Module 2

Planning, Organizing, Directing, and Controlling Functions of HRM

Introduction
In practice, however, HRM is a tool used to try to make optimum use of human resources, to foster
individual development, and to comply with government mandates. Larger organizations typically have an
HRM department and its primary objective is making company goals compatible with employee goals. For
a company to attain its goals, it must have employees who will help it attain them.
An efficiently functional HRM aids the workforce of an organization to contribute efficiently and effectively
towards the overall achievement of an organization’s goals.
To understand HRM, the functions of HRM must be taken into consideration.
Learning Outcome

At the end of the chapter, the students should be able to:

1. Define what is Human Resource Planning.

2. Explain how HR Planning help the organization in many ways.
3. Discuss the steps to Human Resource Planning.
4. Discuss the organizing Function of Management.
5. Explain the Principles of Organizing.
6. Discuss the directing Function of Management.
7. Explain the importance of Directing Function.
8. Discuss the controlling Function of Management
9. Explain the steps of controlling as a management function.

Learning Content

1. Human Resource Planning

2. HR Planning help the organization in many ways
3. Steps to Human Resource Planning
4. Organizing Function of Management
5. Principles of Organizing
6. Directing Function of Management
7. Importance of Directing Function
8. Controlling Function of Management
9. Controlling as a management function involves following steps:

Human Resource Planning

Human Resource Planning (HRP) is the process of forecasting the future human resource requirements of
the organization and determining as to how the existing human resource capacity of the organization
can be utilized to fulfill these requirements. It, thus, focuses on the basic economic concept of demand
and supply in context to the human resource capacity of the organization.

It is the HRP process which helps the management of the organization in meeting the future demand of
human resource in the organization with the supply of the appropriate people in appropriate numbers at
the appropriate time and place.
HR Planning, thus, help the organization in many ways as follows:

 HR managers are in a stage of anticipating the workforce requirements rather than getting
surprised by the change of events
 Prevent the business from falling into the trap of shifting workforce market, a common concern
among all industries and sectors
 Work proactively as the expansion in the workforce market is not always in conjunction with the
workforce requirement of the organization in terms of professional experience, talent needs, skills,
etc.
 Organizations in growth phase may face the challenge of meeting the need for critical set of skills,
competencies and talent to meet their strategic objectives so they can stand well-prepared to meet
the HR needs
 Considering the organizational goals, HR Planning allows the identification, selection and
development of required talent or competency within the organization.

