ABM_AOM11-Ia-b-1

ABM_AOM11-Ia-b-2
ABM_AOM11-Ia-b-3
Organization and Management
Familiarize yourself with the following
- Basic Concepts
- Principles
- Processes related to business organization
- Functional areas of management
- Study of management functions like (planning, organizing, leading and controlling)

Performance

- Solving business cases

- Possible news reporting

Tools

- Gantt Chart - (visual scheduling of the task to be done)

- Rating System (measure the productivity of a worker)

Chapter 1 - Nature and Concept of Management

1. Definition of function of Management (POLC)

The functions of management include planning, organizing, leading, and controlling.
These functions are essential for ensuring that organizations achieve their goals
effectively and efficiently.

a. Planning involves setting objectives and determining the best course of action to
achieve them. It includes analyzing current situations and anticipating future
conditions.

b. Organizing is about arranging resources and tasks to accomplish the

organization's objectives. It involves creating a structure, defining roles, and
allocating resources effectively.

c. Leading entails directing and motivating employees to fulfill organizational goals.

It requires effective communication, inspiration, and conflict resolution.

d. Controlling is about monitoring and evaluating progress towards goals. It

includes setting performance standards, measuring actual performance, and
taking corrective actions when necessary.
- Reflective Essay - Create a Plan and then Organize the resource according to that
plan and then executing it by Leading and motivating employees to fulfill organizational
goals then controlling the progress by evaluating and monitoring the process which
include measuring actual performance and taking corrective action when necessary.

2. Evolution of Management theories

A. The Classical Management Theory was introduced as a result of the industrial

revolution when there was a significant increase in population and numerous
advancements in technology. Due to population growth, organizations realized
that they need to mass-produce their goods in order to supply the increasing
demand of the market. This led to the advancement of technology in production
where machines replaced manual labor and traditional systems and processes
became obsolete. As production increased, so did the wealth and popularity of
some capitalists. However, despite the favorable climate for business, the
workers’ welfare and the systems and processes were neglected. The wages of
the workers were low. Their working environment was not ideal. Efficient
systems and processes were not in place.

It is for these reasons that management theories were introduced. They focus on
Finding ways to manage work more efficiently through systematic work
processes and division of labor to make an organization more productive. The
welfare of the employees was also central to some of these theories.

● Scientific Management Theory emphasized the scientific study of work

methods to make the workers more efficient. The development of this
theory began in the 1880s and lasted up to the 1890s. There were five
contributors to the Scientiûc Management Theory namely Frederick
Winslow Taylor, Frank Gilbreths, Lilian Gilbreths, Henry Gantt, and
Charles Bedaux.

Frederick Winslow Taylor (1856–1915) published the Principles

of Scientific Management in 1909 which contains the following
four principles:

1. Conduct a scientific study of the task to replace the rule-of-

thumb method
2. Conduct a scientific selection, training, and development of
the workers instead of allowing them to be responsible for
their own development.
 3. Cultivate a culture of positive cooperation between workers
and the management to ensure that they adhere to the
scientifically devised methods.
4. Create an equal sharing of work between the management
and workers so that the former can apply scientific
methods of planning tasks and the latter can actually
perform them.

Following the publication of the Principles of Management, Taylor

promoted the scientific management system which emphasized
observation and analysis to improve work methods.Aside from the
above contributions, Frederick Taylor was also the proponent of
the Financial rewards system where workers are given Financial
incentives for exceeding expected productivity.

Frank Gilbreths (1868–1924) and Lilian Gilbreths (1878–1972)

introduced the motion study, which they believe should always
come first before examining a method. They also promoted the
welfare of the workers by introducing the idea that they should
have definite days of work, scheduled breaks, and lunch breaks,
and protection from unsafe working conditions.

Henry Gantt (1861–1919) -

is known to have created the Gantt Chart which is visual
scheduling of tasks to be done to complete a project or work. He
is also attributed to the humane working conditions which may
have a positive effect on the worker’s productivity. Lastly, Henry
Gantt introduced the quota and rewards systems where a worker
is given a quota, and if he or she exceeds the quota, he or she will
receive a monetary reward. This is commonly being practiced in
sales like in the real estate and automobile industries. For
example, in the real estate industry, agents are normally given a
quota per quarter to achieve. In some companies, agents are
required to generate sales for three hundred million pesos per
quarter. If the agent exceeds the quota, he or she will be given
one hundred thousand pesos as an incentive.

