PRINCIPLES OF

MANAGEMENT
AND ORGANIZATION
BACHELOR OF SCIENCE IN BUSINESS ADMINISTRATION
MAJOR IN MARKETING MANAGEMENT

Compiled by
Assoc. Prof. ANGELITA NOCON

2021
 TABLE OF CONTENTS

UNIT I: INTRODUCTION TO MANAGEMENT

Lesson 1 Definition of Management as a Process and as a Structure
Lesson 2 Management Functions and Processes
Lesson 3 Management Skills
Lesson 4 Scientific Management

UNIT II: INTRODUCTION TO ORGANIZATION

Lesson 1 Definition of Organization
Lesson 2 Organizational Levels
Lesson 3 Organizational Types
Lesson 4 Organizational Sizes
Lesson 5 Cross-National Transferability Historical Background
Lesson 6 General Administrative Theorists
Lesson 7 Quantitative Approach into Perspectives

UNIT III: CULTURE AND ENVIRONMENT IN MANAGEMENT AND

ORGANIZATION
Lesson 1 Manager’s Dilemma
Lesson 2 Managing Workforce Diversity
Lesson 3 Managing in a Global Environment
Lesson 4 Organizational Culture
Lesson 5 The Environment

UNIT IV: PLANNING

Lesson 1 Foundations of Planning
Lesson 2 Organizational Goals and Objectives
Lesson 3 Strategic Management
Lesson 4 Planning Tools and Techniques

UNIT V: ORGANIZING
Lesson 1 Organizational Structure and Design
Lesson 2 Contingency Approach to Organizational Design
Lesson 3 Applications of Organizational Design
Lesson 4 Technology, Communications and Organizational Design
Lesson 5 Forms of Commercial Organization
Lesson 6 The Art of Delegation

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UNIT VI: STAFFING
Lesson 1 Human Resource Management
Lesson 2 Strategic Human Resource Management
Lesson 3 Definition of Staffing
Lesson 4 Steps in Staffing Process
Lesson 5 Personnel Decisions
Lesson 6 Job Design and Redesign

UNIT VII: DIRECTING

Lesson 1 Towards Understanding Organizational Behavior
Lesson 2 Foundations of Behavior
Lesson 3 Communication
Lesson 4 Leadership
Lesson 5 Motivation

UNIT VIII: CONTROLLING

Lesson 1 Foundations of Control
Lesson 2 Types of Control
Lesson 3 Ethical Issues on Control
Lesson 4 Control Tools and Techniques

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 PRINCIPLES OF MANAGEMENT AND ORGANIZATION

COURSE OVERVIEW
“Principles of Management and Organization” – The goal of this course is to give students
an introduction of management functions and their importance in businesses and
corporations. The goal of this course is to educate students with the fundamental
competencies they'll need as marketing students. This course emphasizes intellectual,
evolutionary, leadership, and professional expertise that are relevant to managing roles
in companies. It provides an overview of the important managerial abilities needed to
design, organize, supervise, coordinate, and make decisions in an organization. It gives
you a basis for analyzing the difficulties that come up while managing and being
supervised, and it will enable you contribute more effectively to the companies you
represent. This course develops a "systems" perspective of enterprises, which examines
organizations as a part of a larger framework, which includes, but is not confined to, the
work atmosphere, goals, hierarchy, responsibilities, employees, and products.

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 UNIT I: INTRODUCTION TO MANAGEMENT

UNIT OVERVIEW
Globalization is increasingly becoming a cooperative endeavor among all other walks of
people world-wide. Whether in government, business, the church, civil societies, civic
organizations, and other forms of enterprises, the effectiveness with which people work
together toward the attainment of enterprise goals is largely determined by the ability of
those who hold managerial positions. It is of paramount important to have scientific
knowledge, engineering skills, technical abilities, or vast material resources unless the
quality of managing organized groups permits effective coordination of resources.

Indeed, it is a characteristic of every effective group effort designed to attain group goals
at the least cost of time, money, material, or discomfort, that it adopts the basic processes
and principles of management. Managing is vital in all organized cooperation, as well as
at all levels of organizational hierarchy. It is the function not only of the company CEO
and the Army Commander, but also of the shop foreman and the company
warehouseman. In working with many organizations and enterprises, the writers have
heard repeatedly that the “problem” with the organization is “the management”, meaning
personnel at a higher level in the organization.

While problems and difficulties may appear at all levels of management, effective and
perceptive management demands that all those responsible for the work of others at all
levels and in any type of organization, regard themselves as managers. It is in this sense
that this term is used in this book.

LEARNING OUTCOME: After a successful completion of this unit, you should be able to:
• Explain the definition of Management as a process and as a structure
• Differentiate the different management functions and processes
• Determine the various managerial skills and their differences
• Understand scientific management
COURSE MATERIALS

Guide Questions:
1. What can you say about management as a process and as a structure?
2. How can you identify the different management functions and processes?
3. What is the importance of knowing the various managerial skills and their
differences
4. What are the advantages of scientific management in modern society?

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 Lesson 1: Definition of Management as a Process and as a Structure

It is very hard to have an all-encompassing definition of management which covers all its
characteristics. Management is a very important function which is concerned with how
enterprise works. Management has been defined in a number of ways. One of them,
according to Haiman, was “management as a process”.

Management as a process refers to the different processes or steps of management –

right from planning to organizing, staffing, supervising, and controlling. Management in
this context has been defined as the process of getting things done by and in cooperation
with others.

Management as a structure refers to a system where people who belong to the firm’s
hierarchy determines how different aspects of the organization will interact. Different
levels of management and their different roles or positions will participate to attain the
goals of the design process, with upper management creating the organization’s initial
plan of actions.

Management is variedly referred as: the manner of treating, directing, carrying on, or
using for a purpose; conduct, administration, cautious handling or treatment; or the body
of directors or managers of any undertaking, concern, or interest collectively, as according
to F.J. Meine. There are many definitions of management. They emphasize one or the
other important aspects of management activity, such as:

(1) According to Koontz, “Management is the art of getting things done with people
and through informally organized groups. It is the art of creating an environment in
which people can perform as individuals and yet cooperate towards attainment of
group goals. It is the art of removing blocks for such a performance, a way of
optimizing efficiency in reaching goals.”

(2) According to Dalton E. McFarlan, “Management is the fundamental integrating and

operating mechanism underlying organized effort.”

(3) According to George R. Terry, “Management is a distinct process… performed to

determine and accomplish stated objectives by the use of human beings and other
resources.”

(4) According to Harold Koontz and Cyrill O’Donnell, “Management is the creation and
maintenance of an enterprise where individuals, working together in groups, can
perform efficiently and effectively towards the attainment of group goals.”

(5) According to W. Jack Duncan, “Management consists of all organizational

activities that involve goal formation and accomplishment, performance, appraisal,
and the development of an operating philosophy that ensures the organization’s
survival within the social system.”

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The above-mentioned definitions of management are the effective motivation of men and
the efficient utilization of resources for the achievement of pre-determined goals and
objectives. Employees have to be motivated so that they may perform the tasks assigned
to them, as programmed by management. Resources refer to money, materials, methods,
machines, markets and moments. The effective motivation of men and the efficient
utilization of resources are the main mission of an enterprise to attain its objectives and
goals.

Lesson 2: Management Functions and Processes

The functions of management are said to be weaving together of the various parts so that
all factors will function properly and all persons will cooperate for the common purpose.
All managers or executives have to perform certain functions in an organization to get the
things moving. According to Koontz and O’Donnell, the functions of management are:
planning, organizing, staffing, directing, and controlling.

Planning. Planning is an indispensable function of management determining the

objectives to be achieved and the course of action to be allowed to achieve them. It is a
methodic technique of looking ahead in order to meet work requirements and to reduce
the amount of mental efforts required while the work is being done. It is also a mental
effort by which managers anticipate the possible causes or factors that may affect or
change the activities and objectives of a particular organization, with the end in view of
controlling the nature and direction of change and determining what measures of actions
are necessary to accomplish predetermined objectives and goals.

The managers at the top level in an organization devote more time on planning as
compared to the managers at the lower levels. Planning includes the following:

(1) determination of objectives;

(2) forecasting;
(3) search of alternative courses of action and their evaluation;
(4) drawing policies and procedures; and,
(5) budgeting
Planning emphasizes prevention rather than correction of delays. Planning is a pervasive,
continuous and never-ending activity. It leads to more effective and faster achievements
in any organization and enhances the ability of the organization to adapt to future
condition. The importance of planning is to remember the value of time, the virtue of
patience, and the joy of originating.

Organizing. Organizing involves the establishment of an organizational structure,

determination and enumeration of the activities required to achieve the goals of an
organization and each part of it, the grouping of these activities, the assignments of such
groups of activities to a manager, the delegation of authority to carry them out, and
provision for coordination of authority and informal relationships horizontally and vertically
in the organizational structure.

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Organizing is the grouping together of men and establishing relationships among them,
defining the authority and responsibility that the personnel have in the use of the
organization’s material resources to attain predetermined goals and objectives. The
process of organizing involves the following steps:

(1) determination of objectives;

(2) division of activities;
(3) fitting individuals to specific jobs; and,
(4) developing relationship in terms of authorities and responsibilities.

Organizing can be viewed as a bridge connecting the conceptual ideas developed in

creating and planning the specific means for attaining these ideas. Organizing therefore,
greatly contributes to the effectiveness and efficiency of an organization.

If in your mind’s eye you see a successful venture, a deal made, a

profit accomplished, it has a superb chance of actually happening.
Projecting your mind into a successful situation is the most powerful
means to achieve goals. If you spend time with pictures of failure in
your mind, you will orchestrate failure.
Estee Lauder

Staffing. Staffing as a management function is vital these days due to the rapid
advancement of technology, increasing size of organization and workers and complicated
behavior of people. Staffing includes manning and keeping manned, the positions created
by the organizational structure. It thus necessitates defining manpower requirements for
the job to be done, and includes inventory, appraising, and selecting applicants for
different positions, compensations, and training or otherwise developing both applicants
and incumbents to accomplish their task effectively.

Directing. Directing involves guiding and leading subordinates. The superior should
inculcate in his subordinates a keen appreciation of organizational traditions, culture,
history, vision, mission, objectives and policies. Subordinates learn the organizational
structure and the inter-departmental relationships and activities and personalities, their
roles, duties, and authorities. Once subordinates are properly oriented, the superior has
a continuing responsibility for clarifying their assignments, guiding them toward improved
performance, and encouraging them to work with dedication and confidence.

Controlling. Controlling is checking the work accomplished against plans or standards,

and making adjustments or corrections when new developments or unforeseen events
necessitates. It is the measurement and appraisal of activities performed by the
subordinates in order to make sure that the objectives and the plans devised to attain
them are being attained.

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Controlling involves the following:

(1) fixing standards;

(2) measurement of actual performance;
(3) comparing actual and planned performance;
(4) finding variances between the two and the reasons for the variance; and,
(5) taking corrective actions.

Lesson 3: Management Skills

Being a manager is a tough job, but being a great one is even tougher. Just consider the
array of knowledge and skills it takes to deal with a variety of people, tasks and business
needs. Here are the highest-ranked skills:

1. Building good working relationships with people at all levels.

The most important management skill, the survey found, is the ability to build good
relationships with people at all levels. For example, an approach to relationship building
described in the book focuses on creating "high-quality connections" through respectful
engagement.

2. Prioritizing tasks effectively for yourself and your team.

All of us have a huge number of things that we want to do or have to do. The demands
can often seem overwhelming, to us and the members of our team. This is why
prioritization is the second most important management skill.

3. Considering many factors in decision-making.

We've all seen how bad decisions can be when they're rushed or when financial concerns
are the only criteria used. This is why it pays to use a formal, structured process to think
a problem through thoroughly, including analyzing risk and exploring ethical
considerations.

4. Knowing the key principles of good communication.

Management is about getting things done by working with people. You can do this only if
you communicate effectively. This is where the 7 C's of Communication—clear, concise,
concrete, correct, coherent, complete, courteous—can help you get your message
through more clearly.

5. Understanding the needs of different stakeholders and communicating with

them appropriately.
As you spearhead bigger projects, it becomes increasingly important to manage the many
different groups of people who can support or undermine the work you do. This is where
it's important to develop good stakeholder analysis and stakeholder management skills.

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 6. Bringing people together to solve problems.
It's often tempting to try to solve problems on your own, but there are very many reasons
why it pays to bring together a team of experienced people. Gathering people for
brainstorming sessions is a good start, but it also pays to understand structured problem-
solving processes, know how to facilitate meetings well and be skilled in managing group
dynamics.

7. Developing new ideas to solve customers' problems.

A vast number of products and services now sell based on customer ratings and reviews.
To get top reviews, you need to provide something that meets the needs of customers
exceptionally well. Approaches like design thinking and ethnographic research can help
you develop highly satisfying products, and customer experience mapping can help you
deliver a satisfying customer journey.

8. Cultivating relationships with customers.

The way you do this depends on whether you serve consumer or business markets. When
you're dealing with consumers, you'll get great insights into customer groups by
segmenting your market and by developing customer personas representing these
different segments.

9. Building trust within your team.

When people don't trust one another in a team, they waste a huge amount of time
politicking. By contrast, people in trusting teams work efficiently and well, and they can
deliver wonderful results. To build trust, you need to lead by example, communicate
honestly and openly, get to know individuals as people, avoid blame, and discourage
behaviors that breach trust.

10. Using emotional intelligence.

All managers need emotional intelligence to be effective. This means having the self-
awareness, self-control, motivation, empathy and social skills needed to behave in a
mature, wise, empathetic way with the people around you. Emotionally intelligent
managers are a joy to work with, which is why they attract and retain the best people.

Even if you already feel like you have some of these skills, know that there is always more
to learn, and the results will show in your improved leadership. Practice them until they
become effortless, and, in time, not only will you perform better, you'll get better results
from your team and stand out as a talented leader within your organization.

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 Lesson 4: Scientific Management

Fredrick Winslow Taylor (March 20, 1856 - March 21, 1915) commonly known
as ‘Father of Scientific Management’ started his career as an operator and rose to the
position of chief engineer. He conducted various experiments during this process which
forms the basis of scientific management. It implies application of scientific principles for
studying & identifying management problems. According to Taylor, “Scientific
Management is an art of knowing exactly what you want your men to do and seeing that
they do it in the best and cheapest way”. It synthesizes and analyzes workflows. Its major
purpose is improving, especially labor productivity, economic efficiency. It was an old
effort to apply science to the engineering of the procedure and management. In Taylor’s
view, if a work is analyzed scientifically it will be possible to find one best way to do it.
Hence, scientific management is a thoughtful, organized, dual approach towards the job
of management against hit or miss or Rule of Thumb.

Objectives of Frederick Taylor Theory

The major objectives of Frederick Taylor’s contribution to management; are the maximum
improvement of workers. This improvement shows efficiency and effectiveness
performance. Such development is the revolution in management procedure and
employee’s actual performance.

If the procedures and scientific theory of management examples apply, it can hugely
change the following things. For instance:
• Prevent the wastage of time.
• Reduce the cost of production.
• Secure the labor in the industry.
• Increase the efficiency of the workers.
• Develop the relationship between workers and managers.
Functions of Scientific Management Approach

From Taylorism, we can find some significant functions. These functions positively help
the administrators in their organization’s leading. Such as:
• According to the skills and abilities, an employee must be selected.
• Incentives and wages have to install for enhancing their output and encouraging them.
• Implemented those methods which are based on scientific tasks.
• Carefully observe eradicating interruptions when the plan runs.
• In an organization, leadership should develop and standard.

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Principles of Scientific Management

1. Development of Science for each part of men’s job (replacement of rule of

thumb)
a. This principle suggests that work assigned to any employee should be
observed, analyzed with respect to each and every element and part and
time involved in it.
b. This means replacement of odd rule of thumb by the use of method of
enquiry, investigation, data collection, analysis and framing of rules.
c. Under scientific management, decisions are made on the basis of facts and
by the application of scientific decisions.

2. Scientific Selection, Training & Development of Workers

a. There should be scientifically designed procedure for the selection of
workers.
b. Physical, mental & other requirement should be specified for each and
every job.
c. Workers should be selected & trained to make them fit for the job.
d. The management has to provide opportunities for development of workers
having better capabilities.
e. According to Taylor efforts should be made to develop each employee to
his greatest level and efficiency & prosperity.

3. Co-operation between Management & workers or Harmony not discord

a. Taylor believed in co-operation and not individualism.
b. It is only through co-operation that the goals of the enterprise can be
achieved efficiently.
c. There should be no conflict between managers & workers.
d. Taylor believed that interest of employer & employees should be fully
harmonized so as to secure mutually understanding relations between
them.

4. Division of Responsibility
a. This principle determines the concrete nature of roles to be played by
different level of managers & workers.
b. The management should assume the responsibility of planning the work
whereas workers should be concerned with execution of task.
c. Thus, planning is to be separated from execution.

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 5. Mental Revolution
a. The workers and managers should have a complete change of outlook
towards their mutual relation and work effort.
b. It requires that management should create suitable working condition and
solve all problems scientifically.
c. Similarly, workers should attend their jobs with utmost attention, devotion
and carefulness. They should not waste the resources of enterprise.
d. Handsome remuneration should be provided to workers to boost up their
moral.
e. It will create a sense of belongingness among worker.
f. They will be disciplined, loyal and sincere in fulfilling the task assigned to
them.
g. There will be more production and economical growth at a faster rate.

6. Maximum Prosperity for Employer & Employees

a. The aim of scientific management is to see maximum prosperity for
employer and employees.
b. It is important only when there is opportunity for each worker to attain his
highest efficiency.
c. Maximum output & optimum utilization of resources will bring higher profits
for the employer & better wages for the workers.
d. There should be maximum output in place of restricted output.
e. Both managers & workers should be paid handsomely.

REFERENCES
Book: Principles and Practices of Management and Organization by Salvador, Samuel
Mejia, Estelito Cabingan Bagunas and Ellinor Fua Geronimo (2008,2013, 2010, Allen
Adrian Books Inc.)

