ABA 108: Business Communication

MANAGING A BUSINESS: MEANING AND FUNCTIONS

In the last chapter, we discussed various issues related to entrepreneurship. We saw the reasons
why people choose to become entrepreneurs and how they would go about becoming so. In this
chapter, we will now go further and discuss how, once a person has established a business, he or
she would go about managing it in order to reap the maximum benefits.

Learning outcomes
At the end of the chapter, you should be able to:
a) Describe who a manager is.
b) Explain the meaning of management.
c) Explain the role played by planning in managing a business.
d) Discuss the functions of organizing in an enterprise.
e) Discuss the functions of directing in management.
f) Explain controlling as a function of management.
g) Discuss staffing as a function of management.

The meaning of management

As students of business studies, the first question we should ask ourselves is 'What is
management?
We could define management simply as the art of utilizing resources, both human and material,
in order to achieve a desired objective. We could also define it more comprehensively as the
process, which enables an organization to achieve its objectives by planning, organizing,
directing, and controlling its resources. We shall soon discuss more about these aspects of
management. In an organization, we can identify three levels of management, as indicated in the
diagram below:

Levels of Management
The senior or executive level of management is the top organ. The managers at this level are the
ones who establish the policies, the strategies and the goals of the organization. Policies are the
rules, regulations and procedures that will guide the course of actions taken in the organization.
A strategy on the other hand is a plan of action. It is designed in line with the policies, so as to

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arrive at the desired goal.

At the middle level, the main job of the managers is to translate the policies and strategies
developed at the executive level, into specific programmes to be implemented. They analyze
what is happening at the workplace and prepare reports.
The first line managers are the ones who play a purely supervisory role. They are the ones who
have direct contact with the workers. They also give the workers whatever resources they require
in order to perform their work effectively. They are therefore involved mainly in communication
with the workers.

Who is a manager?
Having discussed the meaning and levels of management, the next question that we should ask
ourselves is "Who is a manager'?
In simple terms, a manager is a person who achieves the objectives of an organization by
directing the efforts of worker. The task of the manager is to establish and .maintain a working
atmosphere which enables the people working under him or her to perform effectively and
efficiently. To do this, the manager needs to understand and respond to the many factors that
may affect his work. Such factors could be economic, legal, cultural, technical, political or
ethical. These are referred to as the "environmental factors". Changes in any of these factors
could greatly affect the job of a manager.

We can therefore summaries some of the qualities necessary for a manager to be successful as
follows:
i. Ability to think logically and clearly. Many people find it easy to do, act or perform as
directed, but have difficulty in thinking clearly and purposefully about a problem. Such
people find it easier to follow than to lead. To be a manager, one should be able to think
logically and clearly
ii. Ability to express himself or herself clearly. This is the art of communication. A manager
should know how to communicate his ideas clearly to the workers so that he or she is
well understood.
iii. Technical competence. A manager should possess the appropriate technical ability i.e.

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knowledge in his area of specialization. This is so that he can lead the people
effectively. This also increases his or her credibility or acceptability by those under him.
iv. Ability to perceive the broader issues. A manager should be able to see the overall
picture of issues so that he or she can understand them and know the effect of each one
of them on his actions.
v. Salesmanship. This is the art of making the workers agree with his ideas. It aims at
making the others not only know the idea but accept it and agree with it (i.e. buy it).
vi. Moral integrity. As a manager your actions, conduct and pronouncements should be
beyond reproach. This is in order for the subordinates to have confidence in the manager.
vii. Emotional stability. A manager should be able to keep his or her personal feelings out
of business problems, so that he or she can be able to look at issues objectively.
viii. Skill in human relations. This is the ability to understand human nature and behaviour.
This enables the manager to develop a good and cordial relationship with the workers
and other people that he may get in touch with.

Functions of management
Can you remember the way in which we defined management at the beginning of this chapter?
We referred to it as the process which enables an organization to achieve its objectives by
planning, organizing, directing and controlling its resources.
These are basically what constitute the functions of management. We shall look at each of these
separately.

