Learning Objectives

This unit on Management, shall help the student to:

 Define management and understand its functions

 Realize the value of management skills and management’s role in attaining
business goals
 Read organization structures
 Compare leader with managers
 Trace the evolution of management thoughts
 Learn from the contribution of management thinkers to the field of
management
Functions of Management

Management is the attainment of

organizational goals in an effective and efficient manner
through planning, organizing, leading, and controlling
organizational resources. Organization is an entity that is
goal-directed and deliberately structured. Effectiveness is
the use of minimal resources to produce a desired volume
output.
 The Four Management Functions are planning,
organizing, leading, and controlling as shown in the
figure below.
 Planning is the defining of goals for future organizational performances
and deciding on the tasks and resources needed to attain them.

Organizing is assigning tasks, grouping tasks into departments, and

allocating resources to departments.

Leading is the use of influence to motivate employees’ activities, to

achieve the organization’s goals.

Controlling is the monitoring of employee’s activities keeping the

organization on track toward its goals, and making corrections as needed. The
organization resources are (1) human, (2) financial, (3) materials, and (4)
technology. From technology comes machines, equipment, and installation.
 Goals are what the organization wants to achieve. Goals are written in
the vision and mission of the firm. A vision is a dream. It is what the
organization wants to achieve. Mission is what the business is doing.

Here is the Vision/Mission of Bio-Lab Medical Systems, Incorporated, a

medical-diagnostic clinic.
Guidelines for Setting Goals
Goals should be SMART - Specific, Measurable, Achievable, Realistic, and Time-based.

S - Specific. To be specific, goals should be expressed in quantitative terms.

For example:
" The company's sales target for this year is a 15% increase in unit sales compared to
last year's figures."
M - Measurable. The target is exact as seen in the example above -- 15% increase
in unit sales.
A - Achievable. Given increasing population, a stable economy, peaceful and
orderly situation and other environmental factors,
15% is achievable.
R - Realistic. Again, based on environmental factors, 15% is a very conservative
estimate considering that 15% of 100 is only 15.
T - Time-based. The above example of a goal is bound by time -- "last year" and
“this year".

They should cover key result areas. Key result areas are those activities that contribute
much to company performance. They should be challenging but realistic. The achievement of
goals is a factor in determining the extent of salary increases, promotions, and awards.
The Purpose of Planning
The uses of planning are:
 establishes coordinated effort-gives direction, helps the organization
towards its objectives or goals;
 helps the organization to look ahead, to anticipate or expect changes, to
address or provide solutions to problems that may arise from changes
or uncertainties;
 reduces duplications, overlapping and wasteful activities;
 sets standards for control; and,
 serves as reference --planners refer to previous plans for guidance.
The Planning Types and Models are:
 1. Management by Objectives (MBO) is a method where
managers and employees define goals for every department,
project and person, and use them to monitor subsequent
performance. The four major activites for MBO to be successful
are:
a. Setting goals
b. Developing actions plans
c. Reviewing progress
d. Appraising overall performance
The Planning Types and Models are:
2. Single Use Plans are plans that are developed to achieve a set of
goals that are unlikely to be repeated in the future.