Higher Study Org (2021). Scientific management theory by taylor (5 principles & more).
Retrieved from https://higherstudy.org/scientific-management-theory-by-taylor/

Lumen Learning (n.d.). Defining organization. Retrieved from

https://courses.lumenlearning.com/boundless-management/chapter/defining-
organization/

Management Study Guide (n.d.). Scientific management by taylor. Retrieved from

https://www.managementstudyguide.com/scientificmanagement.htm

Moss, D. (2018). The top 10 management skills you need. SHRM Org. Retrieved from
https://www.shrm.org/hr-today/news/hr-magazine/book-blog/pages/the-top-10-
management-skills-you-need.aspx

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 ACTIVITIES / ASSESSMENTS

Instruction for Case Study

The case exercise below consists of a management situation for you to analyze and offer
solutions. You have to submit a Case Study Paper which will contain your answers to the
questions being provided after every case. The paper that you will submit is designed for
you to figuratively reflect about the situation, give your insight as a Marketing student, and
state what you learned from the class discussion. You will frame and define the problem,
analyze the situation, and offer or defend a resolution. This case exercise presents
realistic situation that will allow you to open your mind and prepare you to future similar
circumstances in the corporate field. The case, like the real world, do not have one “right
solution.” The challenge is for you to think critically about the situation presented and
make recommendations to solve the issue.

Purpose and Overview

The purpose of this case exercise is for students to develop their problem-solving skills
as well as their understanding of the course concepts being discussed, to be applied in
authentic situations. This kind of activity will enhance and train the intelligence and critical
thinking skills of a 21st century learner. The “case exercise process” should be used
multiple times during the semester to accomplish the objective of this course.

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CASE STUDY 1

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 UNIT II: INTRODUCTION TO ORGANIZATION

UNIT OVERVIEW
The modern world of business requires large aggregations of people working together to
produce its goods and services effectively and efficiently. Organizations are the especial
strategies established to bring order out of chaos when groups work together. As stated
by Peter F. Drucker, “things that are unorganized are indeed like individual sounds; they
must set in a suitable relationship to get a pleasant tune.” Organization determines the
relationship among people, work, and resources. Whether groups of people exist in a
common effort, organization must be employed to get productive results. In this chapter
the term “organization” is used in two different things: As a process and as a structure of
relationship.

LEARNING OUTCOME: After a successful completion of this unit, you should be able to:
• Know the definition of organization as well as organizational levels, types, and
sizes
• Appreciate the cross-national transferability historical background
• Learn about general administrative theorists
• Identify quantitative approach into perspectives

COURSE MATERIALS

Guide Questions:
1. What are your ideas about the definition of organization as well as organizational
levels, types, and sizes?
2. Why is there a need to discuss the cross-national transferability historical
background?
3. What are the usual concepts about general administrative theorists?
4. How can you identify quantitative approach into perspectives?

Lesson 1: Definition of Organization

Organization as a Process
Organization is considered as a dynamic process and a managerial activity which is
necessary for planning the utilization of the organization’s / company resources, plant and
equipment materials, money and people to attain the various objectives and goals. To
coordinate the employee’s activities in an orderly and efficiently manner is very necessary
for bringing unity and harmony of their efforts in the pursuit of common goals. The
definitions of organization as advanced by Allen, Theo Haimann, Koontz and O’Donnell,
Oliver Sheldon and G.E. Milward, etc. are as follows:

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 1. According to Allen, “An organization is a process of identifying and grouping the
work to be performed, defining and delegating responsibility and authority and
establishing relationship for the purpose of enabling people to work most
effectively together in accomplishing objectives.”

What You Should Know

On Recognition: “I can live for two months on one good
compliment.”
-MARK TWAIN

2. According to Koontz and O’Donnell, “Organization involves the grouping of

activities necessary to accomplish goals and plans, the assignment of these
activities to appropriate departments and the provision for authority delegation and
coordination.”

3. According to T. Haimann, “Organization is a process of defining and grouping the

activities of the enterprise and establishing the authority relationship among them.”

Organization as a Structure of Relationship

Organization refers to the structure of relationship among positions and jobs which is
created to achieve certain objectives and goals. The definitions of organization as to
structure of relationship are the following:

1. According to Mooney and Reily, “Organization is a form of every human

association for the attainment of a common purpose.”

2. According to Chester Barnard, “Organization is a system of cooperative activities

of two or more persons.”

From the above definitions, we can safely conclude that “organization” is the mechanism
developed by management to unite the efforts of the people in order to realize the
objectives set forth.

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 Lesson 2: Organizational Levels

Three Levels of Organization in Management

As you probably have discovered, levels of organization in management establish a
chain of command. When managers know exactly what authority they have, and respect
the status of those at other levels, an organization is more likely to run smoothly and
efficiently.

1. Top-level managers, or the administrators

2. Middle-level managers, or the executors
3. Lower-level managers, or the first-line, operative managers

• Who are they?

• What are they responsible for?
• What do they do?

1. Top Managers Chart the Course

Who are they?

Members of the board of directors and the “other chiefs,” Marketing 91 says: The chief
operating officer, chief executive officer and chief financial officer.

What are they responsible for?

Setting policies and goals and doing strategic planning.

What do they do?

• Establish policies and procedures
• Determine short- and long-term goals
• Prepare strategic plans
• Draft budgets
• Function as a point of contact for outsiders, particularly government officials and
members of the media
• Appoint middle-level managers
• Oversee activities of departments below them and provide guidance, when
necessary

2. Middle Managers Direct Work Flows

Who are they?

Branch and department managers, who may be divided into even smaller groups: Junior
and senior middle-level managers.

What are they responsible for?

They take direction from top-level managers and ensure that lower-level managers
follow through.

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What do they do?
• Execute directions from top-level managers by communicating them to lower-level
managers
• Interpret and explain policies and procedures
• Manage work activities within departments or divisions
• Evaluate the performance of junior managers
• Keep top-level managers apprised
• Serve as a communication link between lower-level workers and top management
• Participate in the recruitment of lower-level managers

3. Lower Managers Directly Supervise

Who are they?

Supervisors and other first-line managers, who may include a foreman or
superintendent.

What are they responsible for?

They give instructions and manage employees, ensuring that work gets done.

What do they do?

• Assign tasks and answer questions
• Train subordinates
• Monitor production quantity and quality
• Enforce company standards
• Mediate and resolve employee grievances and disciplinary issues
• Communicate employee concerns and suggestions to middle-level managers
• Assume responsibility for the materials and devices employees need to do their
jobs
• Motivate the front-line workers (a hugely important function since they often have
direct contact with a company’s customers)

Lesson 3: Organizational Types

The Types of Organization

There are two (2) types or organization: The Formal and the Informal. Both types are
necessary for any group action as two blades are essential to make a pair of scissors
workable, as stated by Qureshi:

1. Formal Organization. According to Edwin O’Stone, “Formal organization is a

number of persons who systematically and consciously combine their efforts for
the accomplishment of a common task.” A formal organization refers to the
structure of well-defined jobs, each bearing a definite measure of authority,
responsibility and accountability.

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 2. Informal Organization. Informal organization refers to the relationship between
people in an organization based on personal attitudes, emotions, prejudices, likes,
and dislikes, friendships and affiliations. These relationships are not developed
according to the rules and regulations implemented in the formal organization.

Benefits of Informal Organization:

1. It promotes sense of belongingness among members.
2. It helps members with their emotional problems.
3. Members of the group shall help one another in their jobs.
4. Members can create the necessary environment for innovation and creativity.
5. Information can be transmitted quickly among informal group members.
6. Informal groups provide its members a set of norms or standard to correct
behaviors. Their members are expected to adhere to those norms.
7. Informal organization may serve as a “check and balance” on the unlimited use of
authority by a manager.

It has been said that management did not establish informal organizations and neither
can management abolish them. Therefore, management should make sure that informal
organization remains secondary to formal organization. The most desirable combination
of formal and informal organization appears to be a predominant formal system to
maintain unity toward objectives, along with a well-developed informal system to maintain
group cohesiveness and teamwork. In other words, the informal organization needs to be
strong in support to the formal organization, but not strong enough to dominate the formal
organization.

Lesson 4: Organizational Sizes

SMB, SME, and Large Enterprise: Why Your Company Size Classification Matters

As you probably realize, these acronyms are size classifications for companies – and
your business most likely fits within one of the classifications. Although it may not seem
like a big deal, understanding how others classify your business can make a difference,
especially when it comes to choosing technology solutions that best fit your particular
business. Depending on whom you ask, there are several definitions and key
differentiators that influence the classification into which your business falls. The widely
accepted definition of each business size classification is based on the number of
employees and annual revenue – and even those classification ranges can vary. For
example, “SMB” includes the general term of small business, but a small business can
be broken down further. In addition to size and revenue, your buying habits and
technology needs also typically align with a particular business size classification. Many
technology solutions are built with these classifications in mind, or at least have features
and pricing that correlate to the business classifications. Understanding which category
your business falls into can help you define your objectives, specify capabilities, and then
match those to the right technology solutions.

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Here are some definitions and defining characteristics of the most commonly used
business classifications:

What is SMB?
What does the SMB acronym stand for?
SMB stands for Small and Medium-Sized Businesses

What is considered a small business? What is considered a medium-sized business?

Employees: 0-100 is considered a small-sized business; 100-999 is considered a
medium-sized business. Note that these size specifications may be defined differently by
some government organizations, such as the Small Business Administration (SBA) which
uses the size specifications as part of its process for granting small business loans and
for consideration of awarding Federal contracts.

What is SME?
What does the SME acronym stand for?
Small and Medium Enterprises. Also known as the “Mid-Market”

What is SME? How is SME different from SMB?

The SME definition is more globally-used than SMB, and is the official market phrase for
internationally-based enterprises such as the United Nations, World Bank, World Trade
Organization and the European Union.

Large enterprise determining features

• Employees: Over 1000 employees
• Annual Revenue: Over $1 billion
• IT Staff: Full time IT staff, including several specialists
• IT Skills: A wide variety of broad and specific skills
• Location: Several office locations domestically and internationally
• Large CapEx
• Main considerations for technology purchases include guaranteed up-time,
advanced features, and security
• In 2012, a large enterprise level company employed 9 million people in the US
(51.6% of all employees)

Small Business VS. Large Business: When Company Size Makes a Difference

As I mentioned, whether you are considered an SMB business, an SME, or a large

enterprise influences many things, such as how financial decisions are made, the way
your technology needs are framed, and how solution providers treat you during the sales
process. When dealing with SMBs, for example, solution providers are often trained to
focus on the cost savings and ease-of-use of the solution and are aware that budget is
usually a key factor influencing your decision. A vendor considers it highly likely that the
purchaser of the solution (you) will be the one using the solution on a daily basis.

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In the case of the enterprise level company, the provider won’t focus as much on price
and ease-of-use as it might on security and advanced features, for example. Keeping this
information in mind, if your individual circumstance strays from the norm, you should
inform the vendor so they can give you the specific information you need. Let’s say you
are an SMB business and happen to have multiple locations or a large CapEx, your
solution provider may be able to offer you a product or feature that they normally wouldn’t
mention to a smaller business.

Whether you are searching for advanced solution features, a cost-effective option, or an
easy-to-manage platform, knowing how your business is classified, the norms for that
classification, and how your needs compare to those “norms,” are all key to helping you
adequately compare technology solution vendors and then decide which solution is the
best fit for your business.

Lesson 5: Cross-National Transferability Historical Background

In recent decades, there have been many calls for a process of mutual learning between
countries with regard to establishing an environment in which entrepreneurship and
enterprise culture can flourish. This process of mutual learning has commonly involved
governments seeking to identify successful policy initiatives in other nations that can be
transferred to their own country.

Indeed, the selecting of policy measures from other nations for transfer to other countries
has been widely and variously used in recent years to foster not only women’s
entrepreneurship, but also entrepreneurship education, social entrepreneurship, and the
formalization of informal sector entrepreneurship to name a few.

Reinforcing this tendency to seek best practice in one country for transfer to others,
supranational organizations such as the World Bank have played an active role in
facilitating this mutual learning and encouraging the transfer of policies from one nation
to another, not least through its Doing Business Surveys which often pinpoint successful
policy initiatives in specific countries that other nations might replicate in their own. Until
now however, governments seeking to appraise the feasibility and transferability of policy
measures to their own country have often lacked a practical evaluation framework for
selecting and appraising policy measures.

When seeking to harness entrepreneurship and enterprise culture, governments often

seek to transfer policy measures successful in another country to their own. Until now
however, governments have often lacked a practical evaluation framework for selecting
policy measures and then appraising the feasibility and transferability of such measures.

This details how successful policy transfer and cross-national policy learning must be
informed by prospective policy analysis and testing the features of the specific policy
initiative against the specifics of the national context and circumstances, and then
establishes the criteria and processes through which potential policy adopters can identify

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promising policies used elsewhere to tackle similar problems in their own country and
assess their 'goodness of fit' prior to transfer to national realities.
Policy transfer is the spread of a policy – or some aspect of a policy – across units of
government1 that occurs as a result of the adopting unit having at least some knowledge
of the existence of the policy in other units.

Lesson 6: General Administrative Theorists

What is General Administrative Theory?

General Administrative Theory is a set of 14 principles of management, as set forth by

Henri Fayol, a French mining engineer and executive. Fayol was a French Mining
Engineer who recorded his industry methods. He ultimately became a management
theorist with perhaps the greatest effect of all prior management theorists. He is
considered the Father of Administrative Management Theory, often called Process
Theory or Structural Theory.

Fayol believed that the following principles could be applied to any business.

1. Division of Work
By having employees specialize in just a few tasks, they can become much more
efficient than having employees engage in every possible task. Though quite
correct, this principle resulted in deeply uninteresting jobs; employers have
subsequently added back tasks to make jobs more interesting.

2. Authority
Managers must be vested with authority, which gives them the right to give orders.
This principle has held up, though a general trend toward pushing decision making
deep down in the organization has shifted authority to more and more people.

3. Discipline
Employees must obey the governing rules of the organization. This principle is still
true and remains relevant.

4. Unity of Command
Each employee should only receive orders from one supervisor. This principle has
largely held up, though matrix organizations involve the use of two supervisors.
Also, teams are more likely to operate with reduced levels of supervision, instead
tackling issues as a group.

5. Unity of Direction
There should be one plan of action to guide employees. This principle is inherently
obvious; there cannot be multiple, possibly conflicting plans tugging employees in
different directions.

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 6. Subordination of Individuals to the Group
The interests of a single employee do not override those of the entire organization.
If this principle were to be violated, employees could refuse to work on essential
but uninteresting tasks.

7. Remuneration
Employees must be paid a fair wage. Though obvious, this principle points out that
employees will work harder if they are properly compensated for their work.
Subsequent research has found that remuneration only forms a part of the rewards
that employees tend to value.

8. Centralization
The amount of decision making should be properly balanced throughout the
organization, and not just at the top. This was a quite forward-thinking principle,
and foreshadowed the ongoing trend to empower employees well down in the
organizational structure.

9. Scalar Chain
There should be a direct line of authority from the top of the corporate hierarchy to
the bottom, so that any employee can contact a manager in the line of authority if
an issue arises that needs a decision. This concept is still largely operable.

10. Order
Employees must have the correct resources available to complete their jobs
properly, which includes a safe and clean workplace. Managers still spend an
enormous amount of their time ensuring that resources are properly organized.

11. Equity
Employees should be treated fairly and well. This statement was forward-thinking
when it was first promulgated, and has become more relevant as the value of
retaining top-grade employees has become more of a concern.

12. Stability of Tenure

There should be minimal employee turnover, which can be assisted by proper
personnel planning, so that new hires can be brought in in an orderly manner.

13. Initiative
Employees should be allowed to express their ideas, which make them more
involved in the organization and increase the competitiveness of the business.

14. Esprit de Corps

Managers should continually try to improve employee morale, which enhances the
mutual trust of employees and creates a more harmonious workplace.

Nearly all of these principles appear to be painfully obvious today, but were considered
quite leading-edge when they were developed in the late 1800s.

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Who are the Major Contributors to the Administrative Theory of Management?

The Administrative Theory of management is still very much integrated into our modern
understanding of organizations and management practice. Numerous theorists have
contributed to Administrative Management Theory. These theorists develop numerous
process-based approaches that identified management activities as sets of independent
functions. These functions take place at all levels of the organization, regardless of the
industry or nature of the managers responsibilities. Noteworthy administrative theorists
include:

• Max Weber (1864-1920) - Weber is credited with developing Bureaucracy Theory.

This theory was a contemporary of Scientific and pre-dated Administrative
Management theory. As such, we discuss Weber’s work as a section of
Management Theory.

• James D. Mooney (1884-1957): Mooney contributed to administrative

management theory through is book, Onward Industry! (1931), later republished
as The Principles of Organization. In his text, he applied administrative
management theory to organizations in various domestic and international
contexts.

• Luther H. Gulick (1892-1993): Gulick was a physician, administrator, and health

educator. He applied administrative management theory principles to government
and private organizations.

• George Terry (1909-1979) - Terry published the first text entitled, Principles of
Management. He adopted Fayol’s Functions Framework. He combined
commanding and controlling into actualizing. He defined a principle as a
fundamental statement providing a guide to action to be applied through scientific
methods.

• Harold Koontz (1909-1984) - Koontz approached management theory through

the lens of Human Relations within the organization. He advocated treating
employees tactfully as a management approach within the organization. He co-
authored the book Principles of Management with Cyril J. O'Donnell.

• Cyril O'Donnell (1900-1976) - As a theorist, professor, and consultant, he

published management papers and his text with Harold Koontz defining
management as a combination of functions.

• Ralph Davis (1894-1960) - Davis was an academic and consultant who expanded
upon Fayol's management functions model. He published a text, The
Fundamentals of Top Management (1951), in which he introduced a rational-
planning perspective to Fayol’s model. As such, his impact was primarily in the
field of management strategy.

