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Unit II: Management Functions
Planning
select goals and ways to attain them.
Organizing
assign responsibility for task accomplishment.
Performance: Attain goals, products, services, efficiency, effectiveness
Leading
use influence to motivate employees
Controlling
monitor activities and make corrections
Resources: Human, financial, raw materials, technological, information.
Goals - desired future circumstance or condition that the organization attempts to realize.
Plans - blueprint for goal achievement and specifies the necessary resource allocations, schedules.
Planning
Process of developing, organizing, and evaluating the activities required to achieve a desired goal.
Core management activity
Choosing a goal and developing a method or strategy to achieve a goal.
Represents the purposeful efforts take by an organization to maximize its future success.
Benefits of planning:
Source of Motivation and Commitment
Can reduce the uncertainty for employees and clarify what they should accomplish.
Resource Allocation
Help managers decide where they need to allocate resources, such as employees, money, and equipment.
Guide to Action
Focused attention on specific targets and direct employee efforts towards important outcomes.
Set a Standard of Performance
Establish performance criteria so managers can measure whether things are on-or off-track.
Planning is a foundational process that helps organizations:
Motivate employees by giving them clarity and purpose.
Allocate resources wisely to maximize efficiency and effectiveness.
Guide actions by aligning efforts with organizational priorities.
Measure performance by setting clear standards and benchmarks
“There is no better way to improve the performance of the people who work for a company than to have them set goals and develop strategies for achieving those goals.”
Levels of Plan
External Message
Legitimacy for investors, customers, suppliers, community.
Mission Statement
Internal Message
Legitimacy, motivation, resource allocation, guides, rationale, standards.
Strategic Goals / Plans Senior Management (Organization as a whole)
Tactical Goals / Plans Middle Management (Major Divisions, functions)
Operational Goals / Plans Lower Management (Departments, Individuals)
Organizational Goals
Mission
Organizations reason for existence
Describes the organizations values, aspirations, and reason for being.
Basis for development of subsequent goals and plans.
Mission Statement
A broadly stated definition of the organizations basic business scope and operations that distinguishes it form similar types of organizations.
Strategic Goals
Broad statements describing where the organization wants to be in the future.
Strategic Plans
Actions steps by which the organization intends to attain strategic goals.
Blueprint that defines the organizational activities and resource allocations required for meeting these targets.
Long - term, and may define organizational action steps for between 2-5 years.
Tactical Goals
Results that major divisions and departments within the organization intend to achieve.
Tactical Plans
Designed to help execute major strategic plans and to accomplish a specific part of the organizations strategy.
Have a shorter time horizon of about a year or so.
Operational Goals
Specific results expected from departments, work groups and individuals.
Operational Plans
Developed at the lower levels of the organization to specify action steps towards achieving operational goals and to support tactical plans.
The department manager’s tool for daily and weekly operations.
Stated in quantitative terms
Specifies plans for supervisors, department managers, and individual employees.
Organizational Planning Process
Develop the Plan
Define mission, vision
Set goals
Translate the Plan
Define tactical plans and objectives
Develop strategy map
Define contingency plans and scenarios
Identify intelligence teams
Plan Operations
Define operational foals and plans
Select measures and targets
Set stretch goals
Crisis planning
Execute the Plan
Management by objectives
Performance dashboards
Single use plans
Decentralized responsibility
Monitor and Learn
Hold planning reviews
Hold operational reviews
Characteristics of Effective Goals
Are specific and measurable
Have a defined time period
Cover key result areas
Are challenging but realistic
Are linked to rewards
Limitations of Planning
Create a False Sense of Certainty
All planning is based on assumptions, and managers can’t know what the future holds for their industry or for their competitors, suppliers and customers.
Cause Rigidity in a Turbulent Environment
Planning can lock the organization into specific goals, plans, and time frames, which may no longer be appropriate.
Can get in the way of Intuition and Creativity
Managers sometimes squelch creative ideas from employees that do not fit with predetermined action plans.
Barriers to Planning
Failure to commit enough time and effort to planning process
Interpersonal issues involving individuals or groups
Inadequate planning skills
Constantly changing circumstances and environment
Failure to properly implement plan due to lack of time / resources
Inability to monitor post-planning progress
Lack of support from management
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Decision Making
Process of choosing a specific course of action from several possible alternatives, whether it has been planned or is yet to be planned.
Recognition of Decision Requirement
Diagnosis and Analysis of Causes
Development of Alternatives
Selection of Desired Alternative
Implementation of Chosen Alternative
Evaluation and Feedback
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Organizing
Deployment of organization resources to achieve strategic goals
Reflected in the organizations division of labor into specific departments and jobs, formal lines of authority, and mechanisms of coordinating diverse organization tasks.
Organizing Structure
Set of formal tasks assigned to individuals and departments
Formal reporting relationships, including lines of authority, decision responsibility, number of hierarchical levels, and spans of managers control.
Design of systems to ensure effective coordination of employees across departments.
Organization Chart
Visual representation of an organizations structure.
Features of Vertical Structure
Work specialization
Chain of command
Authority, responsibility, and delegation
Span of management
Centralisation and decentralisation
Formalization
Feature of Vertical Structure
Work Specialization
Division of labor, or the degree to which organizational tasks are subdivided into separate jobs.
