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Conrado E. Inigo, Jr., Ph.D., DBE

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Management for Filipinos

To my wife, son and daughter
- Mayette, Christian, Charmie
To my parents, brother, sisters, in-laws,
nephews and nieces.
To all parents, teachers and students.

“What things so ever ye desire when
you pray, believe that ye receive them,
and ye shall have them.” Management for .cilip<nos


Principles and Applications

By Conrado E. Inigo, Jr., Ph.D.
• Associate in Arts - Pamantasan ng Lungsod ng Maynila
• BSBA - Pamantasan ng Lungsod ng Maynila
• Master in Business Administration (MBA)
- Ateneo de Manila University
- Philippine Christian University
• Ph.D. in Business Management - Manuel L. Quezon University
• Management Development Program
Wharton School o f Business
University o f Pennsylvania
• Asia Pacific Business Management Program
- University of Thai Chamber of Commerce
Bangkok, Thailand
• ASEAN Entrepreneurial Course
- Ministryr of Education, Malaysia
• General Management Program
- Faculty o f Business Administration
National University of Singapore
• Computer Development Forum
- University of Nevada, Las Vegas
• Basic Management Program
- University of Phoenix, California
• Minnesota Management Academy
- University of Minnesota
• Executive Strategy Program
- Georgetown University, Washington DC
• AGORA Awardee - Outstanding Achievement
in Marketing Education
• Department Chairman - Graduate School of Business
and Economics, Centro Escolar University
• Dean - School of Accduntancy, Business and Secretarial
and Public Administration, Centro Escolar University
• Assistant Vice President for Technology and Development,
Centro Escolar University

Management for Filipinos

(Management Study Module)

Business and Management Concepts
• Concept of Business and Development
of Business Culture
• Relationship Between Business and the Economy
• Elements of a Business System
• The Profit Motive
• Responsibility of a Business Enterprise
• Why People Engage in Business
• Kinds of Business
• Kinds of Economic Systems
• Phases of Economic Development
• Legal Forms of Business Ownership
• The Project Feasibility Study
• How to Register Your Business
• The Entrepreneur and the Manager
• Positive Values of a Filipino Entrepreneur
• Small Business Associations- in the Philippines
• International Business Environment
• Exporting and Importing
• Multinational Corporations
• Review Questions
• Discussion Questions
• Worksheet

• Significance of Studying Management
• Definition of Management
• Universally-Accepted Functions of Management
Management for FiliDinos

Management as a Science and an Art
Evolution of Management Theories
Principles of Management by Henri Fayol
Scientific Management by Frederick Taylor
Gilbreths and Motion Study
Major Components and Related Major Events
of Management Movements
Advanced Management Program in the Philippines
The MBA Story
Review Questions
Discussion Questions

PART II: Management Functions
Chapter 3 : PLANNING

Definition of Planning
The Nature of Planning
Major Types of Plans
Basic Steps in Business Planning
Other Types of Plan
Decision Making
Planning Techniques and Tools
Why Managers Fail in Planning
Short Case Study
Review Questions
Discussion Questions

Chapter 4 .



Definition of Organizing
Nature of Organizing
Organizing as a Process
The Nature and Development of Organization
Types of Organization Structures
Organization Chart
Results of Good Organization
The Elements of Delegation
The Art of Delegation
The Exception Principle
Formal and Informal Organizations
Centralized and Decentralized Cigo,.;Latio r-

Management for Filipinos

• • • • • • The Nature of Staff and Line Relationship Flat and Tall Structures Short Case Study Review Questions Discussion Questions Worksheets Chapter 5 : STAFFING • • • • • • • • • • • • • Definition of Staffing Nature of Staffing Recruitment Selection Training Identifying Training Needs Common Types of Training Human Asset Accounting Movement of Personnel Short Case Study Review Questions Discussion Question Worksheets Chapter 6 : DIRECTING Definition of Directing Motivation Theories of Motivation Communication Types of Communication Barriers of Communication Leadership Types of Leadership Management Skills Management Roles Management Grid Management Filipino Styles Short Case Study Review Questions Discussion Questions Worksheets Chapter 7 : CONTROLLING • Definition of Controlling • The Nature of Controlling Management for Filipinos vii .

• • • • • • • • • The Control Process Characteristics of Control Types of Control Control Methods and Systems Accounting Concepts and Techniques as Control Devices Short Case Study Review Questions Discussion Questions Worksheet PART III: Applications it #® # 0$ Chapter 8 : INTRODUCTION TO THE DIFFERENT AREAS OF MANAGEMENT viii • • • • • • • • Marketing Management Production Management Materials and Procurement Management Financial Management Human Resources Management Office Management Discussion Question Worksheet Chapter 9 : MANAGEMENT INFORMATION SYSTEMS Chapter 10 : SOCIAL RESPONSIBILITY Chapter 11 : CAREER OPPORTUNITIES IN BUSINESS Chapter 12 : SCIENTIFIC ANALYSIS OF BUSINESS CASES Chapter 13 : PRODUCTIVITY TECHNOLOGIES IN THE PHILIPPINES FINAL REVIEW QUESTIONS SELECTED BIBLIOGRAPHY Management for Filipinos .

C o n ra d o E. The range of topics covered is necessarily broad and. I have prepared. It aims to provide students a foundation and background of management in the successful operation of business. Consequently. Dr. I observed that students and faculty members were always looking for the best textbook which could suit the description recommended by the Philippine Association of Collegiate Schools of Business (PACSB). In igo. San Juan City. This book is intended to serve as an introduction in the study of management for students who are interested in this rapidly expanding field. These cases and exercises will test the knowledge of the students in the application of management functions to practical business situations. Jr. review and discussion questions. and outlined a book supplemented by worksheets which will meet the needs of the students and teachers in the field of entrepreneurship and basic management. organized. Metro Manila Management fo r Filipinos iy .Preface I n my past years of teaching in various schools. The format of the book brings down the management concepts to the level of the average Filipino student. the coverage of various problems and topics is not exhaustive. as a result. At the end of every chapter is a set of short cases. Council of Management Educators (COME) and the Philippine Council of Deans and Educators in Business (PCDEB) for a course in basic management.

With this premise. write a comprehensive description of the importance of Management to your line of specialization (major subject) and/or to the various areas of business (Accounting.Pre-inventory Exercise N a m e :_____________________________ Year/Section: Professor: __________________________ Date: _____ As a student. it is imperative for you to know the relevance of the subject to your career and your expectations. Banking and Finance. Management for Filipinos xv . Computer. Marketing.). Economics. etc.

PARTJ l Business and Management Concepts * * Chapter 2: Nature and Concept of Management .

” .Peter F.Chapter 1 Business in General Learning Objectives: At the end of the chapter. the student is expected to understand the following: • Concept of Business and Development of Business Culture • Relationship Between Business and the Economy • Elements of a Business System • The Profit Motive • Responsibility of a Business Enterprise • W hy People Engage in Business • The Project Feasibility Study • How to Register Your Business • The Entrepreneur and the Manager • Positive Values of a Filipino Entrepreneur • Social and Economic Contributions of Entrepreneurship • Small Business Associations in the Philippines • International Business Environment • Exporting and Importing • Multinational Corporations (M NC ) “The purpose o f business is not to' make a profit. Drucker . but to m ake a customer.

C O N C E P T OF BUSINESS A N D D E VE LO PM EN T O F BUSINESS CULTURE F A irst and foremost in the study of-basic business management. structures. The operations are subjected to public. must be acceptable to every sector. Space/computer technology is continuously improving so that life today is very different from the past and the developments we see today are unknown to the previous gen­ erations. satellites. commensurate his efforts and risks. Nevertheless. In the second place. Business is the evolutionary growth of various activities develop­ ing from a simple to a complex system. i. by the nature of their operations. a simple push of the button brings conveniences of technology right at our doorstep in the same manner that a mere power breakdown is sufficient to dis­ rupt routinary and business activities. as an organi­ zation. Today. procedures. space shuttles. all business organiza­ tions involve men and deal with men. and technological changes. It can be achieved through the use of effective business marketing practices and strategies for reasonable returns to compensate for the businessman's efforts and risk of loss. and organizational units in business. antibiotics.. consumer acceptance. computers. The businessman should be entitled to a reasonable return on invest­ ments because. nor any of our "instant" food or beverage production. systems. government regulations and supervision. may be simple or highly complex in structure. Profit is the main objective of business which distinguishes it from charitable institutions and gov­ ernment agencies. ultra-sound machines. some elements are cqmmon to all businesses. The businessman aims at maximizing his profit so that he can provide for himself and keep his business viable. The profit. In the first place. however.e. prac­ tices. A business entity. taxation. remote-con­ trolled televisions. Business primarily aims to satisfy the consumer's basic and sec­ ondary needs. electric cars. mini-radios. in addition to using his skills and exerting his effort. because a good business does not exploit the public. is having a clear idea of what business is and how it developed. all business enterprises have basic resources which are managed and developed under a money-andcredit economy. he takes the xisk of loss (compared to other individuals who do not ven­ 4 Management for Filipinos . Those were the years when there were no DVD and CD play­ ers. There is much complexity in business because this area involves the whole range of human wants and needs. Today. there are many different managerial functions.

Consumers. aimed to meet the economic needs of consumers with an objective of eventually earn­ ing profit. These wages form the Business in General 5 . profit should be maximized to provide a fair share to the workers in the form of just wages and incentives. R ELA TIO N SH IP B ETW EEN BUSINESS A N D THE ECONOM Y Basically. In practical and legal sense. any unlawful activity like gambling and smug­ gling can be considered business following the definition of business.ture into enterprise because they are afraid to lose their money should the business fail). One measure of economic growth is the Gross National Prod­ uct (GNP). Figure 1. Consequently. to the management in the form of professional remuneration and profit participation. The business firm produces goods and services from the factors of production provided by society. In a broader concept. Consequently. or semi-finished goods from other producers. to produce goods and services. to the owner or stockholders in the form of dividends. It has to pay wages to its personnel. annually).1 (see next page) shows the relation­ ship between business and the economy. students of business are taught and trained to become businessmen based on the moral standards and values of society. defined as the total market value of goods and services produced by a country in any given period (usually quarterly. Nevertheless. Realizing the increasing responsibility of business organizations to society. business is any activity involved in the production and distribution of goods and services. buy these goods and services. thereby creating a demand for the outputs of other businesses. semi annually. components. to the customers and clients . Business firms thus contribute to the country's economic growth. this book emphasizes the inevitable reality with the hope that the exercises and materials in this text will contribute to efficient busi­ ness activities and sound business economy. The complexity of today's business requires a continuing if not lifetime study. the business firm has to purchase materials. in turn. Business is the sum total of all the enterprises that play a vital part in the production and marketing of goods and services to ultimate consumers. the role of business is to produce goods and services which consumers the form of reasonable prices with commensu­ rate quality of goods and services and dependability of supply.

who in turn buy foods. and government sectors. clothes. we may define an industry as a group of business firms offering similar goods or services. he profits if his products are in demand and inherent in all business ventures. Before an entrepreneur invests. we call them an industry. It deals with how society uses its re­ sources to produce goods and services. there are several important ques­ tions he has to answer. construction. such as the agri­ cultural. petroleum. Labor refers to the physical and mental input of the people who produce the goods and services. Do I know enough abut the type of business I 6 Management for Filipinos . In return. trade.pays for the goods and services pays for the factors of productions Figure 1. and capital to provide goods and services. Land pertains to all natural resources. When we combine these firms as a group. and other goods and banking and finance. ELEMENTS OF A BUSINESS SYSTEM Economics is the study of how a society produces and distributes its desired goods and services. capital. The entrepreneur or businessman buys and organizes these three factors of production . Thus. Some business firms manufacture the same products or substitutes for others. Some examples are the electronics. The manufacturing sectors include all industries involved in producing goods. These economic resources to produce are called factors of production. including timber. manufacturing. labor. They are land. and construction industries. A business firm co-exists and interrelates with other mem­ bers in the economic system. Industries may be broadly classified by sectors. minerals. and the entrepreneur. petroleum. car. and the land itself. while the trade sector includes both domestic and foreign trade. labor.1 Relationship between business and the economy income of the workers. chemicals.

In turn. no two businesses are exactly the same. In other words. businessmen will not invest. they invest more funds to expand their businesses and produces new goods or services to satisfy consumer demands.g. ~~"eral 7 . the entrepreneurs make large profits. If.e. If he risks losing all his capital (e. in an oil exploration venture which may fail). If demand is high. The question is: What is "reasonable"? Different businessmen have different expectations of their businesses. entering? Can the business offer the goods and services at competi­ tive prices? What is the rate of return on his investment? Every busi­ nessman expects a reasonable rate of return on his investment. It is the prime motivator in a capital system. Entrepre­ neurs produce goods and services that consumers are willing to buy. Without profits. the amount of profits a businessman expects usu­ ally depends on the risk involved. Profit is impor­ tant in business. he would expect more than ten percent profit for a risky venture. i. the investor expects a very high rate of return T H E PR O FIT M O TIVE Profit is the difference between the income an entrepreneur re­ ceives from the sale of his goods and services and the expenses he incurs to produce them. In general.. high risk should bring high return. by putting the money in a fixed deposit bank account he can get a ten percent return. it is income minus expenses.

In a sole proprietorship or a partnership. equipment. employees working for the enterprise. The businessman or manager must also deal with his supplier fairly and pay duly for his purchase. Owners i Workers i Business Association —► Customers Labor Union Suppliers T Community T Government Figure 1. They are the owners of the business. The business company must also follow all government rules and regulations. and treat tnem well. In return. and abide by decisions of business associations of which it is a member. If he defaults. he will-be replaced.RESPONSIBILITY OF A BUSINESS ENTERPRISE A business enterprise is a part of a larger economic system. his goods must be genuine. or materials to the enterprise. If the employees are unionized. The manager employs workers to help run the business. If his prices are too high.3 A business enterprise in relation to other members in the system 8 Management for Filipinos . customers will buy from other shops. customers buying the goods and services selling machinery. he will not get reliable suppliers. Suppliers themselves are businessmen and are un­ willing to do business with those who cannot pay. If his performance falls below excep­ tion. Other groups and individuals affect the way business is managed. Otherwise. who own the com­ pany. the manager is respon­ sible to the proprietor or the partner. More importantly. the business company must recognize the union and negotiate with it. he must pay fair wages and benefits. provide a safe and healthy working environment. he will continue to be employed. besides being a responsible cor­ porate citizen in the community. A manager is employed to do a job and is directly responsible to the board of directors elected by the shareholders. If the manager does a good job. The manager is responsible to his customers in providing goods and services of satisfactory quality at competitive prices. the workers will resign and look for better jobs elsewhere.

Many companies donate funds to support neighborhood activities. involves a com­ plicated process of stimulus-and-response system to many factors and motives. sex. or protection against danger. Businessmen want to earn profit. Business in General 9 . Physiological or biological need . such as the need for food. W H Y PEOPLE ENGAGE IN BUSINESS Human behavior. The responsibility of a business to the community is a general one.the essentials for survival. a manager must comply with the laws and regulations laid down by the government. Others encourage their employees to participate in social work or cultural programs that benefit society. stability.the need for the realization of personal goal or ambition. and achieve prestige because of certain stimuli.In conducting his business transactions. These factors can be clearly explained and directly linked with the theory postulated by Abraham W. shelter. etc. may be prohibited even though they may be profitable for the businessman. economic and cultural welfare of the community.the desire for security. serve" the community. 4. service to the community. People engage in business because of the following reasons: power. the employer must recognize such representation and negotiate with the union leaders to reach a collective bargaining agreement. there are five needs of men that are to be satisfied continually in the following order: 1. and friendship.the need for self-recognition or group satisfaction.the need for group belongingness. livelihood. air. social ap­ proval. and these are the motiva­ tional factors. 2. Ego or self-esteem need . 5. water. prestige. 3. affection. including consumer behavior. love. The business should strive to promote the social. According to his Hierarchy of Needs theory. profit. an industrial psy­ chologist. If workers in a business enterprise are members of a labor union. Self-fulfillment need . Social need . The satisfaction of these needs of men can be properly explained by the use of a ladder. clothing. Some activities like gambling. Maslow. Safety need .

Services This classification is based on the nature of principal activity performed by the business enterprise. Sony. Honda. COD. Rustan's. Industry 2. Examples of manufacturing companies are Nokia. Service enterprises are primarily concerned with the satisfac­ 10 Management for Filipinos .K IN D S OF BUSINESS Business activity may be divided into three kinds: 1. Robinsons. Consumption involves purchasing and the actual investment of capital in the merchandise handled with the intention of reselling at a profit. etc. 1. Commerce 3. Purefoods. and mining. The manufacturing industries use materials and sup­ plies turned out by the extractive industries and change these raw materials into various articles of materials for further production of goods and new products. Commerce involves the process of buying and selling where the goods are moved from the point of production to the point of con­ sumption. fish­ ing. etc. San Miguel Brewery. National Bookstore. Webster. Examples are Shoe Mart. Shell. Industries involve the conversion of raw materials into fin­ ished products or goods and the application of labor upon raw mate­ rials so that greater usefulness becomes possible after the process in the industrial group can be divided into extractive industries: farming. 3. 2.

and communism.the most common and prevalent of which are capitalism. 2. 1. Capitalism is a system in which the means of production are owned and operated by private individuals. a nation may be under one of various economic sys­ tems . Capitals may also come from individual savers and passive investors willing to spend their money on business enterprises. Broadly speaking. Recreation services which include TV stations. Personal services which include hotels. and the theaters. and newspaper publishers. and property rights are privately invested with the ultimate aim of personal gain. etc. K IN D S OF E C O N O M IC SYSTEM Normally. commission agents. of the process Business in General 11 . who are called capitalists or providers of capital. as a whole. Active capitalists buy materials and equipment. Payment for such personalized service is usually in the form of fees which are sometimes called retainer's fee. Professional and trade services are businesses which capitalize on personal skill and talent for rendering service. schools. repair shops. movie productions. Examples are law offices. Examples of the first group are transportation companies. and (b) professional or trade service. Socialism means the ownership of production and capital by the government and the regulation by society. social­ ism. motion picture producers. These are subdivided into: (a) public and community service. certified public accountants. and others. Com­ petition keeps prices reasonable. there are essential goods and services which involve too much risk and too little profit. It is a system of economic organization wherein privately-owned capital. Individual entrepreneurs are free to enter the market and pro­ duce goods and services for as long as there is demand for them. and 2. beauty parlors. and build factories to produce goods sold for profits. and makes available a wide range of goods and services. management consultants. building contractors. The capitalist system is based on risks and profits. restaurants.tion of the needs and wants of the consumers. Capitalism depends on the actions of capital owners. MERALCO. In every soci­ ety. services may also be subdivided into: .1.

But the term "communism" usually refers to the economic system in the People’s Republic of China. and communism) have been defined in different ways.of production and distribution. For example. Some define it as an economic system with some government involvement. It is also a way of organizing the productive forces of a society. This country is sometimes called "centrally-planned economies" whereas capitalist countries are referred to as "market economies. In this country." These three terms (capitalism. and transporta­ tion are owned and operated by the government. government enterprise can increase employment by providing more jobs. and a country may find itself under economic phases at different points of time. socialism. of the People's Republic of China has recently allowed private ownership of land and has encouraged individuals to set up businesses. for instance. Some use the term "democratic socialism" to mean an economic system in which impor­ tant industries such as public utilities. Communism is an utopian economic system. the gov­ ernment. On the other hand. PHASES OF E C O N O M IC D EVELO PM EN T The transition of economic development from one phase to an­ other is usually gradual. A democratic socialist economy is also called a mixed economy. and of the giving of essential services. Critics say that the system restricts economic free­ dom and that government enterprises are subject to political interfer­ ence and may be inefficient. In such an economy. and Sweden. Demo­ cratic Socialism stabilizes employment because during economic reces­ sions. Communism stands for the collective ownership by the gov­ ernment of consumption goods and production goods. Socialism has been defined in many ways. the state owns and controls all means of production. a free enterprise system with government participation. the United States (often quoted as a typical example of a capitalist economy) has state-owned as well as private enterprises. 12 Management for Filipinos . The government plans economic activities. there is private ownership of property and there are many profit-oriented business enterprises. Examples of demo­ cratic socialist countries are Singapore. postal services. Others argue that the Russia and China are socialist countries. 3. It implies a classless society with no government. Very few countries have a pure capital­ ist or a pure communist economic system. as suggested by Karl Marx. It is in effect. Britain.