1. Planning
In planning, the manager determines when things should be done and how they should be done.
A plan therefore is a pre-determined course of action to take. The plans provide a basis of
reference for decisions by individuals in an organization. They help to indicate a course of
action to help achieve some target.
The planning process
For planning to be effective, there are certain steps that should be followed. These are:
(i) Setting of goals
A manager should set the goals of the organization or department,

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(ii) Search for opportunities (forecasting)

The purpose is to try to discover in the environment any opportunities for activities of the
organization. In this case the manager is involved in forecasting probable events in the future, so
as to come up with the appropriate course of action.
(iii) Making of plans. At this stage, the opportunities that are discovered through the search
are translated or converted into strategies and policies aimed towards the achievement of
the goals.
(iv) Target setting. Here the specific details for the plans are made. This involves
determining the quantities and time guidelines required.
(v) Follow-up plan. This involves carrying out continual checks to determine whether the
plan actually results in performance that is consistent with the original previous thinking.

2. Organizing
After having planned for the activities of the enterprise, a manager then has to decide on how
best the resources available for the achievement of the planned goals and objectives are best
utilized. This then is the process of organizing. It involves matching the resources available to
the work which flows from the plan. It ensures that the financial physical and human resources
necessary are in the right place, in the right quantity, and at the right time.

The manager also needs to ensure that such resources are not wasted or underutilized.

Principles of Organizing
In deciding how best to utilize the available resources, there are certain principles, which should
guide a manager. These include:
(i) The Span of Control
This principle refers to the number of workers that an individual manager or supervisor directs.
The question to ask here is 'how many workers can one supervisor direct effectively?' If the
workers are too few, the time of the supervisor will not be utilized effectively. If they are too
many, he would not be able to supervise all of them effectively. However, we should note that
there is no fixed rule as to the number of workers. This depends on the type of work being

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performed, the type of training that the workers have, whether the work is repetitive in nature,
and the amount of supervision necessary. Recent trends in business enterprise recommend
increasing such spans of control.

(ii) Unity of Command

This is a principle which maintains that each worker should be responsible to, and receive
direction and instructions from one boss only - i.e. his or her immediate supervisor. This helps
to reduce confusion and conflict among workers. It also helps to minimize incidences of lack of
action. Without it there may be poor morale among the workers.

(iii) Scalar Principle

This is a principle which maintains that authority in an organization flows in a clearly defined
and identifiable line from top to bottom. This helps in defining who has authority over whom in
an organization. It also provides a ready-made channel of communication downward and
upward in the organization.

(iv) Delegation of Authority

By authority we mean the right to command or act. It gives a person power over others. Every
person in a managerial position is vested with some authority.

One of the tasks of a manager is to pass on some of his or her authority to another person. This
then is called delegation. Delegation should be made to an individual who has the necessary
knowledge and ability to take intelligent action. The person should also be as close to the point
of action as possible. He or she should also be a person who gets on well with other workers and
is accepted by them.
There are several benefits, which accrue from such delegation:
a) This frees the manager to perform his or her more crucial (core) functions.
b) It increases the morale of the workers who feel honoured from the recognition arising
from such delegation. They become more loyal to the organization.
c) It is a form of training for the workers in the performance of some managerial duties.
d) It helps create a pool of workers who can easily take over the duties of managers at

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higher levels should a vacuum arise. This is called "succession planning".

(v) Specialization
This is the concentration of a workers effort on a particular job or area of work. The more one
concentrates on the performance of a particular job, the better he or she becomes in performing
the job. This is also referred to as "division of labour". We have already discussed this concept in
Chapter Three on production,

3. Directing
In directing, the manager is expected to lead, guide, motivate and supervise workers. It therefore
refers to the interpersonal aspect of management, whereby workers are led to understand and
contribute effectively to the achievement of the goals of the enterprise. In order to direct the
efforts of the workers towards the achievements of enterprise goals, a manager has to consider
the following issues:

Orientation
By orientation within the context of directing, we refer to the responsibility of providing
information to new employees that will enable them work effectively. A manager therefore
needs to:
i. Introduce each new employee to other workers within the organization.
ii. Show the employee around the organization and the physical facilities available.
iii. Brief new employees on the activities of the enterprise.

