Lesson Five:Management of Business Organizations

• Expected Learning outcomes:

• Demonstrate understanding of the origins and development of management thought.
• Describe the nature of management and identify the five basic functions that constitute
the management process.
• Identify different types of managers likely to be found in an organization by level and
area.
• Describe the basic roles and skills required of managers.
 Management of Business Organizations
• Topics/Sub-topics:
 Definition of Management
 The Origin of the Management Theory
 Management -Is it a Science or Art?
 Nature of Management
 Scope of Management
 Characteristics of Management
 Objectives of Management
 Importance of Management
 Levels of Management
 Functions of Management
 Essential Skills of a Manager
 Roles of a Manager
 Management of Business Organizations
• Recommended Readings
• Ronald J. Ebert et al. (2013), Business Essentials, 9Th Edition, Person education Ltd,
England. Pp 134-140.
• Kibera, F.N. (1996) “Risk Management and Insurance” In Introduction to Business. A
Kenya Perspective, Nairobi Kenya Literature Bureau.
• Group Assignment Five
• Using a practical organizational example, discuss the five functions of management in the
organization.
 Management- Introduction
Management has been defined by various scholars as:
 According to George R. Terry, “Management is a distinct process consisting of planning,
organizing, actuating and controlling, performed to determine and accomplish stated objectives by
the use of human beings and other resources”.
 According to Henry Fayol,“To manage is to forecast and to plan, to organize, to command, to
coordinate and to control”.
 According to Peter Drucker,“Management is a multi-purpose organ that manages business and
manages managers and manages workers and work”.
 According to Harold Koontz,“Management is the art of getting things done through and with people
in formally organized groups”.
 According to Mary Parker Follett,“Management is the art of getting things done through people”.
 According to Ross Moore,“Management means decision-making”.
 According to F. W. Taylor,“Management is the art of knowing what you want to do and then seeing
that it is done in the best and cheapest way”
 Management- Definitions
 “Management is the art of knowing what you want to do and then seeing that it is done in the best
and cheapest way”.
 Thus, management can be defined as a dynamic process of utilizing the organizational resources to
achieve organizational goals in an effective and efficient manner.
 There are certain terms which require elaboration. These are (a) process, (b) effectively, and (c)
efficiently.
 The organizational resources that act as inputs in the process of management are: Men, Money,
Materials, Machines, Methods and Markets. These are the six M’s of management.
 The management process is effective when the desired goal is achieved within the time.
 It is efficient if the desired goal is completed by using minimum resources or minimum cost.
Management is said to be poor if it is effective but inefficient.
 Management is said to successful if it is effective as well as efficient. Management should be
efficient otherwise it is useless.
 Origin of Management Theory
 The industrial revolution sparked great debate about management theory. It’s a key turning point in
the history of management. These are six of the leading theories that appeared after this event.
 Every country undergoes industrialization. It occurred in the United Kingdom in the mid-
19th century. British people who immigrated to Australia then brought their knowledge with them.
This sparked a similar industrial revolution in Australia.
 Why is this relevant to modern management?
 The industrial revolution allowed companies to grow far larger than ever before. Management no
longer involved overseeing a few dozen employees directly. Massive corporations with hundreds or
thousands of employees sprouted up from this era. It’s a key turning point in the history of
management that led to many of the theories that we use today.
 The industrial revolution led to the creation of several different concepts of management. Many
came about in the years that followed. Though these concepts evolve, they’re still relevant in the
modern age.
 Let’s dive into the history of management and look at six theories. These all form the basis of
modern management theory.
 Frederick Winslow Taylor – Scientific Management Theory
• A mechanical engineer, he authored The Principles of Scientific Management in 1909.
• At its most basic, his theory proposed for the simplification of jobs.ie productivity would improve. He also
argued that managers and employees must work together. This was a new idea in the history of
management. In the early-20th century, most companies still operated like dictatorships. The manager
assigned the work, and the employee did it.This was especially the case in the factories that rose out of
the industrial revolution. Managers had almost no contact with employees. Instead, they issued orders
and expected employees to get on with the work. There was no standardization or science behind it. This,
Taylor argued, led to unproductive workers.
• He espoused fair pay for a fair day’s work. This mantra focused on employee productivity. If one worker
produced less than another, they did not deserve equal pay. Taylor argued for the creation of scientific
methods. These would make production as efficient as possible. This gave more responsibility to
employees. They all had the same methods available, so the less productive had nothing to hide behind.
