BBA 202 – ORGANIZATION THEORY

TOPIC 3: MANAGEMENT
What is Management?
Management is about coordinating and administering work that will achieve a goal.
To do this requires strategizing and resources. Management is also used in business
to describe the organization of a company’s staff.

Managers are the people who implement management. This requires a myriad of
skills to do so effectively. In addition, an effective manager will understand the
company’s goals and be able to use employees to achieve those goals.

Management Levels

Management is organized in a hierarchical fashion. There are always people to

whom managers report. This management level is made up of three main tiers: top
management, middle management and lower or operational management.

Top Level Management

These are the top of the management chain. These managers are CEOs, presidents,
vice presidents and board members. They set the goals for the organization and its
course, as well as develop strategies, policies and make decisions that impact the
direction of the organization. Therefore, they’re accountable to shareholders and
stakeholders if these initiatives are successful.

Middle-Level Management

The next layer of management is middle management. They’re in charge of the

tactical planning of the organization, report to the top management and are made
up of department managers, regional managers and branch managers. Their
responsibilities include communicating the strategic goals of top management.
They’re more involved in directional and organizational functions than top
management and provide guidance for lower management.

Lower or Operational Management

Lower or operational management is the front-line team leaders, foreman, section

leads and supervisors. Their responsibilities include overseeing the daily work of
employees, staff or team members and providing direction. They make sure quality
standards are upheld, deal with interpersonal conflict and offer feedback on
performance.

FUNCTIONS OF MANAGEMENT

Different experts have classified functions of management. According to George &

Terry, “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, ‘C’ for Co-ordination, ‘R’ for reporting & ‘B’ for
Budgeting. But the most widely accepted are functions of management given by
Koontz and O’Donnell i.e. Planning, Organizing, Staffing, Directing Controlling, and
Coordination; which are described below:

(1) Planning

 Deciding in advance:

 What to do

 How to do

 When to do

 Who is going to do it?

 Bridges a gap between where we are today and where we want to reach.

 Sets the goal of an organization.

 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.

 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.

……. detailed explanation

Planning is the primary function of management and involves the process of

determining objectives, discovering alternative courses of action, and selecting an
appropriate course of action for achieving objectives. In other words, planning is the
determination of a future course of action to achieve a desired result. Under
planning, it is ascertained that what should be done, how it should be done and who
should do it. Before starting of a job all above mentioned activities must be
considered otherwise, the objectives of a business cannot be achieved. Planning is a
long process and under this the following steps are taken:

• Determination of Objectives: This is the first step in planning process. It is a

starting point as everybody in the organization must know what is to be achieved in
future. So, first of all, objectives are laid down after identifying the opportunities
available to a business organization. Objectives are the key point of the process of
planning. Objectives should be clear, definite and simple so that it should be clear to
every employee of organization.

• Establishing Planning Premises: The second step in planning is to establish

planning premises, that is, certain assumptions about the future on the basis of
which the plan will be ultimately formulated. If these assumptions are accurate, the
planning process will be more useful. So, in this various factors which affect the
activities of an organization are determined. These are the external and internal
factors. External factors have no control and may be the policy of the government,
competition, change in customer habit etc. On the other hand internal factors
include capital, labour, machine, raw material etc. Planning premises point out the
business environment in which the plans will operate.

• Collection, Analysis and Classification of Information: For effective planning, all

relevant data should be collected, analyzed and classified. Suggestions should also
invite from employee for the betterment. The data so collected should be presented
in tabulated form, diagrams and graphs to facilitate analysis.

• Finding Alternative Courses of Action: The fourth step in planning is to search for
and examine alternative courses of action. In other words, the next step in planning
will be choosing the best course of action. There are a number of ways of doing a
thing. All the available alternatives should study and then a final selection will be
made. Best results will be achieved only when best way of doing a work is selected.

• Examination of alternative courses of Action: After looking into the entire

alternative course, the next step is to evaluate these alternatives courses
technically in the light of the premises and objectives. Each alternative is evaluated
on the basis of its outcome and advantages. The strong and weak point of each
alternative should be carefully noted and this is done with the help of quantitative
techniques and operation research.

• Selecting the best alternative: The next step is to select the best alternative. The
selection should be made carefully and no partiality is shown while selecting the
alternative.

• Developing Derivative Plans: When the plan for the organization has been
formulated, middle and lower level managers must draw up the appropriate plans
for their sub-units. To support the master plan, each department head prepares a
plan for his department. So, these are the plans required to support the basic plan.

• Communication and Implementation of plans: The next step in planning is to

communicate the plan to every manager in the organization so that they cooperate
whole heartedly in the implementation of plans. These tools will enable a better
implementation of plans.