Advantage: Job can be performed efficiently
Disadvantage: Employees are isolated and do only a single, boring job. May create separation and hinder coordination essential for organizations to be effective.
Chain of Command
Unbroken line of authority that links all persons in an organizations and shows reports to whom.
Two underlying principles:
Unity of command means each employee is held accountable to only one supervisor; and
Scalar principle refers to clearly defined line of authority in the organization that includes all employees.
Authority
the formal and legitimate right of a manager to make decisions, issue orders and allocate resources to achieve organizationally desired outcomes.
Authority is vested in organizational positions, not people.
Authority flows down the vertical hierarchy.
Authority is accepted by subordinates.
Responsibility
is the duty to perform the task or activity an employee or other stakeholder has been assigned. This is usually commensurate to the authority given.
Accountability
means people with authority and responsibility are subject to reporting and justifying task outcomes to those above them in the chain of command.
Delegation
is the process managers use to transfer authority and responsibility to positions below them in the hierarchy.
Span of Management
Also called span of control
Number of employees who report to a supervisor.
When supervisors must be closely involved with subordinates, the span should be small; and when supervisors need little involvement with subordinates, it can be large.
Tall organization (pababa)
Flat Organization (straight / one horizontal line)
Centralization - means that decision authority is located at a single point, usually near the top of the organization.
In a company, this means the boss (or a small group of top managers) makes all the big decisions, and the employees carry them out. It’s like having one captain steering the ship while everyone else rows.
Decentralization - means decision authority is pushed out and downward to lower organization levels.
In a company, this means lower-level employees or managers get to make decisions about their work. For example, a store manager might decide how to arrange the products, or a team leader might decide how to solve a problem. The boss doesn’t have to make every single decision.
Decentralization relieves the burden on top managers, make greater use of workers skills and abilities, ensure that decisions are made close to the action by well-informed people and permit more rapid response to external changes.
Why is Decentralization Helpful?
Relieves the burden on top managers: If the boss has to make every decision, they’ll get overwhelmed. Decentralization lets others share the load.
Makes better use of workers’ skills and abilities: Employees often know their jobs really well. Letting them make decisions means they can use their knowledge and creativity.
Decisions are made close to the action: Imagine you’re playing soccer, and the coach is sitting far away in the stands. They might not see everything happening on the field. But if the players can make decisions, they can react quickly to what’s happening right in front of them. In a company, employees who are closer to the work (like a factory worker or a salesperson) can make better, faster decisions because they know what’s going on.
Faster response to changes: If the boss has to approve every decision, it can take a long time. But if employees can make decisions, they can act quickly when something changes (like a customer’s request or a problem in production).
Formalization
Process of creating written documentation to direct and control employees.
Documentation includes rule books, policies, procedures, job descriptions and regulations.
Five approaches to Structural Design
Vertical Functional
Positions are grouped into departments based on similar skills, expertise and resource use,
Advantage:
Efficient use of resources, economies of scale.
In-depth skill specialization and development.
Career progress within functional departments.
Top manager direction and control.
Excellent coordination within functions.
High-quality technical problem-solving.
Disadvantage:
Poor communications across functional departments
Slow response to external changes, lagging innovation
Decisions concentrated at top hierarchy, creating delay
Responsibility for problem is difficult to pinpoints
Limited view of organizational goals by employees
Limited general management training for employees
Divisional Structure
Departments are grouped based on similar organizational outputs.
Advantages:
Fast response, flexibility in an unstable environment
Fosters concern for customers needs
Excellent coordination across functional departments
Easy pinpointing of responsibility for product problems
Emphasis on overall product and division goals
Development of general management skills
Disadvantages:
Duplication of resources across divisions
Less technical depth and specialization in divisions
Poor coordination across divisions
Less top management control
Competition for corporate resources
Horizontal Matrix
Utilizes functional and divisional chains of command simultaneously in the same part of the organization; involves dual line of authority.
Advantage:
More efficient use of resources than single hierarchy
Flexibility, adaptability to changing environment
Development of both general and specialist management skills
Interdisciplinary cooperation, expertise available to all divisions
Enlarged tasks for employees
Disadvantages
Frustration and confusion from dual chain of command
High conflict between two sides of matrix
Many meetings, more discussion than action
Human relations training needed
Power dominance by one side of matrix
Team-Based approach (Cross-Functional Team)
Group of employees assigned to a functional department that meets as a team to resolve mutual problems.
Advantages:
Reduced barriers among departments, increased compromise.
Less response time, quicker decisions.
Better morale, enthusiasm from employee involvement
Reduced administrative overheads
Disadvantages
Dual loyalties and conflicts
Time and resources spent on meetings
Unplanned decentralization
Network Structure
Disaggregates major functions into separate organizations that are brokered by a small headquarters organization.
Advantages:
Global competitiveness
Workforce flexibility / challenge
Reduced administrative overhead
Disadvantages:
No heads-on control
Can lose organizational part
Employee loyalty weakened.
NoteStudied by 43 peopleNoteStudied by 14 peopleNoteStudied by 14 peopleNoteStudied by 17 peopleNoteStudied by 4 peopleNoteStudied by 230 people