Industrial Phase. Since these resources differ greatly in quality and quantity. It was the period when machineries were used in factories and industrial plants. the various concepts used merely identify the more important attributes of the people's way of life in a certain period of time. 2. the presence of manufacturing companies in certain areas like Metro Manila. tapestries. wiJa the use of power and machines. and the bounties of nature. furniture. The creation of groups and the presence of a large number of livestock have made man settle in an area for a longer period of time. Economic development is only possible if a country has maxi­ mized the use of its human and natural resources. They did not breed nor domesticate animals. As these resources become extensively scarce. saving. This is characterized by. Our ancestors obtained food by hunting and fishing taken directly from the mountains. and other wares which are still admired and treasured to this day. In the Phil­ ippines. Means of Livelihood 1. Business in General 13 . seas. Criteria in Classifying Phases of Economic Development A. . Indus­ trial production. It was the period of the medieval guilds. P astoral Phase. agriculture is the primary industry because of vast agricultural land and the shortage of foreign exchange needed to buy modem ma­ chineries and technology 5. their proper allocation and utilization need extensive research and study. Agricultural Phase. Hunting and Fishing. some countries experience drastic development. porcelain.Since the development of a country's economy from one phase to another is not drastic. H andicraft Phase. 4. led to the mass production of other machines. jewelry. Man began to work as a farmer or a fisherman. 3. Items or objects were made by skilled and trained manual laborers. Man's need for a continuous supply of food led to the development of agriculture and the concept of land ownership. crystal. They made excellent workmanship of sculpture. and setting aside of stocks. This pe­ riod is an offshoot of the "Industrial Revolution" which came to En­ gland and Europe towards the end of the 18th century. Phase. Guilds were associations of artisans engaged in the same trade. such as automobiles and appliances which have made modem living radically different from that of the previous generations. fine musical instruments. This phase made it necessary for man to satisfy the needs of his group during seasons of inclement weather and the real­ ization of a greater need for planning.

While barter was used. Consequently. When several families organize a village. 4. economic and social relations spread among the various families result­ ing in the rise of the village economy. money was used as a medium of exchange. 1. nation-build­ ing develops economic activities on a nationwide scale. When transactions continued to increase in volume and frequency. commodity was offered. a monetary system evolved. The needs of the family were satisfied largely by the efforts and contributions of all members of the family. 3. no exchange took place. 2. Household Economy. Barter Economy. Money and Credit Economy. when such objects became standardized in value and regular in appear­ ance so that it became identified and accepted by the general public as a medium of exchange. ser­ vices for services. International Economy. Consequently. tools. Money solved the problem of barter economy. or public acceptance in any institution using it. it redeemability in precious metals. With better and modem means of transportation and communication. and generally ac­ cepted by the public. This was proven when credit transactions in modem business became far greater in volume than cash transactions. exchange was done through barter which was the direct exchange of goods for goods. Village Economy. such as bars of metals. Medium of Exchange 1. Since barter involved the physical transfer of commodities with every transaction. Credit is the power to obtain economic goods and services in exchange 14 Management for Filipinos . If the commodity offered by a person was not acceptable to another person. This phase involves the grouping of vil­ lages into bigger and broader social units. 3. there came to circu­ late in the market certain objects. it became imperative to allow others to purchase one's goods or engage one's services with payments to be paid at some future date. durable. buttons. Extent of Economic Activity The second classification of economic development considers the extent of economic activity of the various social units involved. a country expands its economic relationship through international trade and diplomatic cooperation. Money is anything which is characterized by its general accept­ ability. the first phase is termed household economy. C. instead. Through time and evolution. During the primitive era.B. goods for services or services for goods. N ational Economy. Money was not used. Money Economy. and utensils which were stable in value. Since the family is the smallest and ear­ liest social unit. it is very inconvenient. 2.

and properties expressly authorized by law or incident to its existence. having the rights of succession and the powers. some of the vital questions to answer are: How difficult is it to organize the business and what formalities are necessary? What is the estimated cost to meet the legal requirements including legal fees. Such agreement is required to be in writing.t form the business should take. Sole Proprietorship .a business organization Where two or more persons contribute money. However. 3. However. A partnership acquires juridical personality upon the agreement of the carry on a business. LEGAL FORMS OF BUSINESS O W N ER SH IP One of the first and most delicate questions which anyone start­ ing a business must ask himself is: Which is the best form of ownership for me to use? Each of the several legal forms of business ownership has its peculiarities and. the future of an undertaking may very well depend on the appropriateness of the form selected for car­ rying it out. tjje^ Business in Genera! 15 .000 or more. property. Corporation .is an artificial being created by the operation of law. 2. Partnership . and filling cost? How can you can get additional capital? How easy can you transfer the owner­ ship? 'Will it be possible for the owners to participate actively in the management of the business? How easy is it to change from one form of ownership to another after the business has been organized? Summarized below are some of the major advantages and disad­ vantages of the three legal forms of business. while general partners have unlimited liability. Credit supplements money as a medium of exchange. Modem business opera­ tions have expanded through the availment of credit facilities.for the promise to pay the agreed equivalent at some future time. In the case of limited partnership where the organization is composed of a limited and general partner. attributes. because the use of credit makes possible the growth of production and of sales. because of this. If you are planning to organize a business. These are not the real measurement of whr. It is possible that the capital in this form of business comes from the collective contribution of members of the family or among friends. for the business to be considered a sole proprietorship. taxes.a form of business ownership organized and managed by only one person. The legal forms of ownership are as follows: 1. it should be registered in the name of only one person. a limited partner has limited liability for business debts. if the capital of the partnership is P3. or talent.

provide certain comparative attributes that can help the businessman simplify his selection. "it depends. Dissolution is least likely to occur 5. Relatively easy to set up 2. the type of risk-taking involved. Dissolution of partnership by any personal rifts between partners 2. Can involve a wide range of people in business including employees 6. it depends on the nature and kind of business you have. Tendency to institutionalize bureaucracy * The major determinants of business forms are the type of busi­ ness. Corporation (at least five stockholders) 1. ADVANTAGES DISADVANTAGES 1. Decision-making is left entirely to owner 1. Complicated settingup process 2. Demanding on owner's personal time 2. Equal profit sharing despite unequal attention and time given by partners to business 3. Reduced tax burden on owners 1. the size of investments. and your own general objectives and personal biases. START A N E W BUSINESS OR BUY AN E X IS T IN G ONE? A good and practical answer is. Checks and balances maintained with two parties around 1. Limited liability of individual share 3. Single Proprietorship (one proprietor) 1. There are businesses where it takes long to develop products and mar16 Management for Filipinos . Growth limited by owner’s financial means 2. Greater room for professionalism 4. Maximum flexibility 2." First. Limited influence on management by individual stockholders 3. Easy to set up/start 2. Partnership (two or more partners) 1.

g. the op­ erations may be essentially good. and 3. it depends on the availability of opportunities for acqui­ sition. The collection of data (through research work) which is signifi­ cant to all areas of undertaking. based on the analysis. 2. or an existing business. You can always look at classified advertisements for opportunities. or companies being sold. sometimes called a-project study or a feasibility study evaluates the viability of a business undertaking. or cash. such as banks and other financial institutions. In this case. Normally. If you are sufficiently interested in a business but figure out that you do not have the best personal preparation for it. you may be better off buying into a company that already has established products in the market bu for some reason or another also needs fresh equity or fresh approaches (The?e are also other businesses where "teething" takes time as in manufacturing operations in general and.. Its real objective is to guide the project promoters. and a new marketing approach. putting up a new plant and training a new set of workers may be relatively more expensive than acquiring an existing plant. The undertaking may be a new or proposed venture. Third. The enterprise may or may not have an expansion program. The preparation of a project study covers: 1.but be prepared for disappointments. business executives. The formulation of recommendations. it may be better for you to get into an existing operation with the option to learn the ropes and gain control of the business at a later date. But looking for actual situations that will allow you to apply this strategy may be difficult. or con­ sult other business professionals . and financial manag­ ers in determining the actions they must take on a project in order to bring about its successful operation. Do you want to have the satisfaction of building a new organization.kets (e. The analysis of the collected data. For businesses such as restaurants. may be the only inputs that could improve its viability. a project study is merely considered as a procedural requirement for securing financing or government assistance. trading in general). it also depends on your personal biases. Second. or would you derive greater satisfaction in "being around" a company that has been losing? Can you also cope with the usual "bad habits" that employees in established organizations bring with the/n? Would you rather de­ velop a new team within a new organization? T H E PROJECT FEASIBILITY STUDY The project feasibility study. Business in General i .

organizational chart. and socio-economic.VARIO US ASPECTS OF PROJECT FEASIBILITY STU D Y A good project study should cover the various aspects of the operations of a project: management. if in the first place. This aspect includes a study of the officers and key personnel. basic considerations in forming the organizations. However. The technical soundness analysis will be considered complete if all pertinent technical aspects of the project have been taken into account in the analysis and if the planned construction or procure­ ment conforms to accepted engineering standards and practice. form of ownership. there can be no discussion of profitability or of the other aspects of the study. Technical Aspect After having determined the market size and area. product de­ mand and growth. financial. The estimated cost of the project should be as low as any other reasonably 18 Management for Filipinos . technical. marketing. Marketing Aspect The marketing aspect is considered the life blood of virtually all project feasibility studies for the extent of the data and information gathering because the succeeding aspects depend largely on it. This serves as the basis of the financial section through the projected de­ mand. the potential and technical feasibility of the project may be analyzed. This aspect will determine the successful realization of the project study. Organization and Management Aspect The overall implementation plan is discussed in the organization and management study. and project schedule. Indeed. The objective of the marketing aspect of a feasibility study is to determine the quantity of the product that can be sold at a certain price given the competitive situation. there is no demand or market. supply. profitability is the focal point of every study. The objective of the management aspect of a feasibility study is to determine the option effectiveness of the organizational set-up and the qualifications of the individuals who will make up the organization. de­ mand and supply gap analysis. marketing program. and the projected sales. This aspect includes the following topics: demand.

Business in Genera! 19 . the project proponent is ready to analyze technical feasibility. the specifications of raw materials 3.Figure 1. the technical requirements of the project must be analyzed. the manufacturing process B. This may be done by A. C. the supplies to be used 4. Stating: 1. Technical Requirements of the Project Prior to projecting technical feasibility. The objective of this portion of the feasibility study is to deter­ mine to what extent the project meets the technical soundness criteria.5 Objective of Marketing Aspect (World Executive Digest. June 1998) available alternate which would produce the intended results. the waste disposal methods 7. Once the technical requirements have been prepared. the utilities needed 6. Taking into consideration any major technological develop­ ment in the industry which may affect the commercial or technical soundness of the project. Listing down in detail estimated production cost and over­ head cost that will go into the operating of the proposed plan. D. both skilled and unskilled 5. the labor needed. the quantity and quality of products to be produced 2. Providing estimates of total project cost and enumerating the major items of capital cost.

3. 6. Statements of assumptions. 2. Projected financial statements. To determine the necessary financial arrangements to'insure that the project will have the cash it needs when required. Details of various amounts contained in the projected financial statements. if the capital require­ ments cannot be met entirely by the proponents. The financial study attempts to meet the following objectives: 1. taxation and legal phases of the project study. safe. should be pre­ convinced not only for profit but also for social and economic benefits. project studies consist of the skillful coordination of the various information of all the factors in the form of financial projec­ tions. Basically. To make a realistic. including possible source and terms. To make complete. and expresses in peso terms the possible outcome of operating the project. What remains is to study the result of the market and technical studies. the investigation should move on to the study of finance cost. complete. management.Financial Aspect The financial aspect of the project feasibility study quantifies the results of the marketing. It becomes even more worthy of establishing a business unit if it will be for tht welfare of others rather than simply for the wealth or power of the proprietor. and conservative estimate of the total cost to put up a project of its capital requirements. technical. 20 Management for Filipinos . to be worthy of financing. To determine the company's earning performance and the soundness and liquidity of its financial positions. and 5. To determine the amount of capital financing available and borrowings needed. So cio -E co n o m ic Aspect A proposed venture. and realistic projections of operating cost and revenues. The major parts of the financial study are: 1. It covers all the factors that are pertinent to an intended venture having established the existence of a sample market and the feasibility of the production facilities to supply this market. To determine whether the project will be able to pay its total debt with a reasonable margin of safety. 4. Analysis of the financial projections. 5. Possible sources of outside financing. 2. 4. 3.

b. 2. and. To find out if an investment in a project or an existing enterprise is still attractive. To specify the level of incentives to be granted (if the office has this discretion). Taxes. To ascertain the viability of new projects. a. 4. 3. Income. Prices. To ascertain the advisability of lending to a new project or existing undertaking. b. Local producers. and foreign exchange balances. a. Stockholders a. com­ munity. 4. b. 3. Management of on-going concerns. Parties Requiring Project Feasibility Study Project Feasibility Studies are prepared for the following parties and purposes: 1. To define the conditions to be imposed in order to safe­ guard the position of the institution. raw materials. To decide on the sale of existing companies and if so. location. To determine if a project is entitled to government incentives. 5. 5. b. distribu­ tion channel. market. and labor. and other designs. sources of financing. and the nation. considering the benefits it will give to families and individuals. To select or improve the project specifications in terms of: form of business organization. considering the use of locally manufactured machines. Lending institutions a. The community. 2. to set the selling prices. Government offices a. Business in General 21 . b. Proponents or promoters of new projects. considering the influence of the proposed project on supply of goods. indicating the amount of revenue it could raise for the government.The objective of the socio-economic aspect of the feasibility study is to determine how the project will affect: 1. To set the reasonable price of an existing business which they are considering to take over. plant capacity. in terms of benefits the proposed business will directly or indirectly share on the developments of the place. To determine the feasibility of expansion programs.

mar­ keting. technological developments. On the other hand. HoweveY. new products coming in. The one preparing the study may not be professionally com­ petent. project studies minimize the profitability of business failures. Notwithstanding the above inherent limitations (but assuming that the one preparing the study is compe­ tent). Such forecasts are based on available information. prices. cost and expenses. and on the opinion of the party preparing the project study.Limitations of Project Feasibility Study A project feasibility study is primarily based on forecast of de­ mand. You may be disappointed to learn that readiness and eagerness alone do not establish a business firm. and management aspects of the business you have in mind. 2. Even assuming that all the required data are available. Certain required information is usually not available. you are now very eager to practice your skills as a manager. y. the basic limita­ tions of the study are as follows: 1. There are certain legal requirements that must be accomplished. 22 Management for Filipinos . and hence the opinion he forms may be deficient. A businessman needs to register his business not only because the enterprise has to be known by its legal or official name. 3. but also because his business requires a legal personality in most of its transac­ tions. These advantages may only be obtained if one's enterprise is properly registered and legally recognized. amendments to laws.ou are now ready to establish your own business. One of such requirements that must be accomplished is the registration of a business activity. H O W T O REGISTER YOUR BUSINESS After you have carefully studied all the technical. you will see that starting your own business is not at all that simple. and available financing. Failure to accomplish certain government requirements may cause unnecessary delays in the business operation. Utility of Project Studies. Hence. changes in tariff rates. sales revenues. the project study still offers the advantage of consulting the most realistic basis of calculated action to implement or stop a project. the study is still a forecast. Thus. In fact. Professional competence is an opinion on the project based on the analyses. the national government offers privileges and other incentives to busi­ nesses considered as priority projects. The results of a forecast do not usually tally with the actual events. financial. and the one preparing is competent.

The normal sequence of registering with the different govern­ ment agencies is as follows: 1. Bureau of Internal Revenue 3. For example. A single proprietorship is the easiest to reg­ ister while a corporation requires more elaborate procedures. If it plans to avail of incentives.A new small enterprise has to be registered in various govern­ ment agencies. The agencies involved in the issuance of permits to operate depend on. SEC is responsible for registering partnerships and corporations while BTRCP is responsible for single proprietorships. The two key agencies involved in implementing two major pro­ grams of the government are the Bureau of Internal Revenue for rev­ enue collection and the Social Security System for the promotion of social justice. A company that wishes to carry out a regulated business activity is required to obtain a PTO from the agency thqt is mandated to regu­ late the industry. On the other hand. it should apply with the Board of Investment (BOI) first before proceed­ ing with the SEC or BTRCP and the rest of the required registrations with government agencies. Local Government Unit 4. Business registration is undertaken for the following purposes: • to establish the legal personality of the business • to obtain a Permit to Operate (PTO) • to comply with the requirements of special regulatory or promotional programs of government. Securities and Exchange Commission of Bureau of Trade Regulation and Consumer Protection 2. the location or area of operation and the nature of the busi­ ness. a Permit to Operate will have to be obtained first from the government agency mandated to regulate the industry before registration with the Local Government Unit can be done. Business in General 23 . there are some business activities that are regulated by law. These are the Securities and Exchange Commission (SEC) and the Bu­ reau of Trade Regulation and Consumer Protection (BTRCP). The complexity of registration varies according to the legal form of the business. All businesses regardless of the type of organization. lo­ cation of operation or nature of business activity are required to comply • with the registration requirements of the BIR and the SSS. All businesses are required to obtain a PTO from the city or mu­ nicipal government where the business activity is to be undertaken. Social Security System If the company will engage in a regulated business activity. There are two government agencies involved in the registration of business for the first purpose depending on the type of organization. drug manufacturing and trading is being regulated by the Bureau of Food and Drug (BFAD).

Register your business name at the DTI regional office where your business is located (those from National Capital Region may reg­ ister at the BTRCP office in Makati. 1931) otherwise known as the Business Names Law was enacted so that no two businesses (whether in the same line or not) would have the same or similar names. With the form. and Certificate of Au­ thority to engage in business in the Philippines from the BOI. file the following basic supporting documents: FOR SINGLE PROPRIETORSHIP For natural-bom Filipinos. 2.REGISTERING W IT H THE DEPARTMENT OF TRADE AND INDUSTRY (DTI) I. Pay a registration/processing fee (P121. The Department of Trade and Industry (DTI). II. Articles of Partnership or Incorporation...00 at 1992 rates) and secure application form. For aliens. 24 Managem ent for Filipinos . recent passport-sized photo. FOR PARTNERSHIP AND CORPORATIONS If fully-owned by Filipinos. registration of business name with BTRCP is optional. Purpose of Licensing: Republic Act 3883 (approved on November 14. Attach original receipt. and. photostat copy of Alien Certificate of Registration (ACR) for current year (bring original for comparison). that business name should be registered. 3. If fully or partially owned by an alien. Fill up the form and file it with the DTI office. you are as­ sured that no other entity can legally use your business name anywhere in the Philippines. The following are the procedures to follow: 1. For partnerships and corporations. By registering with the Bureau. and certificate of authority to engage in business in the Philippines from the Board of Investments. SEC Certificate of Registration. through its Bureau of Trade Regulation and Consumer Protection (BTRCP) administers the registration of business names. Articles of Partnership or Incorpora­ tion and photostat copy of the SEC Certificate of Registration. W ho are required to register: If you are a single proprietor and your business is using a name other than your own name.

III. VI. Entities • Accomplished Application Form • Accomplished In lex Card • Articles of Incorporation / Partnership • SEC Certificate of Registration b. V. Application for Renewal (for Individual Entities) 1. Business in General 25 . During peak season (usually 1st quarter) processing time is seven working days. Original Registration (New) 1.If owners are citizens by naturalization or election. Different procedures apply for provincial and Metro Manila applicants. Estimated Tim e Processing: Processing time normally takes four days from date of filing. Those who are natural-bom citizens but have names suggestive of foreign nationality are often required to submit proof of citizenship like birth certificate or voter's ID. Requirements for Registration: a. Individuals • Accomplished Application Form • Accomplished Index Card • Two Passport Sized Photos of Owner 2. Application Form 2. Accreditation Accreditation is the legal recognition that a service and/or repair enterprise and the technical personnel therein have complied with the require­ ments of law and fulfilled the basic requirements of the industry for their operation and are therefore reliable and competent to practice the trade. Validity of Registration: The BTRCP Certificate of Registration is valid for a period of five (5) years. Old Certificate of Registration IV. photostat copy of naturalization certificate and oath of allegiance/affidavit of election or identification card issued by the Commission on Immigra­ tion and Deportation (CID).

to generate profits and to sustain the growth of the business. As a business expands. They decide Ip start the business. con­ ceives an idea out of his own visualization then turn the idea to 26 Management for Filipinos . Their main role is to maximize the use of resources. or data processing. Entrepreneurship is a cre­ ative endeavor in much the same way as artistic or scientific creativ­ ity is. marketing. Most small business firms are managed and owned by entrepreneurs themselves. hoping to profit from this venture. to make decisions. challenge. risking time and capital.T H E ENTREPRENEUR A N D T H E MANAGER We have used the terms “businessman” and “entrepreneur” inter­ changeably to describe the person who uses the other three factors of production together. The entrepreneur’s way of life is a combination of creativity. When the business becomes more complex. it has to be managed by professional experts in finance. personnel production. though some may become shareholders or partners. like the artist or the scientist. These managers are usu­ ally employees in the business enterprise. They make all manage­ ment decisions. the entrepreneur has to increase owner­ ship to get more capital. hard work and satisfaction. An entrepreneur must.