• Follow-up action or controlling the progress: The process of planning does not end
with the implementation of plans. The plans are formulated for future which is
uncertain. There must be a constant review of the planning to ensure the success.
Managers need to check progress of their plans so that they can make changes in
the plan or take some remedial measure to bridge the gap, if it is unrealistic or
impractical.

(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.

 Establishing the framework of working:

 How many units or sub-units or departments are needed.

 How many posts or designations are needed in each department.

 How to distribute authority and responsibility among employees.

 Once these decisions are taken, organizational structure gets set up.

 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.

……. detailed explanation

When the plans are laid down and the objectives specified, the next step is to give
practical shape to the work to be performed to attain those objectives. This task is
accomplished by the managerial function of organizing. Or we can say that, the
process of creating this structure of roles is known as organizing. Planning is just to
put some idea in writing, but to convert that idea into reality, a group of people is
needed. Further, to streamline the activities of this group of people, organizing is
required. Under this, the whole project is divided into various small jobs, to assign
these jobs to designated, to unite various jobs into one department, to clarify the
rights and duties of employees, and to define relationship among various posts. In a
nutshell, organizing is structuring of functions and duties to be performed by a
group of people for the purpose of attaining enterprise objectives. The organizing
function establishes working relationship among employees by assigning tasks and
giving them enough authority to perform those tasks. Following steps are taken to
complete the organizing function of management:

• Identification of activities: In this stage of organizing process, a manager identifies

and determines those activities that are to be performed for achieving common
goals. It includes the division of all activities in order to achieve the objectives of the
organization. The entire work is divided into various parts and again each part is
divided into various sub-parts.

• Grouping of activities: The grouping of activities starts once the various activities
have been designed to achieve the objectives of the company. The activities of the
same nature are grouped together and assigned to a particular department like
purchase department, sales department.

• Allotment of Duties: In order to ensure effective performance, the grouped

activities are allotted to specific persons. At the time of making such assignment, it
is ensured that the department has required competence and resources for
performing that group of activities.

• Delegating Authority: Every individual is given the authority necessary to perform

the assigned duty effectively. By authority here mean power to take decisions,
issuing instructions, guiding the subordinates, supervise and control them. Authority
flow top to bottom and responsibility from bottom to top.

• Coordinating Activities: In the process of organizing, attempts are also made for
coordinating working of individual with respective department, and finally to
coordinate functioning of various departments towards the achievement of common
goals.

(3) Staffing

 Recruiting, selecting, appointing the employees, assigning duties, maintaining

cordial relationship and taking care of grievances of employees.

 Training and Development of employees, deciding their remuneration, promotion

and increments.

 Evaluating their performance.

 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.

 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.

……. detailed explanation

It refers to knowing about the manpower requirements in the organization and filled
the various posts with suitable employees. An organization may succeed only if it
has trained staff in each and every department and this work is done by staffing. So,
Staffing refers to placement of right person in the right jobs. Staffing includes
selection of right persons, training to those needy persons, promotion of the best
persons, retirement of old persons, performance appraisal of all the personnel’s,
and adequate remuneration of personnel. Thus staffing is regarded as a unique and
very important function because it is only through human force that all other
resources of the organization are utilized optimally.

Following steps are taken to complete the staffing function of management:

• Recruitment or getting applicants for the jobs as they open up.

• Selection of the best qualified from those who seek the job.

• Training those who need further instructions to perform their work effectively or to
qualify for promotion.

• Performance appraisal, since it serves as the basis for job change or promotion

• Administration of compensation plans, since it is important factor in both getting

and holding qualified people.

(4) Directing

 Giving direction or instruction to employees to get the job done.

 Leadership qualities are required.

 Motivating employees by providing monetary and non-monetary incentives.

 Communicating with them at regular intervals.

 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.

 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.

……. detailed explanation

Directing function of management involves guiding, leading and motivating

subordinates so that they contribute towards achieving organizational objectives. It
is done by giving necessary instruction to them regarding the assigned work, and
motivating them to perform in a satisfactory manner. Communication, motivation
and leadership are the essential elements of directing function.

• Communication: Communication is the transmission of human thoughts, views

and opinions from one person to another. A manager has always tell the
subordinates that what has to be done, where it is to be done, how it is to be done
and when it is to be done. Thus communication is very important element in order
to perform all activities of organization effectively.

• Motivation: It refers to that process which excites people to work for achievement
of desired objective. Motivation includes increasing the speed of performance of a
work and developing willingness on the part of the workers. This is done by a
resourceful leader.

• Leadership: Leadership is at very centre of management that deals with ‘getting

work done through others’. Managers can get the work done through people either
by exercising the authority vested in them or by winning support, trust and
confidence of the people. To secure greater work performance and result from
people, a manager has to increase his influence over them. This incremental
influence of a manager over his subordinates, because of which they willingly and
passionately cooperate in the attainment of organizational goals, is referred to as
leadership. The person who tries to influence are called leader.
(5) Controlling

 Matching actual performance with the planed goal.

