MANAGEMENT - the process of managing people, which involves getting things done through and with others.

- To manage is to forecast and to plan, to organize, to command, to coordinate, and to control

- Management is simply the process of decision-making and control over the actions of human beings for the express
purpose of attaining predetermined goals is called Management
- Management is a distinct process consisting of planning, organizing, actuating, and controlling, utilizing both science
and arts and followed to accomplish predetermined objectives” is called a Management.

MANAGEMENT AS SCIENCE:
• Science explains phenomena based upon experimentation, it includes truths and set of principles known as theory.
• Science is a systematized body of knowledge developed systematically, based on observation, measurement, and
experimentation and drawing inferences based on data.
• It is useful for maintaining relationships and following scientific principles.

ROLE OF MANAGEMENT:
• It serves to identify a great need of our time; to improve standards of living for all people through effective utilization
of human and material resources.
• Technological advancements, levels of production, capital investment, and other tangible elements have been
emphasized as contributory factors towards economic growth, rather than managerial skills.

FUNCTIONS OF MANAGEMENT:
1. Planning
 Planning is the first and base component of management. It involves recognizing the organization’s goals and
developing strategies to achieve these goals. This is called strategy planning. These strategies may have to be
altered or completely changed constantly based on the macro and micro factors affecting an organization.
 Constant process. Even though all planning involves the same kind of thought, different kinds of plans are made
for different functions.
2. Organizing
 Organizing is an important responsibility of a manager. A manager’s organizational responsibilities include
organizing the resources of an organization, identifying different roles, choosing the right people for these roles,
delegating tasks to people, etc.
 Also, ensure that the employees have the required resources to perform tasks better.
 Inefficient organization can lead to chaos in the company.
3. Staffing
 The process of choosing the right people for an organization.
 Staffing is filling and keeping filled with qualified people all positions in the business. Recruiting, hiring, training,
evaluating and compensating are the specific activities included in the function.
 In family business, staffing includes all paid and unpaid positions held by the company members including
owners
 Staffing is the process by which managers select, train, promote and retire their subordinates.
 Staffing involves the developing and placing of qualified people in the various jobs in the organization.
 Continuous process which aims to have appropriate persons to move into various vacated positions or new
positions newly created in the enterprise
4. Directing
 Directing is influencing people's behavior through motivation, communication, group dynamics, leadership and
discipline.
 The purpose is to channel the behavior of all the personnel to accomplish the organizations mission and the
objective while simultaneously helping them accomplish their own career objectives.
 Directing is guiding people in the organization through the means of counseling, instructing, motivating and
various other modes of communication.
 Helps is channeling the activities and conduct of employees so that organizational goals can be accomplished
 Directing is the process by which actual performance of subordinates is guided towards common goals of the
enterprise.
  Directing involves motivating, guiding and supervising subordinates towards company objectives.
5. Coordinating
 Coordinating means achieving harmony of individual effort towards the accomplishment of company objectives.
 Coordination involved making plans that coordinate the activities of subordinates, regulate their activity on the
job and regulate their communication
6. Controlling
 Controlling is the sum total of process which ensures all the plans are executed and implemented in the desired
way.
 Decide whether some corrective or preventive methods need to be taken.
 Meant to certain areas and remedial measures
 Controlling is a four-step process of establishing performance standards based on the firm's objectives,
measuring and reporting actual performance, comparing the two, and taking corrective or preventive action as
necessary.
 Process that measures current performance and guides it towards some predetermined goals
 Controlling is necessary to ensure that orders are not misunderstood, rules are not violated and objectives have
not been unknowingly shifted. Control means control of person and other things.
 Involves monitoring of programmed activities to make sure that the end objectives are being met.

HENRI FAYOL’S 14 PRINCIPLES OF MANAGEMENT:

• Division of Work – work should be divided among individuals and groups to ensure that effort and attention are
focused on special portions of the task.

• Authority & Responsibility – authority may be defined by the right to give orders and the power to exact obedience
while responsibility involves being accountable and is therefore naturally associated with authority. Whoever assumes
authority also assumes responsibility.

• Discipline – A successful organization requires the common effort of workers. Penalty should be applied judiciously to
encourage this common effort.

• Unity of Command – workers should receive orders from only one manager. Conflict in family businesses

• Unity of Direction – the entire organization should be moving towards a common objective towards a common
direction

• Subordination of individual interests to the general interests – the interest of one should not take priority over the
interest of the organization as a whole

• Remuneration – many variables such as cost of living, supply of qualified personnel, general business conditions and
success of the business should be considered in determining a worker’s rate of pay.

• Centralization – The lowering of the importance of the subordinate role. Increasing the importance or degree to which
centralization/decentralization should be adopted depends on the specific organization in which the manager is working

• Scalar Chain – managers in hierarchies are part of a chain-like authority scale. Each manager from first-line supervisor
to the president possesses a certain amount of authority. President must possess the most authority and the first line of
supervisor, the least. Lower-level managers should always keep upper-level managers informed of their work activities.
The existence of a scalar chain and adherence to it are necessary if the organization is to be successful.

