CHAPTER - THREE

Functions of Management
 Management Functions
• According Henry Fayol, the managerial functions are broadly
classified into five categories.
 1. What is planning?
• Planning is the most basic of all managerial functions which
involves establishing goals, setting out objectives and defining
the methods by which these goals and objectives are to be
attained.

• An important aspect of planning is decision making - that is,

choosing the right alternatives for the future course of action.

• It is the process of deciding in advance what is to be done,

when and where it is to be done, how it is to be done, by whom
and with which resources.
• Planning is a fundamental function of management and all other
functions of management are influenced by the planning process
since all other functions stem from it.

• Planning is a continuous and unending process to keep the

organization on the path of progress while other management
functions are also performed simultaneously.
 Planning is deciding in the present, what is to be done in
future.
 planning is the process of thinking before doing.
 A plan is a specific, documented intention consisting of an
objective and an action statement.
Types of Plans
Strategic plan
 A strategic plan is an outline of steps designed with the goals of the
entire organization as a whole in mind, rather than with the goals of
specific divisions or departments.
 Strategic planning begins with an organization’s mission.
 It look ahead over the next two, three, five, or even more years to
move the organization from where it currently is to where it wants to
be.
 Top-level management develops the directional objectives for the
entire organization, while lower levels of management develop
compatible objectives and plans to achieve them.
Tactical plans
• A tactical plan is concerned with what the lower level units
within each division must do, how they must do it, and who is
in charge at each level.
• Tactics are the means needed to activate a strategy and make it
work.
• Tactical plans are concerned with shorter time frames and
narrower scopes than are strategic plans. These plans usually
span one year or less because they are considered medium -
term goals.
• Normally, it is the middle manager’s responsibility to take the
broad strategic plan and identify specific tactical actions.
Operational plans
• The specific results expected from departments, work groups, and
individuals are the operational goals.

• Supervisors, team leaders, and facilitators develop operational plans to

support tactical plans.

• Operational plans can be a single-use plan or an ongoing plan.

a. Single-use plans: These plans apply to activities that do not recur or

repeat. A onetime occurrence, such as a special sales program, is a
single-use plan.

b. Continuing or ongoing plans: These are usually made once and retain
their value over a period of years while undergoing periodic revisions
and updates.
Steps in the Planning Process
1. Establishing objectives Should answer WH questions

Outlining assumptions about

2. Developing premises the environment(PEST)

3. Evaluating alternatives & Carefully evaluated according

selection the possibilities and capacity

Formulate secondary plans to

4. Formulating derivative plans support the basic plans in
detailed manner.
Management should involve
operations people in the
5. Securing cooperation and participation planning activities and take
comments

6. Providing for follow-up Reviewed continually

Characteristics of planning
• Planning as the primary function
• Establishment of objectives
• Establishment of assumptions
• It is an intellectual process
• it involves choice and decision making
• Planning is a continuous process
• Planning is looking ahead
• Planning minimizes uncertainties
• Planning has positive impact on the organizational
morale
• Planning facilitates controlling
Importance of planning
• Sense of Direction − Planning provides a unity of purpose. It
brings together all resources towards achieving common goals.

• Resource Paucity − Resource crunch is a major challenge for

organizations today. Managements are confronted with the task
of optimizing outputs with limited resources through intelligent
planning; otherwise, wasteful inefficiencies would lead to higher
prices and severe shortages.

• Uncertainty − Uncertainty is a major challenge even to the most

intelligent planner. Planning helps managers anticipate such
changes and meet these challenges.
Besides of the above, planning is important
• To focus organizational activity on a set of consciously
created objectives.

• To provide a systematic guide for future activities.

• To increase organizational outcome through efficient

operation.

• To encourage systematic thinking. Planning facilitates

effective delegation of authority, removes communication
gaps, and thereby raises overall efficiency.
 2. Organizing
 Organizing is the process of bringing together physical,
financial and human resources and developing productive
relationship amongst them for achievement of organizational
goals.

 Organizing is concerned with the arrangement of an

organization’s resources - people, materials, technology and
finance in order to achieve organization objectives.