3. Standing Plans are ongoing plans used to provide guidance for tasks
performed repeatedly within the organization.

4. Contingency Plans are plans that define company responses to

specific situations such as emergencies and setbacks.
Organizing
Knowledge of the following terminology is important to understand organizing
the second function of management.
1.Organizing is the development of organizational resources to achieve strategic
goals.
2. Organizational Structure is the framework in which the organization defines
how tasks are divided, resources are developed, and departments are coordinated.
3. Organizational Chart is the visual representation of an organization's
structure.
4. Work Specification is the degree to which organizational tasks are subdivided
into individual jobs. This is called the division of labor.
5. Chain of Command is an unbroken line of authority that links all individuals.
Organizing
6. Authority is the formal and legitimate right of a manager to make decisions, to issue orders, and
to allocate resources to achieve organizationally desired outcomes.
7. Responsibility is the employees' duty to perform the assigned task or activity.
8. Accountability is the duty of people with authority and responsibility to repo and justify task
outcomes to those above them in the chain of command.
9. Delegation is what process managers use to transfer authority and responsibility to positions
below them in the hierarchy.
How to Delegate:
a. Delegate the whole task.
b. Select the right person.
c. Ensure that authority is equal to responsibility.
d. Give thorough instructions.
e. Maintain feedback.
Organizing
10. Line Authority is a form of authority in which individuals in management
positions have the formal power to direct and control immediate subordinates.
11. Staff authority is a form of authority granted to staff specialists in their areas of
expertise.
12. Span of Management or Span of Control is the number of employees who
report to a supervisor.
Departmentalization is the basis on which individuals are grouped into
departments and departments into total organizations.

1. Functional Structure is an organizational structure in which positions are

grouped into departments based on skills, expertise, and resource use.
2. Divisional Structure is an organization structure in which departments are
grouped based on similar organizational outputs.
3. Cross-functional Team is a group of employees assigned to a functional
department that meets as a team to resolve mutual problems.
4. Permanent Team is a group of participants from several functions who are
permanently assigned to solve ongoing problems of common interest.
5. Network Structure is an organization structure that disaggregates major
functions into separate companies that are broken by a small headquarters organization.
Departmentalization
6. Tall Structure is a management structure characterized by an overall narrow span of
management and a relatively large number of hierarchical levels.
7. Flat Structure is a management structure characterized by an overall broad span of
control and relatively few hierarchical levels.
8. Centralization is the location of decision authority near top organizational levels.
9. Decentralization is the location of decision authority near lower organizational
levels.
10. Formalization is the written document used to direct and control employees.
Functional versus Divisional Structures
>>>Functional Structure
Leading is the use of influence to motivate employees to achieve organizational goals. Leadership is the
quality that inspires and motivates people beyond their normal levels of performance.

Leaders come in the different types, such as:

Types of Leader
1. A Transactional Leader is one who classifies subordinates' role and task requirements,
initiates structure, provides rewards, and displays consideration for subordinates.
2. A Charismatic Leader is a leader who has the ability to motivate subordinates to
transcend their expected performance.
3. A Transformational Leader is a leader distinguished by a special ability to bring about
innovation and change.
4. An Interactive leader is a leader who is concerned with consensus building, is open and
inclusive, and encourages participation.
5. A Servant Leader is a leader who works to fulfill subordinates' needs and goals as well
as to achieve the organization's larger mission.
Six Traits that Differentiate Leaders from Nonleaders

1. Drive. Leaders exhibit a high effort level. They have a relatively high desire for achievement,
they are ambitious, they have a lot of energy, they are tirelessly persistent in their activities, and they
show initiative.
2. Desire to Lead. Leaders have a strong desire to influence and lead others. They demonstrate the
willingness to take responsibility.
3. Honesty and Integrity. Leaders build trusting relationships between themselves and followers
by being truthful or no deceitful and by showing high consistency between word and deed.
4. Self-confidence. Followers look to leaders for an absence of self-doubt. Leaders, therefore,
need to show self-confidence in order to convince followers of the rightness of goals and decisions.
5. Intelligence. Leaders need to be intelligent enough to gather, synthesize, and interpret large
amounts of information; and to be able to create visions, solve problems and make correct decisions.
6. Job-relevant Knowledge. Effective leaders have a high degree of knowledge about the
company, industry, and technical matters. In-depth knowledge allows leaders to make well-informed
decisions and to understand the implications of those decisions.
 Motivation is defined as the arousal, direction, and persistence of behaviour. This definition was introduced by psychologists
and management thinkers who also came up with theories in motivation.