• Order- for the sake of efficiency and coordination, all materials and people related to a specific kind of work should be
treated as equally as possible
• Equity – all employees should be treated as equally as possible, from janitors to bosses

• Stability of Tenure – retaining productive employees should always be a high priority of management. Recruitment and
selection cost as well as increased product reject rates are usually associated with hiring new workers.

• Initiative – management should take steps to encourage worker initiative which is defined as new or additional work
activity undertaken through self-direction

• Espirit De Corps – management should encourage harmony and general good feelings among employees.

SOCIAL RESPONSIBILITY AND ETHICS:

• Social responsibility means the obligation or responsibility of a business to act in a manner that will serve the best
interest of society. It relates to the voluntary efforts of businessmen towards the betterment of the society.
• Long-term interest in business
• Public Image
• Avoidance of Government Regulations
• Moral justification
• Consumer awareness

RESPONSIBILITY TOWARDS INVESTORS:

• A fair and adequate rate of return on their capital.
• Capital appreciation in the value of investment.
• Safety of capital contributed by them.
• Respect their requests, suggestions, etc.
• A timely payment of their dues.

RESPONSIBILITY TOWARDS EMPLOYEES:

• Fair remuneration to employees in terms of wages and salaries
• Retirement benefits like gratuity, pension
• Security of job
• Job satisfaction
• Continuity of service
• Grievance settlement process.

RESPONSIBILITY TOWARDS CONSUMERS:

• Supplying goods and services which suit the needs of the consumers.
• Supplying goods of the right quality
• Supplying goods at reasonable prices.
• Attending to the grievances of consumers promptly and with courtesy
• Ensuring regular and adequate supply.

RESPONSIBILITY TOWARDS GOVERNMENT:

• Taxes
• Partnership with the government
• Responsibility toward the community
• To prevent environmental pollution and to preserve the ecological
balance.
• Giving jobs to the local people
• Contribute to causes such as promotion of education and literacy

SYSTEMS APPROACH:
A system may be defined “As an orderly grouping of separate but interdependent components to attain some
predetermined objective”. This definition leads to three important aspects.
DESIGNING ORGANIZATIONAL STRUCTURE:
 An organization is a social entity that has a collective goal and is linked to an external environment. It is the
collection of organs of scientific methods and artifacts of the al matter.
 An organization has been defined as "a system of structural interpersonal relationships. In it, individuals are
differentiated in terms of authority, status, and roles with the result that personal interaction is prescribed, and
anticipated reactions between individuals tend to occur while ambiguity and spontaneity are decreased".
 The organization is "the process of identification and grouping the work to be performed, defining and
delegating responsibility and authority and establishing relationships to enable people to work most effectively
together in accomplishing objectives".
 Organization is "the form of every human association for the attainment of a common purpose".

TWO TYPES OF ORGANIZATIONS:

• Formal Organization – refers to a structure of well-defined jobs, each bearing a measure of authority and
responsibility. It is a conscious determination by which people accomplish goals by adhering to the norms laid down by
the structure.
- This kind of organization is an arbitrary set up in which each person is responsible for his performance
- Formal organization has a formal set up to achieve predetermined goals

• Informal Organization – refers to a network of personal and social relationships which spontaneously originates within
the formal setup.
- Develop relationships which are built on likes, dislikes, feelings and emotions therefore the network of social
groups based on friendship can be called as an informal organization.
- There is no conscious effort made to have informal organizations
- It emerges from formal organizations and it is not based on any rules and regulations in which case of formal
organizations

LINE ORGANIZATION:
 Military or scalar organization
 Oldest and simplest form of internal organization structure
 First developed by the Roman army and later adopted by the armies all over the world
 In the line Organization, the line of authority moves directly from the top level to the lowest level in a step-by-
step manner.
 The top-level management takes all major decisions and issues directions for actual execution.
 The responsibility moves in the upward direction.

Advantages:
• Simplicity – structure is easy to understand
• Prompt decisions – facilitates prompts decision-making in all levels of authority
• Discipline – brings discipline in an organization due to the unity of command
• Economical- experts are not appointed
• Attraction to talented persons – brings our talented workers and develops in the quality of leadership
• Quick communication -

Limitations:
• Heavy burden on line executives – line executives are given too many duties and responsibilities
• Non-availability of services of experts – expert assistance is not available promptly when it is needed by line executives
• Favoritism – Favoritism and nepotism are common in line organization. The leadership of departmental executives is
autocratic due to the heavy concentration of powers. He may favor some employees at the cost of others.
• Too much dependence on limited - Power is concentrated in the hands of a few executives
• Naturally, the success and stability of the entire organization depend on their personal skill, initiative, and interest
• Rigidity
• Delays in communication, limited freedom to employees, and unsuitability to modern large business units are some
more demerits of line Organization.

