EMG 2516: INDUSTRIAL MANAGEMENT

Lect. 2 – Elements of Management

By
Dr. James Wakiru

14th September 2021

 Six Key Management Functions
Planning
◦ The process of setting goals, and determining the appropriate action to achieve the goals of the company.
Planning

Organising
◦ The process of allocating and arranging both human and other resources through a formal structure of Controlling Organising
tasks and authority so that plans can be carried out successfully.
Leading Management
◦ The process of guiding and motivating employees to accomplish company’s goals.
Controlling Budgeting Leading

◦ The process of regulating company’s activities so that actual performance conforms to the goals and
standards set at the planning stage. Staffing

Staffing
◦ The process of regulating company’s activities so that actual performance conforms to the goals and
standards set at the planning stage.
Budegting
◦ The process of regulating company’s activities so that actual performance conforms to the goals and
standards set at the planning stage.

2
Management Functions
Planning

1
Reasons for Planning
◦To coordinate human resource
◦To reduce uncertainty in operation
◦To reduce overlapping and wasteful activities

3
Planning
Planning involves setting goals of the company and establishing a plan or strategy to achieve
these goals.

4
 How to set goals? Be SMART!
SMART Goals are
◦ Specific – goals are clearly defined and focused.
◦ Measureable – outcome of the goal can be measured.
◦ Achievable – goals should be realistic and are able to accomplish.
◦ Relevant – goals are relevant to the business operation.
◦ Time-bound – a specific period of time must be set for achieving the goal.

The use of SMART goal setting can help managers save time and
resources by making the planning process more efficient and effective.

5
 SMART Goals
Specific: To set a specific goal, there are some questions to ask.
◦ Who is involved?
◦ What to accomplish?
◦ When to start/end?
◦ Where to start?
◦ Example: setting the goal as “to achieve $3 million sales for product A in the next year” is more meaningful
than “to get more business”.

Measurable: establish concrete criteria for measuring outcomes.

◦ The criteria should be quantifiable so that the outcome can be easily measured.
◦ Examples: to achieve $1 million net profit in the next year or to obtain 20% market share in the industry.

6
 SMART Goals
Achievable: it is important to ensure the goals are realistic and be attainable with consideration of
the abilities and financial capacity of the company.
◦ Example: it is not appropriate for a small company to set a goal of earning billions dollars in one year.

Relevant: the goals should be set for business operation and based on current economic climate.
◦ Example: a business can set a goal of increasing 20% in sales for its product A in the next year which is
relevant to the goal of obtaining 20% market share in the industry.

Time-bound: a goal should be bound within a time frame.

◦ Example: it is not appropriate to set a goal of $30 million sales without time limit or it will never be achieved
as there is no sense of urgency.

7
Planning process
Once managers understand the goals of the company, they can take steps to implement the
planning process in their company.
Implementation of planning process is important because if the planning cannot be transformed
into action, it will not be able to generate benefits to the company.

10
Planning process
2. Listing 3. Selecting best
1. Setting
alternative ways of way to achieve the
company goals
achieving the goals goals

4. Developing
5. Putting plans
plans to pursue
into action
chosen alternative

11
The End

14
Management Functions
Organizing

1
Organising
Organising is the process of allocating and arranging the resources of the company such as
employee, facilities and equipment, finance, to achieve the goals of the company.

3
 Organising Steps

5. Evaluate the
1. Determine the 3. Assign work to 4. Coordinate the results or
2. Group these
specific activities specific employees work of different organising process
activities into a
needed to and provide groups and and make
logical sequence
implement resources required employees appropriate
adjustment

4
Organising Steps
A restaurant wants to improve the service for its customers. How
should the restaurant manager organise the staff to achieve this
goal?

5
 Organising Steps
• Restaurant manager should determine the specific area that the restaurant requires to improve
Step 1 e.g. to reduce the waiting time of customers.

• To designate the jobs to be done within the restaurant such as defining that serving customers
Step 2 includes taking orders, clearing tables and cooking food.