Some of these theories are:

1. Content theory is a group of theories that emphasizes the needs that motivate people.
2. Hierarchy of Needs theory is a content theory that proposes that people are motivated by five categories
of needs - physiological, safety, belongingness, esteem, and self- actualization that exist in a hierarchical order.
3. ERG Theory is a modification of the Hierarchy of Needs theory that proposes three categories of needs:
existence, relatedness, and growth.
a. Existence needs. These are the needs for physical well-being.
b. Relatedness needs. These pertain to the need for satisfactory
relationships with others.
c. Growth needs. These focus on the development of human
potential and the desire for personal growth
and increased competence.
 Control
Organizational control is the
systematic process through which
managers regulate organizational
activities to make them consistent with
expectations established in plans,
targets, and standards of performance.
 Standards are established prior to performance. For example, the
grading system in schools are planned and put in place before
students are accepted. Students are graded based on their day-to-
day performance in class such as recitations, tests, projects, and
participations in class activities.

 Grades are monitored and compared with the passing and failing
marks. If many are failing, probably a corrective action is
necessary, such as a change in teaching method. If many students
are still failing, perhaps a revision of the grading system is
necessary to allow them to meet expectations.

 This process is also applied in business organizations. For

example: a reward is given to an employee who has never been
late in reporting for work for the last five years. Office time is set
at 8:00 AM up to 12:00 noon and 1:00 PM to 5:00 PM. To
determine the punctuality of the employees, a daily time record
(DTR) needs to be punched in a bundy clock every time
employees come in and out of the office. This DTR is reviewed
periodically and kept for future verification. But who can meet
the standard for five years? This is absurd! Six months or one
year would be more reasonable.
The Types of Control are:

1. Feed Forward Control or Preliminary or Preventive Quality Control is one that

focuses on human, material, and financial resources flowing into the organization.
2. Concurrent Control consists of monitoring ongoing employee activities to ensure their
consistency with established standards.
3. Feedback Control or Output Control focuses on the organization's output.
4. Bureaucratic Control is the use of rules, policies, hierarchy of authority, reward
systems, and other formal devices to influence employee behaviour and assess performance.
Qualities of Effective Control Systems

The control systems:

1. are linked to strategy
2. are accepted by members
3. are accurate
4. are flexible
5. are timely
6. point out exceptions
7. are within reasonable costs
8. provide corrective measures
 To be effective, the control system should be linked to strategy. For example, the strategy is
attaining goals through motivated human resources. Thus, a reward system is put in place (as seen in
the Control Process diagram). The reward system is also accepted by employees, hence, their
willingness to punch in and out their DTR's. Entries in the DTR are accurate. Realizing that five years
is unrealistic, the standard is changed from five years to six months or one year. Therefore, the control
system should not be fixed but flexible and timely for people to meet the standard on time. Exceptions
are included to make it clear that there are, for example, people who are not qualified in the reward
system like supervisors and managers.

Rewards are limited. The cost of the reward is equated with the standard required. For example,
not being late for six months or one year cannot be equated with P 100,000 reward.

As mentioned, corrective measures are essential if the system is found to be defective.

The Importance of Control
1. to ensure that activities are done according to plans
2. to ensure that goals are attained.
3. to assist managers in delegation of authority - controls will motivate managers to d
elegate
Areas of Control
Control is applied in the following areas:
Areas of Control
Control is applied in the following areas:

1. Information - The managers need the right information at the right time and in the right
place. Information should be accurate, complete, and available when needed and not
voluminous nor excessive.
2. Finance - The company sets budgets or standards, collects data on actual operation,
compares budget with actual, and uses analytical financial tools like ratios and trends.
3. Operations - The company monitors activities to ensure they are on schedule, within
allowable costs, according to quality standards, and equipment are properly monitored.
4. Employees Behavior- The company sets criteria for hiring employees, designs job
specifications, orients and supervises, trains, mentors, sets rewards systems, and develops
organizational culture.
The Traditional Bureaucratic Control are:
1. Rules and Regulations
a. Standard Operating Procedures (SOPs)
b. policies that prescribe correct employee behaviour
2. Management control systems
a. budgeting
b. financial report
c. reward system
d. operations management
e. Management By Objective (MBO)
3. Hierarchy of authority
a. central authority
b. supervision
4. Total Quality Control (TQM)
5. Formalized selection and training
6. Information Technology
 Evolution of Management
These approaches attempt to explain the real issues facing managers and provide them with tools to solve future problems.
Some authors call them management theories. Theory is a coherent group of assumptions that explains the relationship between two
or more observable facts and that provides a sound basis for predicting future events.

