Part Two - Chapter Three

Fundamentals of Management
3.1 What is Management?

Management is a set of activities (including planning,

organizing, staffing, leading, decision making and
controlling) directed at an organization’s resources
(human, financial, physical, time and information) with
the aim of achieving organizational goals in an efficient
and effective manner.
 All organizations - business, political, cultural or social are involved
in management because it is the management which helps and directs
the various efforts towards a definite purpose.

 Management is a purposive activity. It is something that directs

group efforts towards the attainment of certain pre - determined goals.

According to F.W. Taylor, “Management is an art of knowing what to

do, when to do and see that it is done in the best and cheapest way”.

 It is the process of working with and through others to effectively

achieve the goals of the organization, by efficiently using limited
resources in the changing world.
 3.2. Significance of management
Management is significant since,

 The coordination of resources is impossible without management

 It affects the establishment and re-establishment of many economic social and

political goals of the country

It helps in Achieving Group or Organizational Goals

 Optimum Utilization of Resources.

The success or failure of the organization mostly depends on the management

system because it is the wise utilization of scarce resources for unlimited human
wants.
3.3 Is Management a science, an art or a profession?

Management is science, in that it requires the use of

technical, diagnostic, decision-making skills, logics and
analyses.

And in addition it uses computers and quantitative formulas

to problems on hand. Problems can be solved using
systematic method.
 Management is an art as it requires the use of behavioral and
judgmental skills that cannot quantified the way scientific
information can be.

 An art may be defined as personalized application of general

theoretical principles for achieving best possible results

 Issues can be resolved using instinct and experience.

It requires use of: Conceptual, communication, interpersonal, and

time-management skills.
To say management is a profession it must fulfill the
following criteria:

 Specialized knowledge

 Competence in his/her occupation

 Community service

 Social responsibility

 Self control/ code of conduct

 3.4. Levels of Management

The term “Levels of Management’ refers to a line of demarcation

between various managerial positions in an organization.

The number of levels in management increases when the size of the

business and work force increases and vice versa.

The levels of management can be classified in three broad categories:

1. Top level / Administrative level

2. Middle level / Executory

3. Low level / Supervisory / Operative / First-line managers

1. Top level management (top Managers)
 Top level management consists of highest rank managers of an
organization with different titles such as CEO, president, vice
president.

 Top managers are responsible for managing the entire organization

or major parts of it.

 The top management is the ultimate source of authority and it

manages goals and policies for an enterprise.

 It devotes more time on planning and coordinating functions.

The role of the top management can be summarized as follows

a. Top management lays down the objectives and broad policies of

the enterprise.

b. It issues necessary instructions for preparation of department

budgets, procedures, schedules etc.

c. It prepares strategic plans & policies for the enterprise.

d. It appoints the executive for middle level managers.

f. It is responsible for maintaining a contact with the outside world.

g. It provides guidance and direction.

2. Middle level management (middle Managers)

The branch managers and departmental managers constitute middle

level. They are responsible to the top management for the functioning
of their department.
The major functions of middle level management are:

Acting as intermediary between top and operating level management.

Translating long term plans into medium range plans.

Developing specific targets in their areas of responsibility

Coordinating inputs, productivity and outputs of operating level

managements. Achieving objectives set by top level management.
3. Operating (first level) management (first line Managers)

These are types of managers whose subordinates are non management

workers or operating employees. They are responsible for day-to-day
operation.

The major functions of operating level management are:

 Planning daily and weekly activities and accomplishment 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.
Levels of Management
 3.5. Managerial roles
A manager wears many hats. Not only is a manager a team leader, but he or
she is also a planner, organizer, cheerleader, coach, problem solver, and
decision maker — all rolled into one. And these are just a few of a manager's
roles.

In his classic book, The Nature of Managerial Work, Henry Mintzberg

describes a set of ten roles that a manager fills. These roles fall into three
categories:

 Interpersonal Role: This role involves human interaction.

 Informational Role: This role involves the sharing and analyzing of

information.

 Decisional Role: This role involves decision making.