Motivation
To motivate is to be able to induce people to act in a certain desired manner. We know that items
like machines can be made to perform certain functions through the direct application of the
necessary force. But it is not possible to do the same with human beings. Human beings will
either perform through their own self will or they are persuaded to perform. To rely on the self
will of persons to perform may not yield any reasonable results. It is necessary that for people to
be purposefully motivated in productive work there has to be effective persuasion. This effective
persuasion is then what is involved in the process and techniques of motivation.
Every manager is responsible for motivating his subordinates. This of course depends on the

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extent of his authority.

Ways of Motivating Workers

There are several ways in which workers may be motivated:
i. A manager should make sure that workers are able to meet their basic needs like food,
shelter and clothing by giving good salaries and other benefits,
ii. A manager should also try the make the workers feel secure in their jobs by providing
insurance, health and pension schemes for the workers,
iii. A manager can also make the workers feel important and wanted. This can be done by
giving them some amenities such as company houses and company cars. Even the title of
a job can greatly increase the feeling of self-importance of a worker,
iv. A manager should also make the workers feel loved and wanted. He can occasionally
arrange some company picnics and games for the workers,
v. A manager should also remember to congratulate a worker who has done some work well
and encourage others who have not performed so well,
vi. A manager should give opportunity for a worker to progress within the organization. In
this case he should even encourage the worker to learn and train more so that he or she
can be promoted,
vii. The nature of the work being done is also important. Work should be made as interesting
as possible to the worker,
viii. The way that the manager supervises the work is also important. This is because the
workers want to feel they are being treated like responsible human beings.

Benefits of having properly motivated workers

There are certain benefits that may accrue to an enterprise that has properly motivated workers.
These include:
i. The motivated workers will work hard thereby increasing the productivity and hence the
profits of the organization.
ii. The workers will be very loyal to the organization thereby providing maximum output in
their work.
iii. There will be few workers leaving the organization (i.e. low rate of staff turnover). As

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such, the organization will minimize its cost of hiring new staff.
iv. There will be fewer cases of absenteeism and malingering which will increase
productivity.
Indicators of poorly motivated (de-motivated) workers
Such indicators include: -
i. where many workers are leaving the enterprise within a short period.
ii. where the rate of absenteeism by the workers is very high.
iii. where there is a very high rate of sick-offs by workers.
iv. where there is a high level of antisocial behaviour such as frequent fights by workers
v. where the workers are generally aggressive and uncooperative among themselves.
vi. where there are generally very many cases of breakages and accidents.

Communication
Every manager spends a very large part of his working time communicating with other persons
in the organization. We may therefore ask ourselves, what is communication?
Communication is the transfer of information from one person to another. It involves sending
and receiving a message.
Every person in a business enterprise shares the responsibility for good communication.
About 80% of a manager's time is spent in communication. A manager needs to communicate
with people inside and outside the organization. In the organization, he needs to communicate
with the workers, other managers at his or her level and senior managers. Outside the
organization, he needs to communicate with clients, suppliers, government departments among
others.
For communication to be effective, it is necessary that the message sent is received and
understood as it was intended by the person sending it. For this reason, the person sending it has
to ensure that:
i. The message sent is actually received,
ii. The message sent is understood as it was intended,
iii. The message is actually accepted by the person receiving it.
iv. The message is acted upon in the way and at the time that the sender wants.

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It is therefore necessary in sending a communication that you:

i. are very clear about what you want to say.
ii. understand and know the person or persons that you are communicating with,
iii. use the words and vocabulary that is appropriate to the level of the persons with whom
you are communicating.
iv. are not ambiguous in the manner in which you deliver your message.
v. Are brief and to the point so that you are not boring,
vi. are logical in the manner in which you have arranged the delivery of your message.