A. Classical Approaches provide the foundation for management and organization as they exist today.
A. Classical Approaches provide the foundation for management and organization as
they exist today.
Contemporary Approaches – represent the cornerstones of modern management
thoughts.
Management Theorists

Contributions of Key Advocates of Management Theories

Over the years, many management advocates or writers of management theories have
contributed concepts, theories, and principles that enriched the field of management as a science.
Most of them are listed here, such as:

Barnard, Chester. Mr. Barnard observed that people in the organization come
together to achieve goals that they cannot achieve alone and that organizations can operate
efficiently and survive the difficult times if goals are kept in balance with the needs of the
individuals working for such goals. This can be done if managers understand the individual's zone
of indifference. This refers to what the workers would do without questioning the authority of the
manager.
Deming, Edwards. He introduced the concept of total quality management (TQM) which means
quality is the concern of everybody in the organization from the directors down to the rank and file. He also
came up with the 14 points of quality, which are:

1. Create constancy of purpose for improvement of product/service

2. Adopt a new philosophy
3. Cease dependence on mass inspection
4. End the practice of awarding business on price tag alone
5. Constantly and forever improve the system of production and service
6. Institute modern methods of training on the job
7. Institute leadership
8. Drive out fear
9. Break down barriers between staff areas
10. Eliminate slogans, exhortations, and targets for the work force
11. Eliminate numerical quotas
12. Remove barriers to pride of workmanship
13. Institute a vigorous program of education and training
14. Take action to accomplish the transformation
Drucker, Peter. He is a modern management thinker who introduced the concept of efficiency and
effectiveness.

Fayol, Henri. He was a French industrialist who believed that management can be viewed from the
top level and covers the whole organization. He introduced the fourteen principles of management.
These are:
1. Division of Work 12. Stability of the Staff
2. Authority 13. Initiative
3. Discipline 14. Esprit de Corps
4. Unity of Command
5. Unity of Direction
6. Subordination of individual interest to common good
7. Remuneration
8. Centralization & Decentralization
9. Hierarchy
10. Order
11. Equity
Follet, Mary. She defined management as the art of getting things done through people”. She believes in
the power of people that can accomplish things if their diverse talents are combined.

Gantt, Henry. Mr. Gantt was an industrial engineer who introduced the "bonus" system as conceived by
Frederick Taylor. Worker's performance was posted on colored charts - black if his performance was within
standards and red if he fell below the expectations. This chart, called Gantt Chart, was improved and then
later used in production scheduling. The Gantt Chart is more commonly represented by bars showing time
required to complete activities in a project.

Gilbreth, Frank and Lillian. They concluded in their time and motion study” that motion and fatigue are
intertwined. Therefore, if motion is reduced, fatigue is also reduced.

Mayo, Elton and his associates. They concluded in their study, called the "Hawthorne Effect”, that the
workers perform well if they are treated well; that man is a social being and therefore respond more to work-
group relationships than to management pressures.
McGregor, Douglas. He introduced theory X and theory Y about the manager's perception of the
behaviour of workers. Theory X is a negative belief that workers are lazy and need to be watched. In theory
Y, the manager believes workers love their work and that they are professionals and are responsible people.

Munsterberg, Hugo. He introduced the use of psychology in organizations emphasizing on the behavior
of people in the workplace. He is known as the father of applied psychology.