Charles Bedaux (1887–1944) introduced the rating system to

measure the productivity of a worker. He also introduced the rest
allowance for workers to prevent them from being overworked.
● Bureaucratic Management Theory
The Bureaucratic Management Theory focused on an authoritative
system wherein an organization follows a defined set of rules and
standardized operations. This approach was developed by Max Weber in
1905 and was then deemed effective with organizations that operate on a
large scale. Weber identified five characteristics linked to this theory,
namely Task Specialization, Hierarchical Structure, Formal Selection,
Rules and Requirements, and Impersonality

1. Task Specialization talks about the significance of performing

one’s own task in an organization. Each of the employees has a
specific responsibility to fulfill, thus promoting order and focus on
each department of the company.

2. Hierarchical Structure stresses that an organization must follow

a system in which those with lower positions are subject to the
order and power of those with higher positions

3. Formal Selection discusses the importance of skills and

credentials in choosing someone for the position. Moreover, the
compensation given to an employee is highly dependent on their
position in the company.

4. Rules and Requirements are enforced to ensure efficiency and

uniformity when it comes to completing a task. With this, the goal
set by the company is easily achieved as the employees are well-
coordinated.

5. Impersonality creates a detached relationship among employees

which promotes objective and rational decision making by the
management

● Administrative Management Theory

The Administrative Management Theory is concerned with how the
management effectively organizes and directs the employees to achieve
a common purpose. In 1916, Henry Fayol proposed 14 principles that
can be applied in managing and organizing the activities of the
organization.

1. Division of Work - this principle states that with the specialization

of the workforce, employees are more focused and productive
with their tasks, thus making them skilled enough to increase their
output.
2. Authority - this refers to the right of a higher-up to give orders to
the employees; however, each order issued is accompanied by
responsibility for the ensuing consequences.

3. Discipline - this refers to the obedience and proper conduct that

must be displayed by the individuals in the organization to
establish a good environment in the workplace.
4. Unity of Command - this principle states that an employee must
only receive orders from one supervisor to prevent confusion and
conüict with whose instructions to follow.
5. Unity of Direction -This principle emphasizes that all activities
aimed at the same objective should be directed by a single
manager and a single plan.

6. Subordination of Individual Interests - This principle

emphasizes that the interests of an individual employee should
not take precedence over the interests of the organization as a
whole.
7. Remuneration - states that all forms of compensation to
employees must be fair and proper.

8. The Degree of Centralization - is a management principle that

relates to the distribution of decision-making authority within an
organization. It refers to the extent to which decision-making
power is concentrated at the top levels of the organizational
hierarchy or dispersed among lower levels and departments.

9. Scalar Chain - principles of management and refers to the formal

line of authority or chain of command within an organization. It is
the path through which orders are passed from top management
to the lowest ranks and back up through the hierarchy. However, a
hierarchy is sometimes disregarded. This concept is called
“gangplank”.

10. Order - This principle advocates for the systematic arrangement

of both physical and human resources. For physical order, it
suggests that everything and everyone should be in their proper
place to ensure efficiency. For human resources, it means that
each employee should have a clear role and be assigned to tasks
that align with their skills and abilities.

11. Equity - this emphasizes that all employees must be treated fairly
and kindly.
 12. Stability of Tenure of Personnel - this suggests that employee
replacement must be limited and should instead give employees
more time to familiarize their work and improve their skills
13. Initiative - this principle suggests that superiors must encourage
their subordinates to give new ideas and take initiative
14. Esprit de Corps - this states that managers must boost
employees’ morale and promote team spirit.

B. Behavioral Management Theories

Unlike the classical theories, the Behavioral Management Theory is more
focused on the interests and needs of individuals working in an organization. This
approach gives importance to the understanding of human and behavioral factors
as it may strengthen the unity and teamwork of employees in achieving a
common goal.

1. Human Relations Theory

The Human Relations Theory highlighted the idea that individuals are
motivated to perform better when they feel that they belong to and are
valued in the team. Moreover, money is not the sole motivator of the
employees; the relationships formed with their colleagues are equally
important. Between 1924 and 1933, Elton Mayo further developed this
approach with Fritz Roethlisberger and William Dickinson by conducting a
social experiment at Western Electric Company’s Hawthorne Plant in
Chicago which led them to the result called the “Hawthorne Effect.” The
Hawthorne Effect gave them the ûnding that workers collaborate with
others and do better in their tasks when they are given special attention.

2. Theory X and Y
Theory X and Y, proposed by Douglas McGregor in the 1950s, assumed
that there are two distinct types of workers in an organization. Theory X
believes that most workers need to be controlled and reprimanded as
most workers are lazy and do not exert effort in their assigned tasks. On
the other hand, Theory Y is on the positive outlook on human behavior as
it assumes that most workers do not need to be ordered around because
some have the natural drive to do their tasks and enjoy contributing to the
organization.