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 • Henri Mintzberg (1939 - Present) - Mintzberg is a modern-era theorist who
critiqued Fayol's work as incomplete and impractical. He expanded upon the P-O-
L-C framework by focusing on the roles that managers assume within the
organization. The impact of his work has been substantial and is discussed as a
separate section of Classical Management Theory.

• Robert L. Katz (1933- 2010) - Katz expanded upon the functions of managers by
addressing the individual's skills that managers must possess at various levels
within the organization. This work spanned scientific and administrative theory as
is discussed as a separate section of classical management theory.

Lesson 7: Quantitative Approach into Perspectives

What is the Quantitative Approach to Management?

The quantitative approach applies statistics, optimization models, information models,

computer simulations, and other quantitative techniques to the management
process. Central to the quantitative approach is the principle that organizations are
decision-making units. These decision-making units can be made more efficiently using
mathematical models that place relevant factors into numerical terms.

The primary branches of quantitative management include:

• Management Science
• Operations Management
• Management Information Systems
• Total Quality Management

What are the Positive and Negative Aspects of Quantitative Management Theory?

Benefits include:
• It establishes relationships amongst quantifiable variables of decision-making
situations and facilitates disciplined thinking.
• Mathematical models help to derive precise and accurate results by analyzing
complex statistical data.
• It is useful in areas of planning and control where data is available in quantitative
terms. Decisions are based on data and logic rather than intuition and judgment.
• Computer-based Statistical packages are available which facilitate analysis of
qualitative data also (dummy variables are used to analyze the non-quantifiable
data).

Negatives include:
• Mathematical models cannot fully account for individual behaviors and attitudes.

25
 • The time needed to develop competence in quantitative techniques may delay the
development of other managerial skills.
• Mathematical models typically require a set of assumptions that may not be
realistic in an industrial setting.
• Among the different functions of management, its use is limited in organizing,
staffing and directing. It applies more in planning and control functions.
• It does not eliminate risk but only attempts to reduce it.
• It assumes that all the variables affecting the problem can be quantified in
numerical terms which is not always true.
• Decisions are often based on the availability of limited information.

REFERENCES

Book: Principles and Practices of Management and Organization by Salvador, Samuel

Mejia, Estelito Cabingan Bagunas and Ellinor Fua Geronimo (2008,2013, 2010, Allen
Adrian Books Inc.)
Accounting Tools (2021). General administrative theory definition. Retrieved from
https://www.accountingtools.com/articles/2018/11/17/general-administrative-theory
Gordon, J. (2021). Administrative theory of management. The Business Professor.
Retrieved from https://thebusinessprofessor.com/en_US/management-leadership-
organizational-behavior/administrative-theory-of-management
Gordon, J. (2021). Quantitative approach to management – explained. The Business
Professor. Retrieved from https://thebusinessprofessor.com/en_US/management-
leadership-organizational-behavior/quantitative-approach-to-management
Sangoma Customer Success Team (n.d.). SMB, SME, and large enterprise: Why your
company size classification matters. Retrieved from
https://www.sangoma.com/articles/smb-sme-large-enterprise-size-business-matters/
Wroblewski, M.T. (2020). Levels of business organization. Chron. Retrieved from
https://smallbusiness.chron.com/levels-business-organization-21354.html
Wolman, H. (2009). Policy transfer: What we know about what transfers, how it
happens, and how to do it. Retrieved from
https://gwipp.gwu.edu/sites/g/files/zaxdzs2181/f/downloads/Working_Paper_038_Policy
Transfer.pdf

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 ACTIVITIES / ASSESSMENTS

Instruction for Case Study

The case exercise below consists of a management situation for you to analyze and offer
solutions. You have to submit a Case Study Paper which will contain your answers to the
questions being provided after every case. The paper that you will submit is designed for
you to figuratively reflect about the situation, give your insight as a Marketing student, and
state what you learned from the class discussion. You will frame and define the problem,
analyze the situation, and offer or defend a resolution. This case exercise presents
realistic situation that will allow you to open your mind and prepare you to future similar
circumstances in the corporate field. The case, like the real world, do not have one “right
solution.” The challenge is for you to think critically about the situation presented and
make recommendations to solve the issue.

Purpose and Overview

The purpose of this case exercise is for students to develop their problem-solving skills
as well as their understanding of the course concepts being discussed, to be applied in
authentic situations. This kind of activity will enhance and train the intelligence and critical
thinking skills of a 21st century learner. The “case exercise process” should be used
multiple times during the semester to accomplish the objective of this course.

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CASE STUDY 2

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UNIT III: CULTURE AND ENVIRONMENT IN MANAGEMENT AND ORGANIZATION

UNIT OVERVIEW
The environment of any organization defines the culture, and is very crucial for the entities
that make up the organization. Their behavior, attitude and performance are directly
influenced by the culture although it varies from person to person. In short organizational
culture defines psychology, attitude, experience and belief of an organization and it is
very important for the employees to know the organization’s culture as it helps them in
understanding the objective and philosophy of the organization.

LEARNING OUTCOME: After a successful completion of this unit, you should be able to:
• Recall knowledge about manager’s dilemma and managing workforce diversity
• Discuss ideas about managing in a global environment
• Share thoughts regarding organizational culture and the environment
• Assess the impact of business national or global environment to its culture

COURSE MATERIALS

Guide Questions:
1. What are some basic misconceptions about manager’s dilemma and managing
workforce diversity?
2. How do corporate workers able to manage in a global environment?
3. What are the common issues related to organizational culture and the
environment?
4. How does workers of today respond to the impact of business national or global
environment to their culture?

Lesson 1: Manager’s Dilemma

As we have discussed throughout this course, managers face several challenges in their
efforts to keep their business organizations staffed with effective workforces. To
complicate matters, new challenges arise as the economic and social environments of
business change.

The Manager’s Dilemma is a phenomenon that affects roughly 80% of all managers. It
gets triggered when your demands and responsibilities increase, yet the resources you
have available to meet them do not. The problem with this inverse equation is that when
demands outpace capacity you end up negotiating with yourself about which fire of the
day you will put out while others are painfully neglected. I call this set of imperfect choices
the manager’s dilemma because it is truly a no-win situation without an obvious solution.
The dilemma is more than your everyday stress. There is a big difference between

29
episodic stress where you might say “I’m feeling maxed out!” and the consistent form of
stress caused when you are stuck in the manager’s dilemma. For one, stress increases
when you have too much work, too little time, and too few resources to do it. A temporary
imbalance of these factors triggers normal stress in the average person. If you are in an
industry that has peak periods where your workload fluctuates significantly, then you may
even be able to predict spikes in your level of stress.

What are the Two Major Views of Managers?

Members of an organization and third parties (outside of the organization) generally view
managers in two ways: Omnipotent View and Symbolic View. Each of these is discussed
below.

Omnipotent View of Management

The omnipotent view of managers is that the manager is all-knowing. She has total control
over the organizations mission and operations. That is, the manager is the visionary who
steers all aspects of the organization. Thus, she is individually responsible for the
performance of the organization.

Symbolic View of Management

This view is in direct contrast to the omnipotent view. It says that the role of high-level
management is largely symbolic. Managers have a limited effect on the organization
achieving its goals or objectives. While the adequate performance of management
responsibilities has an effect on organizational performance, the manager's activities are
not the driving force behind strong organizational performance.

Lesson 2: Managing Workforce Diversity

How Do You Manage Diversity in the Workplace?

While it’s clear that diversity can be very beneficial to an organization, it’s essential that
managers, as well as the employees in the organization, understand how to manage it
for both their own benefit as well as that of the organization. Conscious steps and
initiatives need to be taken within the company to enable the coexistence and thriving of
heterogeneous groups. Without these efforts, diversity could turn into a liability rather than
an advantage.

Here are five tips to help you manage a diverse workforce for the best results:

Start with Hiring. Let your hires resemble the country or community your company is
based in as much as possible. This can only be achieved by creating a diverse interview
panel that will ensure that the candidate selection process is free of prejudices and biases
and that candidates are strictly selected based on merit. Fair recruitment is crucial if
diversity will be managed successfully later on.

30
Create inclusive policies and practices. You’ll need to ensure your organization’s
overall practices and policies are inclusive of everyone and do not favor or discriminate a
certain set of employees.

Provide diversity training. Sometimes employees behave insensitively towards their

colleagues not because they want to be mean or discriminatory, but simply because they
do not know any better. Providing diversity training to your employees, especially those
in leadership positions, helps people understand and respect the differences in religion,
race, ethnicity, cultural values, gender and thinking styles.

Facilitate effective communication. One of the biggest challenges of managing a

diverse workforce is ensuring there is clear and effective communication throughout the
organization. To ensure everyone is on the same page, make sure that all the employees
understand all the procedures, policies, safety rules and any other important information.
Work to ensure that cultural and language barriers are overcome when communicating
with your employees.

Encourage interaction. It’s only through interactions with one another can diverse
groups of people really understand, appreciate and respect the differences that exist
among them. Encourage your employees to collaborate with colleagues who are
“different” from them.

Lesson 3: Managing in a Global Environment

Globalization defines our era. While it has created a great deal of debate in economic,
policy and grassroots circles, many aspects of the phenomenon remain virtual terra
incognita. The phenomenon of globalization presents business systems around the
world with both challenges and opportunities. Educational ideas germinated in one
setting, while perhaps not applicable to others, can yield helpful adaptations as nations
strive to prepare their children for a world in which shared science, lifestyles, information,
commodities, technologies, and increased communication across the boundaries of
languages and cultures become the norm. Nations are able to learn from one another to
advance their social well-being.

As global networks expand, countries in every corner of the Earth are affected. Major
forces are driving change at an accelerated pace, creating new challenges for
management systems worldwide. The globalization of economies has meant that an
increasing proportion of jobs are tied up to international trade. New discoveries in science
and the rapid spread of new technologies are “flattening the world” and organizing work
in virtual setting, not just in physical communities. Demographic movements are
increasing work force diversity in organizations in many nations worldwide.

31
The business environment and the labor market are changing rapidly in response to
globalization. Businesses are experimenting with new work arrangements. Changes in
the workplace, including new approaches to work arrangements and working time, must
be seen as part of a broader and dramatic process of change sweeping through the
economy. Companies that want to ensure their long-term viability need the flexibility to
respond to globalization.

Globalization and Management

Sheila Kamerman highlights three (3) trends – increased supply of services, increased
investment in parental leave, and increased emphasis on integrating character-based
education. Vivien Stewart describes how some other regions of the world are introducing
new kinds of knowledge and skills to prepare their students for “global competence” and
“global citizenship”. Alan Ruby examines in particular the increasing diversity of students,
the diversification of delivery systems, and the experiential learnings provided to the
students. And finally, Linda Darling-Hammond shows that there is much to be learned
from other countries’ systemic approaches from teachers’ preparation and induction up
to their professional developments.

What You Should Know

An idea is a point of departure and no more. As soon as
you elaborate it, it becomes transformed by though.

Pablo Picasso, Spanish Artist

Globalization as a New Era

Globalization as a New Era of Capitalism can be thought of as comprising a

“megastrategy” that goes beyond strategic planning to make the organization itself a
flexible system for adapting to the discontinuities of a new era. Thus, strategic
management should convert treats into useful strategic opportunities for growth and
development. After all, the world shall continue to move on, regardless of whatever is our
effort, so we have to face the choice of either being changed by it in ways we may not
like, changing with it to share in guiding the future.

Manpower in a Global Economy

The Philippines have 8 million overseas workers, 6 million are permanent immigrants and
only 2 million are traditional OFW. This data is one such interesting case study as written
by Bernie Chahiles-Magkilat in the Aug ust 20, 2008 issue of Manila Bulletin.

32
In Magkilat’s article, Richard Evans made the following comments and observations
regarding the globalized workforce:

1. Multicultural workforce is becoming a trend globally. Time will come when work
also become borderless.
2. The growing number of migrations only shows a trend that work is becoming
mobile. Migration is increasing by 15% annually.
3. The most that multinationals / transnationals do is rotating talents around the globe
placing the right people at the right place and at the right time.
4. As the future progresses and there is more parity in salary levels, there is no
distinction where you are working or what is your nationality.
5. There is now a new trend that work is becoming mobile and people movement
become long-term. Clients are recognizing that most advanced countries are
recognizing it. That is why we have to manage migration in a socially responsible
manner.
6. Governments are becoming concerned about losing their local talents and about
companies who are merely exporting talents.
7. Already, some countries are making migration process longer than two (2) to three
(3) years.
8. Labor-supplying countries, like the Philippines, must also implement measures to
make their labor pool more globally competitive.
9. There is a shift towards educational institution teaching / training vocational skills
and communication skills in English and Chinese.
10. Business and knowledge relocation should have a positive impact of what the
future should look like, not about cheap labor but developing a real balance.
11. Globalization of work is going to change the world just like what happened with the
personal computers.
12. With the globalization of work, more labor migration is expected.

Lesson 4: Organizational Culture

What is Organizational Culture?

Organizational culture is the collection of values, expectations, and practices that guide
and inform the actions of all team members. Think of it as the collection of traits that make
your company what it is. A great culture exemplifies positive traits that lead to improved
performance, while a dysfunctional company culture brings out qualities that can hinder
even the most successful organizations.

Qualities of a Great Organizational Culture

Every organization’s culture is different, and it’s important to retain what makes your
company unique. However, the cultures of high-performing organizations consistently
reflect certain qualities that you should seek to cultivate:

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Alignment comes when the company’s objectives and its employees’ motivations are all
pulling in the same direction. Exceptional organizations work to build continuous
alignment to their vision, purpose, and goals.

Appreciation can take many forms: a public kudos, a note of thanks, or a promotion.
A culture of appreciation is one in which all team members frequently provide recognition
and thanks for the contributions of others.

Trust is vital to an organization. With a culture of trust, team members can express
themselves and rely on others to have their back when they try something new.

Performance is key, as great companies create a culture that means business. In these
companies, talented employees motivate each other to excel, and, as shown above,
greater profitability and productivity are the results.

Resilience is a key quality in highly dynamic environments where change is continuous.

A resilient culture will teach leaders to watch for and respond to change with ease.

Teamwork encompasses collaboration, communication, and respect between team

members. When everyone on the team supports each other, employees will get more
done and feel happier while doing it.

Integrity, like trust, is vital to all teams when they rely on each other to make decisions,
interpret results, and form partnerships. Honesty and transparency are critical
components of this aspect of culture.

Innovation leads organizations to get the most out of available technologies, resources,
and markets. A culture of innovation means that you apply creative thinking to all aspects
of your business, even your own cultural initiatives.

Psychological safety provides the support employees need to take risks and provide
honest feedback. Remember that psychological safety starts at the team level, not the
individual level, so managers need to take the lead in creating a safe environment where
everyone feels comfortable contributing.

Now that you know what a great culture looks like, let’s tackle how to build one in your
organization.

8 Steps to Building a High-Performing Organizational Culture

Creating a great organizational culture requires developing and executing a plan with
clear objectives that you can work towards and measure. The 8 steps below should serve

34
as a roadmap for building a culture of continuity that will deliver long-term benefits across
your company.

1. Excel in recognition
Recognizing the contributions of all team members has a far-reaching, positive effect on
organizational culture. When everyone on the team recognizes the accomplishments of
others, individuals start to see how they’re part of a whole.

2. Enable employee voice

Creating a culture that values feedback and encourages employee voice is essential, as
failing to do so can lead to lost revenue and demotivated employees.

3. Make your leaders culture advocates

Your company’s success in building a strong workplace culture rests in the hands of team
leaders and managers. They need to openly and transparently discuss the organization’s
culture and values, and they should also be prepared to incorporate feedback from
employees into their cultural advocacy efforts.

4. Live by your company values

Your company’s values are the foundation of its culture. While crafting a mission
statement is a great start, living by company values means weaving them into every
aspect of your business.

5. Forge connections between team members

Building a workplace culture that can handle adversity requires establishing strong
connections between team members, but with increasingly remote and terse
communication, creating those bonds can be challenging.

6. Focus on learning and development

Great workplace cultures are formed by employees who are continually learning and
companies that invest in staff development. Training initiatives, coaching, and providing
employees with new responsibilities are all great ways to show your team that you’re
invested in their success.

7. Keep culture in mind from day one

When an employee’s perspective doesn’t match your company culture, internal discord
is likely to be the result. Organizations should hire for culture and reinforce it during the
onboarding process and beyond. Practices and procedures must be taught, and values
should be shared.

8. Personalize the employee experience

As modern consumers, your employees expect personalized experiences, so you need
to focus on ways to help each team member identify with your culture. Once you start

35
treating your employees with the same care you treat your customers, a culture
that motivates each individual at your organization is sure to follow.

Lesson 5: The Environment

A manager's environment is made up of constantly changing factors — both external and

internal — that affect the operation of the organization. If a new competitor appears in the
marketplace, the managerial environment is affected.

The External Environment

All outside factors that may affect an organization make up the external environment. The
external environment is divided into two parts:

Directly interactive: This environment has an immediate and firsthand impact upon the
organization. A new competitor entering the market is an example.

Indirectly interactive: This environment has a secondary and more distant effect upon
the organization. New legislation taking effect may have a great impact. For example,
complying with the Americans with Disabilities Act requires employers to update their
facilities to accommodate those with disabilities.

Directly interactive forces include owners, customers, suppliers, competitors, employees,

and employee unions. Management has a responsibility to each of these groups. Here
are some examples:

Owners expect managers to watch over their interests and provide a return on
investments.

Customers demand satisfaction with the products and services they purchase and use.

Suppliers require attentive communication, payment, and a strong working relationship

to provide needed resources.

Competitors present challenges as they vie for customers in a marketplace with similar
products or services.

Employees and employee unions provide both the people to do the jobs and the
representation of work force concerns to management.

The second type of external environment is the indirectly interactive forces. These forces
include sociocultural, political and legal, technological, economic, and global influences.
Indirectly interactive forces may impact one organization more than another simply
because of the nature of a particular business.