1. Interpersonal:
 Figure Head Role
 Leader Role

 Liaison Role

2. Informational:
 Monitor Role
 Disseminator Role

 Spokesperson Role

3. Decisional:
 Entrepreneur Role

 Disturbance Handler Role

 Resource Allocator Role

 Negotiator Role
 Category Role Activity
Monitor  Seeks and receives information
relevant to the organization;
 scan periodicals, legal restrictions

Informational and reports; maintain personal

contact with stakeholders
Disseminator  Provide information where it is

needed in the organization members

via memos, reports, phone calls etc.
Spokesperson  Transmit information to outsiders via
reports, memos, and speeches
 Represent the organization in
different meeting
 Category Role Activity
Figure head  Represent the organization in a
symbolic way;
 Perform ceremonial and symbolic
duties, such as greeting visitors and
signing legal documents, cutting the
Interpersonal ribbon etc.
Leader  Direct and motivate subordinates to
achieve organizational goals; help,
council and communicate with
subordinates
Liaison  Acts as a go-between among
individuals inside and outside the
organization
 Maintain information links both
inside and outside organization via
mail, phone calls and meetings.
 Category Role Activity

Entrepreneur  Search out and initiate new

improvement projects;
 identify new opportunities, ideas and
delegate idea responsibilities to others
Disturbance  Handle unexpected events and crises
handler  Take corrective actions during disputes
Decisional or crises;
 resolve conflicts among subordinates;
adapt to environments

Resource  Decide who gets resources; prepare

allocator budgets;
 set schedules and determine priorities
Negotiator  Represent organizations during
negotiations of union contracts, sales,
purchases and budgets
 3.6. Managerial Skills
Not everyone can be a manager. Certain skills, or abilities to translate
knowledge into action that results in desired performance, are required to help
other employees become more productive

 Skill is ability to do something expertly and well.

 Managerial skills are enhanced through formal training, reading, and practice.

There are three principal skills that managers get through experience and
education. These are:
◦ Conceptual skills

◦ Human skills

◦ Technical skills
Conceptual skills

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.
 Conceptual skill involves the ability to view the organization as a whole,
understand how the various parts are interdependent, and recognize its
relationships to large environment or business world.
 Are ability (or mental capacity) to conceive and manipulate ideas and abstract
relation-ships.
 the ability to analyze and diagnose a situation and find the cause and effect

 are more needed by top-level managers

The higher the management level, the more important conceptual skills become.
Human skills

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.

Human skills focus on working with people to accomplish goals through the use
of human resources.

 The ability to understand, alter, lead, and control people’s behavior

 Are needed uniformly at three levels of management. That is the need for human
skills at three levels of management remains fairly constant.

 No matter how human skills are acquired, they're critical for all managers because

of the highly interpersonal nature of managerial work.

Technical skills
 This skill requires the ability to use a special proficiency or
expertise to perform particular tasks.

 A manager’s specialized areas of knowledge and expertise, as well

as the ability to apply that knowledge.

The job-specific knowledge required to perform a task. Common

examples include marketing, accounting, and manufacturing.

 Technical skills are most important at lower levels of

management.
 Are greatly needed by first line managers.
 Skill Distribution at Various management
Levels

Skills
Management Levels
 Chapter Four
Management Functions
 4.1. PLANNING
What is Planning?
 Planning is the systematic process of establishing a need and then
working out the best way to meet the need, within a strategic framework
that enables you to identify priorities and determines your operational
principles.

 Planning means thinking about the future so that you can do something
about it now.

This doesn’t necessarily mean that everything will go according to plan. It

probably won’t.

 But if you have planned properly, your ability to adjust, without

compromising your overall purpose, will be that much greater.
 Planning is the management of the organization's future in an uncertain environment.

It is the process of setting objectives and determining the steps needed to attain the
stated objectives.

 The focus of planning is about achieving the objectives and it does require

knowledge of the organization’s objectives and vision.

 Planning is the chalking out of the course of action.

 It’s the preparation of the blue print.