• Taylor also created four principles of management as part of his work. These are:
 Use scientific methods to determine the most efficient way to complete a task.
 Monitor employees to determine performance. This involves offering guidance to those that aren’t as
efficient as needed.
 Assign employees to work that suits their skills and motivation levels. Then, coach them to reach
maximum efficiency.
 Managers must focus on planning and professional improvement. Employees must focus on the
tasks given to them.
 Henri Fayol – Administrative Management Theory
 Also active during the same time as Taylor was Henri Fayol. Having started his career at a French
mining company at the age of 19, Fayol rose up the ranks. In time, he became the company’s
director, managing over 1,000 people.
 Henri Fayol went 10 better than Taylor when he published Administration Industrielle et Générale.
He created 14 principles of management. However, most of these focused on the administrative
side of management.
 Fayol developed his 14 principles while working in his directorship. As a result, they came from the
direct experience of a man who had been there and done it all.
 He argued that many managers didn’t interact well with their employees. In this, he agreed with
Taylor. But Fayol’s principles focused less on science. Instead, he looked at how to create an
efficient company structure.
 He argued for employee specialization and a focus on organisational interests. Fayol also believed
that all employees should only have one direct manager.
 Fayol’s book became one of the key leadership tools in the history of management. Even today,
his 14 principles of management agree with most modern organisation’s aims.
 Max Weber –  Bureaucratic Management Theory
 One of the earliest examples of evolution in the history of management, Max Weber built on Taylor’s
theory. He argued for similar principles. Weber believed that all managers must build chains of command.
He also argued for standardization.
 Weber and Taylor differed in a key area. Weber realized that Taylor’s scientific theory did not account for
emotions. He argued that the rise of technology could lead to a toxic workplace culture. He differs from
many management theorists because of this focus on the negatives. Too much change can affect morale.
 Weber’s bureaucratic theory argues for the following:
• Detailed record-keeping at all levels of an organisation.
• Employees must have clear job roles so they maintain their focus.
• All organisations should have clear hierarchies.
• The standardization of common procedures.
• Organisations must only hire employees who are fit for the job in question.
 With this last point, Weber touched on an important aspect of modern business. Hiring for fit, he believed,
involved searching for employees with the correct skills.
 We now know much more about hiring practices. Hiring based on skill alone does not account for a
company’s culture. If a new employee’s personality does not fit your culture, they rarely succeed.
 As such, modern management theory has taken Weber’s ideas a step further. Still, his work created
another important stepping stone to today’s management principles.
 Professor Elton Mayo – Human Relations Management
Theory
 Despite their importance, the previous concepts of management didn’t account for people.
Specifically, they all held firm that money was the main influencer of employee performance.
 Elton Mayo’s Studies added a new wrinkle. For five years, Mayo studied employees at Chicago’s
Western Electric Hawthorne Works. He placed his focus on workplace conditions, and how they
affected productivity.
 His study found that relationships work as a key motivator for employees. When working as part of a
team, people become more productive. The improvement was so marked that it became known as
“The Hawthorne Effect”.
 Mayo’s work laid the foundations for the focus on teamwork that today’s management theories
have. He was the first to prove that the right people in the right teams leads to higher productivity.
 His work led to the founding of the Human Relations Management Theory. Other theorists adopted
his research. They used it to look for ways to create high-performing teams. These efforts still had
the same aims of previous theories. They aimed for greater efficiency and better results. But Mayo’s
work emphasized the importance of the human factor.
 As a result, the Hawthorne Studies are a major benchmark in the history of management.
 Ludwig von Bertalanffy – General System Theory
 A biologist, Ludwig von Bertalanffy wasn’t a management theorist. In fact, his general theory related
more to biology than management. Even so, his work in the 1940s proved instrumental in
the history of management.
 He argued that all systems are the sums of their parts. In biology, you can look at your own body for
an example of this. Your organs, muscles, and bones all combine, along with everything else in your
body, to make a whole. One organ or muscle on its own is not productive. But the right combination
leads to an efficient body.
 You may already see how this applies to management theory. Ludwig von Bertalanffy’s General
System has relevance in the workplace too. Most organisations contain several departments. Each
of these departments has people, all of whom have their own jobs. If one department doesn’t carry
its weight, the organisation suffers. In some cases, even one person failing to do their job properly
can have widespread ramifications.
 Beyond this, he also argued that each element in a system reacts to its environment. Outside
influences can affect how a system operates. You could argue that this relates to toxicity in the
workplace. It also places an emphasis on how personal issues can affect an employee’s motivation
levels.