C. Quantitative Theory
Quantitative Theory was introduced out of the need to improve management
decision-making during World War II by using sophisticated mathematical models
and statistical tools and employing computers to manage information. Aside from
its use in the military, this theory was also helpful in managing the production and
delivery of the goods and services of an organization.
D. Modern Management Theories
Modern Management Theories took advantage of technology and incorporated it
with classical theories. This approach also made use of statistical techniques to
analyze, understand, and compare the relationship between the employees and
the management.

1. Systems Theory
This theory developed by Ludwig von Bertalanffy promotes the idea that
management is an interrelated component of an organization. Rather
than viewing each department as a separate entity, this theory believes
that all departments are parts of an open system that need to interact with
each other

Just like our existence on Earth where we freely interact with other
organisms and the environment, an open system in an organization works
the same. This means that the managers and workers may freely interact
with each other and external stakeholders such as the customers, the
competitors, and other people who may have an interest in the company.

2. Contingency Theory
This theory was introduced by Fred Fiedler. It promotes the concept that
managers must be able to adapt to the changing environments of their
organizations, and that they must make better decisions depending on
the given situation.
3. Functions, roles and skills of a manager

A. The Manager
Is responsible for the entire organization particularly in realizing its goals and the
attainment of its vision and mission. According to Peter Drucker, the manager
creates a team out of his people, through decisions on pay, placement,
promotion, and through his communications with the team." Drucker refers to this
as the "integrating" function of the manager.
There are three main levels of manager

1. Top level managers perform administrative functions. They are the

board of directors, president, vice-president, and CEO are all examples of
top-level managers. These managers are responsible for controlling and
overseeing the entire organization. They develop goals, strategic plans,
company policies, and make decisions on the direction of the business.

2. Middle level managers perform executory functions as dictated by top

management. They are the general managers, branch managers, and
department managers. They facilitate the changes needed in the
organization or company on orders of top management and create an
effective working environment. They manage the day-to-day activities of
the business, monitor performance and make sure everything is done in
compliance with the organization's needs.

3. Lower level managers are referred to as the supervisory or the operative

level of managers. They are the line managers as they oversee and direct
the employees. Example: Head nurse, superintendent, supervisor.

B. The 5 functions of a Manager

1. Planning
As a managerial function this involves identifying the goals of the
organization and the best way(s) to accomplish these goals.

According to KOONTZ, "Planning is deciding in advance - what to do,

when to do & how to do. It bridges the gap from where we are & where
we want to be''. A plan is a future course of actions. It is an exercise in
problem solving & decision making. Planning is determination of courses
of action to achieve desired goals. Thus, planning is a systematic thinking
about ways & means for accomplishment of pre-determined goals.
Planning is necessary to ensure proper utilization of human & non-human
resources. It is all pervasive, it is an intellectual activity and it also helps in
avoiding confusion, uncertainties, risks, wastages etc.
2. Organizing
As a managerial function this involves assigning responsibilities to
employees who have the competence and ability to complete the task.

According to Henri Fayol, "To organize a business is to provide it with

everything useful or its functioning i.e raw material, tools, capital and
personnel's". Organizing involves:

a. Identification of activities.
b. Classification of grouping of activities.
c. Assignment of duties.
d. Delegation of authority and creation of responsibility.
e. Coordinating authority and responsibility relationship.

3. Staffing
As a managerial function it involves hiring the right employee for the job.
It is the function of manning the organization structure and keeping it
manned. The main purpose of staffing it is to put the right person on the
right job. Staffing involves:

Manpower Planning (estimating manpower in terms of searching, choose

the person and giving the right place).

a. Recruitment, Selection & Placement

b. Training & Development
c. Remuneration
d. Performance Appraisal
e. Promotions & Transfer

4. Directing
As a managerial function it involves coordinating the entire organization
so it performs efficiently to achieve its goals. This takes up most of the
time of an organizational leader.

Directing deals with influencing, guiding, supervising and motivating the

entire organization in order that it performs and achieves according to its
goals.

It is to be noted that the other functions of management like planning,

organizing, and staffing are only preparations of doing the work of the
organization which need to be directed and coordinated by the manager.
 Direction has following elements

a. Supervision
implies overseeing the work of subordinates by their superiors. It
is the act of watching & directing work & workers.
b. Motivation
means inspiring, stimulating or encouraging the subordinates with
zeal to work. Positive, negative, monetary, non-monetary
incentives may be used for this purpose.
c. Leadership
may be defined as a process by which manager guides and
influences the work of subordinates in desired directions.
d. Communication
is the process of passing information, experience, opinion etc.
from one person to another. It is a bridge of understanding.