36
The sociocultural dimension is especially important because it determines the goods,
services, and standards that society values. The sociocultural force includes the
demographics and values of a particular customer base.

Demographics are measures of the various characteristics of the people and social
groups who make up a society. Age, gender, and income are examples of commonly
used demographic characteristics.

Values refer to certain beliefs that people have about different forms of behavior or
products. Changes in how a society values an item or a behavior can greatly affect a
business. (Think of all the fads that have come and gone!)

The political and legal dimensions of the external environment include regulatory
parameters within which an organization must operate. Political parties create or influence
laws, and business owners must abide by these laws. Tax policies, trade regulations, and
minimum wage legislation are just a few examples of political and legal issues that may
affect the way an organization operates.

The technological dimension of the external environment impacts the scientific processes
used in changing inputs (resources, labor, money) to outputs (goods and services). The
success of many organizations depends on how well they identify and respond to external
technological changes.

The economic dimension reflects worldwide financial conditions. Certain economic

conditions of special concern to organizations include interest rates, inflation,
unemployment rates, gross national product, and the value of the U.S. dollar against other
currencies.

The global dimension of the environment refers to factors in other countries that affect
U.S. organizations. Although the basic management functions of planning, organizing,
staffing, leading, and controlling are the same whether a company operates domestically
or internationally, managers encounter difficulties and risks on an international scale.
Whether it be unfamiliarity with language or customs or a problem within the country itself
(think mad cow disease), managers encounter global risks that they probably wouldn't
have encountered if they had stayed on their own shores.

37
 The Internal Environment

An organization's internal environment is composed of the elements within the

organization, including current employees, management, and especially corporate
culture, which defines employee behavior. The following sections describe some of the
elements that make up the internal environment.

An organization's mission statement describes what the organization stands for and
why it exists. It explains the overall purpose of the organization and includes the attributes
that distinguish it from other organizations of its type.

A mission statement should be more than words on a piece of paper; it should reveal a
company's philosophy, as well as its purpose. This declaration should be a living,
breathing document that provides information and inspiration for the members of the
organization. A mission statement should answer the questions, “What are our values?”
and “What do we stand for?” This statement provides focus for an organization by
rallying its members to work together to achieve its common goals.

But not all mission statements are effective in America's businesses. Effective mission
statements lead to effective efforts. In today's quality‐conscious and highly competitive
environments, an effective mission statement's purpose is centered on serving the
needs of customers. A good mission statement is precise in identifying the following
intents of a company:

Customers — who will be served

Products/services — what will be produced
Location — where the products/services will be produced
Philosophy — what ideology will be followed

Company policies are guidelines that govern how certain organizational situations are
addressed. Just as colleges maintain policies about admittance, grade appeals,
prerequisites, and waivers, companies establish policies to provide guidance to managers
who must make decisions about circumstances that occur frequently within their
organization. Company policies are an indication of an organization's personality and
should coincide with its mission statement.

The formal structure of an organization is the hierarchical arrangement of tasks and

people. This structure determines how information flows within the organization, which
departments are responsible for which activities, and where the decision‐making power
rests.

Some organizations use a chart to simplify the breakdown of its formal structure.
This organizational chart is a pictorial display of the official lines of authority and
communication within an organization.

38
 REFERENCES

Book: Principles and Practices of Management and Organization by Salvador, Samuel

Mejia, Estelito Cabingan Bagunas and Ellinor Fua Geronimo (2008,2013, 2010, Allen
Adrian Books Inc.)

Cliff Notes (n.d.). Principles of management. Retrieved from

https://www.cliffsnotes.com/study-guides/principles-of-management/managerial-
environments/introduction-to-managerial-environments

Gordon, J. (2021). Omnipotent and symbolic views of managers. The Business

Professor. Retrieved from https://thebusinessprofessor.com/en_US/management-
leadership-organizational-behavior/omnipotent-and-symbolic-views-of-managers

Ortiz, F. (2018). Managing diversity in the workplace – how to successfully go about it.
Blue Collar People. Retrieved from https://bluecollarpeople.com/managing-diversity-
workplace-successfully-go/

Rao, S. (2011). Organizational environment and culture. Citeman. Retrieved from

https://www.citeman.com/16536-organizational-environment-and-culture.html

Sostrin, J. (2015). Understanding the manager’s dilemma. Linked In. Retrieved from
https://www.linkedin.com/pulse/understanding-managers-dilemma-jesse-sostrin-phd

Wong, K. (2020). Organizational culture: Definition, importance, and development.

Achievers. Retrieved from https://www.achievers.com/blog/organizational-culture-
definition/

ACTIVITIES / ASSESSMENTS

Instruction for Case Study

The case exercise below consists of a management situation for you to analyze and offer
solutions. You have to submit a Case Study Paper which will contain your answers to the
questions being provided after every case. The paper that you will submit is designed for
you to figuratively reflect about the situation, give your insight as a Marketing student, and
state what you learned from the class discussion. You will frame and define the problem,
analyze the situation, and offer or defend a resolution. This case exercise presents
realistic situation that will allow you to open your mind and prepare you to future similar
circumstances in the corporate field. The case, like the real world, do not have one “right
solution.” The challenge is for you to think critically about the situation presented and
make recommendations to solve the issue.

39
Purpose and Overview
The purpose of this case exercise is for students to develop their problem-solving skills
as well as their understanding of the course concepts being discussed, to be applied in
authentic situations. This kind of activity will enhance and train the intelligence and critical
thinking skills of a 21st century learner. The “case exercise process” should be used
multiple times during the semester to accomplish the objective of this course.

CASE STUDY 3

40
 UNIT IV: PLANNING

UNIT OVERVIEW

Planning is the most basic of the management functions. This involves the selection from
among the alternatives of future courses of action for the business firm as a whole and
each department / division / unit within it. The plan can be simple or complex, long-term,
middle-term, and short-terms. Normally, the lower management group prepares short-
term plan, the middle-management group prepares middle-term plans, and the top
management group prepares long-term plans.

Planning is deciding in advance what is to be done, when, where, how and by whom it
is to be done. Thus, a plan is a determined course of action. It is an attempt on the part
of a manager to anticipate future in order to achieve better performance.

The following are the important elements of planning, according to M.U. Qureshi:
1. The essence of planning is looking ahead. It is always concerned with future.
2. It involves a pre-determined course of action.
3. This action course is determined after a careful study of alternative courses.
4. It is a continuous and integrated process.
5. It always has a dimension of time.
6. Its main objective is to achieve better results.

LEARNING OUTCOME: After a successful completion of this unit, you should be able to:
• Assess the importance of foundations of planning
• Distinguish the different organizational goals and objectives
• Summarize the definition of strategic management
• Identify different planning tools and techniques
• Explain the importance of planning to the success of the business

COURSE MATERIALS

Guide Questions:
1. How does the foundations of planning contribute to the overall success of a
company?
2. What are the different organizational goals and objectives that a business should
have?
3. What are the benefits of strategic management?
4. How helpful are the different planning tools and techniques in productivity?
5. What is the importance of planning to the success of the business?

41
 Lesson 1: Foundations of Planning

Planning can be defined as the primary management function as it establishes the basis
for all the other things managers do. As stated by Koontz and O'Donnel, the fundamental
purpose of planning is to "facilitate the accomplishment of enterprise and objectives". This
involves defining the organizational goals, establishing an overall strategy for achieving
those goals and developing a comprehensive set of plans to integrate and coordinate
organizational work. In other words, planning is a widely accepted approach regarding
the design and implementation of an effective formal system for a company's long-term
and short-term goals and the system design should be contingent on the specific
situational setting of each particular firm. A given formal planning system should thus be
"tailored" to the specific corporate strategy, the organizational structure of the firm, the
behavioral styles and preferences of management at hand, and other factors.

Formal planning consists of written, specific and long-term focus, and involves shared
goals for the organization. Formal strategic planning calls for an explicit process for
determining the firm's long-range objectives, procedures for generating and evaluating
alternative strategies, and a system for monitoring the results of the plan when
implemented. Some of the factors that could motivate an organization to use formal
planning process includes planning establishes coordinated effort where it gives
directions to managers and non-managers alike.

When all organizational members understand where the organizations is going and what
they must contribute to reach the objectives, they can begin to coordinate their activities
and cooperation and teamwork are fostered. By forcing managers to look ahead,
anticipate the change, consider the impact of change and develop appropriate responses,
planning reduces uncertainty. It also clarifies the consequences of the action the
managers might take in response to change. Planning is precisely what managers need
in a chaotic environment. Planning also reduces overlapping and wasteful activities.
Coordination before the fact is likely to uncover waste and redundancy. Furthermore,
when means and ends are clear, inefficiencies become obvious. Finally, planning
establishes the goals or standards that facilitate control. If organizational members are
unsure of what they are attempting to achieve, what are the ways to determine whether
they have achieved it. In planning, objectives are developed. In the controlling function of
management, performance is compared against the established objectives. If and when
significant deviations are identified, corrective action can be taken. Without planning, then
there truly cannot be effective control.

The formal planning process is an approach in which managers use to make decisions
depending on the organizational needs. Some of the companies that use formal planning
believe that it improves profits and growth. Formal strategic planning calls for an explicit
process for determining the firm's long-range objectives, procedures for generating and
evaluating alternative strategies, and a system for monitoring the results of the plan when
implemented. During each of these steps, it is important that a systematic procedure be
used to gain commitment of those who will be affected by the plan. Research shows a
rather consistent, positive relationship between the extent of planning activities and the

42
performance of businesses. This relationship is found despite differing definitions of small
businesses, ways of assessing formality of planning, and types of performance measures
utilized.

Lesson 2: Organizational Goals and Objectives

The objectives are general parts of the planning process. They are the end-results
towards which all business activities are directed. They are needed in every aspect where
performance and result directly and vitally affect the survival and success of the firm. In
other words, the objective of the firm justifies its existence.

According to Robert C. Appley, “Objectives are goals; they are aims which management
and administration wish the organization to achieve.” In other words, goals, aims, and
purposes are also used to signify objectives. Although these terms have different
meaning, the term “objectives” cover all these terms from a broader perspective.

Characteristics of Business Objectives

1. They are multiple in nature. Business firm can never have only one objective. Peter
Drucker has classified the following objectives: market standing, innovation,
productivity, physical and financial resources, profitability, performance and
development, worker’s performance and attitudes and finally fulfilling public
personality.

2. Objectives have hierarchy. Objectives are being set in every level of the
organizational hierarchy. All objectives should always be directed to the overall
objectives of the firm.

3. Objectives form a network. Objectives are interdependent and mutually supportive

and the accomplishment of one objective does not necessarily mean the
immediate attainment of other objectives.

4. Objectives may be long-range or short-range. There are two (2) general types of
objectives in business: Long-range and short-range. The long-range objectives are
stated in general and broad terms while short-range objectives are stated in
specific and definite terms.

5. Business objectives are verifiable. Objectives are expressly stated in numerical

terms so that they may be verifiable. Verifiable objectives provide standards
against which to measure actual performance.

Important benefits that can be derived from the objectives:

1. They bring unity of planning.
2. Objectives are the best means to decentralization of authority and responsibilities.
3. Objectives provide better coordination among personnel and the allocation and
use of resources.

43
 4. Objectives motivate individuals. They specify the purpose of each job and fit the
individual purposes and goals into the overall goals.
5. Objectives give the basic standards for control by way pf classifying the expected
results.

Lesson 3: Strategic Management

Strategic management is the planned use of a business' resources to reach company

goals and objectives. Strategic management requires ongoing evaluation of the
processes and procedures within an organization and external factors that may impact
how the company functions.

Benefits of Strategic Management

Achieving organizational goals takes planning and patience. Strategic management can
help companies reach their goals. Strategic management ensures the steps necessary
to reach a business goal are implemented company-wide.

Strategic management offers many benefits to companies that use it, including:

• Competitive advantage: Strategic management gives businesses an advantage

over competitors because its proactive nature means your company will always be
aware of the changing market.

• Achieving goals: Strategic management helps keep goals achievable by using a

clear and dynamic process for formulating steps and implementation.

• Sustainable growth: Strategic management has been shown to lead to more

efficient organizational performance, which leads to manageable growth.

• Cohesive organization: Strategic management necessitates communication and

goal implementation company-wide. An organization that is working in unison
towards a goal is more likely to achieve that goal.

• Increased managerial awareness: Strategic management means looking toward

the company's future. If managers do this consistently, they will be more aware of
industry trends and challenges.

Five steps of strategic management

While there are different approaches and frameworks for strategic management, there
are generally the same five steps in the process:
1. Identification
2. Analysis
3. Formation
4. Execution
5. Evaluation

44
1. Identification
The first step in strategic management is evaluating the company’s current direction. This
often includes understanding the company’s goal, mission and overall strategic direction.
Assessing where the company’s current process will help you achieve your goal.

2. Analysis
Once you understand the current process, you must analyze the details. A SWOT
analysis, or identification of strengths, weaknesses, opportunities and threats, is a useful
tool.

3. Formation
Once you have the information you need, it is time to create an action plan for reaching
the goal. Make sure the steps are clear, focused and directly related to the goal.

4. Execution
Follow the steps outlined in your strategic plan. Make sure that all stakeholders are
implementing the plan as designed for maximum efficiency.

5. Evaluation
Evaluate the final product. Did you achieve your goal? Was the process implemented
appropriately company-wide? Based on your answers to these questions, you can reflect
and revise as needed.

Lesson 4: Planning Tools and Techniques

Policies

According to George R. Ferry, “Policy is a verbal, written or implied overall guide setting
up boundaries that supply the general units and directions in which managerial action will
take place.” Policies are specific guidelines and constraints for managerial thinking on
decision-making and action. Policies provide the general framework within which the
decision makers are expected to operate while making organizational decisions. They are
the basic guides to be consistent in decision-making.

The purpose of policy formulations are the following:

1. To ensure that there will be no deviation from what has been planned
2. To ensure that ensure consistency of decision-making
3. To provide a guide for thinking in future action and plans
4. To serve as guide posts in the interpretation of business activities and actions

Classification of Policies
1. Originated Policies. These are policies being formulated by the top managers.
These policies order the subordinates how to act in a given situation. They are also
being called as basic policies.

45
 2. Appealed Policy. When a subordinate is in doubt, he may seek the opinion of his
superior. The decision of the superior is said to be known as appealed policy, which
becomes widely known among subordinates as basis for their future actions.
3. External Policies. These are policies imposed on business firms by outside
agencies.
4. Functional Policies. These are policies prepared for different functional
departments: production policy, product policy, financial plan, personnel policy,
and industrial relations policy, among others.
5. Policies according to organizational levels
a. Basic policies being used by the top management levels
b. General policies being used by middle management levels
c. Departmental policies being used by lower management levels

Characteristics of Good Policies

1. Policies must be known and understood by all who are affected by them.
2. Policies should be stable and adoptable.
3. Policies must be consistent within the firm at all management levels.
4. Policies must be sincere and clean.
5. Policies must be realistic and practical.

Important Uses of Policies

1. To inform the special public about the firm’s vision, mission, and objectives for their
guidance in their dealings
2. To serve as basis in the firm’s special public relationships
3. To serve as basis and guide in labor relations
4. To enable managers to make decisions under their respective areas or on
recurring problems
5. To justify the actions of managers about problems presented to them for decision
6. To provide uniformity and consistency in decision-making
7. To enable managers to delegate routinary activities to their subordinates in order
to give them more time for their important functions

Procedures

Procedures are crystal clear administrative specifications prescribing the chronological

order in which repetitive activity is initiated, carried forward and controlled. In other words,
procedures are generally formulated for repetitive activities so that the same steps shall
be followed every time the activities are being performed.

Routinary activities can be performed more effectively and efficiently with the use of good
procedures.

Differences between Policies and Procedures

1. Policies are guides to decision-making while procedures are guides to action.

46
 2. Policies provide allowance for interpretation and discretion while procedures are
more rigid, definite, and specific.
3. Policies are parts of the strategies of the firm while procedures are operational and
tactical tools.
4. Policies are basic things which are the basis in the formulation of procedures.
5. As a general rule, policies are formulated by top management levels while
procedures are laid down by lower management levels.

Forecasting

Forecasting is an attempt to foretell or predict future trends, events, or conditions from

known facts and to prepare for the expected changes in business or industry. Forecasting
involves the act of making a detailed analysis of the past and present to gain a foresight
for the future. Thus, forecasting becomes the process of anticipating the future course of
events and trends.

Important Characteristics of Forecasting

1. Forecasts are the estimates for future trends.
2. These estimates for the future are based on the analysis of past and present
circumstances.
3. Some systematic and scientific techniques are used for the analysis of past trends
and then forecasting the future.
4. Business forecasting can predict possible changes in order to bring accurate and
realistic decisions.

Important Elements of Forecasting (According to James Redfields):

1. Developing the groundwork. This is the first element in forecasting. It involves the
collection of important information relating to the product or services of the firm,
target market, competitors and the general environment of the industry and
society. The study of these important facts helps managers not only in evaluating
the present market position but in predicting the future of the firm.
2. Estimating future business trends. In sales forecasting, the trend values are best
determined on the basis of forecasting.

Leadership is not a role but a

point of view.

Major General John Stanford

47
 3. Comparing actual results with the estimated figures. This step will compare the
actual results with that being forecasted. This shall provide good opportunities to
discuss and evaluate the variances, the possible reasons and future trends.
4. Refining the forecasts. Forecasting is not an exact science. It is just plain and
simple estimate or prediction, thus, management is expected to always review the
forecasts from time to time to make necessary adjustments on the plans, in order
to avoid unnecessary expenses.

Henri Fayol was the first authority in management who recognized the importance of
forecasting in business operations. According to him, “A plan of an organization is the
synthesis of the various forecasts: annual, long-term, short-term or special, etc., etc.” He
further stated, “Purveyance for forecasting is the essence of managership.” In other
words, without proper forecasting no plan can be formulated and without planning, no firm
can be operated successfully.