 Though a biological theory at first, general system theory applies to so much more. In fact, it’s at the
root of many modern managerial theories.
 Douglas McGregor – X & Y Management Theory
 In 1960, Douglas McGregor built on the teamwork-related ideas in the Hawthorne Studies. He
published The Human Side of Enterprise to make his points. In that book, McGregor presents two
types of management: Theory X and Theory Y.
 Theory X relates to authoritarianism. Such managers take a negative view of their employers. They
assume their people have no motivation and won’t work well unless pushed. This leads to the leader
taking too much control, often micromanaging projects. In such an organisation, productivity plays a
huge role. If an employee doesn’t reach a certain “quota”, they don’t receive their rewards. It also
assumes that employees have no ambition of their own. Theory X managers believe they must drag
employees along to get results.
 Theory Y built more directly from Mayo’s studies. Such managers take a much more positive
approach to their people. They believe that teamwork leads to better results. Furthermore, Theory Y
managers encourage professional development and give employees more responsibilities. They
want to see initiative, which builds a positive workplace culture.
 McGregor argued that Theory Y is the better choice of the two. Modern management bears his
claims out as well. Though authoritarianism still exists, most don’t see it as the way to develop a
healthy organisation. Theory Y forms the basis of most modern management theories.
 Management Perspectives
• While the term management refers to organizational activities, it also denotes a body of knowledge or
discipline. Some describe it as a means of leadership while others view it as an economic resource. To
understand the meaning and nature of management, let’s look at the concept from a broader perspective.
Here are various categories that describe management in multiple contexts
Management as a Process
• As a process, management aims at increasing productivity and efficiency in an organization. The purpose
is to strengthen the client base, improve the knowledge, skills and capacity of employees to achieve
particular targets and goals. Management is also a never-ending process that brings different teams and
individuals together. Everyone works in harmony to achieve common objectives.
Management as an Activity
• As an activity, management looks at the daily tasks and accomplishments of an employee. It helps them
prioritize activities and monitor progress, which further helps them grow in their roles. It prevents
miscommunication and task repetition as everyone is aware of their roles and responsibilities. There is
clarity and accountability—the cornerstones of business growth and success.
Management as a Profession
• Management as a profession has been popularized by courses and academic institutions across the
globe. Several organizations prefer individuals with a Master of Business Administration (MBA) degree.
Specialized knowledge (such as an MBA degree) provides an individual with a competitive edge, making
them more desirable for managerial roles. Therefore, management has evolved as a body of knowledge
that continues to solve various workplace problems.
 Is Management an Science or Art?
1.Management as a Science
• Science as a discipline is made up of: i. Systematic body of knowledge,ii. Principles based on
experimentation iii. Universal validity of the laws and principles
• Management satisfies these requirements to a certain extent
i. Management is a systematic body of knowledge with its own theories and principles.
ii. The principles of management also evolved through repeated experimentation. But since management
deals with humans, the outcome of the experiments is significantly unpredictable.
iii. The principles of management do not have a universal applicability and need modification under
different circumstances.Thus, it can be said that management is not an exact science. It is a social
science as it deals with humans or in the words of Ernest Dale – ‘Management is a soft science’.
2. Management as an Art
• Art implies application of knowledge. It is highly personalized activity to achieve desired goals. Since, art
varies from person to person it is prone to failure.
• Just like any other art:i. management is also application of knowledge in different
situations.ii. management is a highly personalized activity and varies from manager to manager. Thus,
management is also prone to failure.iii. management is action-oriented to achieve organizational
objectives.
• Thus, management is a perfect art or rather a fine art.
 Nature of Management
• Management—as a systematic process—helps identify a group of people who carry out particular
activities, thereby improving an organization’s efficiency and effectiveness. Here are the salient
features that highlight the nature of management in businesses.
Universality
• Management is a universal process and is essential for all organizations. If there is human activity,
there is management. The principles of management are applicable irrespective of the size and
location of a business. The universal principle also means that managerial skills can be developed
over time and they’re transferable
Social Process
• The nature of management involves organizing people in groups and managing them. It requires
different levels of empathy, understanding and dynamism. In addition to taking care of social and
emotional well-being, the process involves developing, motivating and retaining employees.
Purposeful
• Management always has an end goal of achieving an organization’s targets, mission and vision.
The success of management can be measured by the extent to which an organization achieves its
objectives. There is an underlying purpose of increasing efficiency and productivity. The objectives
should be realistic, attainable and time-bound.