Pakikipagkapwa tao is a value favorable to entrepreneurship because it is against any form of exploi­ tation of another. he puts in long and unremitting hours of work and takes financial risks. important than those performed by lawyers. 2. pakikisama (togetherness). and not timid and fearful. B a h a la na By nature. If pakikipagkapwa tao developed well. it should promote and up­ hold the vision of entrepreneurship. utang na loob (debt of gratitude). At the same time. we say bahala na (let fate decide the outcome) and do the best we can believing that Nasa Dios ang awa. All these would require a lot of en­ ergy and self-discipline. malasakit (concern). teachers. entrepreneurship is a practical translation of one's pakikipagkapwa tao because the work is to provide things and ser­ vices of value to others to improve their standards of living. To accomplish this. amor propio (self esteem) and bayanihan (cooperative spirit). We undertake projects which should perhaps have frightened us if we were only less courageous to take the risk involved. nasa tao ang gawa (Look io God for compassion and to man for action) Business in General 27 . Basically. or accountants. Filipinos are malakas ang loob (strong-hearted).reality. pakikibagay (adjusting or adapting to other people). nor undercut his competitors by underpricing or maligning them. nor maltreat his workers by under­ paying or overworking them. These services are equally if not more. P a k ik ip a g k a p w a tao There are many ways in making our cultural values favorable to entrepreneurship. The fact is that many of us pursue our plans and projects even if we are not sure of future developments or events that may affect their accomplishment. nor cheat the government by avoiding or evading taxes. our value for pakikipagkapwa tao (human relations) which covers our concern for hiya (loss of face). other Filipinos who benefit from the fruits of the entrepreneur will give him back his share. and workers demonstrate malasakit over the busi­ ness. doctors. The entre­ preneur that has pakikipagkapwa tao does not cheat his customers by overpricing or underweighing his goods. POSITIVE VALUES OF A FILIPINO ENTREPRENEUR 1. The successful entrepreneur attains a position of prestige in the community because of his many contributions to society especially in terms of general jobs to many people and providing needed goods and services. For example. In situations where we are not sure of our ability to accomplish things. Customers pay. competitors play fair.

because almost all of us are intelligent and literate enough to read. 4. JKasipagan Another value that has to do with industriousness or kasipagan is an essential attribute of an entrepreneur. bayanihatt Aside from the family. katokayo and others who are willing to assist us simply from goodwill. (loss of face) or awa (compassion). in turn. hiya. specially in the field of making a living. kababayan. G aya-gaya Our inclination to learn and adjust to new ways of doing things may also be seen in our talent for gaya-gaya or imitations. In many situations./ one really has to be more creative and innovative to make one's products and services more sat­ isfying to customers. There may be the ninong and ninang. (A coward runs away from the fight even before he is wounded) show’s that we as a people do not consider it honorable to surrender before uncertainty or challenge. It is not surpris­ ing why there is plenty of mobility among our countrymen.3. kumare. or to give necessary consultancy services to us when we are in trouble. P akikipagsap alaran The'saying Ang taong talagang duwag. We are very quick to adjust to new and strange situations. need our assistance. our confidence or lakas loob is justified. and it is not unusual to find inter-province migration as precipitated by the love for pakikipagsapalaran (adventure). But. kumpare. this may seem that we can expect them to buy from us. aw a. and count. write. for those who are only starting a business doing gaya-gaya of other products (mostly imported) do contribute to the training and preparation of many Filipinos for an entrepreneurial career. Of course as one matures in an entrepreneurial career. in return for some past utang na loob or the expectation of some future time when they. kaeskwela. tumatakbo’t walang sugat. 5. In business. through banters and proverbs such as: Ang tamad namamatay sa gutom (The lazy man starves to death) Ang hipong tulog tinatangay ng agos (The sleeping shrimp is carried away by the current) 28 Management for Filipinos . to sell us supplies on consignment. That is risk-taking. If they do that on utang (credit) they have to pay because of hiya. there are others around us who can give much needed support. U ta n g na loob. We have our own ways to deal with the "Juan Tamad" (lazy Juan) around us. 6.

F a g t it ip id We also assign a high value on pagtitipid (thrift). We have a heritage for strong religiosity. and as . they do not drastically spend on things that do not pay back in terms of profit. 9. Note. dis­ crimination and abuse during the Spanish Regime. for example. persevering people. 10. Indi­ viduals who save eventually have enough to set their own firm. entrepreneurs. (Put aside something today that you may draw upon it tomorrow). We would rather use katapatan (sincerity) or kalinisan ng loob (purity of heart). pagkaubos tutunganga (Splurge today and woe unto you tomorrow) Habang maiksi ang kumot. 8. We do not allow ourselves to show. It is hard to unwisely spend your hard-earned money. We do not easily give up in the face of difficulty. our parents taught us to be wise spenders and savers. our emotions at the slightest provocation. K a ta p a ta n The Philippines is considered the largest Christian nation in Asia. this does not stop them from hoping for a better future. may hinuhugot. We like to wait until mapuno na ang gatangan (thg cup overflows). otherwise we are branded as masamang tao (worthless persons). how for centuries our forebearers silently suffered exploitation. they can see a brighter future. They would say: Kung may isinuksok. P a g titim p i Another sign of our endurance is our emphasis on pagtitimpi (self-control). In the past. P a g t it iis Filipinos are also considered as persistent. Frugality and being industrious usually come together like iden­ tical twins. which demands that we should be honest in our dealings with others. This capacity to bear emotional or physical stress can serve as well in an entrepreneurial career where we will be constantly battered by many stressful situations.7. We have always admired those who are mapagtiis (enduring). Business in General 29 . And how else can we describe the poor living in the squatter shanties in many depressed urban areas? While many of them believe that poverty is chiefly caused by social or economic injustices. Ubos-ubos biyaya. Even the poorest of the poor believe that by hard work. We do not like to exploit others. You are familiar with "Asyong Aksaya" (Asyong the spend-thrift) who has been immor­ talized both on film and cartoon as the model of the extravagant and unprogressive Filipino. verbally or otherwise. magtiis na mamaluktot (Flex yourself smaller underneath a short blanket).

Some businesses. Entrepreneurship contributes to more equitable distribution of income taxes and therefore eases social unrest. (that •is about 19 million) employed Filipinos were employed by non-farm enterprises.212 business establishments stopped operating. It was also estimated that between January to October of 1987. About 15 million were employed by manufacturing firms alone. When individuals are employed. They 30 Management for Filipinos . In 1987 for example.000 workers in Metropolitan Manila.000 workers an average of 221 lost their jobs because of the decline of entrepreneurship and entrepreneurial activities. People will have more money with which to buy the products and services they need. at least 2. When income is more evenly distributed. As a result. Entrepreneurship creates employment When entrepreneurs put up a business. support them through school. they are able to raise their children.886 people lost their jobs. Entrepreneurship improves the quality of life Entrepreneurial ventures contribute significantly to the continu­ ous improvement of living standards.These traits are very useful in business because exploitative ways are always self-defeating in the long run. and contribute to government income through the payment of income taxes. the country's unem­ ployment rate goes up. and that for every 10. The development of new prod­ ucts and the delivery of needed services make life easier and comfort­ able for society in general. bringing in more profits to entrepreneurs. Every society wants all its qualified members to be gainfully employed. When entrepreneurial activities slow down. it was reported that about half of 38 million. S O C IA L A N D E C O N O M IC C O N T R IB U T IO N S OF ENTREPRENEURSHIP 1. At the third quarter of 1998. at the peak of the economic crisis. a monthly average of only 201 jobs were available for every 10. at least 93. they oftentimes need to hire or employ at least one or two other people in order to get things done. entrepreneurship also grows. 2. 3. acquire medical services whenever needed. employ hundreds of workers. provide them with decent homes. in fact.

Income that is evenly distrib­ uted means less poor people. The eradication of poverty will help solve social problems like crime. the more magnanimous businessmen can also introduce their buyers to you. See next page) Business in General 31 . These services and projects come in the form of infrastructure facilities such as roads and bridges. and privileges as small and medium businessmen. the government allocates for commu­ nities. Putting up a metal factory to process iron-ore does not only utilize the raw material but also feeds other local industries. For example. legal rights. 4. Entrepreneurship brings social benefits through the government. it is not often that job orders can be filled up by a single firm. and intelligent businessmen know that. duties and licenses paid by the entrepreneurs (Not to mention income taxes the entrepreneurs' workers also pay). The Philippines will develop faster economically if none of its resources were left idle or unused. The following is a list of existing Filipino business associations. and malnutrition. Joining them can also open new markets for yourself since bigger businesses can also job out smaller orders to you. Also be alert on the nuances of these terms. After all.may also have enough money to invest on enterprises of their own. Entrepreneurship utilizes and mobilizes resources for greater national productivity. educational and medical facilities and services. maintenance of peace and order. you deserve to join in lobbying for the interest of the Filipino small business sector. thus increasing the supply of entrepreneurs. among others. juvenile delinquency. S M A L L B U S IN E S S A S S O C IA T IO N S IN T H E P H IL IP P IN E S Be aware of your prospects. we have plenty of iron ore that can be processed to supply the needs of industries that manu­ facture spare parts for cars and machines. 5. Business friends are needed to fill up big ones. With the revenues the government collects from taxes. It also saves much for the country m terms of dollars and time since local industries need no longer be dependent on its iron-ore imports all the time. Even if you happen to be a self-employed businessman jobbing out small orders for micro enterprises. Also.

Manila Composition: Christmas decor producers and exporters COCONUT OIL REFINERS ASSOCIATION Address: Muelle de Binondo. San Juan Composition: coffee exporters BOARD OF INVESTMENTS Industry and Investments Bldg. Address: do Saniwares Standard Bldg. de Jesus St. Reliance St. Gil. Manila Composition: shrimp producers and exporters CERAMICS ASSOCIATION OF THE PHILIPPINES. Strata 100 Bldg.. Virata Hall.ARTIFICIAL PLANT MANUFACTURERS ASSOCIATION OF THE PHILIPPINES Address: do Tree's Company 45 Ligertad St. Manila Composition: artificial plant manufacturers ASSOCIATION OF FOOTWEAR INDUSTRIES OF THE PHILIPPINES Address: 56 J.. Puyat Ave. Metro Manila TECHNOLOGY AND LIVELIHOOD RESO URCE CENTER TLRC Building Sen.. Puyat Ave. it is increasingly important 32 Management for Filipinos . Mandaluyong. Makati Composition: ceramics manufacturers and exporters CH AM BER OF FURNITURE INDUSTRIES OF THE PHILIPPINES Address: 9/f. Santos Ave. Thus.. INC. Metro Manila IN T E R N A T IO N A L BUSINESS E N V IR O N M E N T Art important factor in the management of any organization is the increasing internationalization of business activities. Diliman. Makati. Metro Manila DEVELOPMENT B AN K OF THE PHILIPPINES DBP Building Sen. 151 Paseo de Roxas. While not all organizations are directly involved in international business activities.. Makati DEPARTMENT OF SCIENCE AND TECHNOLOGY DOST Compound Gen. events that impact on Philippine organizations oc­ cur. Makati. 1617 Sisa St. Jacinto St. Taguig DEPARTMENT OF LO CAL GOVERNMENT PNCC Building EDSA cor. Gil J.. J. E. Gil Puyat. Eliptica! Road. Quezon City GOVERNMENT RESOURCE INSTITUTION FOR ENTREPRENEURS DEPARTMENT OF TRADE AND INDUSTRY De and Industry Building 361 Sen. Sampaloc. Pasig Composition: furniture manufacturers CHRISTMAS DECORS PRODUCERS AND EXPO R TERS' ASSOCIATION Address: do Makbel Enterprises. Bicutan Taguig.. almost delaying other nations... Port Area.. Diliman.. Manila Composition: coconut oil refiners CO FFEE EXPO RTERS ASSOCIATION OF THE PHILIPPINES Address: 191 Pasadena St. Diliman. These activities present new challenges to managers. Makati. International business activities range from exporting goods to other nations to estab­ lishing manufacturing operations in other nations.. Mandaluyong City DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES DENR Building Visayas Ave. 385 Sen.. Quezon City UNIVERSITY OF THE PHILIPPINES INSTITUTES FOR SM ALL-SCALE INDUSTRIES E.. Rizal DEPARTMENT OF AGRICULTURE DA Building. Puyat Ave. Bonifacio Drive. Emerald Ave. Gil J. UP Campus. Quezon City NATIONAL MANPOW ER AND YOUTH COUNCIL NMYC Complex East Service Road South Expressway. Caloocan City Composition: footwear manufacturers ASSOCIATION OF SHRIMP PRO DU CERS AND EXPORTERS Address: Domestic Insurance Bldg.

3. Some contact an outside person who is sometimes called a combination export-import manager. As the product reaches Business in General 33 . the market could limit the number of stoves demanded below the number which is cost efficient to produce. To restrict selling stoves only to the Philippines. The demand for the firm's product may be seasonal and ir­ regular. The organizational structure that is used depends on how critical these activities are to the overall organization. importing. available technology. By expanding the firm's market to other countries. E X P O R T IN G A N D IM PO R TIN G An organization may become involved in international business activities by exporting. Thus. Organizations that make a commitment in selling their pioducts overseas must decide how to organize their exporting/importing activi­ ties. The trading of goods and services across national boundaries re­ sult from the principle of competitive advantage. Exporting refers to the selling of an organization's goods in an­ other country. 2. and "law. adequate quality and quantity of labor and capital.that all managers understand the nature of international business activi­ ties. the home market may be too small to absorb the output. the output may be sold overseas. for example. finance. there is usually a big demand and the introducing firm is the only supplier. Factors determining a country's competitive advantage include the presence of natural re­ sources. are purchased by households only when they heed to replace an old one or when a new home is built. An export-import manager serves a group of exporting/importing organizations and handles all activities involved in the exporting/importing of the organization's goods and services. many organizations either cannot or do not desire to establish such divisions. importing is the purchasing of goods and services from a foreign company. Stoves. production costs may be lowered by more effective production scheduling. or manufacturing in a foreign coun­ try. This requires special experts on international accounting. If the production process requires high volume to reduce cost per unit. and the cost of these resources. As a result. All products undergo what is called the product life cycle when the products are first introduced. The organization may establish its own internal structure. marketing. Reasons for Exporting 1.

3. the organization may not fac competition as stiff as it does in the Philippines. However. thus. Yet. its marketing cost may be reduced. Bank of America. What would you consider to be a reasonable profit? What are the responsibilities of business enterprises? Management for Filipinos . M U L T IN A T IO N A L C O R PO R ATIO N S (M N C ) The Multinational Corporation (MNC) has become a well-known entity in international business. an MNC is defined as any busi­ ness that maintains a production. By selling its established goods in new overseas mar­ kets. Reasons for Importing 1. percentage of earnings due to foreign operations. 2.. 3.maturity. Coca Cola and Honda having large and growing international activities. a common definition of that entitydoes not seem to exist. world. this competitive edge is reduced and can be maintained only by creating new markets. sales or service presence in two or more countries. the organization is also able to increase its profits without risking new-product development. for the purpose of this book. and percentage of new capital investment destined for overseas facilities.g. French perfumes. The goods may be needed but not available in the importing country (e.g. crude oil). Some foreigr goods are Jess expensive due to lower produc­ tion costs. assembly.. In selling goods or services. with companies such as IBM. where it re-enters the growth stage. R E V IE W Q U E S TIO N S 1. 34 What are the elements of a business system? Which is the most important? What is a profit move? Explain its role in the business. 4. The internationalization of big companies has been dramatic. 2. Measure used to determine if a business is multinational include percentage of total sales by majority-owned for­ eign affiliates. Many foreign-made products have prestige value and are de­ manded by the home market (e. sport carts from Germany). Eastman Kodak.

4. 2. Identify some business enterprises which are active in social activi­ ties and discuss their major contributions. REFERENCES 1. D IS C U S S IO N Q U E S T IO N S 1. Do you think the old saying: <cWhen in Rome. Abasolo. Bureau of Small and Medium Busi­ ness Development. Analyze the enterprise in terms of the four elements discussed in the chapter. 1991. Personnel Management. List your own needs. Explain the relationship between a business enterprise and the economy. Compare your needs with those of your parents. Identify the business activities that will satisfy these needs. 3. 6. 5. 2. 9. List some of your activities which are related to business enterprises. 1997. 2. Damaso. Metro Manila: Sinagtala Publisher. Explain how it is related to the economy. How to Start Your Own Business. Think of a specific business enterprise. Jimeno. Business in General 35 . In what ways may an organization enter into international business activities? What is exporting? importing? Describe some problems faced by organizations engaged in interna­ tional business activities. How does it contribute to the well­ being of society? Discuss the major changes in the Philippine economy over the last two decades. 3. 4. How does the business contribute to the economy? Discuss the role of business. Pacita and Isidro Jose. Department of Trade and Industries. Imagine yourself as part of the business system. Quezon C'ty: Katha Publishing Company. 8. Inc.. 1982. 7. do as the Romans do” applies to international business activities? What problems would you face if you were asked to serve as the manager in a foreign country? E X P E R IE N TIA L EXERCISES 1.

Diliman. Singapore: McGrawHill Book Company. pp. 1 (2nd Quarter. 1987. 1968). Richard D. Inc. Weimer. Preparing Project Feasibility Study. Geoffrey. Monico H. Management of Business. Vernon A. Vicente. Quezon City: Phoenis Press.. Singapore: McGraw Hill Book Company. 1997 12 Shubbin. Ignacio. 13. Introduction to Business: A Management Approach. 9. 1989. New York: Banes and Noble. 1 No. Meredith. Joseph.. Inc. Small Enterprises Research and Development Foundation. Introduction to Modern Business." Philippine Manager Vol. 11-16. 8. Metro Ma­ nila: Sinagtala Publishers. 1992. Joon Eng Chuz.4. and Hughes. John. 1996. 1990. 10. Managements Functional Approach.. Introduction to Entrepreneurship. Putti. 7. 1997. ILO. Muro. Limjoco. 7. New Jersey: Prentice-Hall. Management for Filipinos . Arthur M. Irwin. 1997. Musselman. One. 11. 1992. Quezon City. 6. Vol. Eugene. Inc. p. An Introduction to Business Management. 5. Angel Jr. The Practice of Entrepreneurship. Business Management. "Story of Advanced Management Program in the Far East. et al.

Things that typically unnerve most people do not ruffle me. even if it meant tightening my belt considerably for a while. I dislike taking orders from others. high-status job to start my own business. I would readily leave a well-paying. I have often been in the position of leading projects or groups. 8. I would be able to fire an employee who was not productive. 2. I would want my employees to be content. Even if I dislike doing it. 1. 3. Business in General 37 .W orksheet No. I am generally able to and.2 BUSINESS IN GENERAL N am e: Year/Section: Professor- Date- TEST YOUR POTENTIAL AS AN ENTREPRENEUR Take this test to help you find out whether you have the drive to realize your entrepreneurial dream. 6. I generally try to take charge of matters when I am with people. I believe that there is a proper time for everything and things can't be rushed. Given reasonable odds. * 5. 9. I enjoy pulling it all together. I seem to have a much higher energy level than most people. I find it very difficult to change my course even though the prospect of success is exceedingly dim. When confronted with a complex task. After each sentence (except for questions 21 through 25). in fact. Once I've launched a venture. my efforts can successfully influence the outcome. choose a letter to mark your reaction: a) strongly agree. 4. d) strongly disagree. I am acutely aware of the passage of time and often press myself to complete a task. 11. c) moderately disagree. but not at the expense of the business. 7. » 13. 1. 12. b) moderately agree. 10.

I have worked long. b = 3. 3. b = 3. b) a management position in any firm. b = 3. 2. c = 2. c . a = 4. and I would do it again if necessary. a a a a a a a = « = = = = = 1.1 have h a d _____year(s) of experience in the industry in which I plan to start a business. 3. c = 2. 12. a = 4. 5. 21. 4. I would choose to work with a difficult but highly competent person rather than a congenial but less competent one. I generally need at least_____hours of sleep to function effectively. 2 4 . d d d d d d * = * ■ = = 1 1 1 4 1 1 . b = 3. 3. a) 8 b) 7 c) 6 d) 5 or fewer' Answers: 1. a = 4. 10. 3. a = 4.__ 14. b = 3.1 have missed_____days of work due to illness over the past three years. analytical mind. b = 3. a = 4. 4. 13. I can do just about anything I set my mind to. I have a low tolerance level and get easily frustrated. c ■ 3. c = 2. b* bb= b= b= b= b* 2. Others say I have a sharp. 1. 7. My age i s _____. 4. 6.1 have had business experience i n _____. 3. 4. __ 17. 38 a = 4. a) a management position in a successful firm. b = 3. c) no management experience. c = 2. c = 2. c = 2. hard hours for lengthy periods of time. It is important for me to be the best in whatever I undertake. 2. d = 4 3. c = 2. c ■* 2. __ 20.2. a) 0 to 5 b) 6 to 10 c) 11 to 15 d) 16 or more 25. c = 2. a) 20 to 28 b) 29 to 37 c) 38 to 46 d) 47 or older 2 2 . __ 18. c = 2. c = 3. a) 0 b) 1/2 to 1 c) 1 to 2 d) more than 2 years 2 3 . a = 4. 14. d= 1 d= 1 d= 1 d= 1 d=1 d= 1 d=1 Management for Mllplnos 8. 9. __ 19. I get bored easily with routine tasks and thrive on challenges. 4. 4. __ 15. c = 2. 11. __ 16.

20. 16. 1. 3. 2. you have what it takes to become a successful entrepreneur. and a sense of urgency. d d d d d d d d = = = = = = = = 1 1 4 1 1 1 1 4 d= 1 d =4 S c o re : (94 (85 (75 (74 to 100) to 93) to 84) and below) What are you waiting for? A good bet. 3. 3. 21. No matter how you scored in this test. 25. c c c c c c c c c c c = = = = = = = = = = = 2. creativity. 4. 4. 3. 2. 3'. intelli­ gence. confidence. commitment to excellence. 4.the willingness to work hard. Risky business. 3. 4. management skills. 18. 1.15. b b b b b b b b b b b = = = = = = = = = = = 3. 1 2. 2. Business in General 39 . only you can answer the ques­ tion. secure self-image. 3. and finan­ cial acumen. 4. 3. 2. 24. 2. 17. good health. excitement when challenged. 2. 22. 19. If you find these characteristics in yourself and can couple them with technical competence. 2. 1. 3. Are you an entrepreneur? Look inside yourself for all these traits . a a a a a a a a a a a = = = = = = = = = = = 4. caring realism. 2. 23. 4. 3. Stay right where you are. 3.