 If problem, tries to find out the reasons of deviation.

 Suggesting corrective measures come on the path of plan

 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.”

 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.

……. detailed explanation

The process of management begins with the planning function and concludes with
the controlling function. It involves comparison between the actual work
performance and the planned standards, and taking corrective steps when there is a
difference between the two. So, it is an important function of management and has
following steps:

• Establishing performance standards: Every enterprise plans its activities in

advance. On the basis of plans, the objectives and goals of every department,
branch, etc. are fixed. Standards may be quantitative or qualitative. Most of the
standards are expressed in terms of quantity. Number of units produced, number of
men, hours employed, total cost incurred, revenue earned, the amount of
investment etc.

• Measurement of actual performance: The performance should be compared with

the established standards. So, necessary information should be collected about the
performance. The effective management information system provides the
necessary information. There are several techniques which are used by the
management to measure the performance.
• Comparison of actual performance with standards: The next step in control
process is the comparison of actual performance with the standards set. When the
actual performance is not up to the level then causes for it should be pin-pointed.
Necessary steps are taken so that performance is not adversely affected.

• Taking corrective action: Management has to find out the causes of deviation
before taking corrective measure. The causes of deviation may be due to ineffective
and inadequate communication, defective system of wage payment, defective
system of selection of personnel, lack of proper training, lack of motivation,
ineffective supervision, etc. the management has to take necessary corrective
action on the basis of nature of causes of deviation.

(6) Coordination

The coordination function of management ensures that different departments and

groups work in sync, fostering unity of action and harmony to achieve
organizational objectives efficiently through effective communication and resource
allocation.

It is a crucial management function that integrates and synchronizes the efforts of

individuals, groups, and departments to achieve common goals.

Its primary goal is to ensure that all parts of an organization work together
seamlessly, minimizing friction and maximizing efficiency.

Key Elements:

• Unity of Action: Coordination aims to create a sense of shared purpose and

direction, ensuring that everyone is working towards the same objectives.

• Harmony: It promotes a collaborative environment where different departments

and individuals can work together effectively, resolving conflicts and fostering
positive relationships.

• Effective Communication: Smooth coordination relies on clear and open

communication channels, ensuring that information flows freely between different
parts of the organization.

• Resource Allocation: Coordination helps to ensure that resources are used

efficiently and effectively, preventing duplication of effort and maximizing
productivity.

How to become a good manager

Successful managers have certain traits in common. Developing these traits will
help individuals to tackle the complex world of leadership with confidence.

1. Effective communication skills

Open and clear communication is key to a collaborative work environment. A good
manager not only shares expectations and feedback but does so in a constructive
and supportive way, making sure that their guidance helps individuals and the team
to grow and succeed.

Equally important is the practice of active listening, which involves truly paying
attention to what team members are saying, asking questions, and acknowledging
their contributions. This makes sure that everyone feels heard, valued, and
understood, and helps to promote a sense of inclusivity and respect within the
team.

2. Strong leadership abilities

Leadership involves more than just delegating tasks. To be a good leader, managers
need to develop a blend of insight and foresight to help guide their team. A strong
leader not only sets a clear vision and direction but also inspires their team to work
together towards shared goals.

They can do this by acknowledging and celebrating individual efforts, creating a

supportive environment where everyone can communicate openly, and instilling a
sense of purpose and belonging within the team. By appreciating each team
member’s unique strengths, a good leader can boost personal growth and
teamwork, helping the team to achieve the very best results.

3. Decision-making

Every day presents managers with several decisions that shape their team
dynamics and influence the direction of the business. The ability to make informed
choices requires a balance of weighing risks and benefits, a skill that truly sets a
good manager apart. This process requires an ability to think critically and a solid
understanding of the business world.

4. Empathy and emotional intelligence

Managers with strong emotional intelligence are great at building strong

connections and smoothing over conflicts. By showing empathy and really listening
to the views of their team, they can create a space where employees feel valued
and comfortable sharing ideas and concerns. This kind of environment encourages
collaboration, creativity, and boosts teamwork.

5. Adaptability and flexibility

Good managers don’t just go with the flow, they actively work to innovate within
their team. This creates an environment where everyone feels free to try new things
and come up with fresh ideas. Whether it’s tweaking strategies to match changing
market trends or embracing the latest technologies, being flexible is super
important if businesses want to stay ahead. By staying open to new solutions and
quick to adapt, teams can keep a competitive edge and stand out amongst the
competition.

6. Problem-solving skills

Tackling challenges strategically and getting the team involved is key to

overcoming obstacles effectively. A good manager needs to understand how to
address issues head-on and turn problems into opportunities for growth.