Steps to Human Resource Planning

1. Analyzing Labor Supply
The first step of human resource planning is to identify the company's current human resources supply. In
this step, the HR department studies the strength of the organization based on the number of employees,
their skills, qualifications, positions, benefits, and performance levels.
2. Forecasting Labor Demand
The second step requires the company to outline the future of its workforce. Here, the HR department can
consider certain issues like promotions, retirements, layoffs, and transfers—anything that factors into the
future needs of a company. The HR department can also look at external conditions impacting labor
demand, such as new technology that might increase or decrease the need for workers.
3. Balancing Labor Demand With Supply
The third step in the HRP process is forecasting the employment demand. HR creates a gap analysis that
lays out specific needs to narrow the supply of the company's labor versus future demand. This analysis
will often generate a series of questions, such as:
4. Developing and Implementing a Plan
The answers to questions from the gap analysis help HR determine how to proceed, which is the final
phase of the HRP process. HR must now take practical steps to integrate its plan with the rest of the
company. The department needs a budget, the ability to implement the plan, and a collaborative effort
with all departments to execute that plan.
Organizing Function of Management
Organizing is the function of management which follows planning. It is a function in which the
synchronization and combination of human, physical and financial resources takes place. All the three
resources are important to get results. Therefore, organizational function helps in achievement of results
which in fact is important for the functioning of a concern.
A manager performs organizing function with the help of following steps:-
1. Identification of activities - All the activities which have to be performed in a concern have to be
identified first. For example, preparation of accounts, making sales, record keeping, quality control,
inventory control, etc. All these activities have to be grouped and classified into units.
 2. Departmentally organizing the activities - In this step, the manager tries to combine and group
similar and related activities into units or departments. This organization of dividing the whole
concern into independent units and departments is called departmentation.
3. Classifying the authority - Once the departments are made, the manager likes to classify the powers
and its extent to the managers. This activity of giving a rank in order to the managerial positions is
called hierarchy. The top management is into formulation of policies, the middle level management
into departmental supervision and lower level management into supervision of foremen. The
clarification of authority help in bringing efficiency in the running of a concern. This helps in
achieving efficiency in the running of a concern. This helps in avoiding wastage of time, money,
effort, in avoidance of duplication or overlapping of efforts and this helps in bringing smoothness in
a concern’s working.
4. Co-ordination between authority and responsibility - Relationships are established among various
groups to enable smooth interaction toward the achievement of the organizational goal. Each
individual is made aware of his authority and he/she knows whom they have to take orders from
and to whom they are accountable and to whom they have to report. A clear organizational
structure is drawn and all the employees are made aware of it.
Principles of Organizing
The organizing process can be done efficiently if the managers have certain guidelines so that they can take
decisions and can act. To organize in an effective manner, the following principles of organization can be
used by a manager.
1. Principle of Specialization
According to the principle, the whole work of a concern should be divided amongst the subordinates on
the basis of qualifications, abilities and skills. It is through division of work specialization can be achieved
which results in effective organization.
2. Principle of Functional Definition
According to this principle, all the functions in a concern should be completely and clearly defined to the
managers and subordinates. This can be done by clearly defining the duties, responsibilities, authority and
relationships of people towards each other. Clarifications in authority-responsibility relationships helps in
achieving co-ordination and thereby organization can take place effectively. For example, the primary
functions of production, marketing and finance and the authority responsibility relationships in these
departments should be clearly defined to every person attached to that department. Clarification in the
authority-responsibility relationship helps in efficient organization.
3. Principles of Span of Control/Supervision
According to this principle, span of control is a span of supervision which depicts the number of employees
that can be handled and controlled effectively by a single manager. According to this principle, a manager
should be able to handle what number of employees under him should be decided. This decision can be
taken by choosing either froma wide or narrow span. There are two types of span of control:-
A. Wide span of control- It is one in which a manager can supervise and control effectively a large
group of persons at one time. The features of this span are:-
 Less overhead cost of supervision
 Prompt response from the employees
 Better communication
 Better supervision
 Better co-ordination
  Suitable for repetitive jobs
According to this span, one manager can effectively and efficiently handle a large number of subordinates
at one time.
B. Narrow span of control- According to this span, the work and authority is divided amongst many
subordinates and a manager doesn't supervises and control a very big group of people under him.
The manager according to a narrow span supervises a selected number of employees at one time.
The features are:-
Work which requires tight control and supervision, for example, handicrafts, ivory work, etc. which
requires craftsmanship, there narrow span is more helpful.

 Co-ordination is difficult to be achieved.