 It is the spelling out of what is to be done, when, how and by whom.

 Planning is the task of thinking in advance, i.e., before actually starting operations,

visualizing the future and finalizing the course of action. Planning is the function of
forecasting, framing of the objectives, policies, procedures, schedule, budget etc.
 ◦ What is to be done ------ Identification

◦ When is to be done ------ Time

◦ How is to be done ------- Method

◦ Where is to be done ------ place

◦ By Whom it is to be done ----- Person

Planning is important for several reasons:

 It provides direction for an organization by specifying objectives
 It reduces risk and uncertain of the future

 It allows organizational members to concentrate on common

organization's objective
 It provides criteria for decision making
 It provides basis for control or it facilitates control
 Types of Plans
Plan can be classified in to different types based on various criteria
(basis): repetitiveness, time dimension and scope or breadth
dimension.

1. Based on Repetitiveness

1.1 Single use plan

It is a one-time activity, one that does not required a

single-use plan once the activity is accomplished.

Project, Program and budget are kinds of single use plan

1.2. Standing Plans
Standing plans are type of plans which can be used again and again once
they made. They remain useful for long period in dealing with repetitive
situations.

They include: policies, procedure, and rules.

Policy- is a general statement designed to guide employees' actions in

recurring situations.

Procedures: are sequences of steps or activities involved in making

decisions or performing other tasks.

Rules; are on-going specific plans influencing human behavior or

conducts at work place. A rule is an established guide for conduct.
 2. Classification of plans based on time dimension

2.1 Long range plans

 Long range plans are those plans which have longer time horizon; they are
concerned with distant future than immediate future.
 The time may range from 5 to 10 years based on the size and the type of
organizations.

2.2 Intermediate plans

Intermediate range plans are those plans with a time horizon between one
and five years. They range between long and short-term plans.

2.3 Short range plans

Short range plans are those plans with time dimension it is not possible to
have a right time horizon guide line.
 3. Classification of plans based on scope (Breadth)
3.1 Strategic plans
 Strategic planning produces fundamental decisions and actions that
shape and guide what an organization is, what it does, and why it does
it.

A strategic plan establishes the steps needed to achieve the

company’s strategic objectives and shapes the entire organization’s
direction.

It defines the organizational activities and the allocations of human

resources, finances, facilities and equipment.
 cont…
 Top level managers engage chiefly in strategic planning or long
range planning.

They answer such questions as:

 What is the purpose of this organization?

 What does the org. have to do in the future to remain competitive?

 Top level managers clarify the mission of the organization and
set its goals.

 The output needed by top management for long range planning is

summary reports about finances, operations, and the external
environment.

 Strategic planning is the process of developing and analyzing

the organization's vision, mission, overall goals, objectives general
strategies, and allocating resources.
3.2 Tactical plans

Top managements strategic plan becomes a frame work that sets the
dimension of the Middle level planning effort, the effort that produce
tactical plan.

Top level managers set very general, long-term goals that require
more than one year to achieve.

Examples of long-term goals include long-term growth, improved

customer service, and increased profitability.
 Middle managers interpret these goals and develop tactical
plans for their departments that can be accomplished within
one year or less.
 In order to develop tactical plans, middle management needs
detail reports (financial, operational, market, external
environment)
 It is the process of making detailed decisions about what to
do, who will do it, and how to do it.
 Tactical planning is the process of developing action plans

through which strategies are executed.

Tactical plan- is a plan used to develop means needed to activate

and implement strategy.

Generally, Tactical plans:

 performed by middle level managers

 Have shorter time frame, more detail and narrower scope than
strategic plans

 Guide submits of an organization

 3.3 Operational plans

Operational planning is the process of setting short-ran objectives

and determining in advance how they will be accomplished.

To sum up, Operational plans:

 Are first line managers' tools for exciting daily, weekly, and
monthly activities.

 Performed by operational level managers.

 Are Specific and more detail than others.