• To assign work to specific employees and provide resources required: To determine who will
Step 3 take orders, who will clear the tables, who will cook the food.

• To coordinate the work of different groups and employees: To determine the details of the
Step 4 relationship between the individual employees. i.e. how they work with each other.

• To evaluate the results of implemented organising strategy by gathering the feedback from
customers and see if the restaurant has attained its goals. If not, corrective action should be
Step 5 taken.
6
Organisational Structure
Good management should be able to design an organisational structure to ensure employees
can carry out the work assigned to them effectively.
The use of an organisation chart can also help to visualise the relationships between levels of
the organisational structure.

7
Implications of an Organisation Chart
➢Show the activities of the organisation by level.
➢Highlight subdivisions of the organisation.
➢Identify different types of work performed.
➢Provide information about different management levels.
➢Show the lines of authority in the organisation and the flow of communications within an
organisation.

8
Activity 1 – Group Discussion
Discuss why organising function is important to a company.

9
Activity 1 – Solution
The organising function is important because:
◦ Specialisation is achieved through division of work. E.g., by separating the works amongst cooking,
serving and janitorial etc.
◦ It clarifies the authority of each manager. E.g., the restaurant manager report to the operation manager
of the company.
◦ It clarifies the duties and responsibilities of every job position. E.g., who take the orders, who cleans
the tables.
◦ It facilitates effective administration through a clear clarification of job positions and specification.

10
 Organisational Structure by Level
The organisational structure is based on the level of management.
The line of authority moves directly from the top level to the lowest level in a step-by-step
manner i.e. Lower level managers follow the orders from higher level managers.
The authority and responsibility at each level is clearly defined.

• Example: The general manager issues order to

various departmental managers. Thereafter, the
departmental manager gives instructions to front
line managers.

11
 Organisational Structure by Level
The way that a company’s structure develops often falls into a tall structure or a flat structure.
Tall structure
◦ A structure that has more hierarchical levels of management.

Flat structure
◦ A structure that has fewer hierarchical levels of management.

CEO
Tall Flat CEO
Structure Manager Manager
Structure
Manager Manager
Staff Staff Staff

Staff Staff Staff Staff Staff Staff Staff

Staff Staff Staff

Staff Staff Staff

12
 Organisational Structure by Level
Large company often requires a taller organisational structure. As a company grows, the number of
management levels increases and the structure grows taller. It is because a manager cannot
supervise so many immediate subordinates at one time. It is not practical and feasible for a large
company to have a flat structure.
Small company often requires a flat organisational structure. It is because a tall structure will make a
small company to deal with greater bureaucracy and salaries for middle management.
What structure should a family-owned restaurant be?
Ans: Flat structure

13
 Organisational Structure by Authority
Authority is the right to perform or command. Staff with authority is allowed to perform certain tasks
and direct subordinates to perform by delegating the authority.
The position of individuals on an organisation chart indicates their relative amount of authority. The
higher the position, the more the authority.
There are two main types of authority can exist within an organisation:
◦ Line authority
◦ Staff authority

14
 Organisational Structure by Authority
Line authority – consists of the right to make
decisions and to give orders to subordinates. It is the
most fundamental authority with an organisation and CEO
it reflects existing superior-subordinate relationships.
Staff authority – consists of the right to advise or Legal
assist those who possess line authority. Example Counsel
Legal Counsel of a company.

CIO CFO COO

Line authority
Staff authority

15
Departmentalisation by Function
To divide an organisation into separate units according to their key function performed in the
firm. E.g. Production, Marketing, Finance, etc.
Advantages
◦ Easier to lead and control
◦ Resources can be allocated by departments

Disadvantages
◦ Lack of communication between departments
◦ Employees become narrow specialists

16
 Departmentalisation by Function
Departments are formed by business functions.
Examples: production, marketing, finance, logistic, administration

CEO

Production Marketing Finance Logistic Administration

department department department department department

17
Departmentalisation by Function
Advantages Disadvantages
Resource allocation Overspecialisation
Better communication within Departmental Barriers
department