40 Management for Filipinos .

” .Chapter 2 Nature and Concept of Management Learning Objectives: At the end of the chapter.Leo Tolstoy . the student is expected to understand the following:• Significance of Studying Management • Definition of Management • Universally Accepted Functions of Management • Management as a Science and as an A rt • Evolution of Management Theories • Principles of Management by Henri Fayol • Scientific Management of Frederick Taylor • Gilbreths and Motion Study • Major Components and Related Major Events of Management Movements • Advanced Management Program in the Philippines •T h e MBA Story "Everybody thinks o f changing humanity. and nobody thinks o f changing himself.

giving sufficient attention to the various constraints within which the goals must be achieved. labor union. or home. materials. Hence. school. armed forces. the central idea is developed by studying management from the side of what management does. store. effort.S IG N IFIC A N C E OF STU D Y IN G M A N A G E M E N T ur study of management begins with presenting the basic prin­ ciples and concepts which give a common reference outline within which management is normally applied. establishing and achieving objectives. machines. These resources are what we call the six M's of management which are used and related harmoniously so that the expected end-result may be attained. the available basic resources including men and women. office. Substance is placed on the meaning of management. and expense. the influence of the manager's philosophy and values. all within the anticipated problems of time. its historical' development in the country. 42 Management for Filipinos . Throughout the text. More often than not. methods. These activities make up a distinct process . church. Ac­ cepted current management trends and practices are taken up and the importance of accomplishments in modem management is clearly ex­ plained. Management is the most important subject in business because it deals with people. bank. and the effect of both internal and external factors. In order to achieve an objective. hospital.a management process . money and markets should be put together. From the practical and oper­ ating viewpoint. a manager is expected to formulate objectives. Management exists to some degree in the factory. It is conse­ quently used in almost every human activity.some of which may be changed by different approaches or schools of thought consid­ ered especially helpful to the individual to which management is being applied. hotel. managers delineate their objectives as given by exact statements of the problems to be solved or barriers to be dis­ carded in outlining the work to be done. application to both theory and the study of manage­ ment is included.

beliefs. 1) BASIC RESOURCES 6 M’S FUNDAMENTAL FUNCTIONS THE PROCESS OF MANAGEMENT STATED OBJECTIVES END-RESULTS Figure 2.” An addi­ tional definition is “satisfying the economic and social needs by be­ ing productive for the human being. For ex­ ample. some persons define management as “the force that runs an enterprise and is responsible for its success and failure. “management is the performance of conceiving and achieving desired results by means of group effort consisting of utilizing hu­ man talents and resources.” Some state. (See Figure 2 . “management is a resource used by everybody to achieve goals.D E F IN IT IO N OF M A N A G E M E N T Management is defined in so many ways depending upon the viewpoints.1 The Meaning of Management Nature and Concept of Management 43 . these activities are performed to accomplish stated objectives. organizing. directing.” Still others state that management is simply “getting things done through people” while others claim that it can be summarized as “planning and implementing. and they are performed by men with the help of other resources.for the purpose of this book. However. and for soci­ ety. .” All these definitions have merits. there are different activities that make up a management process. and controlling (POSDICON). staffing. Furthermore. and interpretations of the manager. the following generally accepted definition is used: Management is a distinct process of planning. for the economy.” Others claim. In other words. performed to deter­ mine and accomplish stated objectives by the use of human being and other business resources.

or hiring and training workers needed for production. Planning is used to further accomplish the objectives today and its relationship in the future. when ordering special spare parts for a certain prod­ uct. or a proposal. It involves selecting the best course of action that a business or other enterprises and every department will follow. an analysis. programs.2) O rganizin g Organizing is the grouping together of people. (See Figure 2. but not a real plan. Planning involves forecasting. e. Planning is related to decision-making.UNIVERSALLY A CCEPTED F U N C T IO N S OF M A N A G E M E N T Planning Planning refers to the formulation of objectives. and defining the authority and responsibility that 44 Management for Filipinos . that is. in order to achieve the goals of the business. Although a future business condition can seldom be predicted with accuracy. the first thing to do is to plan a study. rules and regulations.g. procedures. planning is thinking before doing. There are various types of plans. poli­ cies.. Furthermore. making decisions in ad­ vance. ranging from the company purpose and objective to the most detailed individual action plan. unforeseen events may disrupt the best-laid plans. establishing rela­ tionship among them.

It is. People working together in groups to achieve goals must have roles to play. Their activity is a situation where they know how their job fits into the group effort and where they have the necessary rolls and informa­ tion to accomplish it. Staffing Staffing involves filling and keeping filled the positions provided in the organization structure. understandable that this area of management involves motivation. This role illustrates that what men do has a specific purpose and objec­ tive. then. and the need for effective managers to be effec­ tive leaders. it measures performance against goals and plans. It is intentional in the sense that it makes sure that all the tasks necessary to accomplish goals are assigned to men who can do them best. Thus. Whether their roles are developed by themselves must be defined by someone who wants to make sure that men can contribute in a definite way to the group effort. D ire ctin g Directing has to do with the predominantly interpersonal aspect of managing. much Idee-the actors in a drama.the personnel have in the use of the company's material resources to attain predetermined goals and objectives. wishes. compensation. Leadership implies followership. and training or otherwise developing both candidates and current job holders to accomplish their tasks effectively. their desires and attitudes. the delegation of authority and responsibility. shows Nature and Concept of Management 45 . This can be seen as a simple group effort like setting up a fishing expedition. Organizing is also the iden­ tification or grouping of work to be done. too. is that part of manag­ ing that involves establishing an intentional structure of roles for men to fill in an enterprise. It delineates manpower requirements for the job to be done. leadership styles and approaches. and the establishment of relationships among them in order to use to maximum advantage the company's material re­ sources in the attainment of a common objective. Organizing. which includes recruiting and selecting candidates for position. and people tend to follow the man on who they see a means of satisfying their own needs. All managers will agree-that their more serious problems arise from people. C o n tro llin g Controlling is the process of measuring and correcting the activi­ ties of subordinates md the company itself to assure conformity to plans. and communication. therefore. their behavior as indi­ viduals and in groups. and desires.

plans are not self-achieving. Management is a broad field of knowledge with its own areas of specialization . It gathers'and analyzes facts and formulates general laws or principles from these facts. correction is indicated. and the record of labor hours lost are generally familiar. none is considered complete. growth. and the field of management theory is in the process of evolving. Each theory has some limitations. purchasing and procurement. It requires skill and careful study in the management of any endeavor. Management is a science because it is a systematic body of knowledge. inspection records. Their existence. The plans guide managers in the use of resources to accomplish specific goals. each showing whether or not plans are working out. Each has the characteristics of measuring. They are: • The Classical or Traditional School • The Human Relations School 46 Management for Filipinos . M A N A G E M E N T A S A S C IE N C E A N D A S A N A R T Management is both art and science. and organizations. Although planning must precede controlling. administration. While several theories have been advanced in the effort to explain the structure. therefore. Such control devices as the budget for expense. management seeks to inte­ grate into a unified. to date. E V O L U T IO N O F M A N A G E M E N T T H E O R IE S One wonders how organizations came to existence and how they grew. Control activities generally relate to the measurement of achieve­ ment. and. by actions to correct deviations and help assure the success of plans. It is an art because it results in the accomplishment of objectives through the use of human efforts.personnel. and modernity can be explained through some theories or schools of thought. and advertis­ ing. If abnormal deviations persist. or is accepted as being final.where negative deviations exist. functioning and njanagement. Compelling events to conform to plans mean locating the person who is responsible for negative deviations from planned action and then taking the necessary steps to improve performance. However. finance. As an art and as a science. the vari­ ous thoughts and views discussed can be included in four schools of thought or theories. sales or marketing. coordinated whole the essential factors that make up an organization. production. Activities are then checked to determine whether they conform to planned action.

Fie sees authority as the power or the right entrusted to make the w'ork possible and respon­ sibility as the duty or work assigned to a particular position. managerial or technical. Gullick. and Taylor. laid down a number of principles. Classical theorists believed and prescribed certain principles that would aid in .this is the assignment of specialized jobs to various departments and/or positions.because of their outstanding administrative abilities. Division o f Work . Nature and Concept of Management 47 . which is used today. Fayol. Principles of Management by Henri Fayol Henri Fayol was a French industrialist who was the first to issue a complete statement on a theory of general management.• The Management Science or Quantitative School • Modem Management The Classical or Traditional School The concept of management is not new. Fayol gave the following "14 Prin­ ciples of Management" (He stressed flexibility in the application of these principles and the making of allowances for different and chang­ ing circumstances. The classical theory of management is built on principles. Fayol graduated as a mining engineer. Bom of relative well-to-do parents.) 1. Fayol applies the principle to all kinds of work.Henri Fayol finds authority and responsibility to be related and inseparable. tire company was near to bankruptcy. One of the classical theorists. The Catholic Church has made some significant authority. These principles have been suggested by theories such as those presented by Mooney. Reiley. it has been practiced for thousands of years. Fayol took over as managing director and rapidly turned the company into a financially sound organization. Upon his retirement in 1918. Possibly. In 1888. setting up and managing organization. He started in 1860 as a janitor then rose to become the executive of a coal mining and iron foundry company. Fayol lectured and popularized his theory of administration. Fayol's greatest contribution was his discussion of man­ agement principles and elements. 2. and so on. Authority and Responsibility . Emerson. This is the specialization which the economists consider necessary to efficiency in the use of labor. Urwick. Henri Fayol. Some traditional institutions such as the Roman Catholic Church have survived to this day. scalar chain. people learn the task more easily and perform them more effectively. It has been shown in many cases that when work is specialized.

) LOWER LEVEL OR RANK AND FILE (CLERKS.) TOP MANAGEMENT MIDDLE MANAGEMENT (DEPARTMENT HEADS. etc. ETC.3) 8." as well as an extension of the principle of unit of com­ mand. (See Figure 2.this principle explains that "in union there is strength.). CORPORATE TREASURER. Centralization .3. Span of Control . "Esprit de Corps" . This can be applied through probationary appointment (maximum period of six months. Fayol calls it the extent to which authority is concentrated. ETC. ETC." 6. It is a system of management wherein major policies are made only by the top management.this means that ceive orders from one superior/manager only.without using the term centralization of au­ thority. This can be properly described by the use of the pyramid of organization consisting of top management (president. This is the opposite of decentralization. SECTION CHIEFS. middle management (department man­ agers. Fayol points out its dangers and costs.unnecessary labor turnover could be the cause and the effect of bad management. 7. MESSENGERS. Stability of Tenure .it refers to the specific and limited number of subordinates that a manager can effectively handle and control. TYPISTS. 4. e m p lo y e e s should Subordination of Individual Interest to General Interest - re­ The interest of one employee or group of employees sh o u ld not prevail o v e r the interest of the business. chiefs. as provided by law). It emphasizes the need for teamwork and the importance of communication in obtaining it. It is 48 Management for Filipinos . SUPERVISORS. CORPORATE SECRETARY. It is sometimes called compensation. 9.remuneration and method of payment should be fair and afford the maximum possible satisfaction to employees and (PRESIDENT. VICE PRESIDENTS. Scalar Chain . Remuneration .3 The Organization Pyramid employer. Unity of Command . 10. This principle is based on "equal pay for equal work. Employees should be given enough time and period to prove his worth to the company.Fayol thinks of it as a "chain of superiors" from the highest to the lowest ranks. supervisors. etc. vice-president. 5.).) Figure 2.

Taylor quickly saw that workers had little or no reason to pro­ duce more because most wage systems of that time was based on atten­ dance and position. 12. The piece-rate system had been. tried before but generally failed because of poor use and weak standards. During his earlier years at Midvale. Finishing his apprenticeship in 1878. Taylor's efforts became the true beginning of scientific management. many of these were the products of the early factory system. Fayol developed his list of principles from the practices he had used most often in his own work. In six short years. Prin­ ciples o f Scientific Management. Taylor worked with and observed production workers at all levels. He used them as a broad and general guidelines for effective management. it was hard for him to understand and accept this situation. Taylor presented a balanced view of scientific management. Equity . Unity o f Direction .one boss and one plan for a group of activities having the same objective. he rose through eight positions to chief engineer. 13. He pointed out that as productivity rose. His real contribution was not the 14 principles themselves. Taylor put forth his ideas in a book entitled. since he focused on the amount of time required to complete a particular job." In his writings.ensures a place for everything. Thus. Scientific Management by Frederick Taylor Frederick Taylor's Scientific Management is identified with his school of thought. he is usually called the "father of time study. 14.unnecessary elements should be eliminated from all activities as well as from the process and procedures established for carrying them. the Nature and Concept o f Management 49 . He believed that a "mental revolution" would have to take place before management and workers could see that their posi­ tions were compatible. Taylor joined Midvale Steel Company as a common laborer. but rather his formal recognition and synthesis of these principles. Simplicity . Taylor be­ lieved a piece-rate system would work if the workers believed that the standard had been fairly set and the management would stick to it rather than to tradition and custom for setting work standards. Taylor re­ lied primarily on the stopwatch. Order .results from kindness and justice.' Taylor's first job was an apprentice with the Enterprise Hydraulic Works.determined by the optimum level of effective supervision. 11. Taylor referred to this behavior of Taylor's Qifaker-Puritan background. It did not take him long to figure out that many workers put forth less than 100 percent effort.

The Gilbreths and Motion Study Two other researchers. Taylor felt that relating pay directly to output served both the worker's interest and management's requirements. if the worker met the established standards of performance. 2. Under this system. Heartily cooperate with the men to ensure that all the work done is in accordance with the principles of the science develop for the work. Scientifically select and then train the worker. Taylor's ideas have led to two managerial practices: piecerate incentive system and time-and-motion study. training and preparing workers to perform that job. The purpose of the piece-rate incentive system is to reward the worker who produced the maximum output. Management should take over from the workmen all work for which it is better fitted. If the worker's output exceeded the set standards. (In the past the worker had chosen his own work and trained himself as best he could). According to the Gilbreths. higher rate per unit for any additional units he proceeds and the rate per piece would increase after each succeeding level had been reached.) In essence.salaries of both managers and employees would also arise. to replace the old rule-of-thumb method. Taylor's Four Principles of Scientific Management: 1. 4. The increased wages rate was calculated so that companies would be making more profits from the increase in output. To pinpoint the therbligs suitable 50 Management for Filipinos . At the same time. Develop a science for each element of a man's work. a worker would be paid a. he emphasized that managers must avoid such practices as rates cutting. (In the past almost all of the work and the greater part of the responsibility had been thrown upon the workers. These researchers developed the concept of the therblig (Gilbreth spelled backward except for the transposition of the H and T for ease of pronun­ ciation). Taylor's scientific management stresses the need for developing the best way of performing each job. empha­ sized the ideal motions required to perform a job in an optional fashion. his wages would go up. even though they would be paying more in wages. Divide the work and the responsibility equally between man­ agement and the workers. 3. Frank and Lilian Gilbreth (1912). and establishing harmonious cooperation between management and workers so that the job is performed in the desired way. tnere are seventeen therbligs. because they lead to employee hostility toward management. Taylor even advocated the concept of units. a therblig is an elemental hand or arm motion. he earned the base rate set by the management using scientific methods.

The powerful role played by the informal groups and interpersonal relations were' also recognized as a result of these studies. Barnard. The practitio­ ners in the field of management learned how to overcome resistance to change. the researchers were interested in investi­ gating the relation between the illumination factor and productivity. The human relations theory draws its backing mainly from the field of social psy­ chology and from other related fields. concepts such as leadership. as claimed by the theorists. The Gilbreths used motion study successfully in many different situations. and others have made valuable contributions to this school of thought. As a result of these studies. The human relations theorists contend that an employee must be treated as a human being and not as a mere factor of production. Drawing a theoretical framework from these fields. how to provide good leadership. how to motivate employees with long-range effects. the Gilbreths constructed a special adjustable stand for the bricks. and communication were studied and researched in the context of the industrial situation. they analyzed the work of stonemasons-skilled work with a centuries old tradition. and so on. In one study. Human Relations School The human relations theory emphasizes exactly what the classi­ cal theory ignored: the human element. A detailed analysis of these studies shed some light on the human behav­ ior in work situations. March. con­ flict. McGregor. Likert. Simon. Critics contend that the human relations theorists have placed too much em­ Nature and Concept of Management 51 . These studies were conducted by Elton Mayo and his associates from Harvard University. change. how to improve communication techniques and methods. Initially. The beginnings of this school of thought can be traced back #> the famous Hawthorne Studies at the Hawthorne Plant of the Western Electric Company in the United States. motivation. To eliminate wasted motions. Theorists like Argyris.for a particular job/ the Gilbreths photographed the worker in action and then observed the film in slow motion. was not to replace the classical school of thought but to re­ orient its thinking. The Gilbreths noticed that each stonemason soon got tired because he had to bend continually to pick up bricks which were arranged in a small pile before him. from the financial to the human factor. Productivity rose to 200 percent. several prescrip­ tions were offered to solve various industrial problems. The Hawthorne employees interpreted the ex­ perimentation with illumination as evidence of >the fact that manage­ ment was interested in them and their welfare and the result was an increase in productivity. > The purpose of the human relations movement.

gathering information and data. This approach is known as descriptive decision theory. simulation theory. exploring tentative solutions. Business organizations are not social welfare organizations and to survive in the highly com­ petitive environment. There are those theorists who attempted to prescribe how decisions should be made. the criticisms of both the classical theory and the human relations theory have led to some new thinking in the field of organization theory. testing the suggested solutions." in which the manager attempts to achieve rationality in dealing with problems by using any scientific. Since one individual may not have a varied background. Some theorists attempted to describe the decision-making pro­ cess. This school of thought is also known as the quantitative school of thought because a wide variety of quantitative tools for analyzing information in the decision making process. deci­ sion theory. management simply make a series of decisions. the management science or quantitative school of thought. statistical. Since the emphasis is on quantitative approach. this school of thought suggests a team approach to decision making. it requires. logical. the use of quantitative techniques in the decision­ making process is known as operations research. and general business background. Monte Carlo method. engineering.phasis on the human aspect in the organization. the skills of individuals with mathematical. Quantitative tools commonly used are: waiting line theory or queueing theory. The quantitative approach was initiated during the 1940s. given the goals and resources of the organization. In general. Management Science or Quantitative School of Thought The management science approach stresses the use of quantita­ tive techniques and methods in decision making. They go by various titles ranging from management analysts to operations researchers. The management science or quantitative approach advocates a logical sequence of problem formulation. they have to consider many other factors besides the human factor. economics. drawing knowledge and skills heavily from economics and psy­ chology. probability theory and so on. critical path method (CPM). or mathematical means. 52 Management for Filipinos . Miller and Star define operations research (OR) as "applied theory. and executing them. program evaluation review tech­ nique (PERT). Some of these techniques will he discussed in the chapter dealing with decision making. linear programming. The whole emphasis is on decision making. It will be quite a laborious task to identify all those who contrib­ uted to this school of thought. According to the theo­ rists who belong to this school of thought. constructing mathematical models. Perhaps not surprisingly.

The use of electronic computers in decision making and other areas of management. 4.However. 2. • Establishes departmental policies. manages on subjects or problems of general scope. A high regard for economic effectiveness. 3. and contingency or situational theory. Harold Koontz contends that the development of modem man­ agement theory has led to a kind of destructive jungle warfare and the management theory looks like a jungle. Nature and Concept of Management 53 . management science. they share certain common characteristics such as: 1. It has taken different directions and it is still in the process of evolving. No com­ promise has been reached among these contributions as to what consti­ tutes the complete modem management theory. • Analyzes managerial performance to determine capability and readiness for promotion. Modern Management There is no such theory as the modem management theory since there is no one theory accepted by all theorists in the field. M id d le M a n a g e m e n t: • Makes plans of intermediate range and prepares long-range plans for review by top management. The modem management theory is not a single view or theory expressed or formu­ lated by a particular theorist. operations research. The application of scientific approach to managerial problems and situations. Modem management can be classified into three different levels: Top M a n a g e m e n t: • Develops and reviews long-range plans and strategies. examine the attempt made by Scott to integrate all these views and theories into one theory. A reliance on the use of quantitative tools or mathematical models. 5. The contributors to modem manage­ ment theory come from the behavioral sciences. • Evaluates overall performance of various departments and ensures cooperation. • Involves in the selection of key personnel. The main concern is for the improvement of manager's decision-making. • Consults subordinate. Let us briefly look at some significant views taken by theorists in developing the modern manage­ ment theory and finally.

short-range operating plans. "The Engineer as Economist. Functions of the Executive.S. Supervises day-to-day operations. Maintains close contact with operative employees. Supervisory M anagem ent: • • • • • Makes detailed. Taylor's Work (1895-1915) Carl Bath Morris Cooke Henry Lazvrence Gantt Frank and Lilian Gilbreth Harrington Emerson Henri Fayol. personnel or other problems. Makes specific task assignments. Rockefeller (oil) Andrew Carnegie (steel) Cornelius Vanderbilt (shipping and railroads) Henry Toione. 1886 Frederick W. Major Components and Related Major Events of Management Movements MANAGEMENT MOVEMENT COMPONENTS RELATIVE MAJOR EVENTS U. Administration Industrielle et Generale. Onward Industry 1931 Hawthorne Studies.• Counsels subordinates on production. Industrial Revolution (prior to 1875) Steam power (1700-1810) Railroad boom (1830-50) Telegraph (1844) Formation of corporate giants: John D. 1938 Captains of Industry (1875-1920) Scientific Management era (1895-1920) Period of solidification (1920 to early 1930s) Human relations movement (1931 to late 1940s) 54 Management for Filipinos . • Selects and recruits personnel. Reviews performance of subordinates. 1916 Founding of professional management societies (1920s) Mooney and Reiley. led by Elton Mayo (1924-32) Mary Parker Follet (1920-33) Chester Barnard.