Murphy, Edwards Jr. Murphy's Law states that: (1) nothing is as simple as it seems; (2) everything
takes longer than it should; (3) if anything can go wrong, it will; and (4) if there are two or more ways of
doing something and one of them can lead to catastrophe, then someone will do it. This law is important in
planning for the worst scenario to be able to cope with the unexpected.

Ouchi, William. He studied how Japanese business organizations are managed hoping to find solutions to
some of the problems of American business. His study resulted in his introduction of Theory Z.
Pareto, Vilfredo. Mr. Pareto was a mathematician who introduced the 80/20 principle or theory of
distribution. For example, 80% of the total budget for materials is spent for 20% of the materials, or 80% of
the total absences in the class was incurred by 20% of the students or 80% of the total store sales is to 20%
of all customers. His contribution led the way to the use of quantitative techniques in management.

Parkinson, Northcote Cyril. Parkinson's Law suggests that organizational growth is based on two
premises, such as (1) the desire of managers to have more subordinates as a measure of success, and (2) the
personnel of an organization perform work for another. Based on the Parkinson's Law, work tends to expand
to fill the time of employees.

Peter, Lawrence. According to him, managers tend to be promoted to their level of incompetence

Peters, Thomas J. Considering rapid changes in the environment, Mr. Peters introduced the concept of
dynamic engagement. He challenged managers to think beyond change.
Taylor, Frederick. Having introduced the use of science in management, Mr. Taylor was named the
father of scientific management. He believed that there is one best way of performing tasks and selecting
workers. He also introduced the differential rate system and cost analysis. Specifically, Mr. Taylor
introduced the following principles:
1. The development of scientific approach in work activity
2. Efficient selection and training of employees
3. Cooperation and harmonious relationship between management and labor
4. Division of work between managers and workers

Waterman, Robert. He, together with his partner, Tom Peters introduced the MBWA technique or
Management by Walking Around. The technique calls for managers to take time out of their offices and
walk around" through various departments and company facilities to observe operations, identify problems
and solve them on the spot and interact with employees.

Weber, Max. According to Mr. Weber, organizations operate on a formal and hierarchical structure that
defines lines of authority.
Theories in Organizational Behavior

The three major theories of organizational behaviour are Theory X, Theory Y, and Theory Z.
A. Theory X
The assumptions of Theory X are:
1. The average human being has an inherent dislike of work and will avoid it if he can;
2. Because of this human characteristic of dislike of work, most people must be coerced,
controlled, directed, or threatened with punishment to get them to put forth adequate effort
toward the achievement of organizational objectives; and,
3. The average human being prefers to be directed, wishes to avoid responsibility, has relatively
little ambition, and wants security above all.
B. Theory Y
1. The assumptions of Theory Y are as follows. They are opposite to those of Theory X:
2. The expenditure of physical and mental effort in work is as natural as play or rest;
3. External control and the threat of punishment are not the only means of bringing about effort
toward organizational objectives;
4. Commitment of objectives is a result of the rewards associated with their achievement;
5. The average human being learns, under proper conditions not only to accept but also to seek
responsibility;
6. The capacity to exercise a relatively high degree of imagination, ingenuity, and creativity in
the solution of organizational problems is widely, not narrowly, distributed in the population;
and,
7. Under conditions of modern industrial life, the intellectual potentialities of the average human
being are only partially utilized
C. Theory Z

Theory Z is the Japanese Theory of Management. It features the creation of an

industrial team and a stable, cohesive work environment where employees feel affiliated, and
independent while sticking to the proper quality and control of the needs of the organization.
The Theory involves:

1. Lifetime employment 5. Less formal control systems

2. Nonspecialized careers 6. Consensus decision-making
3. Individual responsibilities 7. Slower rates of promotion
4. Concern for the total person
Managing the Human Resources
Workers work toward the fulfillment of business goals. They are the backbone of the enterprise. Hence, hiring
the right workers is vital.