 It involves decisions about the division of work, allocation of

authority and responsibility and the coordination of tasks.
• Organizing as a function of management involves division of
work among people whose efforts must be co-ordinated to
achieve specific objectives and to implement pre-determined
strategies.

• Organization is the foundation upon which the whole structure

of management is built and it is the backbone of management.

• Flexible organization structure is helpful to respond for the

dynamic environment change.
Organizing – the Process
The various steps involved in this process are:
1. Determination of Objectives: Organization structure is built on the
basis of the objectives so that the structure of the organization can
be determined by the management only after knowing the
objectives to be accomplished through the organization.
2. Enumeration of Objectives: If the members of the group are to
pool their efforts effectively, there must be proper division of the
major activities. The first step in organizing group effort is the
division of the total job into essential activities. Each job should be
properly classified and grouped.
3. Classification of Activities: The next step will be to classify
activities according to similarities, common purposes and
functions by taking the human and material resources into account.
4. Assignment of Duties: Here, specific job assignments are made to
different subordinates for ensuring a certainty of work
performance. Each individual should be given a specific
job(authority) to do according to his ability and made responsible
for that.
5. Delegation of Authority: Since so many individuals work in the
same organization, it is the responsibility of management to lay
down structure of relationship in the organization. Authority
without responsibility is a dangerous thing and similarly
responsibility without authority is an empty vessel.
Organizational Design:
• Organization design may be defined as a formal, guided process for
integrating the people, information and technology of an
organization.

• Organization design involves the creation of roles, processes, and

formal reporting relationships in an organization.

• There are two phases in an organization design process: strategic

grouping, which establishes the overall structure of the organization,
(its main sub-units and their relationships), and operational design,
which defines the more detailed roles and processes.
 3. Staffing
• Staffing is a critical organizational function which consists of the process of
acquiring, deploying, and retaining a workforce of sufficient quantity and
quality to create positive impacts on the effectiveness of the organization.

• Staffing has assumed greater importance in the recent years due to

advancement of technology, increase in size of business, complexity of
human behavior etc.

• The main purpose of staffing is to put right man on right job i.e. square pegs
in square holes and round pegs in round holes.

• Managerial function of staffing involves manning the organization structure

through proper and effective selection, appraisal & development of
personnel to fill the roles designed in the structure.
Staffing involves:

– Manpower planning (estimating man power in terms of

searching, choose the person and giving the right place),

– Recruitment, Selection & Placement,

– Training and Development,

– Performance Appraisal and

– Promotions & Transfer.

 4 . Directing
• Directing is a part of managerial function which actuates the
organizational methods to work efficiently for achievement of
organizational purposes.

• It is considered life-spark of the organization which sets it in

motion the action of people because planning, organizing and
staffing are the mere preparations for doing the work.

• Direction is that inert-personnel aspect of management which

deals directly with influencing, guiding, supervising,
motivating sub-ordinate for the achievement of organizational
goals.
Direction has following elements:

• Supervision
• Motivation
• Leadership
• Communication
• Supervision- implies overseeing the work of subordinates by their
superiors. It is the act of watching & directing work & workers.

• Motivation- means inspiring, stimulating or encouraging the sub-

ordinates with zeal to work. Positive, negative, monetary, non-
monetary incentives may be used for this purpose.

• Leadership- may be defined as a process by which manager guides

and influences the work of subordinates in desired direction.

• Communications- is the process of passing information,

experience, opinion and so on from one person to another. It is a
bridge of understanding.
 5. Controlling
• It implies measurement of accomplishment against the standards and correction
of deviation if any to ensure achievement of organizational goals.
• The purpose of controlling is to ensure that everything occurs in conformities
with the standards.
• An efficient system of control helps to predict deviations before they actually
occur.
• According to Theo 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 as being
accomplished”
Therefore; controlling has the following steps:

1. Establishment of standard performance.

2. Measurement of actual performance.

3. Comparison of actual performance with the

standards and finding out deviation if any.

4. Corrective action