5. Controlling
This function involves monitoring or checking the performance of
employees, comparing it with organizational goals, and taking corrective
actions when necessary.

The purpose of controlling is to ensure that organizational activities

conform within a set standard. An efficient system of control helps to
predict deviations before they actually occur. According to Theor
Haimann, "Controlling is the process of checking whether or not proper
progress is being made towards the objectives and goals and acting if
necessary, to correct any deviation". According to Koontz & O'Donnell
"Controlling is the measurement & correction of performance activities of
subordinates in order to make sure that the enterprise objectives and
plans desired to obtain them are being accomplished".

Therefore controlling has following steps.

a. Establishment of standard performance

b. Measurement of actual performance
c. Comparison of actual performance with the standards and finding
out deviation if any
d. Corrective actions.
C. The 10 Roles of a Manager
What is a role?

It refers to behavior expected from a person in accordance with his position or

status. In a simple business organization, the manager has the highest position
in authority. Thus, a manager is expected to lead the entire organization. This
role of leadership is but one of the many roles expected of a manager. In
management, the formal positions occupied in the organization brings with it
expected behaviors.

According to Mintzberg (1973) There are 10 managerial roles: figurehead,

leader, liaison, monitor, disseminator, spokesman, entrepreneur, disturbance
handler, resource allocator and negotiator. These 10 roles fall into three types
of categories of managerial roles: Interpersonal, Informational and Decisional
roles.

a. Interpersonal Roles are the roles that the manager is expected to do as

the highest ranking member of the organization. It also involves building
harmonious relationships among members of the organization. As the
central figure of the organization, he connects the organization to its
employees and to the outside community as well. He assumes the roles
of figurehead, leader and liaison.

1. Figurehead: The manager performs ceremonial duties as head of

the organization like greeting VIPs that visit the organization,
handing out awards to employees, cutting the ribbon of business
openings, and leading in the activities, projects and programs of
the organization.

2. Leader: The manager provides the direction for the rest of the
organization.

3. Liaison: Acts the main contact from the organization to the rest of
the world. This allows the creation of opportunities for business
partnerships and collaborative projects and ventures.

b. Informational roles: Being at the center of the flow of information, it is

the role of the manager to harness this information to relevant decision
making. In the business community the manager has a role of developing
contacts and linkages to further the reach and influence of the business.
Three roles are played, as monitor, disseminator and
spokesman/spokesperson.
 1. Monitor: The Manager continuously scans the environment and
keeps out for information of the macro and micro environments for
opportunities and threats to the organizations.
2. Disseminator: The manager provides relevant information to the
organization
3. Spokesman: The manager sends out information outside the
organization.

c. Decisional Roles: It is the manager that commits the entire organization

to a new business plan or a new strategic direction, like a new project or a
new program. Being the center of information in the organization he
possesses access to the database of information needed to make timely
decisions for the organization. Four roles make up the manager as a
decision maker namely entrepreneur, disturbance handler, resource
allocator, and negotiator.

1. Entrepreneur: The manager as the entrepreneur brings the

organization to the forefront of the business community as a major
player. He uses all resources of the business to further its
economic position in the industry, scans the business
environment, adapts to changing business conditions, and takes
advantage of opportunities as they come.

2. Disturbance Handler: The manager must act to protect the entire

organization from internal or external pressures that would
compromise its integrity. As manager he strives to contain dissent
by promoting fair labor practices. In the wider business community
he leads the organization in joining other business chambers for
common protection. He meets a crisis situation facing the
company and diffuses them.

3. Resource Allocator: The manager is the central authority in

organizational decisions to allocate the scarce resources to the
various departments. He authorizes decisions within departments
prior to implementation.

4. Negotiator: The manager leads the organization in the contracts

and agreements it makes on behalf of the organization.
D. 3 Skills of an Effective Manager
To successfully perform its roles, a manager must have developed:

a. Technical Skills: The manager must processes technical business skills

in the various areas of management in his organization like financial
management, production processes, supply chain, marketing and sales.

b. Human Skills: The manager must also possess the skills to interact with
people both from within and outside the organization. These people skills
allow the manager to positively influence organizational members into
pursuing his vision, mission and goals for the organization.

Human skills allow managers to comfortably mingle with employees and

inspire them to work with effectively.

c. Conceptual Skills: The manager needs conceptual skills to plan,

strategize, and think way ahead into the future given constraints and
opportunities in the market.

Conceptual skills allow managers to think ahead into the future to build
companies that last and become top performers of the industry.