LESSON THREE

MANAGEMENT FUNCTIONS AND PROCESSES

Contents
1. Management Functions and Processes .............................................................................................. 2
1.1 Definition of management and its scope.................................................................................... 2
1.1.1 Planning ............................................................................................................................... 2
1.1.2 Organizing ........................................................................................................................... 2
1.1.3 Staffing ................................................................................................................................. 3
1.1.4 Directing............................................................................................................................... 3
1.1.5 Controlling ........................................................................................................................... 5
1.2 Coordination as the essence of Management ............................................................................ 5
2 Decision Making Process .................................................................................................................... 6
3 Division of work .................................................................................................................................. 7
3.1 Advantages of Division of Labor ............................................................................................... 8
3.2 Disadvantages of Division of Labor........................................................................................... 9
3.3 Consequences of violation or misapplication of division of labor......................................... 10
4 Authority in Management ................................................................................................................ 10
4.1 Authority vs. Power: ................................................................................................................. 12
4.2 Responsibility ............................................................................................................................ 12
4.3 Responsibility vs. Accountability ............................................................................................. 12
1. Management Functions and Processes
1.1 Definition of management and its scope
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 O’DONNEL
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.

1.1.1 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.

1.1.2 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 personnel’s”. To organize a business involves
determining & providing human and non-human resources to the organizational structure.
Organizing as a process involves:

 Identification of activities.
 Classification of grouping of activities.
 Assignment of duties.
 Delegation of authority and creation of responsibility.
 Coordinating authority and responsibility relationships.

1.1.3 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 of 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 & O’Donell, “Managerial function of staffing
involves manning the organization structure through proper and effective selection, appraisal &
development of personnel to fill the roles designed and the structure”.

Staffing involves:

 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.

1.1.4 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.

Communications- is the process of passing information, experience, opinion etc from one
person to another. It is a bridge of understanding.

Leadership- may be defined as a process by which manager guides and influences the work
of subordinates in desired direction.

After all the plans have been laid and resources allocated, it is time for the manager to engage
in his/ her main job-leadership. This involves managing, motivating, and directing people
towards the achievement of the set goals and objectives.

A manager should be skilled at influencing people for a particular purpose or reason. He/ she
should therefore be more of a leader than a boss. A manager must be confident and comfortable
guiding, directing, and supervising different team members in their daily tasks. The same also
applies when there are changes or challenges.

In an organizational setting, the manager should win the other employees or team members’
trust by showing a strong sense of direction and leadership when communicating new
processes, products, services, internal policy, or coming up with different short-term goals.

Leading revolves around influencing and prompting the members of an organization to work
together and further the interest of the organization, meeting the goals set at the planning stage.
The manager must create a positive attitude towards the work and goals among the members
of the organization.

Most people confuse leadership with authoritativeness when the two are quite different.
Whereas both of these methods can get the work done, the latter does not give employees pride
in their work, and most of them may not give their all.

Leading helps one to effectively and efficiently change the behaviors of the employees without
applying too much pressure and making them feel unworthy. For example, the manager should
explain the benefits of doing things in a given way and the drawbacks of the means the
employees like using to help them understand why the business organization is coming up with
new means.

This function, therefore, entails several deferment processes and activities. A manager has to
direct, communicate, motivate and coordinate while going about this function. Coordination
and leading are often considered one. It allows a manager to achieve harmony among
individual efforts speeding up the accomplishment of different group targets.

While leading, a manager must also motivate. It is an essential quality that influences people’s
behaviors by following the right cause and channel that sustain human behavior in a given
direction. One can motivate employees by giving incentives for those who meet the deadline
 first. This will get them on their feet, saving time. Employees are also motivated through
praises and recognition. Acknowledging someone’s good work is the best way to encourage
them to continue doing the same.

One has to be an effective leader to be an efficient manager. Keep in mind that leadership relies
on fellowship. As a norm, humans are more inclined to follow those with means to satisfy their
constant, incessant needs.

While leading, a manager needs to be a beacon of hope and aspiration. He/ she should use
motivating leadership styles and approaches laced with good communication.

1.1.5 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 & O’Donell “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:

i. Establishment of standard performance.

ii. Measurement of actual performance.
iii. Comparison of actual performance with the standards and finding out deviation if any.
iv. Corrective action.