However, forecasting is just predicting the future conditions; they are not the actual
business conditions. Forecasts are only estimates of business trends. The following are
the important limitations of forecasting:
1. Forecasts are not final and conclusive.
2. Forecasts are not definitely true.
3. Forecasts are based on some assumptions and estimates.
4. The world of business is a dynamic world and conditions keep on changing from
time to time.

Thus, business conditions and its future can never be forecasted or predicted accurately.

48
 REFERENCES

Book: Principles and Practices of Management and Organization by Salvador, Samuel

Mejia, Estelito Cabingan Bagunas and Ellinor Fua Geronimo (2008,2013, 2010, Allen
Adrian Books Inc.)

Indeed Editorial Team (2021). Strategic management: Definition, purpose, and

example. Indeed Career Guide. Retrieved from https://www.indeed.com/career-
advice/career-development/what-is-strategic-management

Uni Assignment Centre (n.d.). The foundations of planning management essay.

Retrieved from https://www.uniassignment.com/essay-samples/management/the-
foundations-of-planning-management-essay.php

ACTIVITIES / ASSESSMENTS

Instruction for Case Study

The case exercise below consists of a management situation for you to analyze and offer
solutions. You have to submit a Case Study Paper which will contain your answers to the
questions being provided after every case. The paper that you will submit is designed for
you to figuratively reflect about the situation, give your insight as a Marketing student, and
state what you learned from the class discussion. You will frame and define the problem,
analyze the situation, and offer or defend a resolution. This case exercise presents
realistic situation that will allow you to open your mind and prepare you to future similar
circumstances in the corporate field. The case, like the real world, do not have one “right
solution.” The challenge is for you to think critically about the situation presented and
make recommendations to solve the issue.

Purpose and Overview

The purpose of this case exercise is for students to develop their problem-solving skills
as well as their understanding of the course concepts being discussed, to be applied in
authentic situations. This kind of activity will enhance and train the intelligence and critical
thinking skills of a 21st century learner. The “case exercise process” should be used
multiple times during the semester to accomplish the objective of this course.

49
CASE STUDY 4

50
 UNIT V: ORGANIZING

UNIT OVERVIEW
In setting up a business firm, one of the important components is the establishment of an
appropriate organizational structure. The structure signifies the hierarchical arrangement
of various positions in the firm. It shows the distribution of authority and responsibility
formally in the organization. The structure may be simple or comprehensive, but it can
generally be identified as belonging to certain well-defined forms.

LEARNING OUTCOME: After a successful completion of this unit, you should be able to:
• State organization as a process and as a structure
• Understand contingency approach to organizational design
• List the different types of organizational structures and its applicability,
advantages and disadvantages
• Describe the different forms of commercial organization and their advantages
and disadvantages
• Infer knowledge about the process of delegation and discuss its elements

COURSE MATERIALS

Guide Questions:
1. How can you differentiate organization as a process and as a structure?
2. What are the advantages of a contingency approach to organizational design?
3. What are the different types of organizational structures and its applicability,
advantages and disadvantages?
4. What are the different forms of commercial organizations and how does they
contrast each other?
5. How can the process of delegation and its elements contribute to employees’
competencies?

Lesson 1: Organizational Structure and Design

The Line Type of Organization

The line type of organizational structure is historically the oldest type where there is a
direct flow of authority from one top position to immediate subordinate levels. The concept
of the line type holds that in any organization derived from a scalar process, there must
be a single head who commands it. This is known by different terminologies: the scalar
type, military type, vertical type, and departmental type. All other types of internal
organizational structure have mostly been modifications of the line organization.

51
 Six essential qualities are the key to success: sincerity,
personal integrity, humility, courtesy, wisdom and
charity.

Dr. William Menninger

The Functional Type of Organization

In the functional type of organization, all activities in the firm are grouped together
according to certain functions like production, marketing, finance and personnel. These
functions are put under the charge of different persons. The person-in-charge of a
function follows it throughout the organization and also controls the individuals working in
that functional area. This means that if a person performs several functions, he will be
under the direct charge of the several persons-in-charge of these functions. The
functional in-charge is an expert in his own field. It is rare to find a pure functional plan to
carry out the primary functions.

The Line and Staff Type of Organization

The line and staff type of organization is the combination of the salient features of both
the line and functional types. It is considered as having the advantages of both and with
the disadvantages of each removed or eliminated. The line type organization continues
to be the basic framework of the organizational structure. Authority in the organization
remains mostly line. The principles earlier referred to on directness, responsibility, strong
discipline, and others, continue to be applied. In addition to the regular line personnel, we
now bring in the concept of “staff”. Staff means those personnel of a business firm that
help the line of work most effectively in accomplishing the primary objectives of the firm.
The staff officers consist of experts and specialists in various fields. The main function of
the staff is to help the line officers in such activities which require expertise and
specialized knowledge. The role of the staff is purely advisory and not authoritative, while
the function of line officers is to approve and act on the recommendation or suggestions
submitted by the staff officers, and they have authority over their actions and ideas. In
other words, the line and staff type of organization is a pattern in which the staff officers
advise the line officers to perform the duties better.

The Matrix Type of Organization

This type of organization was developed to establish a flexible organizational structure
that will attain a series of project objectives and goals. Matrix type of organization is also
known as grid type and answers the expanding size and complexity of the business
operation, which requires an organizational structure that is more flexible and technically
oriented than the line and staff and functional types. The matrix type of organization is a

52
combination of the project type of organization and the functional type of organization.
Authority flows vertically within functional departments, while authority of projects
managers flows horizontally crossing vertical lines.

The Committee Type of Organization

According to Louis A. Allen, “A committee is a body of persons appointed or elected to
meet on an organized basis for the consideration of matters brought before it.” W.H.
Newman defines “Committee as a group of people specifically designated to perform
some administrative act. It functions only as a group and required the free exchange of
ideas among its members.”

Lesson 2: Contingency Approach to Organizational Design

What is Contingency or Situational Approach to Management Theory?

The contingency approach, often called the Situational Approach is based upon the
premise that all management is essentially situational in nature. All decisions by
managers will be affected (if not controlled) by the contingencies of a given
situation. Contingency theory builds upon accepted elements of System Theory. It
recognized that an organization is an open system made up of interrelated sub-units. It
adds, however, that the behavior of individual sub-units is contingent upon internal and
external environmental contingencies. Contingency theory also proposes structural
changes or designs, leadership styles, and control systems in an organization that allow
it to react to environmental contingencies.

What are the Primary Characteristics of the Contingency Approach?

The primary characteristics of contingency theory include:

• Non-universality of management theory - There is no one best way of doing
things.
• Contingency - Management decision making is contingent upon the situation.
• Environment - Managerial policies and practices to be effective, must adjust to
changes in the environment.
• Diagnostics - Managers must possess and continue to improve diagnostic skills
so as to anticipate and ready for environmental changes.
• Human Relations - Managers should have sufficient human relations skills to
accommodate and stabilize change.
• Information and Communication - Managers must develop a communication
system adequate to deal with environmental changes.

How do Contingencies Affect Organizational Structure?

Theorists Burns and Stalker, in their text "Management of innovation" (1968), identified
two types of organizational structure (mechanistic) and (organic) and two categories of
the environment (stable and dynamic). Mechanistic structures are more common in stable

53
environments. Organic structures are more common and suitable in dynamic
environments.

The commonly-identified contingencies influencing organizational structure include:

• Organization Size
• Nature of Business and Technology (the need for customization)
• Environmental Uncertainty
• Individual Differences or Organizational Preferences

Advantages and Disadvantages of Contingency Theory

The primary advantages of contingency theory include:

• It provides a realistic view of management and organization.
• It discards the universal validity of principles.
• Managers are situation-oriented and not stereotyped.
• Lends itself to an innovative and creative management style.

The negatives of contingency theory include:

• It does not have a theoretical base.
• Executive is expected to know all the alternative courses of action before taking
actions in a situation that is not always feasible.
• It does not prescribe a course of action.
• A situation can be influenced by many factors. It is difficult to analyze all these
factors.

Lesson 3: Applications of Organizational Design

Organization Design is a process for shaping the way organizations are structured and
run. It involves many different aspects of life at work, including team formations, shift
patterns, lines of reporting, decision-making procedures, communication channels, and
more. Organization Design – and redesign – can help any type of organization to achieve
its goals. Sometimes, a large-scale reorganization is necessary. At other points, more
subtle shifts in structures and systems can ensure that an organization continues to thrive.

Making Organization Design Decisions

The complexity and scope of Organization Design means that it is usually the
responsibility of the senior management or leadership of a company. But many
organizations find that a collaborative approach across all levels is essential for design to
be truly effective in the long term. You can find out more about this in our article about
the related discipline of organization development.

Here are some of the key factors to consider:

54
Strategy. If your organization intends to be innovative, a hierarchical structure may be a
block. But if your strategy is based on low-cost, high-volume delivery, then a rigid structure
with tight controls may be the best design.

Size. You could paralyze a small organization by creating too much specialization. In
larger organizations, on the other hand, there may be economies of scale from
maintaining specialized departments and teams. Designs may need to change, too, as
organizations grow.

Environment. If your market environment is unpredictable or volatile, your organization

needs to be flexible enough to react. But elements of a hierarchical structure may still be
important, to protect you against turbulence, and to ensure that key functions –
compliance tasks, for example – are carried out accurately and on time.

Controls. Some activities need special controls (such as patient services in hospitals,
money handling in banks, and maintenance in air transport) while others are more
efficient when there's a high degree of flexibility.

Incentives. These need to support any new organizational design. If you want to grow by
acquiring new customers, for example, then you'll have to refocus the incentives that you
offer to your sales team accordingly. If not, that team may be working out of sync with
everyone else.

Organization Design in Practice

Once you've considered these and any other relevant factors, you'll likely have a suitable
structure in mind. So, the next step is to ensure that you've selected the most appropriate
options, and to define the steps needed to put the new design in place. There are a
number of tools to help you to do this, such as SWOT and PEST analysis , using focus
groups and surveys, internal audits, and collaborative process reviews. 
From there, good Organization Design involves not only changing the systems by which
people work, but also supporting people to adapt successfully.

With your ideal design in mind as a map to follow, draw up a clear plan for the way it will
work in the context of your organization. Be precise about roles and responsibilities, and
define exactly how your new systems and processes will operate. Then, organize your
people to follow this new design. There may be changes in personnel and working
locations. Make sure that everyone's practical needs are met, allowing them to perform
their role in the organization. You'll also need to check that all the necessary support
functions are in place, and that you have a plan for successfully managing change
Whatever model you're working to, ensure that the management structure is in place to
launch the new design, and to support it in the long term.
And keep returning to your reasons for changing. Ongoing analysis of performance
measures and business-level results will show whether your Organization Design process
is working, and alert you whenever further changes are required.

55
 Lesson 4: Technology, Communications and Organizational Design

A shift is underway, triggering the need to adapt and evolve to survive the most
challenging work environment yet. We need to be closer to our customers and our staff.
We need the flexibility to respond quickly to change. We need to fully utilize our most
valuable asset – our people – across the boundaries of function, department or location.

Breaking down communication barriers

Unsurprisingly, the key role for social tools is to break down barriers to communication.
Individuals need to be able to communicate in real time and break outside of the email
inbox to build productive working relationships with their colleagues.

A centralized digital workplace

To be successful in their dedicated teams, employees need real-time access to the
knowledge, information and tools required to complete tasks and achieve their goals.
Employees may utilize multiple tools and applications to perform their roles, creating a
disjointed network where information held on one application doesn’t necessarily align or
communicate with another.

Creating collaborative spaces for agile teams

The governing principle of an agile organization is collaboration. Social technology is built
on this premise: bringing together individuals to collaborate and work harmoniously
together. Those that offer team spaces that can be quickly and easily established
according to project or objective, with content areas, timelines, calendars and discussion
forums, offer a digital space for all members to work effectively.

Self-service for employees

With the move towards an agile structure, in which employees may work across multiple
locations and within differing teams, logistical and administrative processes can be
difficult to manage centrally.

A digital culture
One of the greatest challenges when promoting an almost ‘disenfranchised’ organization,
in which individuals move freely according to business need and operate across
traditional office boundaries, is how to establish and retain a unified culture. Culture can
implicate on employee engagement levels, productivity, the ability to collaborative and
innovate, and staff retention.

56
 Lesson 5: Forms of Commercial Organization

Commercial organizations may be classified into three (3) general classifications:

1. Private Individuals Ownership
2. Public or Government Ownership
3. Mixed or Both Government and Private Ownership

Private commercial organizations or business enterprises may take the following forms
of ownership:

1. Individual or Single or Sole Proprietorship

An Individual or Sole Proprietorship is a business owned by one person. This form
of ownership is small, requires but little amount of capital, and is readily established
under the control of one person. The owner of the business has total and unlimited
personal liability of the debts incurred by the business. Should it prosper, all the
profits accrue to the owner. The individual or sole proprietorship refers to an
individual who owns, manages, assumes all the risks, and derives all the products
or profits from a business.

2. Partnership
As the business firm expands, the inherent limitations and difficulties of a single or
sole proprietorship lead to the development of other forms of business ownership.
Thus, partnership organization is established. A partnership is a form of business
in which two or more people operate for the common goal of making profit. Each
partner has total and unlimited personal liability of the debts incurred by the
partnership.

The goal of any interaction between individuals, in

families, and in organizations is the creation of win/win
solutions.
-S. Covey

3. Corporation
A corporation is an artificial being created by operation of law, having the rights of
succession and the powers, attributes, and properties expressly, authorized by law
or incident to its existence.
4. Cooperatives
The word cooperative is derived from the French word “cooperari”. The word “co”
means “with”. Combined with “operari” (to work, from opus, operas, work), it
delineates the concept of “working together”. The social concept shows a process
of working together and thinking together to achieve and enjoy the best of life.

57
 Cooperative is the dynamic form of business enterprise that embodies the
philosophy of cooperation. It signifies the voluntary assent of people to form
themselves into a group for the promotion of their common needs by mutual action,
democratic control and sharing of economic benefits on the basis of patronage by
members. It is a business enterprise, like any other business, which has as its
primary aim the promotion of the economic welfare of its members.

Lesson 6: The Art of Delegation

Delegation is one of the essential elements in organizing a business firm. It is necessary

for the existence and efficient management of the organization. In fact, it is important to
effective and efficient managerial performance.
Definition of Authority
According to Haimman, “Delegation of authority means the granting of authority to
subordinates to operate within prescribed limits.”
In other words, delegation is the process by which a manager assigns his authority to his
subordinates to perform specific tasks given to them. It involves transferring of decision-
making authority from one managerial level to another lower level.
Characteristics of Delegation
There are characteristics of delegation, as stated by Qureshi:
• Process of assigning authority
• Shifting decision making authority
• Creates link
• Authorizes subordinates
• Creates responsibility
• Delegation of authority not responsibility
• No reduction of authority
• Does not discharge superior’s responsibility
• Delegation out of one’s authority
• Only the positions
• Specific or general
• Express or implied
• Enhanced or withdrawn
• Depends on many factors

58
Process of Delegation
The processes of delegation consist of essential and interrelated procedures, as stated
by Weihrich and Koontz:
1. Determination of results
2. Assigning duties to the position
3. Delegating authority for accomplishing the tasks assigned
4. Creation of responsibility

REFERENCES

Book: Principles and Practices of Management and Organization by Salvador, Samuel

Mejia, Estelito Cabingan Bagunas and Ellinor Fua Geronimo (2008,2013, 2010, Allen
Adrian Books Inc.)

Gordon, J. (2021). Contingency approach or situational approach to management –

Explained. The Business Professor. Retrieved from
https://thebusinessprofessor.com/en_US/management-leadership-organizational-
behavior/contingency-approach-or-situational-approach-to-management

Hall, B. (2017). Supporting organizational design: The role of social technology.

Retrieved from https://www.interactsoftware.com/blog/supporting-organizational-design/

MindTools (n.d.). Organization design. Retrieved from

https://www.mindtools.com/pages/article/newPPM_95.htm

ACTIVITIES / ASSESSMENTS

Instruction for Case Study

The case exercise below consists of a management situation for you to analyze and offer
solutions. You have to submit a Case Study Paper which will contain your answers to the
questions being provided after every case. The paper that you will submit is designed for
you to figuratively reflect about the situation, give your insight as a Marketing student, and
state what you learned from the class discussion. You will frame and define the problem,
analyze the situation, and offer or defend a resolution. This case exercise presents
realistic situation that will allow you to open your mind and prepare you to future similar
circumstances in the corporate field. The case, like the real world, do not have one “right
solution.” The challenge is for you to think critically about the situation presented and
make recommendations to solve the issue.

59
Purpose and Overview
The purpose of this case exercise is for students to develop their problem-solving skills
as well as their understanding of the course concepts being discussed, to be applied in
authentic situations. This kind of activity will enhance and train the intelligence and critical
thinking skills of a 21st century learner. The “case exercise process” should be used
multiple times during the semester to accomplish the objective of this course.

CASE STUDY 5

60
 UNIT VI: STAFFING

UNIT OVERVIEW
Human resources are significant for effective business organizational functioning. Human
Resources Management (or Personnel Management, as it is sometimes called) was once
relegated to second-class status in many business organizations, but its importance has
grown dramatically in the last several years. This new importance stems from increased
legal complexities, the recognition that human resources are a valuable mans for
improving productivity, and the awareness today of the costs associated with poor human
resource management.
Business managers now realize that the effectiveness of their Human Resource (HR)
function has a substantial impact on a business organization’s bottom-line performance.
Poor human resource planning can result in sudden hiring followed by layoffs costly in
terms of unemployment compensation payments, training expenses, and morale.
Haphazard compensation systems do not attract, keep, and motivate good employees,
and outmoded recruitment practices can expose the business organization to expensive
and embarrassing legal action. Thus, the Chief Human Resource Executive of most large
business organization is a vice president directly reporting and accountable to the CEO,
and many business organizations are developing strategic Human Resource (HR) plans
that are integrated with other strategic planning activities.

