Functions of management

Management has been described as a social process involving responsibility for economical and effective planning
& regulation of operation of an enterprise in the fulfillment of given purposes. It is a dynamic process consisting of
various elements and activities. These activities are different from operative functions like marketing, finance,
purchase etc. Rather these activities are common to each and every manger irrespective of his level or status.
Different experts have classified functions of management. According to George & Jerry, There are four
fundamental functions of management i.e. planning, organizing, actuating and controlling. According to Henry
Fayol, To manage is to forecast and plan, to organize, to command, & to control. Whereas Luther Gullick has
given a keyword POSDCORB where P stands for Planning, O for Organizing, S for Staffing, D for Directing, Co
for Co-ordination, R for reporting & B for Budgeting. But the most widely accepted are functions of management
given by KOONTZ and ODONNEL i.e. Planning, Organizing, Staffing, Directing and Controlling.

For theoretical purposes, it may be convenient to separate the function of management but practically these
functions are overlapping in nature i.e. they are highly inseparable. Each function blends into the other & each
affects the performance of others.

1.

Planning
It is the basic function of management. It deals with chalking out a future course of action & deciding in
advance the most appropriate course of actions for achievement of pre-determined goals. According to
KOONTZ, Planning is deciding in advance - what to do, when to do & how to do. It bridges the gap from
where we are & where we want to be. A plan is a future course of actions. It is an exercise in problem
solving & decision making. Planning is determination of courses of action to achieve desired goals. Thus,
planning is a systematic thinking about ways & means for accomplishment of pre-determined goals.

Planning is necessary to ensure proper utilization of human & non-human resources. It is all pervasive, it is
an intellectual activity and it also helps in avoiding confusion, uncertainties, risks, wastages etc.
2.

Organizing
It is the process of bringing together physical, financial and human resources and developing productive
relationship amongst them for achievement of organizational goals. According to Henry Fayol, To
organize a business is to provide it with everything useful or its functioning i.e. raw material, tools, capital
and personnels. To organize a business involves determining & providing human and non-human
resources to the organizational structure. Organizing as a process involves:

3.

Identification of activities.

Classification of grouping of activities.

Assignment of duties.

Delegation of authority and creation of responsibility.

Coordinating authority and responsibility relationships.

Staffing
It is the function of manning the organization structure and keeping it manned. Staffing has assumed
greater importance in the recent years due to advancement of technology, increase in size of business,
complexity of human behavior etc. The main purpose o staffing is to put right man on right job i.e. square
pegs in square holes and round pegs in round holes. According to Kootz & ODonell, Managerial function
of staffing involves manning the organization structure through proper and effective selection, appraisal &
development of personnel to fill the roles designed un the structure. Staffing involves:

4.

Manpower Planning (estimating man power in terms of searching, choose the person and giving
the right place).

Recruitment, selection & placement.

Training & development.

Remuneration.

Performance appraisal.

Promotions & transfer.

Directing

It is that part of managerial function which actuates the organizational methods to work efficiently for
achievement of organizational purposes. It is considered life-spark of the enterprise which sets it in motion
the action of people because planning, organizing and staffing are the mere preparations for doing the work.
Direction is that inert-personnel aspect of management which deals directly with influencing, guiding,
supervising, motivating sub-ordinate for the achievement of organizational goals. Direction has following
elements:

Supervision

Motivation

Leadership

Communication

Supervision- implies overseeing the work of subordinates by their superiors. It is the act of watching &
directing work & workers.
Motivation- means inspiring, stimulating or encouraging the sub-ordinates with zeal to work. Positive,
negative, monetary, non-monetary incentives may be used for this purpose.
Leadership- may be defined as a process by which manager guides and influences the work of
subordinates in desired direction.
Communications- is the process of passing information, experience, opinion etc from one person to
another. It is a bridge of understanding.
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. An efficient system of control helps to predict deviations before they
actually occur. 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.
According to Koontz & ODonell Controlling is the measurement & correction of performance activities
of subordinates in order to make sure that the enterprise objectives and plans desired to obtain them as
being accomplished. Therefore controlling has following steps:

Establishment of standard performance.

Measurement of actual performance.

Comparison of actual performance with the standards and finding out deviation if any.