 Communication gaps can come.
 Messages can be distorted.
 Specialization work can be achieved.
 Factors influencing Span of Control
Managerial abilities- In the concerns where managers are capable, qualified and experienced, wide span of
control is always helpful.
Competence of subordinates- Where the subordinates are capable and competent and their understanding
levels are proper, the subordinates tend to very frequently visit the superiors for solving their problems. In
such cases, the manager can handle large number of employees. Hence wide span is suitable.
Nature of work- If the work is of repetitive nature, wide span of supervision is more helpful. On the other
hand, if work requires mental skill or craftsmanship, tight control and supervision is required in which
narrow span is more helpful.
Delegation of authority- When the work is delegated to lower levels in an efficient and proper way,
confusions are less and congeniality of the environment can be maintained. In such cases, wide span of
control is suitable and the supervisors can manage and control large number of sub- ordinates at one time.
Degree of decentralization- Decentralization is done in order to achieve specialization in which authority is
shared by many people and managers at different levels. In such cases, a tall structure is helpful. There are
certain concerns where decentralization is done in very effective way which results in direct and personal
communication between superiors and sub- ordinates and there the superiors can manage large number
of subordinates very easily. In such cases, wide span again helps.
4. Principle of Scalar Chain
Scalar chain is a chain of command or authority which flows from top to bottom. With a chain of authority
available, wastages of resources are minimized, communication is affected, overlapping of work is avoided
and easy organization takes place. A scalar chain of command facilitates work flow in an organization
which helps in achievement of effective results. As the authority flows from top to bottom, it clarifies the
authority positions to managers at all level and that facilitates effective organization.
5. Principle of Unity of Command
It implies one subordinate-one superior relationship. Every subordinate is answerable and accountable to
one boss at one time. This helps in avoiding communication gaps and feedback and response is prompt.
Unity of command also helps in effective combination of resources, that is, physical, financial resources
which helps in easy co-ordination and, therefore, effective organization.
DIRECTING FUNCTION OF MANAGEMENT
DIRECTING is said to be a process in which the managers instruct, guide and oversee the performance of
the workers to achieve predetermined goals. Directing is said to be the heart of management
process. Planning, organizing, staffing have got no importance if direction function does not take place.
Directing initiates action and it is from here actual work starts. Direction is said to be consisting of human
factors. In simple words, it can be described as providing guidance to workers is doing work. In field of
management, direction is said to be all those activities which are designed to encourage the subordinates
to work effectively and efficiently. According to Human, “Directing consists of process or technique by
which instruction can be issued and operations can be carried out as originally planned” Therefore,
Directing is the function of guiding, inspiring, overseeing and instructing people towards accomplishment
of organizational goals.
Importance of Directing Function
Directing or Direction function is said to be the heart of management of process and therefore, is the
central point around which accomplishment of goals take place. A few philosophers call Direction as “ Life
spark of an enterprise”. It is also called as on actuating function of management because it is through
direction that the operation of an enterprise actually starts. Being the central character of enterprise, it
provides many benefits to a concern which are as follows:-

1. It Initiates Actions - Directions is the function which is the starting point of the work performance
of subordinates. It is from this function the action takes place, subordinates understand their jobs
and do according to the instructions laid. Whatever are plans laid, can be implemented only once
the actual work starts. It is there that direction becomes beneficial.
2. It Ingrates Efforts - Through direction, the superiors are able to guide, inspire and instruct the
subordinates to work. For this, efforts of every individual towards accomplishment of goals are
required. It is through direction the efforts of every department can be related and integrated with
others. This can be done through persuasive leadership and effective communication. Integration of
efforts bring effectiveness and stability in a concern.
3. Means of Motivation - Direction function helps in achievement of goals. A manager makes use of
the element of motivation here to improve the performances of subordinates. This can be done by
providing incentives or compensation, whether monetary or non - monetary, which serves as a
“Morale booster” to the subordinates Motivation is also helpful for the subordinates to give the
best of their abilities which ultimately helps in growth.
4. It Provides Stability - Stability and balance in concern becomes very important for long term sun
survival in the market. This can be brought upon by the managers with the help of four tools or
elements of direction function - judicious blend of persuasive leadership, effective communication,
strict supervision and efficient motivation. Stability is very important since that is an index of
growth of an enterprise. Therefore, a manager can use of all the four traits in him so that
performance standards can be maintained.
5. Coping up with the changes - It is a human behavior that human beings show resistance to change.
Adaptability with changing environment helps in sustaining planned growth and becoming a market
leader. It is directing function which is of use to meet with changes in environment, both internal as
external. Effective communication helps in coping up with the changes. It is the role of manager
here to communicate the nature and contents of changes very clearly to the subordinates. This
helps in clarifications, easy adaptions and smooth running of an enterprise.
6. Efficient Utilization of Resources - Direction finance helps in clarifying the role of every subordinate
towards his work. The resources can be utilized properly only when less of wastages, duplication of
efforts, overlapping of performances, etc. doesn’t take place. Through direction, the role of
subordinates become clear as manager makes use of his supervisory, the guidance, the instructions
and motivation skill to inspire the subordinates. This helps in maximum possible utilization of
 resources of men, machine, materials and money which helps in reducing costs and increasing
profits.