LEARNING OUTCOME: After a successful completion of this unit, you should be able to:
• Examine the definition and operative functions of human resource management
performed in staffing function of managers
• Know about strategic human resource management
• Develop understanding about the definition of staffing and steps in staffing
process
• Generalize the importance of effective personnel decisions
• Recognize the applicability of the different designs in a specific nature of job or
business

COURSE MATERIALS

Guide Questions:
1. How does the operative functions of human resource management performed in
staffing function of managers help a business?
2. What are the results of a strategic human resource management?
3. Why does staffing and steps in staffing process essential to study?
4. What are the results if there are effective personnel decisions?
5. How does applicability of the different designs in a specific nature of job or
business necessary to attain success?

61
 Lesson 1: Human Resource Management

Definition of Personnel / Human Resource Management

According to P.R. Pereda and P.P Pereda (2008), Personnel or Human Resource
Management may be defined as the function of management, concerned with promoting
and enhancing the development of work effectiveness and advancement of the human
resources in the organization. These are accomplished through proper planning,
organizing, directing, coordinating, and controlling of activities related to procurement,
development, motivation, and compensations of employees to achieve the goals of the
business organization.

Human Resource Management (HRM) is the set of business organizational activities

directed at attracting, developing, and maintaining an effective work force. Human
Resource Management takes place within a complex and ever-changing environmental
context and is increasingly being recognized for its strategic importance, as stated by
Ronald J. Ebert and Ricky W. Greffin (2005).

In other word, Human Resource Management (HRM) is the effective and efficient
recruitment, selection, placement, development, maintenance, and utilization of the
manpower resources of a business organization.

Lesson 2: Strategic Human Resource Management

Human Resource Planning

The starting point in attracting qualified human resources is proper planning. In turn,
Human Resource Planning involves job analysis and forecasting the demand for and
supply of labor.

1. Job Analysis

It is a systematic analysis of job within a business organization. A job analysis results in

two things:

• The job description list the duties and responsibilities of a job; its working condition;
and the tolls, materials, equipment, and information used to perform it.
• The job specification list the skills, abilities, and other credentials and qualifications
needed to perform the job effectively and efficiently.

2. Forecasting Human Resource (HR) Demand and Supply

After business management fully understand the jobs to be performed within the business
organization, they can begin planning for the organization’s future Human Resource (HR)
needs, the manager begins by assessing trends in post HR usage, future business
organizational plans and general economic trends. A good sales forecast is often the

62
foundation, especially for smaller business organizations. Historical ratios can then be
used to predict demand for types of employees, such as operating employees and sales
representatives. Big business organizations use much more complicated models to
predict Human Resource (HR) needs.
There are two tasks in forecasting the supply of labor:
• Forecasting Internal Supply – the number and type of employees who will be in the
business organization at some future date.
• Forecasting External Supply – the number and type of people who will be available
for hiring from the labor market at large.

When you build bridges, you can keep crossing them.

Rick Pitino, American Basketball Coach

3. Matching Human Resource (HR) Supply and Demand

After comparing future demand and internal supply, manager can make plans to manage
shortfalls or overstaffing. If a shortfall is predicted, new employees can be hired, present
employees can be retained and transferred into understaffed areas, or labor-saving or
productivity-enhancing systems can be installed.

If the business organization needs to hire, the external labor-supply forecast helps
managers plan on how to recruit according to whether the type of employee needed is
readily available or scarce in the labor market. The use of temporary workers also helps
managers in staffing by giving them extra flexibility. If overstaffing is expected to be a
problem, the main options are transferring the extra employees, not replacing individuals
who quit, encouraging early retirement, and laying people off.

Lesson 3: Definition of Staffing

Staffing: Definition, Meaning, and Functions

Staffing is the process of hiring eligible candidates in the organization or company for
specific positions. In management, the meaning of staffing is an operation of recruiting
the employees by evaluating their skills, knowledge and then offering them specific job
roles accordingly. Let us find out more about what is Staffing and what it entails along
with its functions and characteristics.

63
What is Staffing?

Definition: Staffing can be defined as one of the most important functions of management.
It involves the process of filling the vacant position of the right personnel at the right job,
at right time. Hence, everything will occur in the right manner. It is a truth that human
resource is one of the greatest for every organization because in any organization all
other resources like- money, material, machine etc. can be utilized effectively and
efficiently by the positive efforts of human resource. Therefore it is very important that
each and every person should get right position in the organization so as to get the right
job, according to their ability, talent, aptitude, and specializations so that it will help the
organization to achieve the pre-set goals in the proper way by the 100% contribution of
manpower. Thus, it can be said that it is staffing is an essential function of every business
organization. From this, we can understand what is Staffing?

Functions of Staffing
1. The first and foremost function of staffing is to obtain qualified personnel for different
jobs position in the organization.
2. In staffing, the right person is recruited for the right jobs, therefore it leads to maximum
productivity and higher performance.
3. It helps in promoting the optimum utilization of human resource through various
aspects.
4. Job satisfaction and morale of the workers increases through the recruitment of the
right person.
5. Staffing helps to ensure better utilization of human resources.
6. It ensures the continuity and growth of the organization, through development
managers.

Importance of Staffing
Efficient Performance of Other Functions
For the efficient performance of other functions of management, staffing is its key. Since, if
an organization does not have the competent personnel, then it cannot perform the functions
of management like planning, organizing and control functions properly.

The Motivation of Human Resources

In an organization, the behaviour of individuals is influenced by various factors which are
involved such as education level, needs, socio-cultural factors, etc. Therefore, the human
aspects of the organization have become very important and so that the workers can also
be motivated by financial and non-financial incentives in order to perform their functions
properly in achieving the objectives.

Building Higher Morale

The right type of climate should be created for the workers to contribute to the achievement
of the organizational objectives. Therefore, by performing the staffing function effectively
and efficiently, the management is able to describe the significance and importance which
it attaches to the personnel working in the enterprise.

64
 Lesson 4: Steps in Staffing Process

Staffing the Business Organization

When business managers have determined that new employees are needed, they must
then turn their attention to recruiting the mix of people. Staffing the business organization
is one of the most complex and important tasks of good Human Resource Management
(HRM). In this section, we will describe both the process of acquiring staff from outside
the organization (external staffing) and the process of promoting staff from within (internal
staffing). Both external staffing and internal staffing, however, start with effective
recruiting.

1. Recruiting Human Resources

Once a business organization has an idea of its future Human Resource (HR) needs, the
next phase is usually recruiting new employees. Recruiting is the process of attracting
qualified persons to apply for the jobs that are open. Some recruits are found internally,
whereas others come from outside of the business organization.

• Internal Recruiting – this means considering present employees as

candidates for openings. Promotion from within can help build high morale and
keep high-quality employees from leaving.
• External Recruiting – this involves attracting people outside of the business
organization to apply for jobs. External recruiting methods include advertising,
campus interviews, employment agencies or executive search organizations,
referrals by present employees, and hiring “walk-ins” or “gate-hires” (people
who show up without being solicited).

2. Selecting Human Resources

Once the recruiting process has attracted a pool of applicants, the next step is to
select, someone to hire. The intent of this is to gather information from the applicants
that can be used to predict future performance and hire the candidates likely to be
most successful. The process of determining the predictive value of information is
called validation.

• Application Forms – the first step in selection is usually asking the applicant
to fill out an application; this is an efficient method of gathering information
about the applicant’s previous work history, educational background, and other
jo- related demographic data.
• Tests – test of ability, skill, aptitude, or knowledge that is relevant to a particular
job are usually the best predictors of job success, although tests of general
intelligence of personality are occasionally useful as well.
• Interviews – this is a popular selection device; however, the interviewer is
sometimes a poor predictor of job success.

65
3. Other Techniques
Organizations also use other selection techniques that vary with circumstances.
Polygraph tests, once popular, are declining in popularity. On the other hand,
organizations occasionally require applicants to take physical examinations. More
organizations are using drug tests, especially in situations in which drug related
performance problems could create serious safety hazards. Some organizations also run
credit checks on prospective employees.

Lesson 5: Personnel Decisions

Building successful businesses starts with having the right people at every level. But,
sometimes you put the wrong people in the wrong roles.
You can hire brilliantly, but ultimately everyone will sometimes make bad choices. Jobs
change. People don’t step up. Organizations pivot. You need to understand who is an
underperformer and who simply is incompetent.

As an investor, when you have a floundering founder or key executive, you need to
manage the situation aggressively. As a first step, consider adding a mutually respected
independent director who can arbitrate disagreements and coach the co-founder. The
director needs to be someone whose judgment you both agree to respect.

For underperforming employees, start by looking to the individual’s peers to judge their
performance and fit. Fairness is paramount, even if the person is unable to improve. Other
members of the team judge management on how fairly they treat the person in question.
Be sure expectations are understood, and if appropriate, give them a short time to
demonstrate they can raise their game.

Don’t make corrective actions personal. It is a personnel decision, not a personal

decision. If there is a role for which a floundering founder might be better suited, consider
changing their position. The tough question is whether the person is incapable of
performing – or simply not performing. If it is the former, act decisively.

We need managers that don’t make people cogs in a wheel but instead get all the wheels
spinning together. That starts with giving people clear priorities, and communicating, what
decisions are being made and why. It’s about taking individuals and making them 10% or
20% or 50% better than they thought they could be. This is where the bulk of
management’s time should be spent.

When co-founders struggle with underperformers, the issue often has to do with
management’s inexperience. Sometimes they fail to set clear expectations. Sometimes
they fail to provide regular feedback. And sometimes they simply fail to act despite clear
signs of trouble.

Another common error is allowing a performance issue to turn into a morale issue. Every
company hits stumbling blocks; allowing them to become major issues is almost always
management’s fault.

66
Not least, managers need to avoid acting impetuously or unpredictably, potentially leaving
the full team to question management’s thinking.

Also keep in mind that smart managers avoid simply firing staff that see the world in a
contrarian way. When you hire diverse groups of people, you end up with different
perspectives, different styles, different experiences … and you end up with conflict and
friction. If you can manage this kind of creative friction – and not everyone can – you’ll
have a highly innovative organization.

Lesson 6: Job Design and Redesign

What is Job Design? A Definition

Job design is the process of creating a job that enables the organization to achieve its
goals while motivating and rewarding the employee. This means that a well-designed job
leads to higher productivity and quality of work, while also leading to higher job
satisfaction, lower absence, and lower employee turnover intentions.

Job design is a systematic approach to creating jobs that are both motivating for
employees and add value to the organization. The latter is important – the role needs to
fit in the organizational framework and help to contribute to organizational goals. If this is
not the case, the role is redundant and should be removed.

When done well, job design can be an incredibly fun and rewarding process, for both the
manager or OD practitioner, as well as for the employee.

Job Redesign - Meaning, Process and its Advantages

Restructuring the elements including tasks, duties and responsibilities of a specific job in
order to make it more encouraging and inspiring for the employees or workers is known
as job redesigning. The process includes revising, analyzing, altering, reforming and
reshuffling the job-related content and dimensions to increase the variety of assignments
and functions to motivate employees and make them feel as an important asset of the
organization. The main objective of conducting job redesigning is to place the right person
at the right job and get the maximum output while increasing their level of satisfaction.

Job Redesign Process

• Revising the Job Content: Job redesigning process involves recollecting and
revising job-related information to determine the inconsistency between person
and the job.
• Analyzing Job-related Information: Once the job analyst is through with
recollecting and revising the job content, analyzing the discrepancies is the next

67
 step. It is done to determine the hindrances in performing job-related tasks and
duties and investigate why an employee is not able to deliver the expected output.
• Altering the Job Elements: The next step is to amend the job elements. It may
include cut back on extra responsibilities or addition of more functions and a higher
degree of accountability. The basic aim of altering the job content is to design a
job in such a manner that encourages employees to work harder and perform
better.
• Reformation of Job Description and Specification: After altering the job
elements, a job analyst needs to reform the job description and specification in
order to make sure that the worker placed at a particular place is able to deliver
what is expected of him.
• Reshuffling the Job-related Tasks and Duties: Next is to reallocation of new or
altered tasks and functions to employees. It may be done by rotating, enriching,
enlarging and engineering the job. The idea is to motivate the performers while
increasing their satisfaction level.

Advantages of Job Redesigning

• Enhances the Quality of Work-Life: Job redesigning motivates the employees

and enhances the quality of their work life. It increases their on-the-job productivity
and encourages them to perform better.
• Increases Organization’s and Employees’ Productivity: Altering their job
functions and duties makes employees much comfortable and adds to their
satisfaction level. The unambiguous job responsibilities and tasks motivate them
to work harder and give their best output. Not only this, it also results in increased
productivity of an organization.
• Brings the Sense of Belongingness in Employees: Redesigning job and
allowing employees to do what they are good at creates a sense of belongingness
in them towards the organization. It is an effective strategy to retain the talent in
the organization and encouraging them to carry out their responsibilities in a better
fashion.
• Creates a Right Person-Job Fit: Job Redesigning plays an important role in
creating a right person-job fit while harnessing the full potential of employees. It
helps organization as well as employees in achieving their targets or goals.

Therefore, the purpose of job redesigning is to identify the task significance and skill
variety available in the organization and reallocating the job-related tasks and
responsibilities according to the specific skills possessed by an employee.

68
 REFERENCES

Book: Principles and Practices of Management and Organization by Salvador, Samuel

Mejia, Estelito Cabingan Bagunas and Ellinor Fua Geronimo (2008,2013, 2010, Allen
Adrian Books Inc.)
Management Study Guide (n.d.). Job redesign – meaning, process, and its advantages.
Retrieved from https://www.managementstudyguide.com/job-redesign.htm
Toppr (n.d). Staffing: Definition, meaning, and functions. Retrieved from
https://www.toppr.com/guides/business-studies/staffing/introduction-to-staffing-and-its-
meaning/
Vulpen, E. (n.d). Job design: A practitioner’s guide. AIHR Academy. Retrieved from
https://www.aihr.com/blog/job-design/

ACTIVITIES / ASSESSMENTS

Instruction for Case Study

The case exercise below consists of a management situation for you to analyze and offer
solutions. You have to submit a Case Study Paper which will contain your answers to the
questions being provided after every case. The paper that you will submit is designed for
you to figuratively reflect about the situation, give your insight as a Marketing student, and
state what you learned from the class discussion. You will frame and define the problem,
analyze the situation, and offer or defend a resolution. This case exercise presents
realistic situation that will allow you to open your mind and prepare you to future similar
circumstances in the corporate field. The case, like the real world, do not have one “right
solution.” The challenge is for you to think critically about the situation presented and
make recommendations to solve the issue.

Purpose and Overview

The purpose of this case exercise is for students to develop their problem-solving skills
as well as their understanding of the course concepts being discussed, to be applied in
authentic situations. This kind of activity will enhance and train the intelligence and critical
thinking skills of a 21st century learner. The “case exercise process” should be used
multiple times during the semester to accomplish the objective of this course.

69
CASE STUDY 6

70
 UNIT VII: DIRECTING

UNIT OVERVIEW
Directing refers to the ways and means employed by management to encourage all
personnel in the business firm to accomplish all assignments given to them, in order to
attain the objectives in the right manner they were planned and organized. It is the
process of initiating action in accordance with what has been planned. It is the process of
guiding, supervising, motivating, leading, and influencing personnel and subordinates
with the end view of attaining organizational objectives and goals effectively and
efficiently. According to Ernest Dale, “Directing is telling people what to do and seeing
that they do it to the best of their ability.” According to Marshal E. Dimock, “The heart of
administration is the directing function which involves determining the course, giving
orders and instructions, providing the dynamic leadership.” Haimann stated, “In order to
make any managerial decision very meaningful and relevant, it is important to convert it
into effective action which every manager does by directing.”

LEARNING OUTCOME: After a successful completion of this unit, you should be able to:
• Gain knowledge towards understanding organizational behavior and the
foundations of behavior
• Learn the three key elements of directing functions (communication, leadership
and motivation) and how they impact on the realization of the organizational
goals and objectives
• Differentiate attitude from behavior
• Adopt ways on how to communicate effectively
• Understand how manager’s high EQ results to effective communication with
employees
• Appreciate the theories of leadership and its applicability in every situation
• Apply the motivation theories on suitable situations

COURSE MATERIALS

Guide Questions:
1. Why is there a need to understand organizational behavior and the foundations
of behavior?
2. How can you differentiate the meaning of attitude from behavior?
3. What is the importance of knowing how to communicate effectively in a
professional field?
4. How can you say that manager’s high EQ results to effective communication with
employees?
5. How can you relate or connect the theories of leadership to everyday situations?
6. As a student, how can you apply motivation theories on suitable circumstances?

71
 Lesson 1: Towards Understanding Organizational Behavior

Early Advocates
• Robert Owen was a renowned Scottish businessman, who suggested a utopian
workplace.
• Hugo Munsterberg was the person who introduced industrial psychology.
Industrial psychology deals with maximizing the productivity and adjustment of
individuals at work.
• Mary Parker Follett, a social philosopher proposed that the manager is
responsible for harmonizing and coordinating group efforts.
• Chester Barnard proposed that an organization is not just an economic entity but
it is a social system that needs cooperation among humans working for it. He
thought that manager is responsible for communicating with workers and boost
their potential to a higher level. Additionally, he thought that managers should be
examining the workplace conditions and then maintains them to create equilibrium
in the state of the workplace.

Behavioral Management Theories

Hugo Munsterbeg (1863-1916) is known as the “father of industrial psychology” and is

as important for psychology students as F.W. Taylor is for management students.
He focused to provide a view of psychology’s practical applications. Munsterbeg believed
that industry can be benefited by psychologists in three major areas:
• Seeking modern ways to hire the right person for the right job.
• Achieving optimum efficiency by identifying psychological conditions.
• Finding methods to direct the behavior of individual employees to be in harmony
with the management’s objectives.