Corrective action.
Taylor and Fayol

Both the persons have contributed to development of science of management. The contribution
of these two pioneers in the field of science of management has been reviewed as The work of
Taylor & Fayol was, of course, especially complementary. They both realized that problem of
personnel & its management at all levels is the key to individual success. Both applied scientific
method to this problem that Taylor worked primarily from operative level, from bottom to
upward, while Fayol concentrated on managing director and work downwards, was merely a
reflection of their very different careers. They both differ from each other in following aspects:
1. Taylor looked at management from supervisory viewpoint & tried to improve efficiency
at operating level. He moved upwards while formulating theory. On the other hand, Fayol
analyzed management from level of top management downward. Thus, Fayol could
afford a broader vision than Taylor.
2. Taylor called his philosophy Scientific Management while Fayol described his
approach as A general theory of administration.
3. Main aim of Taylor - to improve labor productivity & to eliminate all type of waste
through standardization of work & tools. Fayol attempted to develop a universal theory of
management and stressed upon need for teaching the theory of management.
4. Taylor focused his attention on fact by management and his principles are applicable on
shop floor. But Fayol concentrated on function of managers and on general principles of
management wheel could be equally applied in all.
Similarity - Both emphasized mutual co-operation between employment and employees.
Spheres of Human Activity

Fayols theory is more widely applicable than that of Taylor, although Taylors philosophy has
undergone a big change Under influence of modern development, but Fayols principles of
management have stood the test of time and are still being accepted as the core of management
theory.
Psychologists View Point

According to Psychologists, Taylors study had following drawbacks: 1. Ignores human factors - Considers them as machines. Ignores human requirements, want
and aspirations.
2. Separation of Planning and Doing.
3. Dissatisfaction - Comparing performance with others.

4. No best way - Scientific management does not give one best way for solving problems.
Basis

Taylor

Fayol

Human aspect

Taylor disregards human

elements and there is more stress
on improving men, materials and
methods

Fayol pays due regards on human

element. E.g. Principle of initiative,
Espirit De Corps and Equity
recognizes a need for human
relations

Status

Father of scientific management

Father of management principles

Efficiency &
administration

Stressed on efficiency

Stressed on general administration

Approach

It has micro-approach because it

is restricted to factory only

It has macro-approach and discuses

general principles of management
which are applicable in every field
of management.

Scope of
principles

These principles are restricted to

production activities

These are applicable in all kinds of

organization regarding their
management affairs

Achievement

Scientific management

Administrative management

Henri Fayol
A principle refers to a fundamental truth. It establishes cause and effect relationship between
two or more variables under given situation. They serve as a guide to thought & actions.
Therefore, management principles are the statements of fundamental truth based on logic
which provides guidelines for managerial decision making and actions. These principles are
derived: a. On the basis of observation and analysis i.e. practical experience of managers.
b. By conducting experimental studies.
There are 14 Principles of Management described by Henri Fayol.

1. Division of Labor
a. Henry Fayol has stressed on the specialization of jobs.
b. He recommended that work of all kinds must be divided & subdivided and
allotted to various persons according to their expertise in a particular area.
c. Subdivision of work makes it simpler and results in efficiency.
d. It also helps the individual in acquiring speed, accuracy in his performance.
e. Specialization leads to efficiency & economy in spheres of business.
2. Party of Authority & Responsibility
a. Authority & responsibility are co-existing.
b. If authority is given to a person, he should also be made responsible.
c. In a same way, if anyone is made responsible for any job, he should also have
concerned authority.
d. Authority refers to the right of superiors to get exactness from their sub-ordinates
whereas responsibility means obligation for the performance of the job assigned.
e. There should be a balance between the two i.e. they must go hand in hand.
f. Authority without responsibility leads to irresponsible behavior whereas
responsibility without authority makes the person ineffective.
3. Principle of One Boss
a. A sub-ordinate should receive orders and be accountable to one and only one boss
at a time.
b. In other words, a sub-ordinate should not receive instructions from more than one
person because -

It undermines authority
Weakens discipline
Divides loyalty
Creates confusion
Delays and chaos
Escaping responsibilities
Duplication of work
Overlapping of efforts

c. Therefore, dual sub-ordination should be avoided unless and until it is absolutely

essential.
d. Unity of command provides the enterprise a disciplined, stable & orderly
existence.
e. It creates harmonious relationship between superiors and sub-ordinates.
4. Unity of Direction
a. Fayol advocates one head one plan which means that there should be one plan for
a group of activities having similar objectives.
b. Related activities should be grouped together. There should be one plan of action
for them and they should be under the charge of a particular manager.
c. According to this principle, efforts of all the members of the organization should
be directed towards common goal.
d. Without unity of direction, unity of action cannot be achieved.
e. In fact, unity of command is not possible without unity of direction.
Basis

Unity of command

Unity of direction

Meaning

It implies that a sub-ordinate should

receive orders & instructions from only
one boss.