1.2 Coordination as the essence of Management

Co-ordination is the unification, integration, synchronization of the efforts of group members so
as to provide unity of action in the pursuit of common goals. It is a hidden force which binds all
the other functions of management.
According to Mooney and Reelay, “Co-ordination is orderly arrangement of group efforts to
provide unity of action in the pursuit of common goals”.
According to Charles Worth, “Co-ordination is the integration of several parts into an orderly hole
to achieve the purpose of understanding”.
Management seeks to achieve co-ordination through its basic functions of planning, organizing,
staffing, directing and controlling. That is why, co-ordination is not a separate function of
management because achieving of harmony between individuals efforts towards achievement of
group goals is a key to success of management. Co-ordination is the essence of management and
is implicit and inherent in all functions of management.
A manager can be compared to an orchestra conductor since both of them have to create rhythm
and unity in the activities of group members. Co-ordination is an integral element or ingredient of
all the managerial functions as discussed below: -
a. Co-ordination through Planning - Planning facilitates co-ordination by integrating the
various plans through mutual discussion, exchange of ideas. e.g. - co-ordination between
finance budget and purchases budget.
b. Co-ordination through Organizing - Mooney considers co-ordination as the very essence
of organizing. In fact when a manager groups and assigns various activities to subordinates,
and when he creates department’s co-ordination uppermost in his mind.
c. Co-ordination through Staffing - A manager should bear in mind that the right no. of
personnel in various positions with right type of education and skills are taken which will
ensure right men on the right job.
d. Co-ordination through Directing - The purpose of giving orders, instructions & guidance
to the subordinates is served only when there is a harmony between superiors &
subordinates.
e. Co-ordination through Controlling - Manager ensures that there should be co-ordination
between actual performance & standard performance to achieve organizational goals.

2 Decision Making Process

Decision making is the process of making choices by identifying a decision, gathering information,
and assessing alternative resolutions.
Using a step-by-step decision-making process can help you make more deliberate, thoughtful
decisions by organizing relevant information and defining alternatives. This approach increases
the chances that you will choose the most satisfying alternative possible.
Step 1: Identify the decision
You realize that you need to make a decision. Try to clearly define the nature of the decision you
must make. This first step is very important. This can be achieved by answering the following
questions:-
 What is the problem that needs to be solved?
 What is the goal you plan to achieve by implementing this decision?
 How will you measure success?
These questions are all common goal setting techniques that will ultimately help you come up with
possible solutions. When the problem is clearly defined, you then have more information to come
up with the best decision to solve the problem.
Step 2: Gather relevant information
Collect some pertinent information before you make your decision: what information is needed,
the best sources of information, and how to get it. This step involves both internal and external
“work.” Some information is internal: you’ll seek it through a process of self-assessment. Other
information is external: you’ll find it online, in books, from other people, and from other sources.
Step 3: Identify the alternatives
As you collect information, you will probably identify several possible paths of action, or
alternatives. You can also use your imagination and additional information to construct new
alternatives. In this step, you will list all possible and desirable alternatives.
Step 4: Weigh the evidence
Draw on your information and emotions to imagine what it would be like if you carried out each
of the alternatives to the end. Evaluate whether the need identified in Step 1 would be met or
resolved through the use of each alternative. As you go through this difficult internal process,
you’ll begin to favor certain alternatives: those that seem to have a higher potential for reaching
your goal. Finally, place the alternatives in a priority order, based upon your own value system.
Step 5: Choose among alternatives
Once you have weighed all the evidence, you are ready to select the alternative that seems to be
best one for you. You may even choose a combination of alternatives. Your choice in Step 5 may
very likely be the same or similar to the alternative you placed at the top of your list at the end of
Step 4.
Step 6: Take action
You’re now ready to take some positive action by beginning to implement the alternative you
chose in Step 5.
Step 7: Review your decision & its consequences
In this final step, consider the results of your decision and evaluate whether or not it has resolved
the need you identified in Step 1. If the decision has not met the identified need, you may want to
repeat certain steps of the process to make a new decision. For example, you might want to gather
more detailed or somewhat different information or explore additional alternatives.