Mary Parker Follett (1868-1933) was the person who introduced the concepts of social
Work Political Science. She identified:
• Working in groups is more important than working individually in any organization.
• That “power with” should be the principle of management-employee relation in the
organization rather than “Power over”.
• Use of integration to resolve conflicts like providing a solution that offers mutual
benefit to both of the parties involved in the conflict.
• Integrative unity is the secret of success in an organization where different
departments are present and working to achieve the same goal.

The Hawthorne Studies

A number of experiments done in Western Electrical Company, situated in Cicero, Illinois

that are known as “Hawthorne Studies.” It is considered as the best historical contribution
to the field of Organizational Behavior that provided a clear view of the relation of working
conditions to the efficiency of employees and productivity.

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Industrial engineers at Western Electric started these studies in 1924 as an experiment
of scientific management and the studies continued till the 1930s. They tried to identify
how different illumination levels affect worker productivity.

Two groups were created, control group and experimental group. The engineers
examined the experimental groups working in different lighting intensities; however, the
control group was examined under a constant lighting intensity.

Keeping this working scenario in mind, everyone would think that output was related to
lighting intensity. However, engineers found that there was something else that also
contributed to the change in output. Initially, they increased the light in the experimental
group and surprisingly, the output was increased in both groups.

After that, when they decrease the light to almost moonlight, the output was decreased in
the experimental group only. Thus, it was concluded that illumines lighting intensity was
not the factor that directly relates to group productivity. There was “something else” that
needed to be identified, but the engineers were not able to find it.

After these great experiments done by engineers, the Western Electric Company, in
1927, invited Elton Mayo, professor at Harvard for consultation on the studies. It
contributed to creating a long-lasting relationship among employees of the company and
Elton Mayo along with his associates.

The relationship resulted in various interesting experiments, including job redesign,

changes in the long working day and working week, and individual versus group wage
plans. One of the experiments was to examine how group piece work rewards affected
group productivity.

Hawthorne Studies was almost connected to the traditions of scientific management,

because it also focused on increasing productivity by improving the methods and tools of
work such as lighting.

The Hawthorne studies provided different findings:

• Initially, studies did not provide any evidence of the correlation between work
performance of individuals and change in lighting. In fact, work performance almost
increased with any change in illumination lighting.
• After that in the second phase, the studies become apparent. They revealed that
workers’ performance can be improved by just giving them the required attention
not because of the factors that the study aimed to examine.
• In the third phase of studies, the focus was on group productivity and motivation
of individuals.
• Ultimately, the Hawthorne studies provided a concept that the organization also
has social aspects that, if given proper attention, can contribute to better
performance or workers.

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Human Relations Movement
The human relation movement was aimed at providing social skills to managers that they
needed to make management-employee relations better.

Abraham Maslow (1908-1970) was the person who proposed the motivation theory,
which is based on three assumptions about human nature.

• The needs of human beings cannot be satisfied completely.

• Humans always strive to satisfy their needs, which are still unsatisfied.
• The priority of needs can be sorted into a hierarchy that ranges from basic, lower-
level needs to higher-level needs:
o Physiological (lowest)
o Safety
o Belongingness or social
o Esteem
o Self-actualization (highest and not everyone is capable of achieving it)

Douglas McGregor (1906-1964) provided a view of the Theory X and Theory

Y dichotomy. These theories tell how managers make assumptions about workers and
what the effect of these assumptions is on the behavior of the employee.

• Theory X, managers assume that workers always remain lazy and do not put their
complete efforts in their performance; therefore, they need to be pushed. Workers
have no or just a little ambition and mostly focus on their security needs. This kind
of manager thinks that these assumptions are true and they treat workers
accordingly.
• Theory Y managers assume that workers have self-control and do not deliberately
put less effort into the work. They can be innovative and creative and in a general
manner, their needs are higher than the needs met on the job. These kinds of
managers then treat their subordinates as if their assumptions are true.
• Workers are assumed to work sometimes at a higher capacity and sometimes at
lower capacity like all of us.

The Behavioral Science Approach

The behavioral management theories depend on scientific research in order to develop
any theory about human behavior at any workplace that could be helpful to make practical
guidelines for employees at managerial levels.

• It overall emphasis to develop helpful tools that managers could use to improve
workers’ performance. Behavioral science does not depend on mathematical
certainty, because it is about the behavior of humans that is very difficult to predict.
It does not conclude that the scientific approach cannot be practical or its findings
have less importance in the studies of human behavior in an organization.

• In that connection, setting a goal for an individual can be the best example, where
the individual finds it attainable; however, it is not too easy.

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 Lesson 2: Foundations of Behavior

Goals of Organizational Behavior

Organizational behavior is an applied science that deals with individual behavior as well
as group behavior in an organization. The four goals of organizational behavior are to
describe, understand, predict and control.

1. To describe: The first objective is to describe how people behave under various
conditions. For example, as a manager, I have information about a particular junior
officer that he comes office in late and leaves the office early.
2. To understand: The second goal of organizational behavior is to understand why
people behave as they do. Managers have to understand the reasons behind a
particular action. For example, as a manager, I must find out the reason why the
junior officer is coming late and going earlier.
3. To predict: Predicting future behavior of employee is another goal of
organizational behavior. Usually, managers would have the capacity to predict why
the employees are committed to the organization or not. For instance, I have to
realize why he wants to leave my organization, how I can hold the officer in my
organization, what should be done by me in this situation or what my role is etc.
4. To control: The final goal of organizational behavior is to control and develop a
friendly atmosphere for the organization. Since managers are responsible for the
overall performance of an organization, they must develop workers’ teamwork, skill
and commitment.
So, organizational behavior is a human tool for human benefit. It is mainly used to analyze
the human behavior in all types of organizations, such as business, government, school
and services organizations. So, in order to manage the human resources properly, we
need describe, understand, predict, and control human behavior.

Attitudes
Our behavior at work often depends on how we feel about being there. Therefore, making
sense of how people behave depends on understanding their work attitudes.
An attitude refers to our opinions, beliefs, and feelings about aspects of our environment.
We have attitudes toward the food we eat, people we interact with, courses we take, and
various other things. At work, two particular job attitudes have the greatest potential to
influence how we behave.

Personality
Personality is a patterned body of habits, traits, attitudes, and ideas of an individual’s, as
these are organized externally into roles and statues and as they relate internally to
motivation, goals, and various aspects of selfhood. Hence personality is a sum total of
ways in which an individual reacts and interacts with others. It is individual differences in
characteristic patterns of thinking, feeling and behaving. It is the supreme realization of
the innate habit of a living being.

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It is an act of courage flung in the face of life, the absolute affirmation of all that constitutes
the individual, the most successful adaptation to the universal conditions of existence,
coupled with the greatest possible freedom of self-determination.

Perception
Perception is simply defined as how a person sees the world around them and how they
interpret that information. It's a subconscious thing that the mind does and is contingent
on your ability to pay attention to your surroundings and your existing knowledge. The
mind will occasionally filter information out, which is why you don't notice every single
thing around you; it would be a complete information overload otherwise.

In organizational behavior and business, perception often helps shape a person's

personality and how they act in certain situations. These can affect how they respond to
certain things-like stressful situations-their performance at tasks, and even their
creativity.2 For management, paying attention to personality traits in employees can help
them determine the person's work ethic and strengths. That is, if the manager's perception
is not hindered in some way.

Emotional Quotient
If a person can understand the emotions and feelings of his own, it is his personal skill,
but awareness about an organization and administrative units is a social skill to
understand the ethos within which those emotions function. Emotional Intelligence is the
proficiency through which one learns about the emotions of others, and how the
organization affects them. Emotional intelligence offers understanding of others, means
to interact with others that help boost productivity, improve relationships, and increase
your general quality of life.

Lesson 3: Communication

Alvin Dodd, the president of the American Management Association stated that, “The
number one problem of management today is communication.” As a matter of fact,
effective communication is important in bringing about coordination, understanding, and
unity in the overall strife to attain organizational objectives and goals. In the
communication process there are certain basic concepts and principles and steps that
have to be followed to assure the transmission of a message from the sender to the
receiver successfully. In order to meet this challenge, every executive should spend about
80% of his time in communication, as stated by M.U. Qureshi.

Strategies to Effective Communication

1. Clarity and Completeness

It is necessary and important to know the target audience for whom the message is to be
sent. The message to be conveyed must be clear and can be easily understood. The
information should be complete and appropriate. The purpose of the communication
should be clearly defined and understood.

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2. Proper Language
The message should be expressed in simple terms, brief and clear language. The words
or symbols selected for conveying the message must be appropriate to the reference and
understanding of the receiver.

3. Proper Channel or Medium

Selection of proper channel or medium is very necessary. A proper combination of written,
oral and gesture modes as well as formal and informal channels should be used to ensure
effective communication.

4. Sound Organizational Structure

To obtain effective communication, the organizational structure must be properly
structured in accordance with the needs of the organization.

5. Training and Development of Employees

Employees should be trained and developed in line with the vision, mission, objectives,
and goals of the organization. They must be properly informed about the policies, rules,
and regulations of the organization.

Be who you say what you feel, because those who mind
don’t matter and those who matter don’t mind.

Theoddore Seuss Geisel, American Author

Types of Communication Networks

1. Chain Network
Communication is a vertical line from top to bottom and bottom to top of the organizational
hierarchy.

2. Circular Network
Communication moves in a circular way. Every individual can communicate with the
person on his immediate right or left but not with any other person in the organization or
group.

3. Wheel or Star Network

This refers to a network which the members of an organization usually do not
communicate directly with each other. They usually communicate with other members
through one superior or manager like the hub of the wheel. The manager acts as the
central point like the hub of a wheel. This network is also known as “autocratic network”.

4. Free-flow / Decentralized / All Channel Network

This type of communication network is one in which lines are not structured. Every
member of the organization can communicate freely and frankly with all other members.
Thus, there is no restriction on the flow of communication and therefore, it is more of the
nature of an informal network.

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The Categories of Communication

Communication may be classified on the following bases:

1. Communication on the Basis of Organizational Structure

• Formal Communication – means the communication which travels through

the formally established channels.
• Informal Communication or “Grapevine” – takes place on the basis of
informal relations between the members of a group.

2. Communication on the Basis of Direction

• Downward Communication – is one that flows from top to bottom or from

superior to subordinates down the lines of the organizational structure.
• Upward Communication – is one that flows from bottom to top management
or from subordinates to superiors along with the chain of command in the
organizational hierarchy.
• Horizontal or Lateral Communication – refers to the communication
between personnel of the same level or position.
• Diagonal Communication – refers to the communication between people
who are neither in the same department nor on the same level of
organizational hierarchy.

3. Communication on the Basis of Mode of Expression

• Written Communication – is expressed through written words.
• Oral or Verbal Communication – is expressed through words-of-mouth or
spoken words.
• Gestural or Non-Verbal Communication – is a mode of communication
through postures or gestures of the different parts of the body, such as
movement of the lips, wink of an eye, the wave of hands, movement of heads,
facial expressions, tone of voice, and any other movement of body or body
parts which may be used to transmit the message.

Lesson 4: Leadership

The beginning of this century involves a paradigm shift from a management era to a
leadership era. John Naisbitt and Aburdene in Megatrends 2000 described this paradigm
shift as follows:

“The dominant principle of organization has shifted from management in order to control
enterprise to leadership in order to control enterprise to leadership in order to bring out
the best in people and respond quickly to change. This is not the “leadership” individuals
and groups so often call for, when they really want a father-figure to take care of all their

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problems. It is a democratic yet demanding leadership that respects people and
encourages self-management, autonomous teams, and entrepreneurial units.

Theories of Leadership

1. “Great Man" Theories

Great man theories assume that the capacity for leadership is inherent—that great
leaders are born, not made. These theories often portray great leaders as heroic, mythic,
and destined to rise to leadership when needed. The term "Great Man" was used
because, at the time, leadership was thought of primarily as a male quality, especially in
terms of military leadership.

2. Trait Theories
Similar in some ways to Great Man theories, trait theories assume that people inherit
certain qualities and traits that make them better suited to leadership. Trait theories often
identify a particular personality or behavioral characteristics shared by leaders. For
example, traits like extroversion, self-confidence, and courage are all traits that could
potentially be linked to great leaders.

3. Contingency Theories
Contingency theories of leadership focus on particular variables related to the
environment that might determine which particular style of leadership is best suited for
the situation. According to this theory, no leadership style is best in all situations.

4. Situational Theories
Situational theories propose that leaders choose the best course of action based upon
situational variables. Different styles of leadership may be more appropriate for certain
types of decision-making.

5. Behavioral Theories
Behavioral theories of leadership are based upon the belief that great leaders are made,
not born. Consider it the flip-side of the Great Man theories. Rooted in behaviorism, this
leadership theory focuses on the actions of leaders, not on mental qualities or internal
states. According to this theory, people can learn to become leaders through teaching
and observation.

6. Participative Theories
Participative leadership theories suggest that the ideal leadership style is one that takes
the input of others into account. These leaders encourage participation and contributions
from group members and help group members feel more relevant and committed to the
decision-making process. In participative theories, however, the leader retains the right
to allow the input of others.

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7. Management Theories
Management theories, also known as transactional theories, focus on the role of
supervision, organization, and group performance. These theories base leadership on a
system of rewards and punishments. Managerial theories are often used in business;
when employees are successful, they are rewarded and when they fail, they are
reprimanded or punished.

8. Relationship Theories
Relationship theories, also known as transformational theories, focus upon the
connections formed between leaders and followers. Transformational leaders motivate
and inspire people by helping group members see the importance and higher good of the
task.

Issues in Leadership

1. Failure to Communicate
The complexity of today’s business world requires CEOs to be able to communicate on
multiple levels. For example, you have to create the vision and persuade your team to
make it their vision too.

2. Lack of Accountability
If you notice that the big things are not getting done and good ideas fall through the
cracks, you lack accountability. We all need scoreboards that track the results we want.
Most CEOs know this, but putting this system into place requires self-discipline and focus.
Build the systems you need to support accountability and don’t get distracted until they
are a part of your operations.

3. Fear of Firing
Unfortunately, we often find that the people who got you here will not get you there
because the company has outgrown the person’s ability to keep up. As the company
grows, so must your team members and as a leader, you have to make the tough
decisions to continually upgrade your talent.

4. Lack of Alignment
Imagine being a fish trying to swim upstream. It’s tough to make progress. That’s what
happens when your key players are not all on the same page. Sure, you’ll have
disagreements but as the leader, you have to make sure that when the decision is made,
your team is behind it and they move forward in unity to make it happen.

5. Lack of Clear Vision

Real leaders create a compelling vision for the future that ignites a fire under their team
and keeps them working hard and doing the right thing even when nobody’s looking.

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Millennials, in particular, want to believe that the work they do goes beyond just a
paycheck and contributes to the greater good.

6. Poor Execution
There are three reasons leaders fail to execute. First, they don’t follow their own plan with
discipline. Second, they fail to keep score on what matters. Third, they don’t have the
right people in the right jobs to make it happen. If you can assemble these three puzzle
pieces, you can put your company on track to win.

7. A Company Culture by Default

We all envy Google, Facebook, and Zappos for their dazzling company cultures. When
you consciously think about and design your culture to foster your desired behavior, your
culture becomes a competitive advantage that attracts top talent and drives massive
results.

Different Leadership Styles

The main styles of leadership according to K. Davis and Newstrom are:

Autocratic Authoritarian Style

The leader who accepts McGregor’s Theory x model belongs to this style of leadership.
In this type, the leader centralizes his authority and power, makes all decisions by himself,
always wants that his orders are being followed without any question from the
subordinates, and institutes fears, threats, punishments, and penalties to get things done.

Participative or Democratic Style

It is the exact opposite of autocratic leadership. The leaders and their subordinates work
as a social and democratic unit. They have the freedom to express their opinions,
suggestions, and recommendations for the improvement of the firm.

Free-rein or Laissez-Faire Style

This leadership style allows the leader to use his authority and power in a very limited
scale. The leader is giving wide latitude of freedom to his subordinates in business
operation. The role of the leader is just to facilitate his subordinates in doing their jobs.
This style of leadership is a good training ground for future leaders.

Paternalistic Style
It is authoritarian by nature. This style of leadership is work-centered but considers the
interest and welfare of the subordinates. The leader looks after his subordinates as a
father looks after his siblings. The leader always extends his helping hands by providing
proper guidance and encouragement to his subordinates to work harder and better as
members of his own family. Sometimes this style is otherwise called as personalized
leadership style.

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 If your actions inspire others to dream more, learn more, do
more, and become more, you are a leader.

John Quincy Adams, Sixth President of the United States

Lesson 5: Motivation

Motivation Theories
There is no single motivation theory that explains all aspects of human motivation, but
these theoretical explanations do often serve as the basis for the development of
approaches and techniques to increase motivation in distinct areas of human endeavor.
The information below briefly summarizes existing theories of motivation and their
potential real-world applications.

1. Maslow’s Needs Approach / Theory of the Hierarchy of Needs

The most recognized content theory of motivation is that of Abraham Maslow, who
explained motivation through the satisfaction of needs arranged in a hierarchical order.
As satisfied needs do not motivate, it is the dissatisfaction that moves us in the direction
of fulfillment. Needs are conditions within the individual that are essential and necessary
for the maintenance of life and the nurturance of growth and well-being. Hunger and thirst
exemplify two biological needs that arise from the body’s requirement for food and water.
Maslow’s legacy is the order of needs progressing in the ever-increasing complexity,
starting with basic physiological and psychological needs and ending with the need for
self-actualization. While basic needs are experienced as a sense of deficiency, the higher
needs are experienced more in terms of the need for growth and fulfillment.