 Nature of Management
Intangible
• There is no physical proof of the management process. Its success can be measured by the outcomes of
its efforts. For example, lower turnover rates indicate there’s high employee engagement and job
satisfaction. This further shows that managers or individuals in managerial roles have taken proactive
steps toward improving employee retention.
Coordination
• Management coordinates all the functions of an organization by bringing together different teams and
departments. Without coordination, there would be ambiguity and chaos. Therefore, by getting people on
the same page, there is communication and minimized duplication of efforts.
Creativity
• Management is made up of individual components and is a composite process. Every independent
component contributes in unique ways. For example, group efforts encourage creative ideas and
imagination. The sum of individual efforts creates synergy and something new is born.
Dynamic Function
• Management should be dynamic at its core because businesses are often influenced by economic,
social, political and technological factors. With room for flexibility and adaptability, individuals can perform
well even in stressful situations. There should be adequate training and facilitation within the process.
 Scope of Management
• Clearly defined responsibilities, concepts, theories and principles related to managerial functions define
the scope of management. Let’s look at the various aspects of this.
Financial Management
• Every enterprise prioritizes financial management because finances can get extremely tricky if not
managed properly. Effective financial management ensures there are fair returns to stakeholders, proper
estimation of capital requirements and laying down optimal capital. It includes preparation and
examination of financial statements, creating proper dividend policies and negotiations with external
stakeholders.
Marketing Management
• The scope of marketing extends to planning, organizing, directing and controlling activities in the
marketing department. Identifying customer requirements is crucial for providing business solutions.
When a manager is fully aware of the benefits of the products and/or services the organization provides,
they achieve better results. Marketing management ensures that available resources are properly utilized
and the best possible outcomes are achieved.
Personnel Management
• This deals with personnel or individuals in a business environment. It includes the recruitment, transfer,
termination, welfare and social security of employees. This aspect of management is extremely important
as employees form teams and teams drive an organization’s goals. Individual productivity also contributes
to overall efficiency. Without attending to employee needs and wants, an organization is likely to
struggle.
 Scope of Management
Production Management
• This type of management refers to the process of creating utilities. When you convert raw materials
to finished products and oversee the planning and regulation, you’re engaging in production
management. Without production, there isn’t any finished good or service and without it,
organizations can’t generate interest or profits. The final product must fulfill customer requirements.
The process includes quality control, research and development, plan layout and simplification.
Office Management
• This includes controlling and coordinating all office activities to achieve an organization’s goals and
targets. For example, an administration’s efficiency impacts a business significantly. The more
organized the departments and responsibilities are, the more effective an organization is.
 Characteristics of Management
(i) Management is a goal-oriented process: Every organisation has formed for some specific purpose.
The goal of management should be to achieve these purposes. These should be simple and
clearly stated.
(ii) Management is all pervasive: The activities involved in managing an organisation are common to
all whether it is performed economic, social or political activity. A petrol pump needs to be
managed as much as a hospital or a school. Management is not only required for
(iii) Management is multidimensional: Management is a complex activity that has three main
dimensions. These are:
 Management of work:
 Management of people:
 Management of operations:
(iv) Management is a continuous process: The process of management is a series of continuous,
composite, but separate functions (planning, organising, directing, staffing and controlling).
 Characteristics of Management
(v) Management is a group activity: An organisation is a group of diverse individuals with different
needs. Every member of the group has a different purpose for joining the organisation but as
members of the organisation they work towards fulfilling the common organisational goal. This
requires team work and coordination of individual effort in a common direction.
(vi) Management is a dynamic function: Management is a dynamic function and has to adapt itself to
the changing environment. An organisation interacts with its external environment which
consists of various social, economic and political factors. In order to be successful, an
organisation must change itself and its goals according to the needs of the environment.
(vii) Management is an intangible force: Management is an intangible force that cannot be seen but its
presence can be felt in the way the organisation functions.
 Objectives of Management
• Objectives can be classified into organizational objectives, social objectives and personal or
individual objectives
(i) Organisational Objectives: Management is responsible for setting and achieving objectives for
the organisation. It has to achieve a variety of objectives in all areas considering the interest of all
stakeholders including, shareholders, employees, customers and the government. The main
objective of any organisation should be to utilise human and material resources to the maximum
possible advantage, These are survival, profit and growth.
(ii) Social objectives: It involves the creation of benefit for society. As a part of society, every
organisation whether it is business or non-business, has a social obligation to fulfil.
