment:
Transfer, promotion, and recall
from lay-offs
161
Cont’d
Advantages of Internal
Recruitment:
Getting familiar Employees
Less costly

162
Cont’d
Disadvantages of Internal
Recruitment:
 It narrows down selection
options,
 Results in organizational in
breeding (preventing new blood
and new outlooks from coming
in)
163
Cont’d
External recruitment:
Unsolicited applicants
Labor market through
vacancy announcements
Educational institutions
Employment agencies labor
unions

164
Cont’d
Selection:
The selection process may include:
Preliminary Screening
(application blank, resume)
Employment test
Employment interview
Reference letters
Physical examination

165
 2. Training & Development
 Training is the act/process of
increasing the knowledge
and skills of an employee for
doing a particular job.
 It boosts Aptitude, skills and
abilities to do Specific jobs

166
Cont’d
Development involves:
learning opportunities aimed at
the individual growth but not
restricted to a specific job.
Training  operational or

technical employees
Development  managers and

professional.
167
Cont’d
Objectives of Training
 To provide knowledge/skills,
attitudes
 To reduce waste and increase
efficiency
 To minimize inputs use and
maximize output
 To relieve supervisors from close
supervision and get time for other
duties.
168
Cont’d
Training Methods
Job/Position rotation
Coaching
Case study
conferences, seminars and
work shop
Internship

169
3. Maintenance and
Utilization
 Procured and
trained/developed employees
should be maintained and
utilized utmost.
This requires:
 Adequate remuneration of
personnel,
 The creation of opportunities
for progress and
 A mechanism of evaluating
their contribution.
170
Cont’d
Compensation:
Adequate and equitable
remuneration of personnel
Contribution to the
achievement of objectives.

171
Cont’d
Pay for a particular position is set
relative to three groups:
 Employees  similar jobs in
other enterprise/External equity/
 Employees  different jobs
within the same
enterprise/Internal equity/
 Employees  the same job
within the same
enterprise/Employees equity/
172
Cont’d
Factor Affecting Compensation
Decisions
External Factors:
The government through wage
controls
Union’s influence
Economic conditions of the
industry.
173
Cont’d
Internal Factors:
The size and age of the
organization
The labor budget/resource
allocation strategy/

174
Cont’d
Methods of Payment
Employees’ salaries can be
computed based on:
The time they worked
The output they produce/piece
rate system
A combination of both

175
Cont’d
Performance Appraisal
Human resource activity that is
used to determine the extent to
which an employee is performing
the job effectively.

176
Cont’d
Objective of performance
appraisal include:
Information on Strengths and
Weaknesses
Information for managers for future
assignment, promotion, compensation
To maintain equitable and
competitive pay structure
General information on training
needs
177
Cont’d
Employee Relation
 It is concerned with the
relationships existing between
Employers and Employees.
The three basic Elements of
Employee Relation are:
Collective Bargaining
Grievance/Complaint Handling
Disciplinary Action
178
4. Separation
Is the final human resource
management function
Separation can be caused by:
A. Employers
Mandatory retirement,
dismissal, layoff

179
Cont’d
B. Employees
resignation, voluntary
retirement, quits
C. Agreement
Contract Ends,
D. External factors
Accidents, death

180
 Chapter 5
Directing/Leading

181
 What is Leadership?
 Leadership is the process of
influencing others toward
objectives.
 It is an ongoing activity,
 It is oriented toward having an
impact on the behaviors of
others,
 Focused on realizing the specific
aims of the organization.
182
Cont’d
Leadership is the art of
influencing people
Leadership is the ability to
secure desirable actions from a
group of followers voluntarily
without the use of coercion or
force.

183
 Elements/Ingredients of
Leadership
The Three Important
Elements:
1. The leader: qualities of personality
and character
2. The situation/Environment:
partly constant, partly varying
3. The group/the followers: their
needs and values

184
Cont’d

185
Leadership Vs Management
Management is a broad subject that
encompasses:
Planning,
Organizing,
Staffing,
Directing &
Controlling

186
Cont’d
Leadership focuses on the
‘people’ aspects of getting a
job done.
Inspiring,

Motivating, Directing, and

Gaining Commitment

187
How Leaders Influence Others?

 Why do people accept the

influence of a leader? B/c leaders
have the vested power.
Power is:
The capacity to affect the
behavior of others,
The ability of individuals or
groups to induce or influence the
beliefs of others.
188
Types of Power
A. Legitimate Power
 Result of occupying a particular
position or role
 A “right” or is lawfully entitled
to influence
 Is related to the position, rather
than to the person personality
B. Rewarding power
 Give or withhold rewards for
followers
189
Cont’d
C. Coercion Power
Based on fear
Used to maintain a minimum
standard performance or
conformity among subordinates.
The more coercive power a
manager uses, the more
resentment and opposition s/he
faces from subordinates.
190
Cont’d
D. Expert Power
 Knowledge and expertise regarding the
tasks
 Special knowledge
E. Referent Power
• Admired
Subordinates can react to a leader’s
direction with:
 Commitment,
 Compliance, or
 Resistance.
191
Cont’d
Commitment:
Work enthusiastically and
Exert a high level of effort
Compliance:
Exert minimal efforts and deliver
average,
Resistance:
Comply and do the absolute
minimum,
Attempting to sabotage the
attainment of organizational goals.
192
 Leadership Theories
A. Trait Theory
Theories that consider
personality, social, physical, or
intellectual traits to differentiate
leaders from non-leaders.