Lilian Gilbreth. Eventually. Principles of Management. a professional and management organization called the Association of Management and Industrial Engineers in the Philippines (AMIEP) was organized in September. 1953 Koontz and O'Donnell. 1953. 1955 Process approaches Quantitative approaches Behavioral approaches Integrating various approaches to the study of management Theorizes that different situations and conditions require different management approaches Increased awareness of international and global markets managerial approaches. When the Philippines was colonized by Spain. Some of its objective were: 1. under the lead­ ership of Dr. After World War II. For almost three hundred years this type of organization and management proved very effective and formidable. This kind of organization v^as in a form of structure called "barangay" or "balangay" headed by a "datu" or chief­ tain. Top Management Planning. the Spaniards in­ troduced the modem Roman form of government. organization and manage­ ment were already existing. to give professional assistance to practitioners and students of management and industrial engineering. These "barangays" were created as protection and security against invaders.Management process period (early 1950s to early 1960s) Management theory jungle (early to late 1960s) Systems approach (late 1960s to early 1970s) Contingency approach (1970s) International movement (1970s-1990s) Storrs' translation of Fayol's work (1949) Ralph Davis. A D V A N C E D M A N A G E M E N T PROGRAM IN T H E PH ILIPPINES During the period of our ancestors. 1951 George Terry. Nature and Concept of Management / 55 . the Spanish government instituted this structure to promote and protect its personal interest in the country. a well-known authority on scientific man­ agement and human relations. Principles of Management.

heads of the various sectors. Administrators. so that the first program was conducted in the Philippines on June 25. With this in mind. The cost of taking the MBA program in the Philippines is vari­ able. agement 4. su­ pervisors. the Filipino executives negotiated with the dean of Harvard School for approval of the proposed program. It ranges from P3.I 2. The Filipinos who attended the various sessions of the program realized the importance of the course in the development of business and industry in the country. and industry participated in this professional exercise. and to install professionalism among its members. Normally. The "Baguio Program" was known as the Asian Institute for Advanced Management (ALAM). A management institution was established in the country whose objective is to develop the managerial skills of the Filipino entrepreneur as well as his Asian brothers. Other schools fol­ lowed the footsteps of the three universities by organizing their own advanced management course (Master in Business Administration). This school is popularly known as AIM or Asian Institute of Management which is located at Makati City. are the pioneer schools in the field of management. Based on their experience and exposure in the program. 1956. incidentally. This program became possible when some Filipino business managers attended the AMP at Harvard.000 to P8.000 in one semester depending on the school's standard and the number of units taken. the program was jointly sponsored by Ateneo de Manila. The dean thought that the proposal was realistic and constructive. 56 Management fo r Filipinos . 1950 in the Philippines. to develop continuous study and research in the field of man­ and engineering. to introduce the concept ot Taylor's scientific management. De La Salle. Another significant event transpired when a management con­ vention of the Advanced Management Program (AMP) in the Far East was convened in August. 3. business. It was officially opened at the Pines Hotel in Baguio City. the government. Later. and the University of the Philippines which. the allowed minimum number of units is three and a maximum of nine or twelve units per semester.000 or even P20. they encountered the problems of time and money for travel and stay in the United States.

and the University of California at Berkeley. most MBA programs have a similar core curriculum. approximately 800 American business schools offer MBA. this has increased by more than ten-fold to 80 thousand. This pattern is similar to the study of law and medicine. Aus­ tralia. two years of graduate busi­ ness education following a non-business undergraduate degree. The University of Chicago was the first to offer a graduate busi­ ness program. Importantly. From its humble beginnings at the turn of the century. Part of this is explained by growth in all graduate education. Harvard geared its graduate program towards stu­ dents with non-business undergraduate degrees. This is under­ standable because. The core encom­ Nature and Concept of Management 57 . one of the most prestigious in the world. and of course there are a number of foreign institutions. Four more were established in 1900 and by 1925 there were 183. W hat is Taught? While there are variations. either in the family firm or as a trainee in one of the larger trading houses or merchant banks. MBA programs have grown immensely. The school. just 6 percent of all mas­ ters degrees were in business. but it was the Harvard Graduate School of Business. business in those early days was a relatively uncom­ plicated affair. Business enterprises were generally very small by mod­ em standards. charac­ terizes the vast majority of MBA programs today. and unlike other professional training like engineering. United Kingdom. five thousand MBA degrees were awarded in the United States. business training for the most part meant apprenticeship. Business practices were simple and traditional. Indeed it's been said that a Venetian entrepreneur of the 14th century would have Pennsylvania. which pioneered the development of the MBA pro­ gram. particularly in Canada. Up to the end of the 19th century. but it is also true that the MBA program has be­ come more popular among students. and the Philippines which offer the degree. By 1994. made possible by an endowment from the American in­ dustrialist. established in 1908. busi­ ness schools had been established at the University of Chicago. by 1994 this had grown to 40 percent.T H E M B A STORY The MBA Program. and a trade was limited in terms of both distance and products. In 1963. By the end of the century. bears his name to this day. Today. In 1963. Joseph Wharton. This is true for American schools and for foreign insti­ tutions which rely heavily upon the American model. Past and Present In the history of professional education. The Harvard prototype. Some of these have established programs abroad. training is a relative newcomer.

They include accounting. a mix of "vision. and the market will continue to want them as long as we continue to get top people. finance. statistics. but doing it is the challenge facing MBA programs >ver the next decade.J. functional subjects. T h e Future There is no question that the MBA degree has been an immense success. Thomas P. Included among the foundation subjects are economics. educated people. These disciplines form the tool kit for the study of business subjects. For example." values and determination which adds soul to the organiza­ tion. marketing." Give a comprehensive definition of management and discuss its meaning. mathematics and more recently. The functional subjects are those most often associated with the study of business. the dean of the Wharton School. behavioral subjects." Can leadership be taught in graduate business schools? Leavit thinks it possible. statistics play a vital role in marketing and finance. These subjects parallel functional areas within the business enterprise and prepare the MBA student with the tools depending upon the course being taught. R E V IE W Q U E S T IO N S 1. and personnel management. data processing. Leavit. articulate. Evaluate the concept of management as "getting things done through other people. and integrative subjects. in his article? "Management and Management Education: What's Right and What's Wrong?" argues that management education over the past thirty years has been preoccupied with teaching the use of analytic methods to solve problems. pro­ duction management. international business. Explaining the popularity of the degree. environmental subjects. and crucial still: entrepreneurial leadership. operations research. What's been missing is an emphasis on what he calls path-finding. March 9.passes five broad subject areas: foundation subjects. but many now are sounding a note of alarm over the lack of a third. So what lies ahead for the MBA degree? Experts in the field of business education acknowledge that MBA students have been welltrained in problem solving and policy implementation. The market wants more of these people. H. Often students whose under­ graduate training included these subjects are excused from this course in the MBA program. and the instructor's preferred method for teaching. It feeds off itself" (Business Week. Genity said: "Companies think they are getting bright. How does your own definition differ from this/ I 58 Management for Filipinos . 1999). 2.

What was Henri Fayol's major contribution to the management movement? D IS C U S S IO N Q U E STIO N S 1. 7. 8. 6. Will all these schools of management ever be merged? Give your reasons. a manager? Can management be learned through books and study or only through experience? Discuss the following statement: "All entrepreneurs are managers./ 59 . 4." Discuss your views on this statement. Discuss how you can make use of or apply the concept of manage­ ment in your routinary/daily activities. Think of a concrete situation in which you can use the following principles of Taylor and Fayol: a. 6. 4. What is scientific management? Who proposed it? Discuss the four main principles of scientific management.3. such as a comer grocery store. Is management a science or an art? What are the different organizational levels and what are the char­ acteristics of each? 5. but not all managers are entrepreneurs. How does one decide who is and who is not a manager in a given organization? For example. 2. E X P E R IE N TIA L EXERCISES 1. 7. . Comment on this statement." "Successful managers adapt their style to the situation. Remuneration Nature and Concept of Management . How do Taylor's and Fayol's approaches to the management pro­ cess differ and how do they compare similarly? Why have Taylor and scientific management been misunderstood by many people as inhumane? Management has often been described as an yniversal process. State the four classifications of management theories and briefly describe each purpose. 3. 5. 2. meaning that the basics of management are transferable and appli­ cable in almost any environment. Division of Work c. Scientific Management b. is the operator of a one-person business. Unity of Command d.

Management: A Functional Approach. New York: McGraw-Hill Book Company. Essentials o f Management. 3.. Singapore: McGrawHill Book Company. Evaluate their relevance to the present business conditions. New Delhi: Tata-McGraw-Hill Publishing Co. Stability of Tenure f. 60 Management for Filipinos . Singapore: McGraw-Hill Book Company. Harold and O’Donnel. Koontz. His/her position in the organization. e. Inc. Management Theory and Practice. 2. 1997. 1996. curriculum. Joon Eng Chua. George R. Cyrill. Activities or functions performed in his/her role. How he/she spends an average day at work. Span of Control h. Manila: GIC Enterprises. 1997. Management Theory and Practice. The person whom you have chosen can be at any level of management. officer. Centralization/ Decentralization Bring to class copies of undergraduate and/or graduate manage­ ment programs (prospectus. hospital. Ltd. or an administrator of a company. Principles o f Management. 10. Make an appointment with a manager. Esdras T. Terry. d. REFERENCES 1. p. Putti. etc. 20. 2-4. 6. brochures. al. Irwin..3. Joseph. Find out from him/her the following details: a. Martinez. "Esprit de Corps" g. et. Number of subordinates under him/her. Illinois: Richard D. 4. Inc. al. pp. 1998. p. 1997.. Management o f Business.. 5. et. b. government department or and other organization.. 4. Ernest. hotel. e. Skills he /she thinks are necessary to be successful in the job.) of any col­ lege or university. Dale. c.

Nature and Concept of Management 61 . 2.3 NATURE & CONCEPT OF MANAGEMENT Name: _________________ _____________ Year/Section: ----------------Professor: __________________________ Date: ----------------------------- Discuss how you can make use of or apply the concept of Management in your routinary / daily activities.W orksheet No.

■ Management for Filipinos .

W orksheet No. Division of Work Nature and Concept of Management 63 .4 NATURE & CONCEPT OF MANAGEMENT Name: _________________ _____________ Year/Section: Professor: __________________________ Date: --------- Think of concrete situations in which you can use the following prin­ ciples o f Taylor and fayol PRINCIPLES ORGANIZATION/ INDIVIDUAL HOW USED/SITUATION 1. Scientific M anagem ent l 2. 2.

Rem uneration 5.of Tenure 64 Management for Filipinos HOW USED/SITUATION .PRINCIPLES ORGANIZATION/ INDIVIDUAL 3. Unity of Command 4. Stability .

Esprit de Corps * 7.P R IN C IP L E S O R G A N IZ A T IO N / IN D IV ID U A L H O W U S E D /S IT U A T IO N 6. Centralization/ Decentralization © Nature and Concept of Management 65 . Span of Control 8.


NAME OF SCHOOL MANAGEMENT PROGRAM / (U n d e rg ra d u a te a n d / o r G ra d u a te ) M A JO R O F F E R E D O B J E C T IV E S O F M A NA G EM EN T SUB JECTS T H E P R O G R A M / M A JO R OFFERED Nature and Concent of Manaoement 67 .Worksheet No.5 NATURE & CONCEPT OF MANAGEMENT Name: _______________________ _ Year/Section:_________ Professor ____________________ ___ Date:________________ Bring to the class. etc. curriculum .) of any college or university. Evaluate the relevance of the program to the present business conditions. copies of undergraduate and / or graduate manage­ ment programs (prospectus. brochures. 2.


government and / or other type of organization. Skills he/she thinks are necessary to be successful in the job. or an administrator o f a company. Position in the Organization Number of subordinates under him/her Activities or functions performed in his / her role. hospital. Nature and Concept of Management 69 . The person whom you have chosen can be at any level of management.W orksheet No. hotel. officer. 2.6 NATURE & CONCEPT OF MANAGEMENT Name: _____________________________ Year/Section: ----------------- Professor: _________________________ Date: ----------------------------- Find out from him / her the following details: Make an appointment with a manager. How he/she spends an average day at work.

•u 70 Management for Filipinos .

Chapter 3: Planning Chapter 4: Organizing Chapter 5: Staffing Chapter 6: Directing Chapter 7: Controlling .Management Functions **.

M«n*jj«*n*nt for Filipinos .

that's how we learn to make goods ones" . the student is expected to understand the following: • Definition o f’Planning • The Nature of Planning • Major Types of Plans • Basic Steps in Business Planning • Other Types of Plans • Decision Making • Planning Techniques and Tools • W hy Managers Fail in Planning “ We all have ihe right to make bad decisions.Chapter 3 Planning Learning Objectives: At the end of the chapter.Larry Williams .



A LANNING is a logical and systematic approach of formulating
the objectives, programs, policies, procedures, budgets, rules and regu­
lations, and other types of plans.
Planning is considered the most basic of all managerial functions
(organizing, staffing, directing, and controlling). Without this basic
function, the other four functions of the manager cannot be tackled
efficiently and effectively. Therefore, a manager organizes, staffs, di­
rects, and controls in order to guarantee the attainment of objectives
and the other types of plans made.


Four major factors summarize the essential nature of planning.
These are:
1. Contribution to purpose and objectives

Planning is required to facilitate accomplishment of business
purposes and objectives. This statement is taken from the nature of
organizeu business.
2. Planning as the first basic function

Since managerial functions of organizing, staffing, directing, and
controlling are designed to support the accomplishment of business
objectives, planning is logically performed before the execution of all
other managerial functions. Besides, a plan must be formulated to ac­
complish the objectives before any manager knows what kind of orga­
nization structure and job description and qualifications are needed,
how to direct subordinates, and what kind of control technique is to be
applied. Inevitably, all the managerial functions must be planned if they
are to be effective and efficient.
3. Planning as a function of all managers

Planning is a function of all managers, although the character
and scope of planning will differ from one authority to another.
The broader scope of planning goes far in clarifying the issue on
the part of some students of management to distinguish between policy
making and administration or between the “manager" and the "admin­

Management for Filipinos

istrator" or "supervisor". One manager, because of his authoniy or
position in the organization, may do more planning than another, or the
planning of one manager may be more basic and applicable to a larger
portion of the business than that of another.

4. Planning for efficient organization
The efficiency of a plan is evaluated by the amount it contributes
to purpose and objectives as offset by the expenses and other things
required to formulate and implement it. A plan contributes to the at­
tainment of objectives, but sometimes at too high or unnecessarily high
Plans may also become inefficient in the attainment of objectives
by affecting group satisfaction. The new president of a company that
was experiencing bankruptcy attempted quickly to reorganize and cut
expenses by wholesale and drastic lay-offs of key employees. The? re­
sults are fear, resentment and loss of morale affecting productivity and
thereby defeat his objective of eliminating losses and making profits.
Attempts to install management evaluation and development program
fail because of group resentment of the method used, regardless of the
basic effectiveness of the programs.

A n u m b e r o f d iffe re n t ty p e s o f m a n a g e m e n t p la n s e x is t. F o r
t h i s p u rp o s e , c e r t a i n ty p e s o f p la n s h a v e b e e n s e le c te d .








BY NOVEMBER 30, 2001










NO. 1

NO. 2

NO. 3




INDIVIDUAL-------------------- >










Figure 3.1 Hierarchy of Objectives

Objectives or Goals
Quite frequently goals and objectives are used interchangeably.
The intended goal prescribes definite scope and suggests direc­
tion to maximize the efforts of a manager. It is also synonymous to aim,
purpose, goal and mission.
Objectives are the prime parts of the plans in the definition, we
have stated that planning involved determination of desired future
events. These results or events are objective and also go by the name of
goals, targets, and so on. A n objective has to do with the direction in
which an individual or organization wants to move.
It is an estimated result expected in the future. Objectives are
established at organizational, departmental, or individual level. To train
five technicians in a particular skill on a given period, say in the next
six months, can be an objective of a foreman. Objectives are usually
expressed in quantifiable manner.

It is the purpose or reason for the existence of an organization.
The mission can be defined in terms of an organization's product/services or markets/customers. Marketing pharmaceutical products can be
the mission of a drug manufacturing company.

Long-Range and Short-Range Objectives
Long-range objectives generally go beyond the current fiscal year
of the organization. They must support and not conflict with the orga­
nizational mission. But they may be quite different from the organiza­
tional mission and still support it. For instance, the organizational mis­
sion of a fast-food restaurant might be to provide a rapid hot food
service to a certain area of the city.
One long-range objective might be to increase sales to a specific
level within the next four years. Obviously, this objective is quite differ­
ent from the organizational mission; but it still supports the mission.
Short-range objectives should be derived from an in-depth evalu­
ation of the organization's long-range objectives. Such an evaluation

Managem ent for Filipinos

should result in a listing of priorities. Then short-range objectives can be
set to help achieved the long-range objectives.
All levels within the organization should set objectives of the
organization based on the long-range objectives and short-range objec­
tives of the firm. Objectives at any level must be coordinated with and
subordinated to, the objectives of the next higher level. All objectives
are then synchronized and not working against each other.
Objectives should be clear, concise, and quantified when pos­

Guidelines in Implementing
Management by Objectives (M B O )









Adapt your objectives directly to organizational goals and strate­
gic plans. Do not assume that they support higher-level manage­
ment objectives.
Quantify and target the results whenever possible. Do not formu­
late objectives Whose attainment cannot be measured or at least
Test your objectives for challenge and achievability. Do not build
cushions to hedge against accountability for results.
Adjust the objectives to tire availability of resources and the reali­
ties of organizational life. Do not keep your head either in the
clouds or in the sand.
Establish performance reports and milestones that measure
progress toward the objective. Do not rely on instinct or bench­
marks to appraise performance.
Put your objectives in writing and express them in clear, concise,
and unambiguous statements. Do not allow them to remain in
loose or vague terms.
Limit the number of statements of objectives to the most relevant
key result areas of your job. Do not obscure priorities by stating
too many objectives.
Communicate your objectives to your subordinates so that they
can formulate their own job objectives. D o not demand that they
do your goal setting for you.
Review your statements with others to assure consistency and
mutual support. Do not fall into the trap of setting your objectives
in a vacuum.
Modify your statements to meet changing conditions and priori­
Do not continue to pursue objectives which have become obsolete.

To summarize, an M BO system in its simplest form, must meet
the following minimum requirements:





1. F o rm u la te lo n g -ra n g e
o rg a n iza tio n a l o bjectives.

> O b je c tiv e setting

2 . D e v e lo p specific
divisional o bjectives.

- > 3 . E stab lish d e p a rtm e n ta l
o bjectives.
A ction planning
4 . S e t individual jo b o bjectives.

-£> 5 . F o rm u la te action plans.
R e c y c le
- > 6 . Im p le m e n t an d ta k e corrective
S e lf- c o n tr o l

-> 7. R e v ie w progress tow ard
o bjectives.
P e rio d ic review s
- > 8 . A p p ra is e o verall p e rfo rm a n c e ,
reinforce behavior, and
streng th en m otivation
a . M a n a g e r training a n d
s e lf-d e v e lo p m e n t
b. C o m p e n s a tio n
c. C a re e r an d m a n p o w e r

Figure 3.2 The MBO Process


Management for Filipinos

1. Individual objectives are jointly set by the subordinate and the
2. Individuals are periodically evaluated and receive feedback
concerning their performance.
3. Individuals are evaluated and rewarded on the basis of objec­
tive attainment.