It means one head, one plan for a

group of activities having similar
objectives.

Nature

It is related to the functioning of

personnels.

It is related to the functioning of

departments, or organization as a
whole.

Necessity

It is necessary for fixing responsibility

of each subordinates.

It is necessary for sound

organization.

Advantag
e

It avoids conflicts, confusion & chaos.

It avoids duplication of efforts and

wastage of resources.

Result

It leads to better superior sub-ordinate

relationship.

It leads to smooth running of the

enterprise.

Therefore it is obvious that they are different from each other but they are dependent on each
other i.e. unity of direction is a pre-requisite for unity of command. But it does not automatically
comes from the unity of direction.
5. Equity
a. Equity means combination of fairness, kindness & justice.
b. The employees should be treated with kindness & equity if devotion is expected
of them.
c. It implies that managers should be fair and impartial while dealing with the
subordinates.
d. They should give similar treatment to people of similar position.
e. They should not discriminate with respect to age, caste, sex, religion, relation etc.
f. Equity is essential to create and maintain cordial relations between the managers
and sub-ordinate.
g. But equity does not mean total absence of harshness.
h. Fayol was of opinion that, at times force and harshness might become necessary
for the sake of equity.
6. Order
a. This principle is concerned with proper & systematic arrangement of things and
people.
b. Arrangement of things is called material order and placement of people is called
social order.
c. Material order- There should be safe, appropriate and specific place for every
article and every place to be effectively used for specific activity and commodity.
d. Social order- Selection and appointment of most suitable person on the suitable
job. There should be a specific place for every one and everyone should have a
specific place so that they can easily be contacted whenever need arises.
7. Discipline
a. According to Fayol, Discipline means sincerity, obedience, respect of authority
& observance of rules and regulations of the enterprise.

b. This principle applies that subordinate should respect their superiors and obey
their order.
c. It is an important requisite for smooth running of the enterprise.
d. Discipline is not only required on path of subordinates but also on the part of
management.
e. Discipline can be enforced if - There are good superiors at all levels.
- There are clear & fair agreements with workers.
- Sanctions (punishments) are judiciously applied.
8. Initiative
a. Workers should be encouraged to take initiative in the work assigned to them.
b. It means eagerness to initiate actions without being asked to do so.
c. Fayol advised that management should provide opportunity to its employees to
suggest ideas, experiences& new method of work.
d. It helps in developing an atmosphere of trust and understanding.
e. People then enjoy working in the organization because it adds to their zeal and
energy.
f. To suggest improvement in formulation & implementation of place.
g. They can be encouraged with the help of monetary & non-monetary incentives.
9. Fair Remuneration
a. The quantum and method of remuneration to be paid to the workers should be
fair, reasonable, satisfactory & rewarding of the efforts.
b. As far as possible it should accord satisfaction to both employer and the
employees.
c. Wages should be determined on the basis of cost of living, work assigned,
financial position of the business, wage rate prevailing etc.
d. Logical & appropriate wage rates and methods of their payment reduce tension &
differences between workers & management creates harmonious relationship and
pleasing atmosphere of work.

e. Fayol also recommended provision of other benefits such as free education,

medical & residential facilities to workers.
10. Stability of Tenure
a. Fayol emphasized that employees should not be moved frequently from one job
position to another i.e. the period of service in a job should be fixed.
b. Therefore employees should be appointed after keeping in view principles of
recruitment & selection but once they are appointed their services should be
served.
c. According to Fayol. Time is required for an employee to get used to a new work
& succeed to doing it well but if he is removed before that he will not be able to
render worthwhile services.
d. As a result, the time, effort and money spent on training the worker will go waste.
e. Stability of job creates team spirit and a sense of belongingness among workers
which ultimately increase the quality as well as quantity of work.
11. Scalar Chain
a. Fayol defines scalar chain as The chain of superiors ranging from the ultimate
authority to the lowest.
b. Every orders, instructions, messages, requests, explanation etc. has to pass
through Scalar chain.
c. But, for the sake of convenience & urgency, this path can be cut shirt and this
short cut is known as Gang Plank.