(iii) Personnel objectives: Organisations are made up of people who have different personalities,
backgrounds, experiences and objectives. They all become part of the organisation to satisfy their
diverse needs. These vary from financial needs such as competitive salaries and perks, social
needs such as peer recognition and higher level needs such as personal growth and development.
Management has to reconcile personal goals with organisational objectives for harmony in the
organisation
 Importance of Management
• Importance of management to an organization can be gauged through the activities it performs.
These activities can be listed as:
a. Optimum utilization of resources: Management helps to utilize the resources in best possible
manner thereby reducing the wastage ensuring maximum possible profitability. This gives business
a competitive edge in the market and also helps in growth and expansion of business.
b. Cordial industrial relations: It motivates employees to perform the assigned job to their potential
level. This increases productivity and results in higher satisfaction level among the employees. The
employee turnover and absenteeism is also reduced. Thus, management and workers have cordial
relationship.
c. Adapting to changing environment: Management keeps a track of the changes in business
environment. This helps organization to adapt to the changed situations of the market. Bringing
about changes in the organization, including introduction of new technology, becomes easier with
the efforts of the managers.
d. Develops team spirit: Management brings about unity of direction in the organization as it guides
all the efforts towards the achievement of a common objective. This helps develop team-spirit in
the organization.
e. Effective communication: Management brings about an effective communication – both upwards
and downwards. This helps in smooth functioning of the organization.
 Levels of Management
• In an organisation, managers differ in their status and power. There is a line of demarcation that
distinguish managers on the basis of powers and authority they enjoy. There are generally three levels of
management in any organisations
1.Top Level Management: also called functional management or strategic management,
 It is the topmost decision-making body in the organization.
 It is the ultimate source of power and authority.
Functions of Top-Level Management: 
• Planning & Decision Makings are main function of top-level management. which includes formulating of
basic policies, making corporate plan, deciding the corporate goal and take decisions regarding survival,
growth and profitability of the organization as a whole.
• They decide the structure or the organization and appoint various executives.
• It comprises of directors selected by the owners or shareholders of the organization along with chief
executives officer (CEO), general managers, managing directors, chairman etc.
 Levels of Management
2.Middle Level Management:The managers in the middle level are appointed to act as a channel of
communication between the top level and lower-level management.
• They are responsible for communicating and interpreting the policies made at the top level to the lower
management along with coordination between various units at the lower level.
Functions of Middle-Level Management: 
• Their main function is concerned with overall functioning of their respective departments which includes
departmental plans, establish departmental goals and perform various activities for smooth functioning of their
department.
• This level comprises of departmental heads, deputy managers etc.
3.Lower-Level Management also called operative management or supervisory management
• This consists of supervisors, foremen, superintendents etc.
• They are responsible for taking decisions which are of routine nature.
• They directly guide, instruct and supervise the job of workers.
• The managers at lower level responsible to ensure discipline among the workers, evaluate their performance
and report to the higher authorities.
• They are also entrusted with communication of workers’ grievances to the higher management. They act as a
link between the middle management and the workers at the lowest level
 Functions of Management- Planning:
• Planning is the first and foremost function of the management. All other functions are based on planning
function. Manager has to determine in advance what it is to be done, when it is to be done, and how it is
to be done. Optimum utilization of resources is out of question without planning.
• Planning is a basic managerial function. Planning helps in determining the course of action to be followed
for achieving various organisational objectives. It is a decision in advance, what to do, when to do, how to
do and who will do a particular task. Planning is a process which involves ‘thinking before doing’.
Planning is concerned with the mental state of a manager. He thinks before undertaking a work. Other
functions of management such as- organizing, staffing, directing, coordinating and controlling are also
undertaken after planning.
• Hart defines planning as – “the determination in advance of a line of action by which certain results are to
be achieved.” According to Terry, “Planning is the selecting and relating of facts and the making and using
of assumptions regarding the future in the visualization and formulations of proposed activities believed
necessary to achieve desired results.”
• Planning is a process of looking ahead. The primary object of planning is to achieve better results. It
involves the selection of organisational objectives and developing policies, procedure, programmes,
budgets and strategies. Planning is a continuous process that takes place at all levels of management.
• A detailed planning is done in the beginning but the actual performance is reviewed and suitable changes
are made in plans when actual execution is done. Plans may be of many kinds, such as- short range
plans, medium range plans, long range plans, standing plans, single use plans, strategic plans,
administrative plans and operational plans.
 Planning
• Planning sets the direction for the entire organization to proceed towards the goals. In the absence of planning,
no other managerial function can be performed.Plans are not rigid and they are supposed to be flexible in
response to changes in external environment.Planning is done across the levels of management
The entire planning function revolves round the following:
• i. Determination of objectives for the organization.