It is th e a ctu a l c o u rs e o f a ctio n d e sig n e d to c a r r y o u t th e estab ­
lish ed ob jective. To im p ro v e th e q u a lity lev el o f a p r o d u c t, a c o m p a n y
m a y in stitu te a q u a lity a w a re n e ss p ro g ra m .
It is a c o m p re h e n s iv e p la n th a t in d ica te s u se o f d iffe re n t re ­
so u rce s in a n in te g ra te d p a tte rn a n d e sta b lish e s a se q u e n ce o f req u ired
a ctio n s a n d tim e sch e d u le s fo r e a c h in o rd e r to a c h ie v e s ta te d objec­
tiv es. E x a m p le s : M a rk e tin g P ro g ra m , P e rso n n e l P ro g ra m , F in a n cia l P ro ­
g ra m , etc.
A p ro g ra m c a n b e ea sily a n d sy ste m a tic a lly s h o w n b y u sin g a
p ro je c t sc h e d u le . P ro je c t sc h e d u lin g re fe rs to th e id e n tific a tio n a n d
a n a ly sis o f th e activ itie s fro m the p ro je ct p la n n in g s ta g e u p to th e s ta rt
o f n o r m a l o p e r a tio n s . In d e te r m in in g th e v a r io u s a c tiv itie s o f th e
p ro je ct, a ss u m p tio n sh o u ld b e m a d e in to u ch in g all a s p e c ts o f th e s tu d y
s u c h a s the p la n t site a n d lo ca tio n , b u ild in g co h s tru c tio n , e tc.
To co n cre tiz e th e se q u e n ce o f th e v a rio u s activ itie s, a G a n tt C h a rt
sh o u ld b e u s e d a s a p la n n in g a n d co n tro l to o l o f s tu d y in g the p ro je ct
p ro p o sa l. It w a s fo rm u la te d in 1 9 1 7 b y H e n ry L . G a n tt, a n o te d p io n e e r
in the field o f in d u stria l m a n a g e m e n t, a s a d e v ice fo r co n tro llin g the
p ro d u c tio n o f ra w m a te ria ls. It is n o w w id e ly u se d fo r a v a rie ty of
p u rp o s e s to su it p e r f o r m a n c e /o u tp u l/a c tiv itie s a g a in st a .tim e req u ire­
m ent

(See Figure 3.3)

P o lic ie s
T h ese a re b a sic g u id elin es fo r a ctio n . T h e y in d ica te d w h a t is
p e rm itte d an d w h a t is n o t p e rm itte d . P ro m o tin g p e o p le fro m w ith in
c a n b e a p e rso n n e l p o licy of a co m p an y .
P olicies are b ro a d , g e n e ra l g u id e s fo r a ctio n w h ic h co n stra in o r
d ire ct o b jective a tta in m e n t. In this lig h t, p o licie s c h a n n e l h o w m a n a g e ­
m e n t sh o u ld o rd e r its affairs a n d its a ttitu d e to w a rd m a jo r issu e s; they
d ic ta te th e in ten t o f th o se w h o g u id e th e o rg a n iz a tio n . In o th e r w o rd s ,
p olicies d efin e th e u n iv e rse fro m w h ich fu tu re s tra te g ie s a n d p la n s are
d e riv e d . " I t is th e p o licy of th e p u b lic re la tio n s d e p a rtm e n t to a n s w e r
in w ritin g all w ritte n c u s to m e r c o m p la in ts " is a n e x a m p le o f su c h a
P lan n ln n


to m a in ta in . 80 Management for Fllipinoi . to follow . W ellesta b lish e d fo rm a l p ro c e d u re s rue often k n o w n as sta n d a rd o p e ra tin g p ro c e d u re s (SO P s). P o licie s e x ist a t all le v e ls o f a n o rg a n iz a tio n .2001 1. RIAN T SITE ACQUISITION 6. O RD ER AND RECEIPT O F MACHINES 10. P ro c e d u re s P ro c e d u re s a re series o f re la te d ste p s e x p re s s e d in ch ro n o lo g ica l o rd e r fo r a sp ecific p u rp o s e . BUILDING CONSTRUCTION 7. A p o licy su c h a s " th is co m p a n y w ill a lw a y s try to fill v a c a n c ie s a t all lev els b y p ro ­ m o tin g fro m w ith in " w o u ld re la te to e v e ry o n e in th e o rg a n iz a tio n . INSTALLATION OF MACHINES 11. to a c c e p t a n d sim ila r v erb s. P ro c e d u re s a n d ru les d iffer fro m p o licies o n ly in d e g re e . A ty p ica l o rg a n iz a ­ tio n h a s so m e p olicies th at re la te to e v e ry b o d y in th e o rg a n iz a tio n a n d so m e th a t relate o n ly to ce rta in p a rts o f d ie o rg a n iz a tio n . T h e y o u tlin e p re cis e ly h o w a r e c u r r in g a c tiv ity m u s t b e a c c o m p lis h e d . HIRING & TRAINING OF PERSO NNEL 8. A C T I V I T I E S PLANNING STAGE 2. M ACHINERY SU PP U E S SELECTION 9. A c o m p a n y 's p o licy m a y b e to a c c e p t all c u s ­ to m e r re tu rn s su b m itte d w ith in o n e m o n th o f p u rc h a s e .. OBTAINING OF FINANCING b e . to p r o m o te . START OF NORM AL OPERATIONS Figure 3. P ro c e d u re s a llo w little flexib ility a n d d e v ia tio n . T h e se a re in stru ctio n s a s to h o w a p a rtic u la r th in g sh o u ld b e d o n e . c o m p a n y p r o ­ ce d u re s w o u ld o u tlin e e x a c tly h o w a re tu rn sh o u ld b e p ro ce ss e d . A p ro ce d u re d efin es in ste p -b y -ste p fash io n th e m e th o d s b y a n d th ro u g h w h ich p o licies are a ch ie v e d . A se t o f p ro ce d u re s m a y b e p re sc rib e d in o p e ra tin g a m a c h in e o r h a n d lin g e m p lo y e e g rie v a n ce s. l 2002 lEnannEsaaanszEHH .3 Gantt Chart P o licy sta te m e n ts o ften cp n tain th e w o rd s to e n su re . REGISTRATION 4. PUTTING UP OF EQUITY 3.

and programs. From the above classifications. Although they are not the same. P h ilo s o p h y The values and beliefs an organization holds as the guiding light is the company's philosophy. strategy. philosophy. rules do not have to specify sequence. The use of budget enables executives to perform their management functions more effec­ tively since budget provides them with the proper guidance in matters of disbursement. It pertained to the art and science of directing military forces.Rules Rules require specific and definite actions for a given situation. there are some relation­ ship among them. providing comfort and enhancing the quality of life of society was the vision of Mr. These are very specific actions to be taken with respect to a situ­ ation. They permit no flex­ ibility and deviation. Budget A plan stated in financial terms is called a budget.C. Rules leave little doubt about what is to be done. procedures. mission. Planning 81 . Unlike procedures. A strategy outlines the basic steps and management intends to do to achieve its objectives. the founder of the electron­ ics firm bearing his name. The word strategy originated with the Greeks around 400 B. rules. S t ra t e g y It is the method of shaping a company's future and involves determining the long-run direction of the organization. A company may have the strategy to diversify into related businesses within the next few years. Wearing uniforms or reporting to work at a particular time are some examples. we can see that objectives are not the same as policies. It is an esti­ mate qf income and expenditures for a future period. Providing quality products at reasonable prices. These are usually passed on by the founder of the organization. Konosuke Matsushita. for example: "No smoking in the conference room" is a rule.

Effective plans are not written in one sitting. for groups and for the entire organization. This is to determine whether or not a specific idea makes sense. The following are the basic steps in business planning: 1. 4. These funding or investment requirements include the specifications of need for capital.BASIC STEPS IN BUSINESS P LA N N IN G Business planning created through time as a series of ideas is gradually developed. and whether or not it can fulfill the series of goals and objectives identified in the preceding steps. Forecast cash needs. all the parts are interdependent. Each influences the other. 3. commonly referred to as MBO. whether or not it can work. Get it into paper as con­ cisely as possible. It indicates the cash investment associated with different sets of alternatives. 2. and the amount of working capital necessary. The more precise and specific this description. they can be compared to determine where complements and gaps may exist. This is by far the most important and most difficult part of the business plan. Generally. Evaluate the ideas. and objectives. Define the business idea. Once the busi­ ness idea and the goals and objectives have been defined in writing. Subordi­ nates and superiors jointly determine and agree upon the results they seek to achieve along with the standards that will be used to measure the results. the goal sets for individuals are subsets of the entire goal set for groups. Management by objectives. the approach will involve the identification of goals for indi­ viduals. Establish goals and objectives. equipment. the easier the rest of the planning process. other capital needs. Each part of the plan leads into the next. can be a process for ex­ plicitly teaching the objectives of the organization. Applying manage­ ment by objectives involves participation in a sharing of important management functions by workers at all levels within the organization. which are themselves goal subsets of the entire organization goals. Write a description of the business idea. goals. 82 M anagem ent fo r Filipinos . There may be a wide range of goals or objectives that may be desired by the various units and elements of a company. Conversely.

It uses one standing plan that anticipated in ad­ vance whether to approve or not any request for a loan. These plans bring consistency to the operations. Identify sources of funds. Technological change is an uncontrollable variable. Standing Plans These plans serve as guidelines to managerial action. make it work. A completed business plan is a summary and evaluation of the business idea. it stands with­ out the necessity of deliberation each time ^a s’milar situation arises. It is written as a result of the planning process. To become a leader in its industry may be a long-range plan for an organization. Long-range Plans These are the strategic plans of the organization. These can possibly be taken from personal equity or borrowing from any banking institution. assumptions must be made about uncontrollable and controllable variables. A manager may have control over the product line of the organization. The plan ceases to exist when the goals are achieved. Funds are potentially available to business from a wide variety of sources. O T H E R TYPES OF PLANS Plans can be classified in a number of ways on the basis of fre­ quency of use and the time horizon. the sources and uses of funds. Under this plan. Single-use Plans These plans are designed for a specific purpose or period. and projected income flows and cash needs. It does not need a different plan to handle each loan. one's own funds. A plan to set up a warehouse is another example of a single-use plan. W rite a business plan. It shows the probability of success. The time span'of long-range plans cannot be stated specifically because Planning 83 . Standing plans are used where an activity occurs repeatedly. Managerial efficiency is enhanced because once the decision is made. over which a manager may not have any control because it takes place in the external environment. A bank granting loans for house construction is an example. Let us take a look at some specific types of plans. One common single­ use plan is the budget. It takes time to achieve this goal. the principles' ability to. 6. and what additional funds can be obtained from various outside sources.5.

P la n t Location 6. P la c e S tra te g y c. Pricing S tra te g y III. Financial S ta te m e n ts 4 .s 84 • M anagem ent fo r Filipinos . M a c h in e ry an d E q u ip m e n t 5. Total P ro ject C o s t 2 . Job A nalysis 4 . P la n t Layou t 7. Financial Analysi. C o m p e n s a tio n S c h e d u le 5. P rodu ctio n/T echn ical A s p e c t 1. Industry II. P rom otion S tra te g y d. C o m p a n y ’s N a m e 2. D escription o f th e P roject 2. M a n a g e m e n t/O rg a n iz a tio n A s p e c t 1. D escription o f th e B usiness 1. M ark e tin g P ro g ra m a. S o u rc e s o f Fin an cin g 3. Building an d Facilities 8. O rg a n iza tio n a l Structure 3 . R a w M a te ria ls and S up p lies 9. M a rk e tin g A s p e c t 1. P ro d u c t/S e rv ic e 3 . W a s te D isposal FINANCIAL PLAN V. T a rg e t M a rk e t 2 .Relationship Between The Planning Process And The Business Plan B U S IN E S S P L A N I. F o rm of O w n e rs h ip 2. P la n t S iz e a n d Production S c h e d u le 4 . M an u fa c tu rin g P ro cess 3 . P ro ject S c h e d u le (G a n tt C h a rt) IV. Finan cial A s p e c t 1. P ro du ct S tra te g y b.

a n d d isp atch in g p ro ce ss e s. Interm ed iate Plans T h e se p lan s fo llow o n ce th e lo n g -ra n g e p la n s a re fo rm u la te d . Manpower Plans T h ese in v o lv e a sy ste m a tic w a y o f d e te rm in in g th e ty p e s o f p e r­ son n el n eed ed in the lon g a n d s h o rt-ra n g e fo r a n o rg a n iz a tio n . To a ch ie v e this. Sh o rt-range Plans T h ese p la n s p ro v id e the g u id elin es fo r d a y -to -d a y a ctio n s in the o rg a n iz a tio n . Planning 85 . T h is o c­ c u rs a t h ig h er levels and in v o lv e s a lo n g e r p e rio d o f tim e . the n e e d fo r e x p a n sio n a n d th e s o u rce s of fu n d s. T h e se o b jectives are co n v e rte d in to o p e ra tio n a l p lan s. Production Plans T h e se fo c u s o n p ro d u c in g th e d e s ire d a m o u n t o f g o o d s d e ­ m a n d e d a t th e m a rk e t p lace. M arketing Plans T h e c o m m o n objectives o f m a rk e tin g p la n s a re to in cre a se th eir p re se n t m a rk e t sh are an d d e v e lo p n e w p ro d u c ts . In te rm e d ia te p la n s a re m a d e fo r th e rea liz a tio n o f lo n g -ra n g e g o a ls. In p ra c tic e they m a y ra n g e fro m 3 to 5 y ears. T h ese p la n s u su a lly c o v e r a one to th re e -y e a r p erio d .circ u m sta n ce s v a r y fro m o rg a n iz a tio n to o rg an iz a tio n . sch ed u lin g . Financial Plans T h ey p ro v id e a q u an titativ e b asis fo r d e cisio n m a k in g a n d c o n ­ trol. P e rs o n ­ n el of v ario u s qualities a n d q u an tities m u st' b e re c ru ite d a n d m a d e availab le a t a p p ro p ria te tim es. To b e co m e a le a d e r in its in d u stry (th e lo n g -ra n g e p la n a n o rg a n iz a tio n m a y p la n to se t u p re g io n a l sales offices). the n e e d fo r w o rk in g cap ital. A ll ty p e s of fo recasts are n e e d e d for this ty p e o f p lan n in g . T h e fin an cial d a ta tells m a n a g e rs h o w w e ll th e y a re d o in g . S ch ed u lin g se ts u p a tim e-tab le. R o u tin g d e te rm in e s th e p a th fo r th e flow o f p ro d u c tio n . fo re ca s ts a re n e c e s s a ry as to the d em an d a n d su p p ly o f labor. Strategic Plans These in v o lv e d eterm in in g th e m a jo r g o a ls o f th e e n tire o rg a n iz a ­ tion an d the p olicies to g u id e th e a ch ie v e m e n t o f th ese g o als. D isp a tch in g sig n als th e flo w of tim e an d fin d re a s o n s fo r d elay s. P ro d u c tio n p la n n in g in v o lv e s ro u tin g . T h ese p lan s m a y c o v e r u p to a year.

How long should a long-range plan be? The question cannot be an­ swered specifically. most long-range plans span at least three to five years.Tactical Plans They deal with the determination of the short term-specific uti­ lization of the resources of the organization in achieving its strategic goals. it is primarily carried out at the top level of the organization. Production plans deal with producing the desired product/services on a time schedule. strategies and policies needed to reach those objectives. For practical purposes. 88 Management for Filipinos . However. the strategic plan­ ning is analogous to top-level long-range planning. Operational versus Strategic Plans Strategic planning is the process which sets forth organizational objectives to be achieved. not absolute. Operational or tactical planning is short-range planning and con­ centrate on the formulation of functional plans. and short-range plans to make sure that the strategies are successfully implemented. Long-range plans start at the end of the current year and extend into the future. top-level long-r^nge planning. What may be long-range given a specific environment and activity. Strategic planning is primarily done by top-level managers. Functional Plans In addition to being long-range or short-range. plans are often classified by function or use. finan­ cial plans. The terms strategic planning. The most frequently encountered types of functional plan are sales and marketing plans. and personnel plans. production plans. In prac­ tice. with some extending as far as 20 years into the future. The right time frame varies with the organization and tire nature of the specific environment and activity. and corporate planning basi­ cally means the same thing and are interchangeable. Production schedules and day-to-day plans are examples of operational plans. The reliance for tnese plans is on past performance and as to how an organization previously allocated its resources. the distinctions between strategic and operational planning are relative. While long-range planning is possible at any level in the organization. The major difference is the level at which the planning is done. Sales and marketing plans are for de­ veloping new products/services and setting both present and future products/services. Planning Horizon: Short-Range Versus Long-Range Short-range plans generally cover up to one year.' What may be short range when operating in a relatively static environment. op­ erational planning is done by managers at all levels in the organization and specially by middle-and lower-level managers.

With this tool it is possible to determine what will be the break­ even point for a company as a whole or any of its product. Marginal Analysis This tool is used in decision making to figure out how much more output will result if one more variable (worker) is added. This technique is particularly useful for evaluating alternatives in the deci­ sion making process. depend on the business level'at which the decision is made. personnel. and opinions. experiences. total revenue equals total cost and there is no profit. and program evaluation review technique (PERT). The extent to which these things are involved. gaming. Our discussions will cover only the basic as­ pects of these techniques. simulation. Monte Carlo. effort. In the business world. Investment alternatives can be evalu­ ated using a discounted peso analysis of cash inflows and outflows. Many decisions in management are also determined by quantitative means such as operations research. Planning 87 . such as intuition.will discuss some other techniques used in the decision making process. linear programming. and materials may be involved in making a decision. and ana­ lyzing cash inflows and outflows. a great investment in time. and variable cost per unit. as well as the total effect of their involvement.D E C IS IO N M A K IN G This is the process of choosing a specific procedure or course of action from among several possible alternatives. Break-even Analysis This is another tool which enable a manager to see the effects of alternatives available based on price. facts. Samuelson defines a marginal product as the extra product or output added by one extra unit of that factor. Financial Analysis This is another tool in decision making used for estimating the profitability of an investment. we . Some of these techniques have already been discussed in the chapters dealing with planning and controlling func­ tions. Judgment is important in decision making. Decision making can be determined by non-quantitative means. economy. In this section. At break­ even point. A number of sophisticated techniques are available which aid the decision making process. While other factors are being held constant. calculating the payback period. fixed cost.

1. T his m e th o d in d e cisio n s in v o lv in g the allo ca tio n o f to re a c h a p a rtic u la r o b jective su ch as. the situ a tio n m u st in v o lv e tw o o r m o re activ ities co m p e tin g fo r lim ited re s o u rc e s a n d all rela tio n sh ip s in th e situ atio n m u s t b e linear. w a itin g lin es o c c u r an d the m a n a g e r m u s t d e cid e h o w to h a n d le th e situ atio n . an d a lte rn a tiv e u ses. T h ese ratio s b rin g o u t a relatio n sh ip b e tw e e n tw o fin an cial asp e cts. Queueing or Waiting-line Method T h is m e th o d u ses m a th e m a tica l tech n iq u es fo r b a la n c in g w a itin g lin es a n d se rv ice s p ro v id e d . an aly sis." in w h ich the d ecisio n m a k e r seek s scientific. 88 Management for Filipinos . W h e n th ere is irre g u la r d e m a n d . h ig h e st m a rg in . lo g ical. a n d ro u tin e p ro b le m s. W h e n th ese re s o u rc e s h a v e se v e ra l is u se d fo r so lv in g sim p le. O b ser­ v a tio n . Linear Programming T his tech n iq u e is u sed re so u rce o r lim ited re so u rce s least co st. h y p o th e sis fo rm u la tio n . th e y m a y g o elsew h ere. Som e ra tio s are: C u r r e n t A s s e ts C u r r e n t a s s e ts C u r r e n t lia b ilitie s _______T o ta l d e b t_______ D e b t to e q u ity E q u ity S a le In v e n to r y tu r n o v e r I n v e n to ry N e t o p e r a tin g p ro fit N e t o p e r a tin g m a rg in S a le s N e t p ro fit a f t e r t a x e s R e tu r n on c a p ita l N e t w o rth Operations Research Techniques O p e r a tio n s re s e a rc h in v o lv e s th e a p p lic a tio n o f q u a n tita tiv e m e th o d s to d ecisio n m ak in g . so on. In o rd e r to ap p ly this m e th o d . O p e ra tio n s R e se a rc h (O R ) h a s b e e n d e ­ fined b y M iller a n d S ta rr a s "A p p lie d D ecisio n T h e o ry . co m p le x .Ratio Analysis It is an a cc o u n tin g too l u sed fo r the in te rp re ta tio n o f a cc o u n tin g in fo rm atio n . If p e o p le w a itin g in q u eu es are n o t g o in g to b e p ro v id e d q u ick se rv ice . T h e b asic fin ancial ra tio s c o m p a re c o s ts an d re v e n u e fo r a p a rtic u la r p e rio d . a n d e x p e rim e n ta tio n are the m e th o d s g en e ra lly u sed in O R tech n iq u es. 2. o r m a th e m a tic a l m e a n s.

000 T1 if good m arket P 80. These models are useful in evaluating^ and selecting the best one.4 shows that the decision involves two alternatives: (a) buying a new machine and (b) repairing the existing machine. Role playing or teaching concepts through case studies are some form.000 T1 if poor m arket P 50. C a m e T h e o ry This involves selecting the best strategy. Figure 3.000 T1 if poor m arket P 40. Minimizing the maximum loss (minimax) and maximizing the minimum gain (maximini) are the two concepts used in the game theory. 4.of simulation techniques. Under Planning 89 . Thus. The blueprint of a proposed building is an ex­ ample of simulation. McDonald con­ tends that the strategic situation is the theory which lifes in the instruc­ tion between two or more individuals. it is a "conflict of interest" situation where one individual tries to win.000 T1 Figure 3. Through a graphic illustration. D e c is io n Tree This is an interesting technique used in analyzing a decision.3. taking into consideration one's actions and the action of one's competitors. When one individual wins. In recent years. each of whose actions is based on an expectation concerning the actions of others over whom he has no control.4 Decision Tree 5. the alternative solutions can be identi­ fied and probability estimates are assigned to these alternatives and pay-offs relating to alternatives can be determined. computers are being widely used in simulation techniques. S im u la tio n This technique involves the building of a model that represents a real or an existing system. the other losses. A L T E R N A T IV E S C H A N C E E V E N T if good m arket P120.