Controlling Function of Management

Controlling consists of verifying whether everything occurs in conformities with the plans adopted,
instructions issued and principles established. Controlling ensures that there is effective and efficient
utilization of organizational resources so as to achieve the planned goals. Controlling measures, the
deviation of actual performance from the standard performance, discovers the causes of such deviations
and helps in taking corrective actions
Controlling as a management function involves following steps:

1. Establishment of standards- Standards are the plans or the targets which have to be achieved in
the course of business function. They can also be called as the criterions for judging the
performance. Standards generally are classified into two-
a. Measurable or tangible - Those standards which can be measured and expressed are called
as measurable standards. They can be in form of cost, output, expenditure, time, profit, etc.
b. Non-measurable or intangible- There are standards which cannot be measured monetarily.
For example- performance of a manager, deviation of workers, their attitudes towards a
concern. These are called as intangible standards.
2. Measurement of performance- The second major step in controlling is to measure the
performance. Finding out deviations becomes easy through measuring the actual performance.
Performance levels are sometimes easy to measure and sometimes difficult. Measurement of
tangible standards is easy as it can be expressed in units, cost, money terms, etc. Quantitative
measurement becomes difficult when performance of manager has to be measured. Performance
of a manager cannot be measured in quantities. It can be measured only by-
a. Attitude of the workers,
b. Their morale to work,
c. The development in the attitudes regarding the physical environment, and
d. Their communication with the superiors.
3. Comparison of actual and standard performance- Comparison of actual performance with the
planned targets is very important. Deviation can be defined as the gap between actual performance
and the planned targets. The manager has to find out two things here- extent of deviation and
cause of deviation. Extent of deviation means that the manager has to find out whether the
deviation is positive or negative or whether the actual performance is in conformity with the
planned performance. The managers have to exercise control by exception. He has to find out
those deviations which are critical and important for business. Minor deviations have to be ignored.
Major deviations like replacement of machinery, appointment of workers, quality of raw material,
rate of profits, etc. should be looked upon consciously. Therefore it is said, “ If a manager controls
everything, he ends up controlling nothing.”

Once the deviation is identified, a manager has to think about various cause which has led to
deviation. The causes can be-

a. Erroneous planning,
b. Co-ordination loosens,
c. Implementation of plans is defective, and
d. Supervision and communication is ineffective, etc.
4. Taking remedial actions- Once the causes and extent of deviations are known, the manager has to
detect those errors and take remedial measures for it. There are two alternatives here-
a. Taking corrective measures for deviations which have occurred; and
 b. After taking the corrective measures, if the actual performance is not in conformity with
plans, the manager can revise the targets. It is here the controlling process comes to an end.
Follow up is an important step because it is only through taking corrective measures, a
manager can exercise controlling.

Learning Task 1:
Read the following resource materials. (Module or E-resources)
1. https://www.brightnetwork.co.uk/career-path-guides/asset-investment-management/investment-
management-firm/
2. https://www.thebalance.com/asset-management-companies-for-beginners-4048203#what-is-asset-
management

Learning Task 2:
Read and watch the following resource materials. (Module or E-resources)
1. https://www.youtube.com/watch?v=DTB4Kd-gCvU
2. https://www.youtube.com/watch?v=RYxhmhUqLj8

Assessment Task:
1. Define what is Human Resource Planning.
2. Explain how HR Planning help the organization in many ways.
3. Discuss the steps to Human Resource Planning.
4. Discuss the organizing Function of Management.
5. Explain the Principles of Organizing.
6. Discuss the directing Function of Management.
7. Explain the importance of Directing Function.
8. Discuss the controlling Function of Management
9. Explain the steps of controlling as a management function.

References;

1. Johnason, P. (2019). HRM in changing organizational contexts. In D. G.Collings & G. Wood (Eds.),
Human resource management: A critical approach (pp. 19-37).
2. London: Routledge.Collings, D. G., & Wood, G. (2019). Human resource management: A critical
approach. Paauwe, J., & Boon, C. (2019).
3. Strategic HRM: A critical review. In D. G. Collings, G. Wood (Eds.)
4. London: Routledge.Klerck, G. (2019). "Industrial relations and human resource management".
5. In D. G. Collings & G. Wood (Eds.), Human resource management: A critical approach (pp. 238-259).
London: Routledge.
6. https://searchhrsoftware.techtarget.com/definition/human-resource-management-HRM
7. https://www.google.com/search?q=human+resource+management+meanin
8. https://en.wikipedia.org/wiki/Human_resource_management