• ii. Formulation of policies, budgets, programmes and schedules.
• iii. Formulation of plans of action both strategic and operational.
• iv. Forecasting.
• v. Decision making.
The process of Planning involves a number of steps:
• (i) Gathering information,
• (ii) Laying down objectives,
• (iii) Developing planning premises,
• (iv) Examining alternative courses of action,
• (v) Evaluation of action patterns,
• (vi) Reviewing limitations, and
• (vii) Implementation of plans.
 2. Organizing
 Every business enterprise needs the services of a number of persons to look after its different
aspects. The management sets up the objectives or goals to be achieved by its personnel. The
energy of every individual is channelized to achieve the enterprise objectives. The function of
organizing is to arrange, guide, co-ordinate, direct and control the activities of other factors of
production, viz., men, material, money and machines so as to accomplish the objectives of the
enterprise.
 In the words of Koontz and O’Donnel, “Organizing is that part of managing that involves establishing
and intentional structure of roles for people in an enterprise to fill.” Organisation provides the
necessary framework within which people associate for the attainment of business objectives.
 Louis A. Allen describes organisation as – “the process of identifying and grouping work to be
performed, defining and delegating responsibility and authority and establishing relationships for the
purpose of enabling people to work most effectively together in accomplishing objectives.”
 The term ‘organizing’ generally connotes assembling men, money, material and technology
together. But in organizational context, organizing is the process of establishing harmonious
relationship among the members of an organization and the creation of network of relationship
among them. Under organizing function, work is assigned to employees, who are given authority to
carry out the work assigned and made accountable for it.
 2. Organizing

Organizing involves the following activities:

• i. Determining the total activities of business essential to accomplish organizational objectives.
• ii. Dividing and sub dividing the total activities into identifiable groups.
• iii. Grouping the activities of similar nature in terms of departments/sections/ units.
• iv. Delegation of authority to respective departments.
• v. Coordinating the functions of different departments for accomplishing the overall goals of an
organization.
• The character and type of organisation depends upon the size and nature of the enterprise.
 3. Staffing
• The function involves manning the positions created by organisation process.
• It is concerned with human resources of an organisation.
• In the words of Koontz and O’Donnel, “staffing is filling, and keeping filled, positions in the
organisation structure through defining work-force requirements/appraising, selecting, compensating
and training.
Planning requires the following functions to be performed:
a) Determination of manpower requirements for the whole organization.
b) Arranging to identify eligible candidates and persuading them to apply for the vacancies.
c) Selecting suitable candidates.
d) Formulating HR policies for governing manpower of the organization.
e) Periodical training of manpower and their development.
f) Compensating the manpower and incentivising decisions.
g) Installing grievance addressing mechanism.
h) Periodical evaluation of human resources and promotion decision.
i) Transfer, promotion, disciplinary actions and termination.
j) Motivation of employees.
k) Putting in place employee well-being measures and career development opportunities.
 4.Directing
• Directing is concerned with carrying out the desired plans. It initiates organized and planned action and
ensures effective performance by subordinates towards the accomplishment of group activities. Direction
is called management in action. In the words of George R. Terry, “Direction is moving to action and
supplying stimulative power to the group.” After planning, organizing and staffing, the manager has to
guide and supervise his subordinates.
• According to Massie, “Directing concerns the total manner in which a manager influences the actions of
subordinates. It is the final action of a manager in getting others to act after all preparations have been
completed.”
• Directing denotes motivating, leading, guiding and communicating with subordinates on an ongoing basis
in order to accomplish pre-set goals. Employees are kept informed of all necessary matters by circulars,
instructions, manuals, newsletters, notice-boards, meetings, participative mechanisms, etc., in order to
enable the employees to accomplish the organizational goals.
• Directing is a continuous function and is performed at all levels of management.
• The main activities involved in direction are as follows:
• (a) Leadership,
• (b) Communication,
• (c) Motivation, and
• (d) Supervision.
 4.Directing
The process of directing involves the following:
• i. Issuing orders and instructions regarding the work to be performed.
• ii. Guiding, counseling, mentoring and educating the employees.
• iii. Supervising the work of employees on a regular basis.
• iv. Maintaining discipline among employees and rewarding those who perform their jobs efficiently.
• v. Motivating the employees and inspiring subordinates to follow the orders and instructions.
• vi. Providing effective leadership to employees.