Leadership
One of the key determinants of the success of an enterprise is the quality of the leadership
practiced in the organization. Leadership can be defined as the effort of one person - the leader -
which is directed at influencing the behaviour, attitudes, beliefs and values of workers of an
organization.
For a person to be a good leader there are certain qualities that he or she should posses. These
include:
i. High intelligence and good judgment so as to make good decisions.
ii. The willingness and ability to accept responsibility.
iii. Good communication skills so that he or she can express himself or herself clearly.
iv. Good appreciation and understanding of the workers, their aspirations and feelings.
v. Fairness and justice in his dealing with workers.
vi. Firmness in his/her beliefs
vii. Self-confidence,
viii. Patience and tolerance,
ix. A well developed sense of humour.
x. Open-mindedness so that he/she can accommodate different viewpoints.
xi. Honesty in his/her dealing with other persons,
xii. A high level of enthusiasm, excitement and energy,
xiii. A preparedness to set fairly high standards of performance for himself/herself and for the

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workers.
xiv. The ability and willingness to give and receive feedback on performance.
There are several different types of leadership styles that a manager can adopt. These include:

The Autocratic Leadership

An autocratic leader decides what has to be done and uses his authority to make people carry
out that decision. In such a situation, the power and direction flow from the top downwards. The
leader uses threats and punishment to make the people work. There are no incentives provided
hence low productivity.

The Charismatic Leadership Style

In this leadership style the manager exercises authority because of his own personality. The
workers look upon him for leadership because of his perceived superior qualities. This could be
due to his exceptional knowledge and skills, as well as other personal attributes acquired
naturally. A charismatic leader is seen as the sole source of rewards and benefits, and can create
a vacuum if he or she is away.

The Democratic Leadership Style

In this leadership style, people are treated as equals and it is assumed that they will act
intelligently and reasonably. The manager allows discussion among the workers and listens to
opinions and ideas before making decisions. The decisions made are therefore more acceptable
to the people.

The Participative Leadership Style

This is the ideal leadership style. The workers are fully involved in the decision making process.
Decisions are arrived at by mutual agreement or consensus although the manager may outline
the broad issues. Participation leads to commitment to organizational goals. Workers get
motivated and productivity is increased.

The Laissez Faire Leadership Style

This leadership style is also referred to as "free for all". This is because the leader gives the

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workers total freedom in making decisions. The workers do not have to be directed to do their
work. There is minimal supervision. The approach can easily lead to chaos and anarchy as each
worker seeks to have his or her opinion heard and acted upon.
4. Staffing
Staffing involves managing the personnel requirements of an organization. These include human
resource planning, recruitment, selection, training, appraisal and compensation.
(i) Human Resource Planning
This is concerned with forecasting the personnel requirements of an organization. This
forecasting involves analyzing the skills required and the current and expected vacancies in the
organization. In case vacancies are identified the organization could hire new workers.
(ii) Recruitment
This is the process of hiring suitable people to fill the identified vacancies. The
recruitment process would involve analyzing and describing the job and describing the
qualities of the person required to fill the post.
(iii) Employee selection
This is the process by which suitability of candidates for the job are evaluated and
determined, This process includes analyzing the information from each applicant,
conducting interviews which could involve written tasks, physical examination, and
evaluating references and recommendation . of each candidate.
At the end of the process, both the organization and the applicant make a decision. This is
because selection is a two-way process with each evaluating the other. The organization
should select the applicant who is best suited for the job irrespective of sex, race, religion
or any other factor.
(iv) Training
In order to improve skills and efficiency of workers it is necessary that the organization
offers training to their employees. This training of employees could either be on-the- job or
off-the-job.
On the job training is provided at the place of work and is usually carried out by attaching
the employees to an experience worker or giving instructions to the employee on how to
perform certain tasks. On the hand, off-the-job training is mostly conducted in training
institutions.

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(v) Appraisal
This involves an evaluation of the individual employee's performance on the job and the
potential for development. The performance appraisal is usually conducted for the
purposes of determining:
(a) current level of employee job performance.
(b) strengths and weaknesses of the employee in job performance.
(c) Basis for rewarding employees, training or potential for promotion.

(vi) Compensation
An organization needs to determine the salary structure for various levels and categories of
its employees. The salary structure may reflect level of education, training, skills and
experience required to perform each job. There are various systems that could be used in
determining employees salaries and wages. These include the following:
(a) Fixed salary rates: This is a method where a worker is paid a specific, predetermined
salary after working for a given period such as one month.
(b) Performance-based salaries: This is a method where employees are paid salaries
based directly on output (or work performance).
(c) Fixed salary plus bonuses: This is a method where an employee is paid a certain
minimum salary but could earn additional pay in case he or she exceeds certain level
of output or target.

