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Management Concepts – The Four Functions of Management

Any organization, whether new or old, small or big, requires certain methods, procedures and
plans in place for its efficient functioning. For this to happen, they must develop and
implement management concepts which help them implement their vision for the future of the
➤ Planning
➤ Organizing
➤ Directing/Leading
➤ Controlling
➤ Staffing – The Fifth Function
The four concepts of management, translated into functions lead to the creation of a cohesive
organization. They can be shown here as a diagram. It is interesting to note that there is no
hard and fast rule to be followed in the application of these functions, as management is a
real-time decision-making system, any of these functions can be operational in conjunction
with any other and also as independent entities themselves.
Four Functions
Planning is the foundation pillar of management. It is the base upon which the all other areas
of management are built. Planning requires administration to assess where the company
presently is and where it would be in the upcoming years. From there, an appropriate course of
action is determined and implemented to attain the company’s goals and objectives.
Planning is an unending course of action. There may be sudden strategies, required to be
implemented during a crisis. There are external factors that constantly affect a company, both
positively and negatively. Depending on the conditions, a company may have to alter its
course of action regarding certain goals. This kind of preparation or arrangement is known as
strategic planning.
In strategic planning, management analyzes internal and external factors, that may affect the
company, its objectives and goals. One of the primary tools of strategic planning is the use of
SWOT Analysis, a technique that helps organizations find their strengths and weaknesses,
identify areas of opportunity and take preventive measures against threats arising from both
internal and external environmental factors.
The SWOT matrix can be understood by dividing it’s cells according to what they represent for
the organization.
Internal environment stands for the factors affecting performance within the company itself,
this could be both positive or negative in nature.
External environment is the outside world, factors beyond the control of the organization which
may affect it in positive or negative ways.
Strengths are the things that the organization does well, its core competency in production,
sales, innovation and so on.
Weaknesses are the areas which need improvement such as a high attrition rate.

000 units by the 30th of March with a reduction in operating expenses by 3% and launching X product in 3 (names) markets simultaneously on (date). How can objectives be realistic? The best way is to state them in numbers. can lead to unrealistic and often unachievable goals being set by the managers. ➤ Setting Objective Goals Before the actual process of planning can begin. not all goals and their objectives can be set down in quantitative terms. This objective must be precise before it is anything else. . an objective of producing 20. there may be several limitations to the organization’s smooth functioning due to bottlenecks in different departments like the human resources. enthusiasm about a particular sector of the economy. This may not. Then the planning process can incorporate the results and solutions offered in its structure. Data makes it easier to forecast future revenue streams and possible holdups due to working capital issues.Threats are the foreign variables that affect the company such as government regulations. operations and finance. without review and monitoring it will not be effective. as a desirable and rational outcome of planning should be first outlined. these premises take the nature of analytical forecasts which are made to understand future conditions. like most management principles. however. is much more to the point than saying we will increase production. although for the primary purpose of achieving a set goal. or a new launch having performed well in the initial months. with clear language and a frame of reference which all employees can understand. where is all this discussion and debate going to lead? An objective marker. For example. it is a dynamic process which can be broken up into different parts for ease of understanding and also as a reference. Saying that we plan to achieve a certain figure of sales and make a certain amount of profit is nonsensical. It progresses through stages of development and is ultimately. planning may sound like a static one-off activity which is to be done in a particular manner and then left to fend for itself. ➤ Developing Planning Premises A premise is an assumption about something that has not yet come to pass. An organization can analyze it’s position in relation to its strengths and weaknessess by classifying them in the SWOT matrix. On the outside it can give a feeling of how the economy and competitors might behave in the future. one must know what its purpose is. ➤ Recognizing Limitations An organization is a coming together of different people who work in different verticals. Care must be taken that the forecast data be in quantitative terms and not a qualitative or descriptive view. An example is the effect of motivational programs on the efficiency of the employees. a looping function. some are subjective and can only be described or formulated according to precedent. along with the necessary strategy changes required. be as easy to do in the real world. lower costs and make a huge profit selling our new product this year. However. entry of new competitors or even natural disasters. when the means to achieve them have not been decided upon. In relation to planning. Planning objectives must be realistic. Swot Analysis How Does Planning Happen? Although in theory.