Sources of Manpower
Potential employees can be sourced through:
 Job Fair. Schools, industry organizations, the government, or private institutions sponsor job fairs
with the objective of helping job seekers and employers meet each other. Employers joining a job
fair should know exactly what qualifications or traits of an applicant they are looking for and for
what positions. Employers are guided by a job description and job specification.
 Employment Agencies. Employment agencies have mushroomed over the years. This is a kind of
service that helps entrepreneurs or employers locate a job seeker for local or overseas employment.
 Internet. Posting in the internet a need for an employer is no longer uncommon these days given
the computer technology. For this reason, international sourcing is no longer improbable.
 Through Friends. Friends usually recommend people they know with the aim of helping them find
jobs, and normally friends help each other.
 Recruitment and Hiring
Employers do not only look at the physical appearance to hire
the person. They would like to know a lot of information about the
applicant, hence the many tools used in the process of recruitment and
hiring. Some of these tools are:
 Job Description. This pertains to the list of functions that the worker
is expected to perform. It includes the position title, the supervisor to
whom he shall report, salary range, and other information about the
job.
 Job Specifications. This refers to the qualifications, traits, and skills
needed to perform the job. Physical attributes, like height, may also be
included.
 Application Form. This form asks about some personal details about
the applicant, his educational qualifications, traits, skills, experience,
training, former employers, (if previously employed) and other
information which the employer feels are important. Such information
is checked and verified for truthfulness by asking some documents to
be attached to the application form like educational transcript of
records, police/NBI clearance, etc. A recent photograph (front view) is
also asked to be attached to the form.
 Recruitment and Hiring
 Interview Questions. A list of interview questions is prepared prior
to the interview. Sometimes these questions are already answered
in the application form, but it is asked just the same, for
verification purposes.
 Testing. This can be either a written test or a performance test
depending on the position applied for. A performance test is an
actual test. For example, an applicant for the position of baker is
tested by asking him to bake a cake and then the output is quality
tested.
 Recruitment and Hiring Process
The recruitment and hiring process can be easily understood based
on the diagram on Figure 15-2. Recruitment means trying to attract
applicants to apply for a position in a company. This is done through
advertisements in newspapers, radio/TV, the Internet, or through friends.

 Assuming an applicant is already applying for the position,

recruitment starts with a preliminary interview guided by a list of
questions. If the applicant passed this stage, he is asked to fill up an
application form and is scheduled for testing. Otherwise, he is
rejected. If he passed the test, he is asked to subject himself for
medical examination. If found to be fit for work, he is asked to report
for final interview where situations may be discussed and the
applicant is asked how he will respond to such situations. Wage rates
and readiness to start work are also discussed. If all is well, an
orientation is given to the new recruit. Company policies, rules,
assignments, functions, and others are discussed. He is also given a
copy of his job description and is introduced to the other personnel in
the organization. He is also asked to submit additional documents like
birth certificate, marriage contract (if married), SSS number, and Tax
Identification Number (TIN).
Employee Categories
Employees are categorized as follows:
 Casual/Temporary. As temporary employees, their stay should not reach six months. Otherwise, the
entrepreneur will be forced to give them a regular status as provided by law. Many entrepreneurs
terminate the services of casual workers after five months and rehires them if their performance is
satisfactory.
 Probationary. Employees on probation are those intended for permanent position. The length of
time involved is again not more than six (6) months.
 Contractual. Employees work in an organization based on a contract. The contract can be a year or
more, and the entrepreneur is not expected to hire the contractor for regular employment. The
service of the contractual worker expires at the termination of the contract.
 Permanent or Regular Employee. Regular employees enjoy all the benefits mandated by law plus
the benefits on the generosity of the employer. Their stay in the business is also unlimited
Training
In spite of their background, employees still need to be trained. The first training that they receive
upon joining the company is the orientation.