By engaging the whole team, they can empower team members to contribute ideas
and solutions. This approach creates an environment of continuous improvement
where everyone feels valued and motivated to solve any problems that come their
way.

7. Delegation

A good manager needs to learn to trust their team with responsibilities while
keeping individuals accountable and providing support when needed. It’s also super
important to understand your team’s strengths and weaknesses, and delegate tasks
wisely to make the most of individual skills. This helps to empower team members
and give them a sense of ownership over their work.

By delegating well, managers can focus on the big picture, like long-term planning
and innovation, which are vital for business growth. Plus, effective delegation can
boost productivity and job satisfaction, as employees are more likely to feel valued
and motivated to hit team goals.

8. Integrity and ethical behaviour

Want to know the secret to earning respect and loyalty within your team? It’s having
integrity! Good managers lead by example and keep company values and ethics at
the front and centre when making decisions.

By doing this, managers can create a transparent and honest work environment
that’s built on trust. This highlights the importance of ethical behaviour,
encouraging everyone to act with integrity. A strong commitment to ethics shapes a
more cohesive and motivated team, steering the business towards long-term
success.

9. Vision and strategic thinking

Good managers think ahead, making sure team goals are aligned with where the
business is heading. This gives everyone a sense of purpose and direction,
motivating the team to work together towards shared goals. Strategic thinking is a
key part of good management and means spotting potential challenges ahead and
seizing opportunities as they come.
Good managers can steer their teams through uncertainties and provide a clear
path to long-term. This will help build a more resilient team that’s ready to adapt to
changes while keeping an eye on the big picture.

10. Commitment to continuous improvement

The best managers are lifelong learners who are committed to their own
development and to the growth of their team. They actively encourage both
personal and professional growth by creating environments where team members
feel supported and motivated to pursue new skills and knowledge. These managers
regularly seek feedback from colleagues and employees, using it as a tool to
improve processes. By cultivating a culture of continuous improvement, they keep
their teams competitive and drive innovation.

Common Leadership Styles

1. Democratic Leadership

A democratic leadership style is where a leader makes decisions based on the input
received from team members. It is a collaborative and consultative leadership style
where each team member has an opportunity to contribute to the direction of
ongoing projects. However, the leader holds the final responsibility to make the
decision.

Democratic leadership is one of the most popular and effective leadership styles
because of its ability to provide lower-level employees a voice making it equally
important in the organization. It is a style that resembles how decisions are made in
company boardrooms. Democratic leadership can culminate in a vote to make
decisions.

Democratic leadership also involves the delegation of authority to other people who
determine work assignments. It utilizes the skills and experiences of team members
in carrying out tasks.

The democratic leadership style encourages creativity and engagement of team

members, which often leads to high job satisfaction and high productivity. However,
establishing a consensus among team members can be time-consuming and costly,
especially in cases where decisions need to be made swiftly.

2. Autocratic Leadership

Autocratic leadership is the direct opposite of democratic leadership. In this case,

the leader makes all decisions on behalf of the team without taking any input or
suggestions from them. The leader holds all authority and responsibility. They have
absolute power and dictate all tasks to be undertaken. There is no consultation with
employees before a decision is made. After the decision is made, everyone is
expected to support the decision made by the leader. There is often some level of
fear of the leader by the team.

The autocratic type of leadership style can be very retrogressive as it fuels

employee disgruntlement since most decisions would not be in the employees’
interests. An example can be a unilateral increase in working hours or a change in
other working conditions unfavorable to employees but made by leadership to
increase production. Without employee consultation, the manager may not be fully
aware of why production is not increasing, thereby resorting to a forced increase in
working hours. It can lead to persistent absenteeism and high employee turnover.

However, autocratic leadership can be an effective approach in cases where the

leader is experienced and knowledgeable about the circumstances surrounding the
decision in question and where the decision needs to be made swiftly. There are
other instances where it is also ideal such as when a decision does not require team
input or an agreement to ensure a successful outcome.

3. Laissez-Faire Leadership

Laissez-faire leadership is accurately defined as a hands-off or passive approach to

leadership. Instead, leaders provide their team members with the necessary tools,
information, and resources to carry out their work tasks. The “let them be” style of
leadership entails that a leader steps back and lets team members work without
supervision and free to plan, organize, make decisions, tackle problems, and
complete the assigned projects.

The laissez-faire leadership approach is empowering to employees who are creative,

skilled, and self-motivated. The level of trust and independence given to the team
can prove to be uplifting and productive and can lead to job satisfaction.

At the same time, it is important to keep such a type of leadership in check as chaos
and confusion can quickly ensue if the team is not organized. The team can end up
doing completely different things contrary to what the leader expects.

According to research, laissez-faire leadership is the least satisfying and least

effective.