d. A Gang Plank is a temporary arrangement between two different points to

facilitate quick & easy communication as explained below:

In the figure given, if D has to communicate with G he will first send the
communication upwards with the help of C, B to A and then downwards with the
help of E and F to G which will take quite some time and by that time, it may not
be worth therefore a gang plank has been developed between the two.
e. Gang Plank clarifies that management principles are not rigid rather they are
very flexible. They can be moulded and modified as per the requirements of
situations
12. Sub-Ordination of Individual Interest to General Interest
a. An organization is much bigger than the individual it constitutes therefore interest
of the undertaking should prevail in all circumstances.
b. As far as possible, reconciliation should be achieved between individual and
group interests.
c. But in case of conflict, individual must sacrifice for bigger interests.
d. In order to achieve this attitude, it is essential that - Employees should be honest & sincere.
- Proper & regular supervision of work.
- Reconciliation of mutual differences and clashes by mutual agreement.
For example, for change of location of plant, for change of profit sharing
ratio, etc.
13. Espirit De Corps (can be achieved through unity of command)

a. It refers to team spirit i.e. harmony in the work groups and mutual understanding
among the members.
b. Spirit De Corps inspires workers to work harder.
c. Fayol cautioned the managers against dividing the employees into competing
groups because it might damage the moral of the workers and interest of the
undertaking in the long run.
d. To inculcate Espirit De Corps following steps should be undertaken

There should be proper co-ordination of work at all levels

Subordinates should be encouraged to develop informal relations among

themselves.

Efforts should be made to create enthusiasm and keenness among

subordinates so that they can work to the maximum ability.

Efficient employees should be rewarded and those who are not up to the
mark should be given a chance to improve their performance.

Subordinates should be made conscious of that whatever they are doing is

of great importance to the business & society.

e. He also cautioned against the more use of Britain communication to the

subordinates i.e. face to face communication should be developed. The managers
should infuse team spirit & belongingness. There should be no place for
misunderstanding. People then enjoy working in the organization & offer their
best towards the organization.
14. Centralization & De-Centralization
a. Centralization means concentration of authority at the top level. In other words,
centralization is a situation in which top management retains most of the decision
making authority.
b. Decentralization means disposal of decision making authority to all the levels of
the organization. In other words, sharing authority downwards is decentralization.
c. According to Fayol, Degree of centralization or decentralization depends on no.
of factors like size of business, experience of superiors, dependability & ability of
subordinates etc.
d. Anything which increases the role of subordinate is decentralization & anything
which decreases it is centralization.

e. Fayol suggested that absolute centralization or decentralization is not feasible. An

organization should strike to achieve a lot between the two.
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 level of management determines a chain
of command, the amount of authority & status enjoyed by any managerial position. 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
Managers at all these levels perform different functions. The role of managers at all the three
levels is discussed below:

LEVELS OF MANAGEMENT
1.

Top Level of Management

It consists of board of directors, chief executive or managing director. 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 i.e. departmental managers.
e. It controls & coordinates the activities of all the departments.
f. It is also responsible for maintaining a contact with the outside world.
g. It provides guidance and direction.
h. The top management is also responsible towards the shareholders for the
performance of the enterprise.
2.

Middle Level of Management

The branch managers and departmental managers constitute middle level. They are
responsible to the top management for the functioning of their department. They devote
more time to organizational and directional functions. In small organization, there is only
one layer of middle level of management but in big enterprises, there may be senior and
junior middle level management. Their role can be emphasized as a. They execute the plans of the organization in accordance with the policies and
directives of the top management.
b. They make plans for the sub-units of the organization.
c. They participate in employment & training of lower level management.
d. They interpret and explain policies from top level management to lower level.
e. They are responsible for coordinating the activities within the division or
department.
f. It also sends important reports and other important data to top level management.
g. They evaluate performance of junior managers.
h. They are also responsible for inspiring lower level managers towards better
performance.
3.