5. Controlling
A business organization needs to plan how to organize and direct the use of its resources so as to
achieve its goals. Further to this, the organization needs to set the standards that should be
maintained in performing the activities of the business. It also needs to set targets that should be
attained when performing various tasks.
The planned activities performed by various employees in an organization should therefore
conform to the set standards or meet the planned targets. These standards and targets are the

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yardsticks against which performance of activities are to be measured. It is necessary then that
the performance of various activities are continuously monitored and measured against the
standards and targets set. All these constitute the control function of management.

Control as a management function can be defined as the process of checking or following-up

performance of activities undertaken in a business organization, to find out whether or not such
preformed activities conform to the required standard or to certain targets. Monitoring of
activities in a business enterprise is a continuous process.

The control mechanism established in a business can assist a manager to detect deviations from
the set standards or targets. In case the performance of certain business activities or transactions
do not meet the required standards or targets, then corrective measures need to be taken. There
should then be some follow-up activities, deliberately put in place by the manager, to correct
any deviations in the future.

Every business organization should establish a control system. This is in order to provide the
management with a tool of monitoring performance and assist them in initiating measures or
following up activities to correct the deviations. Establishing control mechanism in an
organization would involve the following:
(i) Establishing the standards: Standards are the levels of expected performance or output
that should be met while performing certain tasks. The expected standards usually act as
guides and therefore direct or provide the drive to employees to perform towards that
goal,
(ii) Measuring actual performance: This involves knowing and determining the levels of
performing certain tasks,
(iii) Comparing actual performance against set standards: This process involves
determining whether actual performance of certain activities conforms to the expected
standards of the expected output levels, In case any deviations are detected, the manager
should assess the magnitude and beable to look for appropriate measure to correct it.
(iv) Correcting deviation: This involves a manager taking remedial action to correct the
mistake that was responsible for a particular deviation.

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Control tools
Control tools are devices or mechanisms that a manager can establish in an organization for the
purpose of controlling certain business activities so that they may conform to its plans. There are
many devices that can be used, but for the purpose of this book we shall discuss only three,
namely; budgets, audits and personal observation.

Budgets
A budget is a written plan of action. It outlines in quantitative terms various activities and their
expected level of performance or targets in a give period of time. For instance, an enterprise
may prepare a production budget that may outline the production targets e.g. weekly, monthly,
quarterly and at what cost.
The most common budget is the financial budget which is a systematic presentation of
expenditure and revenue intended to cover that expenditure within a given time period, usually
one year.
A budget is one of the most important control tools used by management today. It sets some
predetermined targets against which each manager can assess his performance.

Audits
This is an investigative tool that is conducted regularly or periodically by personnel who are
qualified in that area. They are referred to as auditors as their work is to check the financial
records of a business to ascertain that financial transactions of the business have been carried out
prudently i.e. properly and accurately. An audit inquiry can reveal or unearth instance of misuse
of business resources such as money.

Personal Observation
Although personal observation may sound quite simple, it is an important way of ensuring
management control in an organization. It involves the manager observing the happenings or
events of the business by walking and seeing what is going on in operational areas, listening to
and talking with employees. A manager who regularly visits working areas makes workers work
even harder and he or she also detects problem areas early enough.

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Reasons for Establishing Control Tools

A business enterprise may institute a control system for various reasons. Some of the reasons
may include:
i. To ensure that the resources of the organization are utilized in the most efficient manner
possible.
ii. To reduce the rate of wastage in organizational resources.
iii. To ensure that the programmes or activities of the business are implemented according to
prepared plans.
iv. To assist in guiding, inspiring and directing the efforts of workers in achieving their set
goals and targets.
v. To assist the managers detect problem areas.
vi. To assist the managers in designing appropriate measures to correct any shortcomings
within its organization.

Activities
1. Discuss the role that each of the following school administrators play in the management
of your school.
(i) The headteacher
(ii) Deputy headteacher
(iii) The school bursar
2. Discuss the merits and demerits of each of the following leadership styles
(i) Democratic leadership style
(ii) Autocratic leadership style
(iii) Participative leadership style

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