FEATURES OF LINE AND STAFF ORGANIZATION:

- Modification of line organization and is more complex than line organization
- Specialized and support activities are attached to the line of command by appointing staff supervisors and staff
specialists who are attached to the line authority

There are two types of staff:

• Staff Assistants
• Staff Supervisor
• Line and Staff Organization is a compromise of line organization
• Division of work and specialization takes place in line and staff organization.
• The whole organization is divided into different functional areas to which staff specialists are attached.
• Efficiency can be achieved through the features of specialization.
• There are two lines of authority which flow at one time in a concern:
• Line Authority
• Staff Authority
• Power of command remains with the line executive and staff serves only as counselors.

Merits:
• Relief to the line of executives (since they have staff attached to them)
• Expert advice
• Benefit of Specialization
• Better co-ordination
• Benefits of Research and Development
• Training
• Balanced decisions
• Unity of action

Demerits:
• Lack of understanding
• Lack of sound advice
• Line and staff conflicts
• Costly
• Assumption of authority
• Staff steals the show

FUNCTIONAL ORGANIZATION:
• Functional organization has been divided to put the specialists in the top position throughout the enterprise. This is an
organization in which we can define as a system in which functional departments are created to deal with the problems
of business at various levels.

Features of Functional Organization:

• The entire organizational activities are divided into specific functions
• Complex form of administrative organization compared to the other two.
• Three authorities exist- Line, staff, and function.
• Each functional area is put under the charge of functional specialists and he has the authority to make all decisions
regarding the function whenever the function is performed throughout the enterprise.
• The principle of unity of command does not apply to such an organization as it is present in the line organization.

Merits:
• Specialization
• Effective Control
• Efficiency
• Economy
• Expansion

Demerits:
• Confusion
• Lack of Coordination
• Difficulty in fixing responsibility
• Conflicts
• Costly

MATRIX ORGANIZATION
• An organizational structure that facilitates the horizontal flow of skills and information. It is used mainly in managing
large projects or product development processes, drawing employees from different functional disciplines for
assignment to a team without removing them from their respective positions.
 Employees report on a day-to-day performance to the project/product manager whose authority flows sideways
across departmental boundaries
 They also continue to report on their overall performance to the head of their department whose authority flows
downward within his department
 Associates new support mechanisms, organizational culture, and behavioral patterns

Advantages:
• Individuals can be chosen according to the needs of the project.
• The use of a project team that is dynamic and able to view problems differently as specialists have been brought
together in a new environment.
• Project managers are directly responsible for completing the project within a specific deadline and budget.

Disadvantages:
• A conflict of loyalty between line managers and project managers over the allocation of resources.
• Projects can be difficult to monitor if teams have a lot of independence.

MANAGEMENT – The process of planning, organizing, and controlling tasks to realize the objectives of the organization
MANAGEMENT ADVISORY SERVICES – refers to the area of accounting work concerned with providing advice and
technical assistance to help clients improve the use of their resources to achieve their goals.

Planning involves:
-Setting immediate and long-term objectives.
-Deciding which alternative is best suited to attain the set objectives.

Organizing involves:
-Deciding how to utilize available resources as plans are carried out.
-Tackling activities necessary to achieve objectives such as staffing, subordinating, directing, and motivating.

Controlling involves:
-Comparing actual performance with set plans or standards.
-Deciding what corrective actions to take should there be any deviation (variance) between actual and planned
performance.

MANAGEMENT BY OBJECTIVES VS MANAGEMENT BY EXCEPTION

MBO – the management process in which a subordinate and a supervisor agree on goals and the methods of achieving
them and develop a plan in accordance with that agreement. The subordinate is then evaluated with reference to the
agreed plan at the end of the period

MBE – the management technique of highlighting those which vary significantly from plans and standards in line with
the management principle that executive time should be spent on items that are non-routine and are identified as top
priority.

Management Accounting – an application of appropriate techniques and concepts in processing historical and projected
economic objectives data of an entity to assist management in establishing plan to meet economic objectives and in
making rational decisions with a view toward achieving the objectives. (American Association of Accountants) Thus,
management accounting’s main role is to provide accounting information to managers who shall use these pieces of
information as basis in making sound, objective and rational business decisions.

MANAGEMENT ACCOUNTING

Controllership – the practice of the establishment science of control, which is the process by which management assures
itself that company resources are obtained and utilized according to plans that are in line with the company’s set
objectives.
Controller – an officer of an organization who has responsibility for the accounting aspect of management control. It is a
title given to a person holding the position of chief management executive of a business enterprise. In many accounting
texts and business literature, the controller is often referred to as the “chief accountant”.

LINE FUNCTION VS STAFF FUNCTION

Line function – the authority to give commands or orders to subordinates; it exercises direct downward authority over
line departments. (e.g. VP for operations over operations manager)

Staff Function – the authority to advise but not to command others – the function of providing line and staff managers
with specialized service and technical advice for support; it is exercised laterally or upward. The controller primarily
exercises a staff function as the controller’s office gives advice and service other departments and to entire organization
as a whole; however, in an accounting department headed by the controller, has a line authority over subordinates
in the said department.

CONTROLLER vs TREASURER
To avoid incompatible duties being assigned to a single officer, a controller (recording function) must not hold at the
same time the position of a treasurer (custody function).