Lower Level of Management

Lower level is also known as supervisory / operative level of management. It consists of

supervisors, foreman, section officers, superintendent etc. According to R.C. Davis,

Supervisory management refers to those executives whose work has to be largely with
personal oversight and direction of operative employees. In other words, they are
concerned with direction and controlling function of management. Their activities include
a. Assigning of jobs and tasks to various workers.
b. They guide and instruct workers for day to day activities.
c. They are responsible for the quality as well as quantity of production.
d. They are also entrusted with the responsibility of maintaining good relation in the
organization.
e. They communicate workers problems, suggestions, and recommendatory appeals
etc to the higher level and higher level goals and objectives to the workers.
f. They help to solve the grievances of the workers.
g. They supervise & guide the sub-ordinates.
h. They are responsible for providing training to the workers.
i. They arrange necessary materials, machines, tools etc for getting the things done.
j. They prepare periodical reports about the performance of the workers.
k. They ensure discipline in the enterprise.
l. They motivate workers.
m. They are the image builders of the enterprise because they are in direct contact
with the workers.

Roles performed by managers

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 addition, managers' schedules are usually jam-packed. Whether they're busy with employee
meetings, unexpected problems, or strategy sessions, managers often find little spare time on
their calendars. (And that doesn't even include responding to e-mail!)
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: This role involves human interaction.

Informational: This role involves the sharing and analyzing of information.

Decisional: This role involves decision making.

Table 1 contains a more in-depth look at each category of roles that help managers carry out all
five functions described in the preceding Functions of Managers section.
TABLE 1
Category

Mintzberg's Set of Ten Roles

Role

Informational Monitor

Seek and receive information; scan periodicals and reports;

maintain personal contact with stakeholders.

Disseminator

Forward information to organization members via memos,

reports, and phone calls.

Spokesperson

Transmit information to outsiders via reports, memos, and

speeches.

Interpersonal Figurehead

Decisional

Activity

Perform ceremonial and symbolic duties, such as greeting

visitors and signing legal documents.

Leader

Direct and motivate subordinates; counsel and communicate

with subordinates.

Liaison

Maintain information links both inside and outside

organization via mail, phone calls, and meetings.

Entrepreneur

Initiate improvement projects; identify new ideas and

Category

Role

Activity

delegate idea responsibility to others.

Disturbance
handler

Take corrective action during disputes or crises; resolve

conflicts among subordinates; adapt to environments.

Resource
allocator

Decide who gets resources; prepare budgets; set schedules

and determine priorities.

Negotiator

Represent department during negotiations of union contracts,

sales, purchases, and budgets.

Skills needed by managers

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.
These skills fall under the following categories:

Technical: This skill requires the ability to use a special proficiency or expertise to
perform particular tasks. Accountants, engineers, market researchers, and computer
scientists, as examples, possess technical skills. Managers acquire these skills initially
through formal education and then further develop them through training and job
experience. Technical skills are most important at lower levels of management.

Human: This skill demonstrates the ability to work well in cooperation with others.
Human skills emerge in the workplace as a spirit of trust, enthusiasm, and genuine
involvement in interpersonal relationships. A manager with good human skills has a high
degree of self-awareness and a capacity to understand or empathize with the feelings of
others. Some managers are naturally born with great human skills, while others improve
their skills through classes or experience. No matter how human skills are acquired,
they're critical for all managers because of the highly interpersonal nature of managerial
work.

Conceptual: This skill calls for the ability to think analytically. Analytical skills enable
managers to break down problems into smaller parts, to see the relations among the parts,

and to recognize the implications of any one problem for others. As managers assume
ever-higher responsibilities in organizations, they must deal with more ambiguous
problems that have long-term consequences. Again, managers may acquire these skills
initially through formal education and then further develop them by training and job
experience. The higher the management level, the more important conceptual skills
become.
Although all three categories contain skills essential for managers, their relative importance
tends to vary by level of managerial responsibility.
Business and management educators are increasingly interested in helping people acquire
technical, human, and conceptual skills, and develop specific competencies, or specialized skills,
that contribute to high performance in a management job. Following are some of the skills and
personal characteristics that the American Assembly of Collegiate Schools of Business (AACSB)
is urging business schools to help their students develop.

Leadership ability to influence others to perform tasks

Self-objectivity ability to evaluate yourself realistically

Analytic thinking ability to interpret and explain patterns in information

Behavioral flexibility ability to modify personal behavior to react objectively rather

than subjectively to accomplish organizational goals

Oral communication ability to express ideas clearly in words

Written communication ability to express ideas clearly in writing

Personal impact ability to create a good impression and instill confidence

Resistance to stress ability to perform under stressful conditions

Tolerance for uncertainty ability to perform in ambiguous situations