must outline these strategies. after accounting for the objectives. and try to find out the best way to handle the important tasks and reduce unnecessary expenditure within the company. A plan may look attractive on the boardroom table but may not necessarily work on the assembly line or integrate with the supply chain of the organization. The management must organize all its resources beforehand. A review is therefore another primary aspect of the planning process. just as the assembly line will require . A plan period sets apart a number of days or months. premises and limitations it might be subject to. ➤ Defining Jobs and Activities Job profiles need to be identified according to the needs of the various departments within a company. It also has to decide for suitable departments to hand over authority and responsibilities. in consultation with the subordinates. any changes that are required must be documented and embedded in the next iteration of the plans. in case changes are required during the plan period. These policies are mostly short term in nature and are done more on the departmental level. Policies can be of various kinds such as new audit norms for the finance department or changes in hiring practices for the HR department. They must also ensure the harmonization of staff. to follow the course of action decided during the planning process. Alternative strategies and plans must also be formulated as fall-backs. The following can be steps in organizing function from the perspective of a manager. managers must look at the requirements of different divisions or departments. to be able to deal with them when the time comes. Care must be taken to ensure that the plan period is reasonable and not overenthusiastic or pessimistic about the objectives. While determining the hierarchy of the organization. ➤ Plan Period A suitable time frame is necessary to be able to achieve the objectives in a systematic fashion. ➤ Review and Appraisal of Plans Once the various plans are in action.A good plan must incorporate these limitations into its structure. ➤ Formulating Strategies and Policies The basic function of any plan is to lay down certain policies and adopt strategies which will propel the organization toward its goals. there must be timely reviews to judge whether they are operating according to the given objectives. Management determines the division of work according to its need. they are usually implemented to improve efficiency in the various procedures. ➤ Operational Planning Support plans are required for the broader strategies and policies developed by the management. This time frame is an objective in itself and acts as a guideline for fulfillment of the various aspects of the plan. depending upon the nature of the plan. Back to Index Organizing The second function of the management is getting prepared and getting organized. Strategies are broader in their scope and are more focused on short term or long term results. The accounts department will need a cashier. The top management of the organization.

This aspect of organizing deals with the division of labor in the organization. to achieve the company’s goals and also accomplish their personal or career goals. ➤ Distribution of Authority The next step is to specify the range and breadth of the powers given to various managers and supervisors working in different departments. This study or comparison leads to further corrective and preventive actions. The controlling function aims to check if the tasks being allotted are performed on time and according to the standards set by the quality department. It also enables them to render assistance to the employees by guiding them in the right direction. Some characteristic features of the directing function are as follows. all this must be ready at hand for the managers to refer to and accordingly make appointments. Even before this is done. A good example is classifying the workers in charge of welding under a separate supervisor. It also involves evaluation and reporting of actual job performance. Controlling Control – the last of the five functions of management. . This is vital as the smooth functioning of the whole organizational structure depends upon people learning to work together. includes establishing performance standards. and department leadership.the services of supervisors and workers. the activities themselves must be clear. Directing/Leading Directing/Leading Directing or leading is the third function of management. It is therefore inspirational in nature. When these points are studied by the management. ➤ Balancing Authority and Responsibility Only classifying and assigning responsibility is not enough. both skilled and unskilled. Managers who have the responsibility to direct have to be sensitive to behavior patterns and have the ability to read body language so as to make more informed decisions regarding their employees. accounting of pay-in slips or the steps involved in the production. or setting up a team of software engineers under a team leader. Working under this function helps the management control and supervise the actions of the staff. communication. a manager must make sure the different departments co-ordinate among themselves and recognize the powers and duties assigned to each one of them. Directing is undertaken by all levels of the management. A superior directs his subordinate who in turn delegates tasks to the people he supervises and so on. Directing aims to delegate tasks to subordinates. which are aligned to the company’s objectives. This is necessary for the division of responsibility and effective reporting. it is necessary to compare both these things. ➤ Organizing Activities The second step is to organize these varied jobs into manageable units. Directing is a very human function of management in that it deals with people on a personal basis. The worker on the shop floor also directs the machines to perform certain tasks. which can be powered by motivation. doing this the right way can be helpful in increasing the productivity of the entire organization. Directing attempts to motivate and lead the employees toward the planned objectives. department dynamics.

in comparison with other three. It aims to see if the results are in line with the objectives set forth in the original plan. payments. The controlling processes. social security accounting and much more. adopt necessary preventive measures. mining. is a continuous process. Understanding the communication process and working on areas that need improvement. with proper communication. Even the most labor efficient business models like online marketing and consulting require expertise in the form of knowledgeable individuals whose job it is to identify trends. It is very important to maintain a productive working environment. do research and provide business plans or solutions to problems. In industries where man power is required for important processes of production such as manufacturing. Standards must be set according to the resources available and accounting for external factors which may affect performance. Efficiency is a prime focus of this function as managing people is the toughest job there is. and make policy changes in time. that an organization sets for itself. which is the attainment of objectives and goals. Staffing Some modern management experts also include the function of staffing as an important management practice.Controlling happens after the planning process has been implemented and the tasks assigned. It is an ongoing activity as employees keep leaving and joining the company. medical allowances. let alone do business and make profits. they also retire from time to time leaving empty places in various positions. creative problem-solving and successful application of all five functions is necessary. Of course. benefits. everything must be accounted for. Some distinct features of staffing function are mentioned below. automobiles and heavy engineering. for achieving the ultimate goal. All levels of management take part in this function. leaves. Effective and efficient management leads to success. staffing can be a crucial aspect of the business. . no organization can get off the ground. Staffing is an important function because it puts the right man in the right job. Control is also dynamic in nature as the management can anticipate future problems. This can only be done effectively. build positive interpersonal relationships and engage in problem solving. Without human resources. helps managers become more effective planners.