3 Division of work
The principle of ‘Division of Work’ means to divide a given activity or work into small pieces or
parts so that each part is handled with great ease and efficiency.
This principle states that every work should be divided into the smallest possible part and each
such part is to be performed by an individual person (laborer). Instead of assigning the whole work
to an individual, it’s better to assign one task to one person. Before assigning the task to anyone it
must be assured that he possess the required knowledge, skill, capability and will to perform the
task effectively and efficiently. If the same task is performed by a person again and again he gains
specialization in that task and can perform with greater ease and minimizes wastage of resources
and time.
Henry Fayol emphasized on division of work as a cardinal principle of management. According to
him, this principle of management is based on the theory that if workers are given a specialized
task to do, they will become skillful and more efficient in it than if they had a broader range of
tasks. Therefore, a process where everyone has a specialized role will be an efficient one.
Fayol has emphasized on this issue because specialization and minimization of wastage is a key to
success for each and every organization. He was of the view that every work should be divided
into the smallest possible part and then is to be assigned to an individual to gain success and
specialization. This principle also guarantees specialization, efficiency and maximum production
with minimum time and least efforts.
3.1 Advantages of Division of Labor
a. Efficient Mastery
Without the division of labor, mastery of a skill takes much longer. This is because a workers
attention is spread across many areas.
For instance, it would be difficult to master a language if you are also trying to learn the piano,
engineering, CSS, and economics. So, the division of labor allows the worker to focus and master
a specific part of the process, which helps them learn it faster.
When a firm employs a new worker, it is far quicker to train them if they can focus on a specific
task. For instance, an employee at a car manufacturing plant will be more efficient if they focused
on fitting the wheels on, rather than the doors, the steering wheel, etc.
b. Quicker Training
Some industries have a higher turnover rate than others. The division of labor allows new
employees to come in and easily replace lost workers. Instead of taking 12 months to become
efficient in a role, it may take 3 months.
This reduces the impact of losing a worker. For instance, a worker that has learnt how to make a
pin from start to finish also takes away their skills and expertise. To replace that worker will require
months, if not years of training and experience.
By contrast, if a worker who makes the head of the pin leaves, an incoming employee has far less
to learn and master. To put it another way; it is more efficient to replace a piece of the puzzle, than
the entire puzzle.
c. Higher Productivity
When workers focus solely on a specific task, they can master it quicker and more efficiently. In
turn, workers become more productive.
By allowing workers pure focus on one task, their attentions are not diverted. If we go back to
Smith’s pin factory example; the division of labor increased productivity from one pin per worker
per day, to over 4,800 pins per worker per day (when dividing total output by number of workers).
The reason productivity increases is partially due to a greater level of mastery. However, it is also
a by-product of several other advantages. For instance, it allows workers to flow to areas where
they are best suited. Some employees may be better suited to dealing and manipulating data, whilst
others are better at managing people and projects.
d. Efficient Allocation of Workers
When we say allocation of workers, we refer to their role within the production process. For
instance, what may just be a one stage process could become a five-stage one. This creates five
separate and unique roles, each with a different task.
If we look to large corporations, they have departments for finance, IT, human resources, and
marketing, among others. The division of labor allows employees to specialize. This is efficient
because those who are well suited to an IT role will not be so well suited to a human resources
role.
There are specific skills that are not necessarily well transferred to specific tasks. So rather than
be a jack of all trades and master on none; division of labor allows the employee to be a master.
e. Innovation
When workers are set specific tasks, which is their pure focus. So it becomes easier to see pitfalls
in the existing process. Doing the same task each day makes it easier to analyze areas for
improvement. It takes up more of the brains processing power, so it is at the forefront of a workers
mind.
3.2 Disadvantages of Division of Labor
a. Boredom from Repetition
Specializing on a specific task can increase productivity, but it can introduce a level of monotony
and boredom. Doing the same thing repeatedly without any challenge is not conductive to the
human condition. We naturally crave advancement and meaning.
Certain jobs are more monotonous than others. Think of standing in the middle of a factory,
repetitively putting goods in a box. Some may enjoy such tasks, whilst others become disengaged.
However, on the whole, productivity may decline and turnover rates increase. Yet compared to the
pre-division of labor, the productivity rates are still at advanced levels.
One of the ways by which employers counter-act boredom is either through performance based
bonuses, higher pay, or performance checks. The success of which depends on how and where
they are implemented.
 b. Interdependence
When tasks are split down between different departments/employees, a level of interdependence
is created. For instance, the creation of a simple pencil is split down into several parts. Someone
must mine the granite, another to cut the wood, another to produce the rubber, and another to put
it all together.
Nobody in the process truly understands how the pencil is made, but all are involved in its creation.
At the same time, the final production is reliant on the timely delivery of materials. Should one
part of the process be delayed, either by a strike or natural disaster, the whole chain can fall apart.
c. Lack of Responsibility
When each person is only a small part of a bigger chain, it can become difficult to assign
responsibility. If a task fails, it can be time-consuming to find out where things went wrong. At
the same time, it also becomes easier for certain individuals to slack.
When one person produces X output, it is easily measurable. However, when they are part of a
bigger process, it is difficult to measure the final output. As a result, some employees may not take
so much responsibility for the failure of tasks
3.3 Consequences of violation or misapplication of division of labor
 Overburden on a single employee,
 Conflicting situations,
 Wastage of time and resources,
 Chaos and confusion.