 5.Coordination
 Co-ordination is one of the most important functions of management. It is essential to channelize the activities of
various individuals in the organisation for the achievement of common goals. Every department or section is
given a target to be achieved and they should concentrate only on their work and should not bother about the
work of other organs.
 It is left to the management to see that the work of different segments is going according to pre-determined
targets and corrective measures have to be taken if there is any deviation. Co-ordination creates a team spirit
and helps in achieving goals through collective efforts. It is the orderly arrangement of group effort to provide
unity of action in the pursuit of common objectives.
 Dalton McFarland defines co-ordination as the, “process whereby an executive develops an orderly pattern of
group effort among his subordinates and secures unity of action in the pursuit of common purposes.”
 Co-ordination can be classified under two categories – (i) vertical and horizontal co-ordination, and (ii) internal
and external co-ordination. Whereas vertical co-ordination is the co-ordination between different levels of
management, the term horizontal co-ordination is used when co-ordination has to be achieved between
departments of the same level of authority. Co-ordination is internal when it is between different sections of the
same concern and external when it is required with persons outside the organisation.
 Co-ordination is regarded as the very essence of management as in order to co-ordinate the activities of his
subordinates, a manager has to perform all the other functions of management, viz., planning, organizing,
staffing, directing and controlling. It must also be noted by the readers that co-ordination and co-operation do not
mean the same thing.
 Co-ordination is much wider term than co-operation. Co-operation indicates the willingness of individuals to help
each other. It is an attitude of a group of people and is largely the result of voluntary action. Co-ordination, on
the other hand, is a conscious managerial effort which is the result of a deliberate action.
 6.Controlling
 Controlling can be defined as – “determining what is being accomplished, that is evaluating the
performance, if necessary, applying corrective measures so that the performance takes place according
to plans.”
 Control is essential for achieving objectives of an enterprise. The planning of various activities does not
ensure automatic implementation of policies. Control is the process which enables management to get its
policies implemented and take corrective actions if performance is not according to the pre-determined
standards. If planning is the beginning of the management process, controlling may be said to be the final
stage. If planning is looking ahead, controlling is looking back. Control is not possible without planning
and planning is meaningless without control.
 Control is a line function and executives at various levels of management continuously assess the
performance of their subordinates. The main purpose of control is to see that the activity is achieving the
desired results. A control system, to be effective, must conform to the nature of activity, report deviations
promptly, reflect organisation structure, assure corrective action and be economical.
 The process of controlling is the final function carried out in terms of planning. This function is performed
to evaluate the performance of employees and deciding increments and promotion decisions. The control
function helps in identifying under-performers and arranging remedial training for them. It is the control
function which facilitates synchronisation of actual performance with predetermined standards.
 6.Controlling

The following activities are performed under control function:

• i. Fixing performance standards for subordinates.

• ii. Measuring the actual performance in the light of standards.

• iii. Comparing the actual performance with standards.

• iv. Finding out the causes for deviation and analyzing them.

• v. Undertaking corrective measures in order to bring actual performance to the standards set.

• vi. Besides various control devices like accounting, auditing, management information system,
network analysis and cost control, financial tools are also used in organizations for control purpose.
 Essential Skills of an Effective Manager
1. Conceptual, Human and Technical Skills
• According to Robert Katz, successful management of an organization depends on application of three skills by
the managers. These are:
i. Conceptual Skills
• Conceptual skills refer to the problem-solving ability of managers. This requires managers to treat the
organization as a whole, understand the functioning of various sub-systems of the organization and foresee any
changes that may affect the organization.
ii. Human Skills
• Human skill or interpersonal skill is related to manager’s attitude towards others. It refers to the ability of a
manager to understand and empathise with his superiors, peers and subordinates. Thus, human skill reflect the
ability to work as a group member and encourage team work.
iii. Technical Skills
• Technical skill refers to the ability to use special skills, understand the techniques and handle materials, tools
and equipment. It is primarily concerned with the methods and procedures related to various activities of the
organization.
• A manager requires Conceptual, Human as well as Technical skills to perform his functions but the degree of
skill various at different levels.
 Essential Skills of an Effective Manager
• At the top level, the main task of management is policy making which requires a high degree of
conceptual skills and relatively low degree of technical skills.
• At the lower level, the main task of management is supervision and guidance of the workers which
requires a high degree of technical knowledge and relatively low degree of conceptual skills.
• The human skill holds equal significance at all levels.