Some decision makers tend to develop the habit of "crisis deci­ sion-making. others are gut-wrenching experiences for the decision 90 Management for Filipinos . Some are made with a casual nod of the head. The reliability and validity of information cannot be achieved without good communication tech­ niques and practice. • Tactical-level managers are charged with the responsibility of implementing the objectives and policies set forth at the strategic level of management. In more complex decision trees. A clear understanding of objec­ tives is essential for effective decision making. By encouraging the participation of those who are affected by the outcome of the decision. These objectives include not only decision objectives. and strategic. everybody makes decisions. • Operational-level managers complete specific tasks as directed by tactical-level managers. Some decision makers simply rely on reports for information without actually examining what is going on in their departments as well as in the entire organization. Everybody has problems. Most companies have three lev­ els of management: operational. but also organizational objectives. the manager identifies specific tasks that need to be accomplished. This reality-checking improves the objectivity in decision making. the man­ ager must bear certain facts in mind. tactical. This will assure the smooth implementation of a decision once it is made. The Decision Making Environment The business system model helps to place the decision makiftg environment in its proper perspective. The decision mak­ ing is not good in this case. To do this.the decision to buy a new machine are conditions where a good market exist and where poor market conditions exist. The payoff under each of these cOhditions is shown at the end." This involves deciding under stress. When the right moment is passed. • Strategic-level managers determine long-term strategies and set corporate objectives and policy consistent with these objectives. He must realize the importance of communication in the decision making process. Strengthening of internal communication is another important area a decision maker must look into. Commu­ nicating is the medium for decision making. even an excellent decision may not have any value. prob­ ability estimates and expected values of various alternatives will be shown. and since decisions are made to solve problems. Whether decision making uses these techniques or not. This follows also for the alternative of repairing the old machine. the decision maker can anticipate any re­ sistance and thus focus his attention on reducing or eliminating this resistance.

m ak er. A s a ru le of th u m b , th e h ig h e r th e d ecisio n m a k e r is in the
o rg a n iz a tio n , th e m o re co m p le x a n d ^difficult th e d e cisio n h e h a s to
m ak e. A lso , the n u m b e r of p e o p le affected b y the d ecisio n in c re a s e s a t
th e level of th e d ecisio n m ak er. F o r d ecisio n s m a d e a t the s tra te g ic an d
ta ctica l lev els, e a c h a lte rn a tiv e w ill h a v e a v id p ro p o n e n ts (a n d o p p o ­
n e n ts). To a m u c h le sse r e x te n t, th is is also tru e o f o p e ra tio n a l level
d ecisio n s. A s a resu lt, the d ecisio n m a k e r is co n sta n tly sm o o th in g w ith
n e w in sig h t a n d in fo rm atio n . Im p o rta n t c o rp o ra te d e cisio n s are se ld o m
m a d e on a w h im . D ecisio n m a k e rs are influ en ced b y av ailab le in fo rm a ­
tion , b u t they, a re a lso in flu en ced b y c o rp o ra te policy, tra d itio n , v a rio u s
p re ssu re g ro u p s (fo r e x a m p le , v e n d o rs), an d p eers. D ecisio n m a k e rs
w a n t to m a k e su re th a t e a ch a lte rn a tiv e h a s b een th o ro u g h ly e v a lu a te d ;
in so d o in g , the d ecisio n m a k e r is su b jected to inten se p e e r p re ss u re an d
often b ia se d in fo rm a tio n . U n fo rtu n ately , p e e r p re ssu re ca n , o n o cca sio n ,
b e m o re in flu en tial th an reaso n . H o w e v e r, this is the d ecisio n m a k in g
e n v iro n m e n t. E v a lu a tin g in fo rm atio n a t face v a lu e is n o t e n o u g h . The
d ecisio n m a k e r m u s t h a v e th e ability to p la ce ea ch p iece o f in fo rm a tio n
in its p ro p e r p e rsp e c tiv e .

The Decision Making Process
W h e th e r a d elib erate actio n o r n o t, p e o p le w h o m a k e in fo rm a ­
tio n -b a se d d e cisio n s g o th ro u g h a d ecisio n m ak in g p ro ce ss. T h e ste p s in
th e d ecisio n m a k in g p ro ce ss are to:

S et objectives.


Id en tify co n strain ts.
Id en tify altern ativ es.
G a th e r a p p ro p ria te in form ation .


E v a lu a te a ltern ativ es.
C h o o se th e m o st a ccep tab le altern ativ es.

T h e ste p s in the d ecisio n m ak in g p ro ce ss are illu stra te d in


S te p I : S e t O b je c tiv e s

T h e e x iste n ce o f a p ro b le m im p lies th e n eed for a d e cisio n m a k e r
to m a k e a t least o n e d ecisio n , an d ty p ica lly a series o f d ecisio n s, to
re so lv e a p ro b lem . In this first step , the d ecisio n m a k e r sets the objec­
tiv es fo r the d ecisio n .
S te p 2: Id e n tify C o n s tra in ts

C o n stra in ts in so m e w a y lim it the d ecisio n m a k e r's ch o ice s. C o n ­
strain ts co u ld be d efin ed b y legal, e co n o m ic , o r p o litical co n sid e ra tio n s.


D ecision co n stra in ts a re so m e tim e s p re se n te d in te rm s o f d e sire d sp e ci­
ficatio n o r p e rfo rm a n c e sta n d a rd s.
S te p 3: Id e n tify A lte rn a tiv e s

T h e d ecisio n m a k in g p ro ce ss in v o lv e s m a k in g a ch o ic e b e tw e e n
tw o o r m o re a lte rn a tiv e s. In this ste p , th e d e cisio n m a k e r iden tifies
a lte rn a tiv e so lu tio n s th a t m e e t th e co n stra in ts o u tlin ed in ste p 2 . In
m o s t ca s e s, th e a lte rn a tiv e s are ch o se n b e ca u s e th e y p ro v id e d a so lu tio n
to th e p ro b le m , b u t o ften on e o f th e a lte rn a tiv e s is to d o n o th in g .

Figure 3.5 Steps In the decision making process

S te p 4: G a t h e r A p p ro p ria te In fo rm a tio n
T h e in fo rm a tio n re q u ire m e n ts fo r a g iv e n d ecisio n v a r y c o n s id e r­
a b ly d e p e n d in g o n the co m p le x ity a n d sc o p e o f th e d e cisio n to b e
m a d e . D u rin g this step , the d ecisio n m a k e r g a th e rs in fo rm a tio n th a t
m a y p ro v id e in sigh t as to w h ich a lte rn a tiv e to ch o o se.
S te p 5: E v a lu a te A lte rn a tiv e s

In this step , th e d ecisio n m a k e r e v a lu a te s e a c h a lte rn a tiv e . A d e ­
cisio n ca n b e re n d e re d b a se d o n a v a ila b le in fo rm atio n .


Management for Filipinos

S te p 6: C h o o se th e M o s t A c c e p ta b le A lte r n a tiv e

In this step , the m a n a g e r e x a m in e s the ra n k in g o f a lte rn a tiv e s
a n d se le cts th e m o s t a cce p ta b le a lte rn a tiv e , w h ich is o ften th e top ra n k e d a lte rn a tiv e . O n o cca sio n , e x te n d in g circ u m sta n ce s c a u s e d m a n ­
a g e rs to lo o k p a st the h ig h e st-ra n k in g a lte rn a tiv e a n d se le ct a lo w erra n k in g alte rn a tiv e . D ecision s, e sp e cia lly th o se m a d e co lle c tiv e ly by
se v e ra l m a n a g e rs, are often the re su lt o f creativity.

T h ere a re v a rio u s q u an titativ e an d scientific te ch n iq u es th a t are
a v ailab le to aid the m a n a g e r in h is p la n n in g p ro ce ss. S o m e o f th ese are
th e fo llo w in g :

F o re c a s tin g

T h is is an a tte m p t to foretell o r p re d ic t fu tu re tre n d s, e v e n ts, o r
co n d itio n s fro m k n o w n d a ta an d to p re p a re fo r the e x p e cte d ch a n g e s in
b u sin ess o r in d u stry .
M a n y d ecisio n s are b a se d o n e stim a te s o f w h a t is lik ely to h a p ­
p e n in th e fu tu re. S u ch d ecisio n s are m a d e a lm o s t d a ily b y b o th b u si­
n e ss m e n a n d e co n o m is ts e m p lo y e d b y the g o v e rn m e n t. T h ese e stim a te s
o f fu tu re e co n o m ic co n d itio n s o r tre n d s, b ased ' o n th ro u g h a n a ly se s of
th e p a st a n d p re se n t, are called fo recasts. B o th sh o rt-te rm a n d lo n g -te rm
fo re ca s ts a re u sed .
U n d e r this tech n iq u e, p a st an d p re se n t o r c u rre n t in fo rm a tio n is
u se d to p re d ic t fu tu re ev e n ts o r co n d itio n s. S o m e m a n a g e rs re ly on
th e ir Own in tu ition in p re d ictin g the fu tu re ev e n ts. T h e y are able to d o
th is b e ca u s e o f th e ir e x p e rie n c e on the job. B u t the co m p le x ity o f e n v i­
ro n m e n t m a k e s it n o lo n g e r an effective w a y o f fo recastin g . Since d e p a r­
tu res fro m h isto rica l tre n d s are b e co m in g freq u en t, it is g e ttin g difficult
to fo re ca st fo r tw o y e a rs o r lon g er. T h e lo n g -ra n g e p la n n e rs m u s t a cc e p t
th is reality. In re ce n t y e a rs, a n u m b e r of so p h istica te d tech n iq u es h a v e
b e e n d e v e lo p e d fo r fo re ca stin g p u rp o s e s. A lth o u g h th ere a re n o u n iv e r­
sal fo re ca stin g m e th o d s, so m e co m m o n ly u se d m e th o d s o f fo re ca stin g
a re th e s u rv e y m e th o d , the tren d m e th o d , a n d e co n o m e tric m e th o d .
T h e s u rv e y m e th o d in v o lv e s p ro b in g th e c u s to m e r o r re sp o n d e n t
th ro u g h q u e stio n a ire s o r in terv iew s. U s u a lly a sa m p le g ro u p is ch o se n
fo r this p u rp o s e . S o m e so p h istica te d sa m p lin g te ch n iq u e s are av ailab le.
T h e sa m p le ch o se n m u s t b e re p re se n ta tiv e of th e g ro u p w h o se o p in io n s
th e o rg a n iz a tio n is so lic itin g . B a s e d o n th e in f o rm a tio n , o b ta in e d
th ro u g h s u rv e y s , fo re ca sts a re .m ade.
T h e tre n d m e th o d o r tim e-series an aly sis is a n o th e r tech n iq u e of
fo re ca stin g . U n d e r this m e th o d , the fu tu re is p re d icte d b y p ro jected


trends using past data or information. This method brings out a rela
tionship between sales and time as shown in Figure 3.6.

Fig. 3.6 The Trend Method

The use of econometric models is another method of forecasting.
These models are based on statistical methods of analyzing data and
making predictions. They help to find the historical relationship be­
tween sales volume and a number of independent variables. For in­
stance, the Gross National Product (GNP) is used to predict future sales
based on their past relationship.
Even with all these sophisticated techniques, management deci­
sion is still needed. These techniques don't replace managers or mana­
gerial intuition and judgment. Forecasts have not been taken seriously
by some top managers. This may be due to the fact that some forecasts
have been wrong in the past. Reliable information is more crucial to the
successful use of forecasting techniques.


Break-even Analysis
Break-even charts are used for planning purposes. The mechanics
of break-even charts are discussed in the chapter dealing with control
function. Almost every manager makes a profit plan and break-even
analysis is useful for developing it. In order to make profits, total cost
must not exceed total revenue. Using the break-even charts, a break­
even point, that is, the point at which total cost equal total revenue, can
be determined. Using these charts, a manager can say whether the com­
pany can sell enough products to breakeven and plan accordingly.


Management for Filipinos


S c h ed u lin g

This is the term used for planning time for various activities in an
organization. A number of scheduling techniques are available, ranging
from simple to complex. Network analysis is a quantitative technique
used for scheduling. Two well-known network analysis methods are
Program Evaluation Review Technique (PERT), and Critical Path
Method (CPM). These techniques help to plan complicated and exten­
sive projects in which co-ordination is essential for cases.
Two basic concepts in these two techniques are: events and activi­
ties, an event is an identifiable accomplishments that occurs at a defi­
nite point in time. Activities are the work required to complete the
event. Events show the beginning and end of an activity. While events
are shown as circles in the network, activities are indicated by arrows.
A network consists of a series of interconnected events and activities.
In using this network, three types of timings are estimated for
each activity, that is, the time between two circles (events). These tim­
ings are: optimistic time (the minimum time it could take); pessimistic
time (the maximum time it could take); and the most probable time. An
average of these times (expected) is computed and placed above the
arrows. For example, the optimistic time for activity between A and B
is 4 days, pessimistic time 8 days, and probable time 6 days, then, the
average time is:
Expected time


4 +8 +6
—------------ = ------ = 6 days
6 days
(A )----------------- ► (B)

This diagram is the same as the previous one but time schedules
from activities are shown on this diagram. The circles are events and the
arrows are activities for instance, if we are going to construct a network
for a house building project, putting on floors is an event and the work
one does to achieve that event is an activity. The diagram above shows
the following paths and times.
Thus, the four basic steps in developing PERT are:
1. Identify and list major tasks in a project.
2. Determine the order in which these tasks must be carried out,
in terms of which one comes first, second, and so on and
which activities can be carried out simultaneously.
3. Figure out a pessimistic, probable or most likely, and optimis­
tic times for each activity or task.
4. Estimate the expected completion time by averaging the above
5. Draw a PERT network showing the sequence and times.


T h e critica l p a th u se d in P E R T sh o u ld n o t b e co n fu se d w ith the
C ritica l P a th M e th o d , a n o th e r fo rm o f n e tw o rk a n aly sis. T h e a p p ro a c h
o f th e critica l m e th o d is essen tially th e s a m e a s th e P E R T e x c e p t the
critica l p a th m e th o d u ses o n e e stim a te of the tim e , w h ile P E R T u se s
m o re th a n o n e e stim a te of th e item .
T h e a d v a n ta g e o f th ese tech n iq u es is th a t th e y fo cu s th e m a n a g e r
to e n g a g e in p lan n in g , id en tify in g critica l a re a s a n d c o rre c tin g th em .
W ith th e h e lp o f th ese tech n iq u es, a m a n a g e r w ill b e able to m o n ito r
th o se activ ities m o s t critica l to the su cce ssfu l c o m p le tio n o f a p ro ject.

4. Management by Objectives
P e te r D ru ck e r u se d this te rm in 1 9 5 4 a n d a p p lie d it to a n a p ­
p ro a c h to p lan n in g . S in ce th e n M a n a g e m e n t b y O b jectives (M B O ) h a s
d ra w n a g re a t d e a l o f a tte n tio n a m o n g th e a c a d e m ic s a n d p ra ctitio n e rs .
M B O is an a p p ro a c h to m a n a g e m e n t d e sig n e d to e n c o u ra g e ini­
tia tiv e a n d p re v e n t w o rk in g a t c ro s s-p u rp o se s , o r in d e e d , fo r n o p u r­
p o s e a t all. It is a w a y to h elp m a n a g e rs a cc o m p lish th eir job w ith in th e
fra m e w o rk o f o rg a n iz a tio n n e e d s a n d re so u rce s. In this a p p ro a c h , th e
b o s s a n d su b o rd in a te s fu n ction as a te a m in se ttin g o b jectives a n d a c­
co m p lish in g th o se objectives th ro u g h co o p e ra tio n .
O n e a p p ro a c h to se ttin g objectives th a t h a s en jo y ed co n sid e ra tio n
o r co n sid e ra b le p o p u la rity is the co n c e p t o f m a n a g e m e n t b y objectives.
M B O is a p h ilo s o p h y b a se d o n co n v e rtin g o rg a n iz a tio n a l o b jectiv es into
p e rso n a l o b jectives. It a ss u m e s th a t estab lish in g p e rso n a l o b jectiv es,
elicits e m p lo y e e c o m m itm e n t w h ich le a d s to im p ro v e d p e rfo rm a n ce .
T h e M B O p ro c e s s is s u m m a riz e d in F ig u re 3 .2 . M B O h a s a ls o b e e n
ca lle d m a n a g e m e n t b y resu lts, g o als, co n tro ls, w o rk p la n n in g a n d re­
view , a n d g o a ls m a n a g e m e n t. A ll th ese p ro g ra m s are sim ilar a n d fo llow
th e sa m e b a sic p ro ce ss.

T h ere a re m a n y re a s o n s w h y m a n a g e rs fail in p la n n in g . T h e
m o re o b v io u s o n e is b e c a u s e p la n n in g re q u ire s c o m m itm e n ts to b e
m a d e to d a y fo r an u n ce rta in fu tu re. E v e n ts o ften d o n o t tu rn o u t as w e
e x p e ct. A m o n g th e m o s t im p o rta n t re a s o n s fo r ineffectiv e p la n n in g a re
th e follow in g:

L a c k o f r e a l c o m m itm e n t In p la n n in g .

D esp ite the a v o w e d in terest in p la n n in g , th e re is often a la ck o r
re a l co m m itm e n t b y m a n a g e rs fro m th e to p lev el d o w n to th e lo w e st
lev el su p e rv iso r. T h ere is a n a tu ra l te n d e n c y to le t to d a y 's p ro b le m
p u sh asid e p la n n in g fo r to m o rro w 's o p p o rtu n itie s. It is a lm o s t ce rta in ly
tru e th a t m o s t p e o p le w o u ld ra th e r fig h t fires, m e e t crise s o r kill sn ak e"

Management for Filipinos

Lack of meaningful objectives and goals. a ttain ab le (C a n th e y b e a cc o m p lish e d a n d v erifi­ ab le?) L ik e su p p o rtin g p la n s. P la n n in g is p ra c tic a l e x e rc is e in ratio n alizatio n . w ith o u t h a v in g to thin k . S o m e m a n a g e rs g e t so w ra p p e d u p in d e v e lo p in g m a jo r a n d m in o r p ro g ra m s th a t th e y n e g le ct to see th a t th ere a re o th e r ty p e s o f p lan s: m issio n s o r p u rp o s e s. to fit o n e an o th er. in fo rm a tio n a n d a d e sire to c o m e u p w ith th e b e st p o ssib le an sw er. it b e co m e s o n ly a sta te m e n t o f w ish es a n d h o p e s . Tendency to underestimate the Importance1of planning premises. th a t is. th e y m u s t b e im p le m e n te d if a s y s te m o f p la n n in g is to b e co m p le te . Planning 97 . objectives o r g o a ls. p o licie s. w h ich is o ften th e c a s e . 6. Failure to see the scope of plans. a k n o w le d g e o f a lte rn a tiv e s. s tra te g ie s. A ll m u s t in v o lv e a n aly sis a n d d ecisio n m a k in g a n d m u s t b e im p le m e n te d if a s y s te m o f p la n n in g is to b e co m p le te . If p la n s a n d d e cisio n s in an o rg a n iz a tio n s are to b e co n siste n t. g o als m u s t b e d e fin e d in th e lig h t o f stre n g th s a n d w ea k n e sse s a n d the m a n y in tern al an d e x te rn a l e n v iro n ­ m e n t fo rce s th a t m a y in flu en ce th eir a c h ie v e m e n t 5. 8. It re q u ire s d e a r g o als. T h is m e a n s th a t m a n a g e m e n t n e e d s a clim a te th a t fo rce s p e o p le to p lan . is fu n . Too much reliance on experience. 3. p ro c e d u re s an d b u d g e t as w ell a s p ro g ra m s . Y et m a n y o rg a n iz a tio n s a n d p e o p le b eliev e th ey h a v e p la n n in g w h e n all th e y h a v e a re p la n n in g stu d ies. T h is is la rg e ly b e c a u s e su c h activ ities se e m m o re im p o rta n t a n d m o re in te re stin g a n d rap id -fire d e cisio n m a k in g . stra te g ie s a re th e k in d o f p la n s w h ic h g iv e u n ified d ire ctio n to th e e n te r p r is e s " p la n ­ n in g effo rts. A s w e fo u n d in the p re v io u s ch a p te rs o f this b o o k . 2. N o th in g is p la n n e d u n less it in clu d es a d e cisio n o f s o m e k in d . M o reo v er. 7. a n ability to a n a ly z e a lte rn a tiv e s in th e lig h t o f g o a ls so u g h t. 4. W ith o u t a so u n d strateg y . u n less a s tra te g y is im p le m e n te d b y a n a ctio n p la n . p la n s g o in th e w ro n g d irectio n . P la n n in g ca n n o t b e effectiv e u n less g o a ls a re cle a r (D o p e o p le u n d e rs ta n d th e m ? ). ru les. E x p e rie n c e a s h a s b e e n in d ica te d is lik ely to b e a d a n g e ro u s te a ch e r sim p ly b e ca u s e w h a t h a p p e n e d in th e p a s t m a y n o t lik ely fit a fu tu re situ atio n . Folium to develop and Implement sound an p la n . Interchanging planning studies with plans. Failure to see planning as a rational process.

there are so many variables that no one can solve for all of them.000 in the first year reach P10 million five years later. but the president was not impressed. suggested format for case study) N A T IO N A L B O O K C O M P A N Y Delia de los Reyes was the founder and president of a publishing company specializing in collegiate textbooks. or make the necessary decisions that will allow its subordinates to make their plans. La ck o f clea r delegation. Planning is not like to be very effective if top management does not believe in it. It is obviously very difficult for people to plan if they do not know what their jobs are. She maintains that if she concentrates in formulat­ ing plans and policies today. if they are unaware of how their jobs relate to others in an organization. New and old employees were making conflicting decision. the company grew rapidly and its sales of 10. encourage it. 10.9. The publication. production. 98 M anagem ent fo r Filipinos . La ck o f adequate control techniques and Inform ation. and effective marketing promotion. the company was faced with a serious problem. She believes it is best to solve problems as they happen. Planning can hardly be very difficult but effective unless the people responsible for these know how well they are working. La ck o f top m anagem ent support. It will be recalled that this principle requires managers to search out those factors that would make the most problem situation. How'ever. 11. 12. Since the task of managerial control is to follow up plans and to assure that these are actually succeeding. and if they do not have clear authority to make decisions. Failure to use the principle o f lim iting factor. she might not have a company tomorrow. SH O R T CASE STUDY: P LA N N IN G (See Chapter 12. One of the De Los Reyes partners suggested that the company needed planning and clearcut policies and programs to guide decision making. expertise. Because of her personal ability. and sales force also in­ creased.