4 Authority in Management
Definitions of Authority
Authority means a formal, institutional or legal power in a particular job, function or position that
empowers the holder of that job, function or position to successfully perform his task.
Sources of Authority
There are various theories to explain the sources of authority, important among them are as
follows:
a. ‘Formal’, ‘Traditional’ or ‘Top-Down Theory’ of Authority:
Formal authority flows from law, rules, and regulations that are framed by, or with the consent of
all stakeholders. For example, shareholders of a company are the source of all legal authority to
control and manage its affairs. Through legal process, they delegate this authority to Board of
directors elected/selected by them.
The Board, on its part, selects and appoints staff that will help it accomplish the tasks and
responsibility necessary to achieve organizational goals. Then, it assigns tasks and responsibility
to the staff, based on their competence levels. Assignment of tasks and responsibility will be
meaningful only when it is accompanied by delegation of necessary authority to perform the
assigned tasks and responsibility.
Top managers of the company owe responsibility and accountability to their superiors—the board
of directors—who on their part are responsible and accountable to shareholders. Top managers
appoint senior and junior level managers and assign tasks and responsibility to them to perform
and delegate them appropriate authority to operate and control the resources placed under their
control. Their reward is the salary and prospects of promotion to higher responsibility positions in
the organization.
The flow of legal authority is top-down at each level. Delegation of authority from a manager to a
subordinate is in proportion to the nature of tasks and responsibility assigned to the subordinate.
However, delegation of authority does not diminish the authority and responsibility of the
manager- he continues to be the source of authority vested in him and also continues to be
responsible for performance of the assigned task by him and/or his subordinate(s).
b. ‘Acceptance Theory’ of Authority:
Acceptance theory of authority is the exact opposite of the traditional, formal theory of authority.
According to acceptance theory, authority of a manager will be in direct proportion to the
acceptance given to his authority by his subordinates. Legal authority or social or cultural norms
become irrelevant here. If the subordinates do not accept the authority of manager, they may not
willingly comply with his decisions and orders – they may even defy them.
The acceptance theory was formulated by Chester Barnard who held that authority lies in the
character of a communication (order) issued in a formal organization which makes it acceptable
to the persons for whom it is intended. The essence of the theory is that any authority is as effective
or ineffective as the willingness or unwillingness of subordinates to accept it.
According to Barnard, “an individual will accept the exercise of authority by his superior if the
advantages to him from accepting the authority and the disadvantages from not accepting the
authority are greater than the advantages from not accepting and the disadvantages from accepting;
conversely, he will not accept the exercise of authority if the latter factors are greater than the
former.”
c. ‘Competence Theory’ of Authority
A person can influence the behavior of others even if he does not command any formal, legal or
traditional authority. This happens when he enjoys support and confidence of his followers because
they see him as personification of their urges and aspirations. They do so also because they trust
his extraordinary technical, social and human qualities.
At the root of his authority are his competence, charisma and leader-like qualities. Thus, union
leaders of an organization may select a relatively junior worker to present their case before the top
management for increase in salaries because they feel he is forceful and logical in arguing the case
and has at his command well-documented evidence to support his viewpoint.
4.1 Authority vs. Power:
Authority may not mean the same thing as power A person many have the power to influence the
activity and behaviour of other persons but he may not have the official or legal right of command
and thus enforce compliance by others. Such a person would have power but no authority. It may,
therefore, be said that authority includes power but power may or may not be supported by
authority. Also, all authority is formal.
4.2 Responsibility
Meaning of Responsibility
The term responsibility has been interpreted in two different ways. Some writers define as a duty
while others call it an obligation. In a more comprehensive sense responsibility can be defined as
an obligation of a subordinate to perform the duties assigned to him.
Thus the responsibility is the obligation to perform certain functions and achieve results. It is the
liability for proper discharge of duties.
“Duty” or “responsibility” refers to an obligation or liability for performance of a task or
responsibility that is assigned. Assignment of a task or responsibility casts a duty to perform
something. It means the person who has been assigned a task or responsibility has a duty or
obligation to perform it.
4.3 Responsibility vs. Accountability
Accountability means an obligation on the part of a person to account for, or explain, why the task
or responsibility assigned to him has not been performed as desired. A person will be accountable
only when he has been assigned any task or responsibility by the person who commands authority
over him.
Accountability will shrink or expand with the nature of responsibility assigned. A manager is
accountable only to his superior but the top management owes the maximum accountability.