2. Hard and Soft Skills
i. Hard Skills
• Hard skills represent the special skills required to perform a job. These are acquired and developed
through studying and training. For example: proficiency in accounting or a software such as Tally is
acquired by study, practice and training.
ii. Soft Skills
• These skills are not job-specific and can be applied to a wide range of activities. These are self-
taught and self-developed through experience and do not require any kind of training. For example:
communication skills, problem-solving skills, ability to lead etc.
 Major Roles of a Manager in an Organization
• Various roles played by manager in an organization are briefly explained below.
1. Figurehead Role of Manager
• Managers perform the duties that are ceremonial and symbolic in nature such as welcoming official visitors,
signing legal documents etc as head of the organization or strategic business unit or department.
• Duties of interpersonal roles include routine, involving little serious communication and less important decisions.
However, they are important for the smooth functioning of an organization or department.
2. Leadership Role of Manager
• All managers have a leadership role. The manager, as in charge of the organization / department, coordinates
the work of others and leads his subordinates.
• This role includes hiring, training, motivating and disciplining employees. Formal authority and functional
authority provides greater potential power to exercise and get the things done.
3. Liaison Role of Manager
• As the leader of the organization or unit, the manager has to perform the functions of motivation,
communication, encouraging team spirit and the like. Further, he has to coordinate the activities of all his
subordinates, which involves the activity of liaison.
• This role also requires the manager to interact with other managers outside the organization to secure favours
and information. In this role, the manager represents his organization in all matters of formality.
 Major Roles of a Manager in an Organization
4. Monitoring Role of Manager
• As a result of the network of contacts, the manager gets the information by scanning his environment,
subordinates, peers and superiors.
• The manager seeks and receives information concerning internal and external events so as to gain
understanding of the organization and its environment. Typically this is done through reading magazines and
talking with others to learn the changes in the public’s tastes, what competitors may be planning, and the like.
• Managers, mostly collect information in verbal form often as gossip, hearsay, speculation and through grapevine
channels.
5. Disseminator Role of Manager
• Manager disseminates the information, he collects from different sources and through various means. He
passes some of the privileged information directly to his subordinates, peers and superiors who otherwise have
no access to it. This information is gathered by him from his environments and from his own equals in the
organization.
• The manager will play an important role in disseminating the information to his subordinates, when they don’t
have contact with one another.
 Major Roles of a Manager in an Organization
6. Spokesman Role of Manager
• Managers also perform a spokesperson role when they represent the organization to outsiders. Manager is
required to speak on behalf of the organization and transmit information on organization’s plan, policies and
actions.The manager has to keep his superior informed of every development in his unit, who in turn inform the
insiders and outsiders. Directors and shareholders must be informed about the financial performance, customers
must be informed about the new product developments, quality maintenance, government officials about
implementation of law etc.
7. Entrepreneurial Role of Manager
• As an entrepreneur, the manager is a creator and innovator. He initiates and oversee new products that will
improve their organization’s performance.He seeks to improve his department, adapt to the changing
environmental factors. The manager would like to have new ideas, initiates new projects and initiates the
developmental projects.
8. Disturbance Handler Role of Manager
• As a disturbance handler, managers take corrective action to response to previously unforeseen problems.
Disturbance handler role presents the manager as the involuntarily responding to pressures. Pressures of the
situation are severe and highly demand the attention of the manager and as such the manager cannot ignore
the situation. For example, worker strike, declining sales, bankruptcy of a major customer etc. The manager
should have enough time in handling disturbance carefully, skilfully and effectively.
 Major Roles of a Manager in an Organization
9. Resource Allocator Role of Manager
• The most important resource that a manager allocates to his subordinates is his time. As a resource allocator,
managers are responsible for allocating human, physical and monetary resources. Accordingly, setting up of a
time schedule for the completion of an operation or approval of expenditure on a particular project, etc., are the
functions which the managers perform in the role of a resource allocator.
• The manager should have an open-door policy and allow the subordinates to express their opinions and share
their experiences. This process helps both the manager and his subordinates in making effective decisions. In
addition, the manager should empower his subordinates by delegating his authority and power.
10. Negotiator Role of Manager
• In this tole, the manager represents the organization in bargaining and negotiations with outsiders and insiders,
in order to gain advantages for his own unit. He negotiates with the subordinates for improved commitment and
loyalty, with the peers for cooperation, coordination and integration, with workers and their unions regarding
conditions of employment, commitment, productivity, with the government about providing facilities for business
expansion etc.
• These negotiations are integral part of the manager’s job for only he has authority to commit organizational
resources and has nerve centre of information.