18
Departmentalisation by Product
Departments are formed according to the goods and services a company offers.
Examples: fashion, leather, jewellery, accessories

CEO

Fashion Leather Jewellery Accessories

division division division division
19
Departmentalisation by Location
Departments are formed according to geographic regions.
Examples: North America, European, Asia Pacific, Latin America

CEO/
International
Operation

North America Asia Pacific Latin America

European division
division division division

20
Departmentalisation by Product &
Location
Advantages Disadvantages
Management Focus Wasting Resources
Better Service Competition

21
Activity 2 – Design an Organisation Chart
Suppose you want to set up a new business with your friends. Decide the product you would
like to sell as well as the target customers. Design the organisation chart of your business which
you think is appropriate and explain why?

22
The End

23
Management Functions
Leading

1
 Leading
Leading involves how manager directs and motivates
employees to perform tasks in order to achieve the company
goals.

3
Activity 1 – Class Discussion
Can you describe the characteristics of a good leader like the former Chairman of Apple
Computers Inc., Steve Jobs?

4
 Activity 1 – Solution
Characteristics of a good leader:
◦ Able to determine the objectives and policies of the company.
◦ Responsible for the execution of the company policies.
◦ To serve as a planner about how to lead people to achieve goals.
◦ Being the representative of the company for external relation
and communication.
◦ To serve as a role model such as being persistent and innovative
for subordinates to look up to.

5
Leadership Styles
Autocratic

Laissez- Leadership
Styles Democratic
faire

Bureaucra
tic
6
 Autocratic Leadership
Classical style
Manager retains power and decision-making authority.
Make unilateral decision, dictate work methods.
Orders are issued to be carried out, with no questions allowed and no explanations given.
It is best applied to situations where there is little time for decision-making or where the leader is
the most knowledgeable person of the team.

7
 Democratic Leadership
Participative style
Encourage employees to involve in decision making.
Let employees determine the work methods and use feedback as an opportunity for helpful coaching.
Employees feel engaged in the process and are more motivated and creative.
It is best applied where staff require a great deal of flexibility to complete the task or where the staff
know the job well and do not require too much instruction.

8
Bureaucratic Leadership
Everything must be done according to procedure or policy.
The company operates in a rational manner rather than relying on the feelings of the managers.
It is best applied to situation where employees are working in dangerous environment that
requires a definite set of procedures to operate.

9
Laissez-faire Leadership
“hands-off” style
Manager provides little direction and gives employees freedom to make their own decision at
work.
This style can be effective where employees are highly qualified in an area of expertise.

10
 Activity 2 – Class Discussion
Which leadership style should be adopted by the management in the following
situations? Briefly explain your answer.
1. A newly recruited employee who is expected to pick up work in short time,
the manager is being a coach to direct him in work.
2. The existing project team who knows their job well and does not require too
much instruction. The manager simply let the team make their own decision
and provide feedback when they need help.
3. An employee who is the expert of his job and knows more about the job than
the manager. There is no need for the manager to give instruction and the
employee is free to make his own decision at work.

11
 Activity 2 – Solution
Situation Leadership Reason
Style

1. Autocratic The employee knows little about the task assigned but the
manager is the most knowledgeable person.

2. Democratic The team knows the job well and they can complete their
works automatically with limited instruction given. Manager
can allow the team to participate in decision-making.

3. Laissez-faire Employees are highly qualified in an area of expertise and

manager can simply provide little direction and gives
employees freedom to make their own decision at work.

12
Which Leadership Style is the Best?
Many factors such as the leader’s base of power, the difficulty of the task, and the
characteristics of the employees will help determine the most appropriate leadership style in
any particular circumstance.
No one single leadership style is the best of all.