193
Cont’d
Leadership Traits:
• Ambition and energy
• The desire to lead
• Honest and integrity
• Self-confidence
• Intelligence
• High self-monitoring
• Job-relevant knowledge
194
Limitation of Traits Theory
 Not all leaders possess all the traits
 Many non-leaders may possess most of
the traits.
 No guidance as to the magnitude of
each trait for a person to be a leader.
 Traits tend to be a chicken-and-egg
proposition. i.e. Successful leaders may
display traits such as good vocabulary,
education and self-confidence after
they have assumed leadership
positions.
195
 Cont’d
B. Behavioral Theory of
Leadership
Researchers tried to determine:
What effective leaders did,
How they delegated tasks,
How they communicated with
How they motivate their subordinates,
How they carried out their tasks, and
so on.
196
Cont’d
University of Michigan study
i. Job Centered Leader:
Close supervision
The leader relies on coercion,
reward, and legitimate power
ii. Employee Centered leader:
Delegating authority and
supporting followers
Personal advancement, growth
and achievement
197
Cont’d
The university of OHIO study
Indentified two leadership factors:
initiating structure and
consideration
Initiating structure involves
behavior in which the leader organizes
and defines the relationship in the
group, tends to establish well-defined
patterns and channels of
communication, and spells out ways of
getting the job done.
198
Cont’d
Consideration involves
behavior indicating sensitiveness
to subordinates, respect their
ideas and feelings, and
establishes mutual trust and
friendship between the leader
and the followers.

199
Cont’d
C. The Contingency /Situational
Leadership Theory
Effectiveness of a particular style
of leader behavior depends on
the situation.
leader traits or behaviors are
contingent or dependent on
relevant situational
characteristics
200
Cont’d
Determinants:
Leaders: behavior and
competence
Followers: behavior and
competence
Situations:
 job characteristics,
 organizational policies,
 leaders member
 position power
201
Cont’d
Hersey and Blanchard’s
Situational Leadership Theory

Unable Unable Able Able

and but and and
Unwilling Willing Unwilli Willing
ng

Leader: decreasing need

for support and supervision
Directive High Task and Supportive Monitoring
Relationship Participati
Orientations ve 202
Cont’d
D. Theory X and Theory Y
Theory X – pessimistic and negative:
A manager basing an operating
philosophy of Theory X would:
Impose a directive leadership style on
the individual or work group s/he is
supervising.
Coercion, negative motivation, and
refusal to allow employee participate in
decision-making would probably be the
actions of the manager.
203
Cont’d
Theory Y- adopts a developmental
approach/ modern + positive set of
assumptions
A manager with Theory Y assumption will:
• Prepare him/herself to work with people
as individuals,
• Involve people in the process of
decision-making, to
• Openly encourage people to seek
responsibility and to
• Work with people to achieve their goals.
204
Cont’d
Criticisms on both Assumptions
Theory X describes
“organizations without people”.
Theory Y describes “People
without organization.”
Both suffer from too much
generalization in that sweeping
statements are made concerning
work and human behavior.
205
LEADERSHIP STYLES
Leadership style (behavior patterns of
leaders):
 Leaders’ action and
 The reaction of subordinates
emotionally and behaviorally.
Leadership style is composed of three
parts:
 How the manager chooses to
motivate subordinates
 His/her decision-making style
 His/her areas of emphasis
(orientation) in the work environment:
206
Cont’d
Three Major Styles:
1. Autocratic
2. Democratic/ Participative
3. Laissez-Faire

Which one is best?

207
Motivation
 Psychological processes that
cause arousal, direction, and
persistence of voluntary actions
that are goal oriented
 Internal force that energizes
behavior, gives direction to
behavior, and underlies the
tendency to persist.

208
Cont’d

209
Cont’d

210
Cont’d
 We can measure motivation
but see it on peoples
behavior.

Performance = Ability x
Motivation x
Environmental
conditions

211
Motivation Process
Need
Deficiency

Need
Goal
Satisfacti
Directed
on
Behavior

212
Motivation Theory
1. Carrot and Stick Approach

213
Cont’d

214
2. Maslow’s Hierarchy of
Needs

215
3. Herzberg’s Two-Factor
Theory

216
 Chapter 6
Controlling Function

217
 Controlling: Definition
Controlling is the process through
which managers assure that actual
activities conform to planned
activities.
Controlling is the process of
regulating organizational activities
so that actual performance conforms
to expected organizational standards
and goals.
It is checking current performance
against predetermined standards
contained in the plans.
218
Importance of Controlling
Adapting to changing conditions
Limiting the magnification of errors
To prevent failure

219
 The Controlling Process
The Controlling Process has 5 Major
Steps:
1. Determine Areas to Control
2. Establishing Standards
Performance standards
Corollary standards
Standards of conduct
3. Measuring Actual Performance
4. Comparing Performance against
Standards
5. Taking Corrective Action (on time): 220
 Types of Controlling
1.Preventive/Steering/ preliminary /
Input Control
2.Concurrent/Screening/Yes-No/
Checking Control:
3. Feedback/Post-Action/ Output
Control

221
Techniques of Control
Two Major techniques:
Cybernetic and Non-cybernetic
Controls
Over-control Vs Under-control

222
Characteristics of Effective
Control System
Future oriented
Multidimensional
Economically Realistic (Cost
Effective)
Accurate
Acceptable to Organization
Members
Timely
223
Cont’d
Reliability and Validity
Monitorable
Organizationally Realistic
Flexible
Focus on Critical Control Points
Easy to Understand
Emphasis on Exception

224
 THE END!!

ANY QUESTION?

225