2. Herzberg Two-Factor Theory / Motivation-Hygiene Theory

Herzberg’s two-factor theory, also known as motivation-hygiene theory, was originally

intended to address employee motivation and recognized two sources of job satisfaction.
He argued that motivating factors influence job satisfaction because they are based on
an individual’s need for personal growth: achievement, recognition, work itself,
responsibility, and advancement. On the other hand, hygiene factors, which represented
deficiency needs, defined the job context and could make individuals unhappy with their
job: company policy and administration, supervision, salary, interpersonal relationships,
and working conditions.

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3. Vroom’s Motivational Model / Expectancy Theory

Victor Vroom’s expectancy theory (1964), on the other hand, integrates needs, equity,
and reinforcement theories to explain how we choose from alternative forms of voluntary
behavior based on the belief that decisions will have desired outcomes. Vroom suggests
that we are motivated to pursue an activity by appraising three factors:
• Expectancy that assumes more effort will result in success
• Instrumentality that sees a connection between activity and goal
• Valence which represents the degree to which we value the reward or the results
of success.

4. Reinforcement Theory

The most well-known process theory of motivation is the reinforcement theory, which
focused on the consequences of human behavior as a motivating factor. Based on
Skinner’s operant conditioning theory, it identifies positive reinforcements as promoters
that increased the possibility of the desired behavior’s repetition: praise, appreciation, a
good grade, trophy, money, promotion, or any other reward (Gordon, 1987). It
distinguished positive reinforcements from negative reinforcement and punishment,
where the former gives a person only what they need in exchange for desired behavior,
and the latter tries to stop the undesired behavior by inflicting unwanted consequences.

5. Locke’s Goal-Setting Theory

Finally, Locke and Latham’s (1990) goal-setting theory, an integrative model of
motivation, sees goals as key determinants of behavior. Possibly the most widely applied,
the goal-setting theory stresses goal specificity, difficulty, and acceptance and provides
guidelines for how to incorporate them into incentive programs and management by
objectives (MBO) techniques in many areas.

6. Alderfer’s ERG theory

Alderfer’s theory of motivation expands on the work of Maslow and takes the premise of
need categories a bit further. He observes that when lower needs are satisfied, they
occupy less of our attention, but the higher needs tend to become more important, the
more we pursue them. He also observed a phenomenon that he called the frustration-
regression process where when our higher needs are thwarted, we may regress to lower
needs. This is especially important when it comes to motivating employees. When a
sense of autonomy or the need for mastery is compromised, say because of the structure
of the work environment, the employee may focus more on the sense of security or
relatedness the job provides.

7. McClelland’s Achievement Motivation Theory

McClelland took a different approach to conceptualize needs and argued that needs are
developed and learned, and focused his research away from satisfaction. He was also
adamant that only one dominant motive can be present in our behavior at a time.

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McClelland categorized the needs or motives into achievement, affiliation, and power and
saw them as being influenced by either internal drivers or extrinsic factors.

8. Adams’ Equity Theory of Motivation

Adams’ equity theory of motivation (1965), based on Social Exchange theory, states that
we are motivated when treated equitably, and we receive what we consider fair for our
efforts. It suggests that we not only compare our contributions to the amount of rewards
we receive but also compare them to what others receive for the same amount of input.

Issues in Motivation

1. Poor Leadership Structure

When no one appears to be in charge, or worse, everyone thinks they're in charge, it can
be hard to perform at peak levels. A lack of hierarchy or direct reporting structure leads
to confusion, resentment and an overall lack of direction. Employees are demotivated
because their objectives are unclear, and therefore, difficult to work toward.

2. Lack of Challenging Work

Employees who are bored are typically unmotivated. They may not take an interest in
tasks they consider mundane or may perform poorly at the work they do attempt.

3. Workplace Conflict
When employees are at odds with one another, or with management, it's not only
demotivating, it's also unproductive and could lead to a toxic work environment.

4. Lack of Confidence in the Company

If employees don't feel the company is "going anywhere," or perceive the business is
mismanaged to the point of potential job loss, this feeling of insecurity can manifest as
poor motivation.

5. No One-on-One Attention
Regardless of the company's size, employees need regular feedback to be motivated to
do their jobs properly, and well.

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 REFERENCES

Book: Principles and Practices of Management and Organization by Salvador, Samuel

Mejia, Estelito Cabingan Bagunas and Ellinor Fua Geronimo (2008,2013, 2010, Allen
Adrian Books Inc.)

Cherry, K. (2019). The major leadership theories. Very Well Mind. Retrieved from
https://www.verywellmind.com/leadership-theories-2795323

Daniels, R. (2020). Discuss the behavioral management theories in detail. Business

Study Notes. Retrieved from https://www.businessstudynotes.com/hrm/discuss-the-
behavioral-management-theories/

GK Today (2015). Emotional intelligence in organizational behaviour. Retrieved from

https://www.gktoday.in/topic/emotional-intelligence-in-organizational-behaviour/

I Edu Note (n.d.). Personality: Characteristics, factors, roles, theories of personality.

Retrieved from https://www.iedunote.com/personality

Lumen Learning (n.d.). Work attitudes. Retrieved from

https://courses.lumenlearning.com/suny-orgbehavior/chapter/4-2-work-attitudes/

McQuerrey, L. (2018). Top five employee motivation problems. Chron. Retrieved from
https://work.chron.com/top-five-employee-motivation-problems-22613.html

Moses, M. (n.d.). The seven biggest problems with leadership today. CEO Coaching
International. Retrieved from https://ceocoachinginternational.com/problems-with-
leadership

Souders, B. (2021). 20 most popular theories of motivation in psychology. Positive

Psychology. Retrieved from https://positivepsychology.com/motivation-theories-
psychology/

Uoda (2014). Goals of organizational behavior. Wordpress. Retrieved from

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Universal Class (n.d.). The concepts of perception and attribution in organizational

behavior in business. Retrieved from
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attribution-in-organizational-behavior-in-business.htm

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 ACTIVITIES / ASSESSMENTS

Instruction for Case Study

The case exercise below consists of a management situation for you to analyze and offer
solutions. You have to submit a Case Study Paper which will contain your answers to the
questions being provided after every case. The paper that you will submit is designed for
you to figuratively reflect about the situation, give your insight as a Marketing student, and
state what you learned from the class discussion. You will frame and define the problem,
analyze the situation, and offer or defend a resolution. This case exercise presents
realistic situation that will allow you to open your mind and prepare you to future similar
circumstances in the corporate field. The case, like the real world, do not have one “right
solution.” The challenge is for you to think critically about the situation presented and
make recommendations to solve the issue.

Purpose and Overview

The purpose of this case exercise is for students to develop their problem-solving skills
as well as their understanding of the course concepts being discussed, to be applied in
authentic situations. This kind of activity will enhance and train the intelligence and critical
thinking skills of a 21st century learner. The “case exercise process” should be used
multiple times during the semester to accomplish the objective of this course.

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CASE STUDY 7

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 UNIT VIII: CONTROLLING

UNIT OVERVIEW

Controlling means the evaluation of the work accomplished against plans or standards to
determine if it is being carried out as planned, making necessary adjustments when
needed in case there are new developments, in order to achieve the objectives of the firm
in the most efficient manner. Controlling is one of the important functions of a manager.
In order to seek planned results from the subordinates, a manager needs to exercise
effective control over the activities of the subordinates. In other words, the meaning of
controlling function can be defined as ensuring that activities in an organization are
performed as per the plans. Controlling also ensures that an organization’s resources are
being used effectively & efficiently for the achievement of predetermined goals.

LEARNING OUTCOME: After a successful completion of this unit, you should be able to:
• Determine the importance of the different foundations of control
• Name the different types of control and controlling functions
• Synthesize opinions regarding ethical issues on control
• Develop effective ways about the tools and techniques of controlling and their
applicability

COURSE MATERIALS

Guide Questions:
1. What is the importance of gaining knowledge about the different foundations of
control?
2. How can the different types of control and controlling functions beneficial in
achieving organizational goals?
3. Why is there a need to be sensitive when dealing with ethical issues on control?
4. What are the effective ways to properly use the tools and techniques of
controlling and their applicability?

Lesson 1: Foundations of Control

The Concept of Controlling

Controlling is another important function of management. This function tries to ensure

that all actions and activities are in conformity with the plans and objectives of the firm. In
other words, this function of management aims to make things happen in order to attain
successfully the objectives and goals of the firm.

According to Massie, “Controlling is the process that measure current performance and
guides it towards some predetermined goals.”

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Controlling is defined as the process by which managers ensure that performance is in
conformity with the plans, objectives, and goals set forth by management.

Characteristics of Controlling

Controlling is a management function.

• Controlling is an all-pervasive function, it exists in all levels of management.
• Controlling is a universal process, it remains the same regardless of the activity
involved or its location in the firm.
• Controlling is a continuous and unending process.
• Controlling involves dynamic process; it is not static.
• Controlling is a positive and constructive process.
• Controlling is a goal-oriented function of management.
• Controlling is an action-oriented function of management.
• Controlling is forward-looking in a business operation.
• Controlling and planning are closely related. These functions of management
cannot be taken separately; they always go together.
• Controlling is not interfering with the works and activities of others. It simply
ensures the activities and works of the subordinates towards the desired objectives
and goals.

Objectives of Effective Controlling

According to Peter Drucker, Robbins and Coulter, and Qureshi, the following are the
objectives of effective controlling:

1. To direct the activities according to plans;

2. To establish coordination between objects, means, and efforts of the organization;
3. To know the progress of the activities on the basis of standards fixed;
4. To find out deviations and try to remove these deviations;
5. To get the knowledge regarding quality cost and time of work performed;
6. To regularize actions and behavior;
7. To prevent dishonesty and establish order and discipline;
8. To maintain the flow of activities of the business;
9. To stop wastage and to maintain the cost;
10. To make decentralization and delegation of authority successfully;
11. To motivate and mobilize employees; and,
12. To ensure efficient and effective use of organizational resources.

Controlling Process
Usually, the controlling process consists of the following steps, according to Qureshi:

1. Establishing of Standards
It must be noted that standards are the objectives or plans against which actual
performance can be best measured. Specifically, standards should be both quantitative
and qualitative.

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Standards are classified into five (5) categories:

• Productivity Standards: these standards determine the number of products or

services to be produced in a given period of time.
• Time Standards: these standards determine the period of time being allowed to
produce certain number of products and services to be performed.
• Cost Standards: these standards determine the amount of money needed in the
production of products and services.
• Quality Standards: these standards set the level of satisfaction desired.
• Behavioral Standards: these standards state the desired type of behavior of
personnel in the firm.

2. Measurement of Performance
Actual performance can be measured through personal observations, samples, reports,
financial statements, and inspections. To ensure the effectiveness of measurement of
performance, the standards should be clear, complete, precise, and objective.

3. Comparison of Performance with Standards

Here, the actual accomplishment is being compared with the standards set forth, in order
to check if there are delays or deviations.

4. Taking Corrective Action

Correction of deviations in the performance of any given function or activity or task may
be made by modifying the plan either by changing the number of personnel or by better
selection and training of subordinates, or by changing or adjusting the other factors or
production.

Lesson 2: Types of Control

Types of Control
Controlling helps managers eliminate gaps between actual performance and goals.
Control is the process in which actual performance is compared to company standards.
If this is not performed then necessary corrective action should be taken. Let us learn
more about control techniques in management. Below are some of the types of control
with explanation:

Feedback control: Feedback control involves gathering information about a past activity
or action, and evaluating that information, and taking steps to improve similar activities or
action in the future. Feedback control is historical in nature and is also known as post-
action control. The implication is that the measured activity has already occurred, and it
is impossible to go back and perform correctly to bring it up to standard. It is the least
active of the controls and is generally a basis for reactions. Feedback allows managers
to use past performance information to inform future performance in line with planned
objectives.

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Concurrent control: The process of monitoring and adjusting ongoing activities and
processes is known as concurrent control. Concurrent controls are dynamic engagement
in a current process where observations are made in real-time.

Feedforward control: Feedforward is a management and communication term that

alludes to a representative or an association to give a controlled impact from which you
are expecting output. Feedforward controls are future-directed, they attempt to detect and
anticipate problems or deviations from the standards in advance of their occurrence.

Behavioral control: Behavioral control involves direct evaluation of managerial and

employee decision making, not the results of managerial decisions. Behavioral control
identified rewards for a wide range of criteria, such as in a balanced scorecard.

Financial and non-financial controls: Financial controls involve the management of a

firm’s costs and expenses so that they can be controlled in relation to budgetary amounts.

This is the true joy of life, the being used up for a purpose recognized by
yourself as a mighty one; being a force of nature instead of a feverish, selfish
little clot of ailments and grievances, complaining that the world will not devote
itself to making you happy.
- George Bernard Shaw

Lesson 3: Ethical Issues on Control

Unethical Leadership

Having a personal issue with your boss is one thing, but reporting to a person who is
behaving unethically is another. This may come in an obvious form, like manipulating
numbers in a report or spending company money on inappropriate activities; however, it
can also occur more subtly, in the form of bullying, accepting inappropriate gifts from
suppliers, or asking you to skip a standard procedure just once. With studies indicating
that managers are responsible for 60% of workplace misconduct, the abuse of leadership
authority is an unfortunate reality.

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Toxic Workplace Culture

With the current emphasis in many organizations to hire for “cultural fit,” a toxic culture
can be exacerbated by continually repopulating the company with like-minded
personalities and toxic mentalities. Even worse, hiring for “cultural fit” can become a
smokescreen for discrimination, which can result in more ethical issues and legal
ramifications.

Discrimination and Harassment

Laws require organizations to be equal employment opportunity employers.

Organizations must recruit a diverse workforce, enforce policies and training that support
an equal opportunity program, and foster an environment that is respectful of all types of
people.

Unrealistic and Conflicting Goals

Unrealistic objectives can spur leaders to put undue pressure on their employees, and
employees may consider cutting corners or breaching ethical or legal guidelines to obtain
them. Cutting corners ethically is a shortcut that rarely pays off, and if your entire team or
department is failing to meet goals, company leadership needs that feedback to revisit
those goals and re-evaluate performance expectations.

Questionable Use of Company Technology

While this may feel like a minor blip in the grand scheme of workplace ethics, the improper
use of the internet and company technology is a huge cost for organizations in lost time,
worker productivity and company dollars.

Lesson 4: Control Tools and Techniques

Kinds of Techniques in Controlling

There are two (2) kinds of techniques in controlling:
1. Conventional Technique
2. Modern Technique
Types of Conventional Techniques
1. Personal observation
2. Setting as model
3. Plans and policies
4. Organizational chart and functional charts
5. Operation manuals
6. Disciplinary measures
7. Oral and written instructions

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 8. Statistical reports
9. Annual / monthly and special reports
10. Records management and evaluation
11. Financial statements
12. Audit system
13. Simple break-even analysis
14. Standard costing
15. Budget operation management and control
16. Cash auditing
17. Inventory control

Types of Modern Techniques

1. Return of Investment (ROI) – is a technique of control of the overall
accomplishment of the firm.
2. Management Audit – is a systematic technique of evaluating the operation and
effectiveness of the management of a firm.
3. Management Information System (MIS) – is a system of collecting, processing,
recording, and transmitting information needed by management.
4. Zero-Base Budgeting (ZBB) – is a budgeting technique which does not consider
figures of previous fiscal year in the preparation of a budget.
5. PERT / CPM – Program Evaluation and Review Technique (PERT) and Critical
Path Method (CPM); these are techniques that can be used to control the actions
and activities of personnel.

Limitations in Control
Control provides better performance and maintenance of standards; however, there are
limitations that cannot just be ignored, such as:
1. Difficulty of setting standards that can be applied to all functions and activities
2. Difficulty in determining standard qualifications of personnel
3. Influence of external pressure groups or individual
4. Limited manpower experts to implement the standards
5. Strong opposition from personnel, for evaluating their performances and activities
6. Time consuming. You really need enough time to study, evaluate and implement
the standards.
7. Difficulty in identifying responsible personnel in any deviation / shortcoming
8. No political will to implement the corrective action. There are times when
management cannot easily implement corrective measure or control due to many
pressures.
9. Limited funds to set-up standards

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Requirements of Effective Controlling
1. It should serve the needs for which they are intended.
2. It should be economical to maximize profit.
3. It should be stable yet to flexible to cope-up with the changing needs of the firm.
4. It should identify changes or deviations.
5. It should be objective and free from any biases.
6. It should consider the organizational structure.
7. It must be properly understood by those who are to use them.
8. It should be able to indicate future deviation from what has been planned, in order
to consider corrective measures.
9. It should include several alternatives to correct deviations.
10. It should promote unity, cooperation, and goodwill.

REFERENCES

Book: Principles and Practices of Management and Organization by Salvador, Samuel

Mejia, Estelito Cabingan Bagunas and Ellinor Fua Geronimo (2008,2013, 2010, Allen
Adrian Books Inc.)

Kumar, V. (2019). Types of control. Roarwap. Retrieved from

https://www.roarwap.com/management-process/types-of-control/

Michigan State University (2019). 5 common ethical issues in the workplace. Retrieved
from https://www.michiganstateuniversityonline.com/resources/leadership/common-
ethical-issues-in-the-workplace/

ACTIVITIES / ASSESSMENTS

Instruction for Case Study

The case exercise below consists of a management situation for you to analyze and offer
solutions. You have to submit a Case Study Paper which will contain your answers to the
questions being provided after every case. The paper that you will submit is designed for
you to figuratively reflect about the situation, give your insight as a Marketing student, and
state what you learned from the class discussion. You will frame and define the problem,
analyze the situation, and offer or defend a resolution. This case exercise presents
realistic situation that will allow you to open your mind and prepare you to future similar
circumstances in the corporate field. The case, like the real world, do not have one “right
solution.” The challenge is for you to think critically about the situation presented and
make recommendations to solve the issue

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Purpose and Overview
The purpose of this case exercise is for students to develop their problem-solving skills
as well as their understanding of the course concepts being discussed, to be applied in
authentic situations. This kind of activity will enhance and train the intelligence and critical
thinking skills of a 21st century learner. The “case exercise process” should be used
multiple times during the semester to accomplish the objective of this course.

CASE STUDY 8

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