13
The End

14
Management Functions
Controlling

1
 Controlling
Controlling is the process of evaluating and correcting individual performance to ensure that
outcomes conform to the standard set before.
4. Taking 1. Setting
corrective standard
action

3. Comparing
2. Measuring
actual
actual
performance
performance
with standard

3
Control Process – Step 1
Establishing Standard
Standard must be reasonable and achievable.
Ideal standard which is unachievable may frustrate employees and cannot help achieve the
standards set.
Low standard which is too easy to achieve cannot make improvement for company’s operation.

4
 Control Process – Step 2
Measuring Actual Performance
For a given standard, manager must decide how to measure actual performance.
Setting control criteria:

➢ Company ➢ Employees
• Sales • Satisfaction
• Costs • Turnover
• Output • Absenteeism

Sources of data:
◦ Observation
◦ Statistical reports

5
Control Process – Step 3
Comparing Actual Performance with Standard
Compare the actual performance against the standards based on the control criteria and identify
the deviations, if any.
Deviations are noted if:
◦ Actual performance below the standard.
◦ Actual performance above the standard.

6
Control Process – Step 4
Taking Corrective Action
If no deviation or deviation is insignificant, no action is required.
Otherwise, take corrective actions such as changing the existing strategy, employees’
remunerations, training etc., OR
Revise the standard if it is not realistic, fair and achievable.

7
Illustrative Example for the Control Process
• Setting Monthly sales target set by Sales Directors. Sales managers are then required to achieve the
Standard sales target.
Step 1
• Measuring
At the end of each month, the sales figure of each manager is recorded so total monthly
actual
sales levels can be determined.
Step 2 performance

• Comparing
actual Compare monthly sales total to sales target to see if any deviation.
performance
Step 3 with standard

• Taking If monthly sales are significantly below the target, the Sales Director should reduce the target
corrective if it is unrealistic for the managers to achieve or do more promotion to stimulate the sales.
Step 4 action If, on the other hand, monthly total are significantly high, which may indicate the target is too
easy to achieve, then the Sales Director should increase the target total.

8
Activity 1 – Group Discussion
A restaurant wants to improve the service provided to its customers. One of the targets is to
reduce the waiting time for serving the food after the customer places an order.
Please design a controlling system to measure the efficiency of service and customer satisfaction.

9
 Activity 1 – Suggested Solution
Step Action
1. Establishing The food will be ready in 20 minutes after customer places
standard an order.
2. Measuring actual Source of data: actual time taken to serve the food;
performance customer satisfaction survey.
Control criteria: time taken; satisfaction.
3. Comparing actual Identify if there are any discrepancies for the time taken and
performance with the result of customer satisfaction survey.
standard
4. Taking correct See if it is too tough to get the food ready in 20 minutes if
action the actual time required is far more than the standard and
revise the standard to be a more realistic and achievable one. 10
Activity 2 – Class Discussion
You have just been employed as the manager of a local fast food shop. You are reviewing the
management tasks ahead and aware that they belong to one of the four major management
functions. Identify the management functions performed in the activities listed in the Student
Worksheet (Parts 5-2).

11
 Activity 2 – Class Discussion
Activity Planning Organising Leading Controlling
Decide whether to open a branch.
Assign job duties
Check register slips to ensure proper prices
are being charged to customer
Consider the use of technology to save costs
Decide what new menu items to offer
Monitor that shop opens and closes as
scheduled
Set target time to complete customer’s order
Check whether the budgeted profit is
achieved for the year
Explain the work plan with staff and the
expectations on them 12
 Activity 2 – Solution
Activity Planning Organising Leading Controlling
Decide whether to open a branch. 
Assign job duties 
Check register slips to ensure proper prices 
are being charged to customer
Consider the use of technology to save costs 
Decide what new menu items to offer 
Monitor that shop opens and closes as 
scheduled
Set target time to complete customer’s order 
Check whether the budgeted profit is 
achieved for the year
Explain the work plan with staff and the 
expectations on them 13
Importance of Controlling
Controls can help managers:
◦ Coping with uncertainty because of the standard set in advance, managers can react quickly to any
sudden events.
◦ Detecting irregularities such as poor quality, cost overruns etc. and managers can take remedial action
as soon as when it arises.

14
The End

15