Training could be in the form of meetings, keeping employees informed about changes in the
company, like new policy, new rules, salary increase, or new benefits. Even a change in their uniform will
motivate them. It will give them the feeling that they belong.

Employees may also be sent to attend seminars or conferences outside the company.
Trainors may be asked to conduct a seminar for the employees. Topics like "How to Answer the
Phone Properly", talking to potential clients, or receiving inquiries may be trivial, but it will surely improve
employee performance and outlook. It will certainly improve company reputation.

For a growing business, at the expense of the company, loyal employees may be sent to take a
formal training about a certain field that the business plans to expand. For example, bread bakeshop plans
to expand to cakes and pastries, thus the loyal baker is sent to study cake decorating and pastry making.
Wage and Salary

Wage is the price for services rendered. It is a determinant whether the applicant will accept
the job offer or not or whether the entrepreneur will accept the applicant or not especially if
his asking price is too much. In all cases, the minimum wage law is the basis for
remuneration.

Different positions require different wages. Clerical positions are paid within the minimum
wage, while supervisory or managerial positions are paid more. To avoid wage inequalities, a
wage schedule is prepared, like the one below:
The ₱13,000 pay for a new supervisor will not be equal to the pay of a clerk
who has been with the company for several years and is already receiving a
maximum of ₱12,500. As maximum pay, he cannot expect any increase
anymore unless he moves to the next level position – that of a supervisor. It
is important, therefore, to improve one’s qualification for promotion
purposes, otherwise the pay is stuck at a certain level. The steps on the
schedule refer to the steps in salary adjustment.
Employee Benefits
Benefits are classified as monetary and non-monetary. The former refers to bonuses, 13th month pay,
allowances, and SSS employer's contributions, while the latter comes in the form of free uniform, free
accommodation, free food, free medical/dental assistance, and free use of company facilities like the
library and others.

Many benefits are mandated by law while others are based on the generosity of the employer. Regular
employees, for instance, are entitled to a 15-day paid sick leave and another 15 days paid vacation leave.

The Social Security System (SSS) contribution as mandated by law covers all employee categories.
Guided by the SSS schedule of premiums, a certain amount is deducted from the salary of the employee.
This amount is added to the employer's contribution and is remitted to the SSS office on or before the 10th
day of the following month of collection.
Reward System
job performance, a reward system is organized. This is made known to
everybody so that everybody is a candidate for the reward.

Sales personnel, for example, are given rewards based on amount of sales or
sales above targets. Non-sales personnel are rewarded based on punctuality,
high rating on performance evaluation, distinctive contributions or company
operation, loyalty, or number of years in service and so on.
Discipline
On the other side of the reward system is discipline. Erring employees are disciplined for non-
compliance of rules and regulations and violation of policies.

The wearing of uniform, for example, is an important rule. Customers would know who are the bona
fide employees of the establishment.
Disciplinary actions are progressive in nature, like:
1st offense - verbal warning
2nd offense - another verbal warning
3rd offense - written warning
4th offense - suspension
5th offense - termination from service
Labor Unions
A labor union is an organization of workers, ideally, that works as partners of the business owners or
managers in operating the business. In practice, however, this is not the case. The general feeling is
animosity. Workers believe management is taking advantage of them and is depriving them in terms of
wages and benefits. The owners or managers, on the other hand, wants too much -- more than what the
business is capable of giving them. Many times, both parties do not agree on issues, hence, a deadlock is
declared. Consequently, a strike or work stoppage is called by the Union.

Strikes can be peaceful or very unruly. A sit-down strike is peaceful because workers continue to report to
their place of work but refuse to do their job. Unruly strikes, on the other hand, is where workers shout
invectives directed to the owners/ managers and sometimes cause damage to company property. That is
why companies with unruly strikers are heavily guarded by policemen.

Workers also picket around the company premises. Placards are paraded in front of the company for people
to see their demands and appeals to management. More often a boycott (a call to customers not to patronize
the company's products) is also called