 Factors affecting planning

◦ Environmental condition

◦ Time

◦ Resource availability

◦ Skill and attitude of manager

◦ Collection and analyzing of data

 4.2. Organizing
An organization is a group of people working together to achieve
the specified goal.
Organization has the following characteristics
Established with purpose
Common goals /coordination of effort
Filled with people/ Division of Labor
Hierarchy of Authority/ Structure
In general, organizations are characterized as being;
Purposive - common objectives to accomplish task
Peopled - cooperative efforts
Structured –hierarchal, rules & regulations, communication
Organizing is one of the functions of management that deals with
coordination of people and resources with the activities.

Organizing is establishing the relationship between the tasks to be

performed in an organization, the personnel and the physical
facilities needed.

Organizing function brings together human & physical resources in

orderly manner, arranges & coordinated with pattern to accomplish
objectives.
Organizing is the process of
 identifying and grouping tasks to be performed,

 assigning responsibilities and delegating authority

 establishing relationships

for the purpose of enabling workers to work most

effectively together in the accomplishments of objectives.
 Organizational Chart

Organizational Chart- is graphic illustration of the

organization’s management hierarchy and departments and
their working relationships.

 Each box - indicates position with in the organization and

 Each line - indicates reporting relationships and lines of

communication.
Organizational chart remains useful because it provides different
important information regarding;

 Who reports to whom- that, chain of command.

 Span of control- how many subordinates does a manager have

 Channels of formal communication shown by solid lines that

connect each job (box)
 Bases of departmentalization
 Activities in each position
 The hierarchy of decision making
 Authority relationships
 4.3. Staffing
 Staffing can be defined as one of the most important functions of
management.

 It involves the process of filling the vacant position of the right

personnel at the right job, at right time.

concerned with determining and obtaining the proper kind of personnel

both in quality and quantity.

 According to Koontz and O’Donnell, “Staffing involves manning the

organization structure through proper and effective selection appraisal
and development of personal to fill the roles designed into the
structure.”
 Importance of Staffing
a) Helps in finding efficient worker

b) Helps in increased Productivity

c) Maintains Harmony

d) Helps in morale boosting

e) Helps in Optimum utilization of human resources

 Staffing Process
 Manpower Planning (estimating man power in terms of searching,

choose the person and giving the right place)

 Recruitment, selection & placement
 Induction and Orientation
 Training & development
 Remuneration
 Performance appraisal
 Promotions & transfer
 Compensation
 Separation
 4.4. Directing/ Leading
 Directing is concerned with the initiation of organized action and
stimulating people to work.

 It involves issuance of orders, instructions and leading and

motivating the employees to execute them.

 Directing is the inter-personal aspect of management which deals

directly with influencing, guiding, supervising and motivating the
subordinates for the accomplishment of pre-determined objectives.

Planning, organizing, staffing are merely preparations for doing the

work but the work actually initiates through directing function.
 It is said to be the heart of management process

Importance of Directing
 Initiates action
 Creates a Sound work environment
 Develop managers
 Behavioral satisfaction
 Increase in productivity
 Achieves coordination
 Facilitate control, change and growth
 Enable to cope with the changes
 Helps in efficient utilization of resources
 Elements of Directing
They are:
1. Supervision
2. Communication
3. Motivation and
4. Leadership
 4.5. Controlling
It implies measurement of accomplishment against the standards
and correction of deviation if any to ensure achievement of
organizational goals.

The purpose of controlling is to ensure that everything occurs in

conformities with the standards.

According to Theo Haimann, “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”.
Therefore controlling has following steps:

a) Establishment of standard performance.

b) Measurement of actual performance.

c) Comparison of actual performance with the standards

and finding out deviation if any.

d) Corrective action.
 4.6. Decision Making

Decision Making is the process of selecting an alternative course of

action that will solve a problem.
The first decision is whether or not to take corrective action.
Decision Making process
I. Identifying the problem
II. Identify the limiting or critical factors
III. Develop alternative solutions.
IV. Analyze the alternatives.
V. Select the best alternative solutions.
VI. Implement the chosen alternative.
VII. Establish a control and evaluation system