H o w is M B O u se d in p la n n in g ? D escrib e the step s 8._________ 1. W h a t is p la n n in g ? W h y is it n e c e s s a ry to p la n ? D iscu ss th e relatio n sh ip b e tw e e n p la n n in g a n d d e cisio n m a k in g . s ta n d in g o f w h a t th e y a re s u p p o se d to d o ? M a n y m a n a g e rs b eliev e: "P o lic y sh o u ld a lw a y s b e m a d e a t th e 3. B riefly e x p la in the ap p lica tio n of th e fo llow in g tech n iq u es to th e d ecisio n m a k in g p ro ce ss: (a) L in e a r p ro g ra m m in g (b) G a m e th e o ry (c) S im u la tio n D IS C U S S IO N Q U E S T IO N S ." W h a t c a n y o u sa y a b o u t this? D iscu ss th e fo llo w in g sta te m e n t: "P la n n in g is so m e th in g m a n a g e rs sh o u ld d o w h e n th e y h a v e n o th in g else to d o . W h a t is th e p u rp o s e of fo re ca st? B riefly e x p la in so m e o f th e 6. m o s t c o m m o n m e th o d s o f fo re ca stin g w h ich h elp m a n a g e rs p lan . citin g o n e o r tw o 10. (b) P u rp o s e (c) S tra te g y (d ) P ro ce d u re E n u m e ra te th e ste p s in th e b u sin e ss p la n n in g p ro ce ss. B riefly d escrib e th e v a rio u s ty p es o f p lan s. 9. D efine: (a) P o licy 4. 5. W h a t p e rce n ta g e o f m a n a g e rs d o y o u th in k h a v e a cle a r u n d e r­ 2." Planning 99 . d e cisio n m ak in g ? B riefly d escrib e v a rio u s ty p es o f d ecisio n s. 2. W h a t is m e a n t b y th e te rm . in th e M B O p ro ce ss. 3. e x a m p le s o f e a ch .R E V IE W Q U E S TIO N S 1. D escrib e w h a t e a c h o f th e fo llo w in g are a n d h o w th e y m ig h t b e u se d to h e lp m a n a g e rs plan. (a ) PERT (b) Break-even analysis 7. D escrib e b riefly h o w the fo llo w in g tech n iq u es are u se d in d ecisio n m ak in g : (a ) M a rg in a l a n aly sis (b) R atio a n a ly sis (c) B re a k -e v e n an aly sis 11. W h a t is m e a n t b y the te rm : o p e ra tio n s re se a rch ? 12. t o p .

Joseph. Develop a personal program. REFERENCES 1. the scientific approach. William. p. 1997. Esdras T. Koontz. Harold and O’Donnel. New York: Harper & Broth­ ers Publishers. Terry. Approach a manager or an administrator and find out how he or she plans and what difficulties he or she had encountered in the plan­ ning process.. list the top five decisions you made. 146-166. 4. Formulate some of the following types of plans in accordance with your business proposal: (a) Company Objectives (b) Programs (You may use the Gantt Chart) (c) Activities (d) Procedures (e) Rules and Regulations (f) Budget 4. 1998. p. 1995. George R. Manila: GIC Enterprises. Cyrill. pp. Illinois: Richard D. As decision makers. New York: McGraw-Hill Book Company. Inc. 5. New Delhi: Tata-McGraw-Hill Publishing Co. al. or the professional approach? Why? 5. Basics o f Successful Planning. 1997. It has been stated that a firm can have multiple objectives. Martinez. 51-59. Putti.. 2.E XP E R IE N TIA L EXERCISES 1. Essentials o f Management. The Practice of Management. 100 Management fo r Filipinos . policies. Management: A Functional Approach. et. 3. Were they based primarily on intuition. Peter F. in a one-hour period during the day. 6. pp. Management Theory and Practice. Irwin. Osgood. Principles o f Management. 3. 1998. Singapore: McGrawHill Book Company.. 40-42. 97. Inc. Assume you have determined your objectives which is to get a grade of 95% or 98% this semester. and procedures which would affect your objective.. Drucker. What do you think would be the objectives of the following companies and organizations with regard to their interrelationships with society? (a) Bank of the Philippine Islands (b) Department of Labor and Employment (c) Shoe Mart (d) Catholic Women's League (e) University of the Philippines 2. 1997. 31.

.. What do you think mould be the objectives of the folloiuing companies and organizations with regard to their interrelationships with society? a) Bank of the Philippine Islands b) Department of Labor and Employment c) Shoe Mart d) Rotary Club of Manila e) University of the Philippines Planning 101 ....... 3.OBJECTIVES N a m e : _____________________________ _ _ _ Y ear/S ection: ------------------- P r o fe s s o r :___________ ________________ _ Date: .. — __ _______ It has been stated in the book that a firm can have multiple objectives.7 PLANNING ...W orksheet No.

102 ___ Management for Filipinos / .

3.8 PLANNING ■ OBJECTIVES / OTHERTYPES OF PLANS N a m e : _____________________________ ___________ Y e a r /S e c tio n : P ro fe s s o r: D a t e : ------------- ____________________________________ Assume that you have determined your objective which is to get a grade o f 95% or 98% this semester. and procedures which would affect your objectives. Develop your personal program.Worksheet No. Planning 103 . policies.


TYPES OF PLAN _________________________ ___________________________________ Y e a r /S e c tio n : ------------------------ D a t e : ---------------------------------------- Formulate some of the following types of plans in accordance with your business proposal. 3.Worksheet No. BUSINESS PROPOSAL PROGRAMS (You may use the Gantt Chart) Planning 105 .9 N a m e : _________ ' P ro fe s s o r: PLANNING .


10 PLANNING . Were they based primarily on intuition. the scientific approach.DECISION-MAKING N a m e : ________________________________________ Y e a r /S e c tio n : P ro fe s s o r: D a t e : ---------------------------------------- ________ __ ________________________ ------------------------ As a decision-maker.Worksheet No. or the professional approach? Why? Planning 107 . 3. in a one hour period during the day. list the top five decisions you made.

Management for Filipinos .

" . Drucker .Chapter 4 Organizing Learning Objectives: A t the end o f the chapter.Peter F. the student is expected to understand the following: • Definition of Organizing • Nature of Organizing • Organizing as a Process •T h e Nature and Development of Organization • Types of Organization Structures • The Nature of Line and Staff Relationship • Organization Chart • Results of Good Organization • The Elements of Delegation • Informal and Formal Organization • Centralized and Decentralized Organization "It is not necessary fo r a business to grow bigger. but it is necessary that it constantly grows better.

G enerally. M en w o rk in g to g e th e r in g ro u p s to a ch ie v e a g o a l sh o u ld h a v e th eir resp ectiv e ro les to play. m o s t m a n a g e rs thin k th a t th e te rm s m e a n a fo rm alized d esig n o f in ten tio n al stru c tu re s . T h is is p o ssib le in b u sin e ss o r g o v e rn m e n t as it is in b ask etb all o r v o lley b all. N A T U R E O F O R G A N IZ IN G It h as b e e n p ro v e n th a t a w e a k n e ss in th e o rg a n iz a tio n is a p o si­ tiv e sign b e ca u s e it in d u ce s the p e o p le to atta in te a m w o rk . TTie d e sig n a n d stru c tu re an d im p ro v e m e n t o f th e s e 'sy ste m s o f ro les are b a sica lly th e m a n a g e ria l fu n ction of o rg a n iz in g . d e fin in g th e a u th o rity amd re ­ sp on sib ility o f p e rso n n e l b y u sin g th e c o m p a n y 's o th e r baisic re s o u rc e s to attain p re d e te rm in e d g o a ls o r objectives. Sub­ sequently. O rg a n iz in g is th e iden tifi­ ca tio n of th e g ro u p ih g o f w o rk to b e d o n e . th o se p e o p le co u ld w o rk to g e th e r m o re e ffectiv ely if th e y k n ow the ro les th e y w a n t to p e rfo rm in a n y g ro u p u n d e rta k in g an d h o w th eir ro les re la te to o n e an oth er. a n d p o sition s. T h eir a ctiv ity is a situ a tio n w h e re th ey k n o w h ow th e ir job s fit in to g ro u p effo rt a n d w h e re th e y h a v e the n e ce ssa ry to o ls a n d in form ation : to a cco m p lish it. W h e th e r th eir roles a re d e v e lo p e d b y th e m se lv e s m u s t b e d efin ed a n d d e sig n e d b y so m eo n e w h o w a n ts to m a k e su re th a t m e n c a n co n trib u te in a definite w a y to g ro u p effort. ro les. th e d e le g a tio n o f a u th o rity a n d resp on sib ility to th e e m p lo y e e s.D E F IN IT IO N O F O R G A N IZ IN G o \ / R G A N IZ IN G is th e p ro ce ss o f g ro u p in g to g e th e r o f m e n a n d estab lishin g relatio n sh ip s a m o n g th e m . a n d th e e sta b lish m e n t o f rela tio n sh ip s a m o n g the p e rso n n e l in o rd e r to u se to m a x im u m a d v a n ta g e the co m p a n y 's b a sic m a te ria l re so u rce s in th e a c c o m p lish m e n t o f a c o m ­ m o n goal. T his ca n b e d e m o n ­ strated in a sim p le effo rt as p u ttin g u p c a m p o n a fish in g e x p e d itio n . 110 Management for Filipinos . sim ilar to b ask etb all p la y e rs . sin ce th ey k n o w th at th ere sh o u ld b e co o p e ra tio n to a cc o m p lish so m e th in g . S o m e b eliev e it in c lu d e s the b e h a v io r of all m em b ers o f the g ro u p . A ro le w o u ld m e a n th a t w h a t m e n d o h a s a specific p u rp o s e a n d o b jective. O th e rs s a y it is th e to ta l s y ste m o f so cial an d cu ltu ral relatio n sh ip s. O rg an iz in g is a b ro a d te rm th a t ca n be in te rp re te d d ifferen tly b y m a n y m a n a g e m e n t th eo rists.

th e stru c tu re m u s t re fle ct a u th o rity g iv e n to to p a r d m id d le m a n a g e m e n t. so cia l o r eth ical. F o u rth . w h ic h a re a lso tru e o f a n o rg a n iz a ­ tio n s tru c tu re . sh o u ld re fle ct th e ir e x te rn a l e n v iro n m e n t. L ik e w ise . a n d th e o rg a n iz e rs w ho co n s id e r th e ir m a te ria ls . it is an u n d en iab le fa c t th a t th e p ro p e r o rg a n i­ z a tio n is th e b a ck b o n e o f th e su cce ssfu l e n te rp rise . a n d to h e lp p e o p le g a in objec­ tiv e s efficien tly a n d e ffe ctiv e ly in a ch a n g in g fu tu re . c u s to m s a n d tra d itio n s. a n d flow o f m a n a g e m e n t d ire ctio n a n d co n tro l. In th is c a s e . te ch ­ n o lo g ica l. T h e o rg a n iz a tio n estab lish es s tru c tu re in o rd e r to p e rm it co n trib u tio n s b y m e m b e rs o f th e g ro u p . S e co n d . th e p re m ise s o f a p la n m a y b e e c o n o m ic . a so u n d o rg a n iz a tio n s tru c tu re c a n n e v e r b e e ith e r m e c h a n istic o r static. is p e rfo rm e d . p o in ts o f o rig in . th e o rg a n iz a tio n m u s t b e m a n n e d . m a n a g e ria l o r o th e rw ise . " O r g a n iz a tio n " a lso co n n o te s a cre a tiv e p ro ce ss . o rg a n iz a tio n s tru c tu re . T h u s . T h is is sim ilar to e n g in e e rs w h o c o n s id e r p e rfo rm a n c e . th a t it p ro v id e s the re q u ir e d ch a n n e ls . O n e (W e b s te r's ) is th e " e x e c u tiv e s tru c tu re of a b u s in e s s . T h is d o e s n o t m e a n th a t th e s tru c tu re m u s t b e b a s e d a ro u n d the in d iv id u a ls in ste a d o f a ro u n d th e g o a ls a n d su p p o rtin g activ ities. th e so lid fo u n d a tio n u p o n w h ic h th e e n tire b u sin e ss is b u il t W h a t is an O rganization? T h e te r m "o rg a n iz a tio n " h a s se v e ra l d efin itio n s. like a n y o th e r p lan . p o litica l. T H E N ATU RE A N D D EVELO PM EN T O F O R G A N IZ A T IO N A lth o u g h th e re a re d ifferen ces o f in te rp re ta tio n s a s to th e e x a c t n a tu r e o f o rg a n iz a tio n .p e o p le . th e re is n o sin g le b e st o rg a n iz a tio n stru c tu re fo r v a rio u s o p e ra ­ tio n s. F irs t. A ll th e p a rts of Organizing 111 . T h ird . th e s tru c tu re m u s t reflect o b jectives a n d p la n s b e ca u s e a ctiv itie s o f th e o rg a n iz a tio n a re b a s e d o n th e m . B u t a v e ry im p o rta n t co n sid e ra tio n is th e k in d o f p e o p le w h o a re to staff it. a n d th e a u th o rity o f a n o rg a n iz a tio n s tru c tu re m u s t co n s id e r the p e o p le 's lim itatio n s.O R G A N IZ IN G A S A P R O C E S S O rg a n iz in g a s a p ro ce ss sh o u ld c o n sid e r s e v e ra l fa c to rs o r fu n d a ­ m e n ta ls .stre n g th s a n d w e a k n e sse s o f m a te ria ls in th eir p ro je cts. G ro u p in g s o f a ctiv i­ ties." T h is d efin itio n in d ica te s th a t o rg a n iz a tio n is th e fra m e w o rk o r b a ck b o n e b y w h ic h th e w o r k of a b u sin e ss.

and manpower. Line organization This is the simplest form cf structure and refers to a direct straight-line responsibility and control from the top management to the middle management and to the lower level. The Line type of structure has some advantages.) The term organi­ zation is sometimes used to mean the total business organization. four principal organization types with different degrees of complexity appropriate to the business in terms of its size and type of product. he is over-burdened with various activities. It is the oldest form of organization structure based on the classical prin­ ciple of the Scalar Chain. Figure 4. The managers of the departments are given complete authority and responsibility over the activities involving their func­ tional areas. In this form of structure. Business 112 Management for Filipinos . Line and staff organization This utilizes the assistance of experts 01 specialists. authority passes responsibility-directly to his immediate superior. There are. He has to recruit sales­ men. Thus. (You can see from these two definitions that there is a specific relationship between organization and management. must have knowledge in personnel activities. They are the re­ sults of managerial efforts to carry out a predetermined course of ac­ tion. train them.a business do not come into existence spontaneously. in­ cluding facilities. however.1 shows an illustration of a Line type organization struc­ ture." to which a member is assigned specific duties and under the term of which all employees work effectively together within a framework of superior and subordinate relationship. This final definition refers to the term "concept. money. TYPES OF O R G A N IZ A T IO N STRUCTURES It has been stated that organization structures may differ in terms of the specific needs of a given business enterprise. One of the disadvantages of this type of structure is that a manager of a department must be familiar with diverse activities re­ lated to the operation of the department. for instance. Authority and responsibility are clear in this type of organization and the clarity helps to avoid several organizational prob­ lems. A Sales Manager. This form of organization is common in many small and medium­ sized companies. These types are: 1. It acquired this name because there are direct single lines of au­ thority and responsibility between the manager and his subordinates. materials. 2. and take care of their benefit programs.

1 Line Type leaders have recognized . Therefore. industrial relations. the centering around ot a special assistant is organized into a department known as a staff department. As the activities of these assistants increase. and many other activities of business. public relations.2 Line and Staff Type Organizing 113 . industrial engineer.Figure 4. such as re­ search. planning. or budget officer. one option toward reorga­ nization as a company expands in size and complexity is to appoint assistants to managers. These assistants fre­ quently carry the title of process engineer. Figure 4. They are the coordinating force that work toward the preservation of harmony and good personnel relations between the workmen and the special executive assistants. distribution. Managers and general foremen retain supervisory au­ thority and control over the activities of personnel of their respective departments. Eventually. design engineer. Specific advisory responsibility is delegated to these assistants. supporting the line organization of the enterprise.that a small number of managers could not personally assume direct responsibility for all their companies expand from simple to complex organizations . other personnel are added to assist.

confusion. Figure 4. The Speed boss is assigned with the responsibilities of introducing men and getting the set standards of production. The Gang boss prepares for the production and the worker has to ap­ proach him for direction in this area. namely. Committees Committee is another common organizational form 114 Management for Filipinos u s e d . The movement as indicated in Figure 4. Reporting to several bosses may create organizational problems such as lack of clar­ ity of authority. The job of Order-of-Work Clerk is to plan and schedule order. 4. no one subordinate can have more than one supervisor.3 Functional type Taylor felt that the advantage of functional specialization will b e achieved to a great extent under this method of organization. The Repair boss takes care of the equipment and tool repairs. inadequate control. each worker in the production department has eight supervisors. The Inspector is in charge of checking the quality of work. This removed the staff specialist from his "assisting" capacity and gave him the pure authority and responsibility for supervision and administration of the function. The Personnel Activities are handled by the Shop Disciplinarian. Functional organization It utilizes the pure services of experts or specialists. The information relating to cost and production is maintained by the Time and Cost Clerk." According to this principle. The Instruction Card Clerk determines the best way to do the job. and conflicts. The develop­ ment of staff departments and positions led quite naturally to attempt complete reorganization on a functional sifeu- . But this type of organization violates one of the traditional principles of organi­ zation. the "Unity of Command. replacing the operating foreman.

Any manager or supervisor has the right to form a committee if it is needed by his department or company. As defined by George Terry: "An organization chart is a diagrammatical form which shows important aspects of an organization including the major functions and Organizing . many companies add a network of committees to the line and staff organization. the committee approach has been taken for granted and committees are automatically set up with­ out even considering the purpose and the need for such committees. and responsibility must be clearly defined. such as the budget com­ mittee. 3. Standing Committee. should be varied in terms of the needs of a given enterprise. 4. Two types of thinking seem to be common when it comes to the use of the com­ mittee form of organization. authority. The organization of a committee should grow out of a need that is recognized by the representatives of the departments and the personnel affected. O R G A N I Z A T I O N C H A R T ________________________________ An organization chart is a diagram or drawing showing the im­ portant aspects of an organizational structure. In order to facilitate a cooperative relationship within a large industrial enterprise. Duties. and the people who occupy them. It is a means by which ideas can be pooled and offered for criticism. A committee is a tool for the development of ideas and proce­ dures. managers are totally reluctant to use committees because of a fear of diverse opinions. However. Committees. there are at least four basic principles to be considered. or b.ations where group participation and decision are required. On one side. It shows the re-ationship unong positions as to authority. 1. It is the strong right arm of a tactful administration that real­ izes the importance of getting its people to work together in the solu­ tion of its own problems. 2. This undertakes temporary activities. responsibility and accountability. Committees may be classified as: a. The members of a committee should be representatives of the function and the personnel concerned who have variations in opinion among them. This is sometimes called permanent com­ mittee which undertakes permanent activities. Ad Hoc Committee. like other phases of organization. On the other side. The organization and operation of a committee should be a cooperative development. These are created to undertake special activities rather than routinary activities.

existing positions and/or departments. objectives. A well-prepared chart shows all of those involved in any undertaking. Listed below each job title are brief statements of the responsibilities. The personnel chart shows the departments in the same relative manner as the functional chart. Before drawing an organization chart. functions. Types of Organization Chart Some organization charts show positions and/or departments. 3. M aster Chart or Chart o f Authority. organization. How to Draw an Organization Chart An organization chart may consist of an entire business. It shows the m ajor responsibilities of departments or positions. Functional Chart. It assists management to divide the different duties or functions in the business establishment so that they will be pe. others show only the functions to be performed. But instead of list­ ing the functions. or departments." Purpose of an Organization Chart An organization chart assists one to view the firm's structure as a whole. therefore. Others would show either. 1. what each of them is to do and to whom each is responsible. It is a way of sorting the responsibilities of the positions so that time and effort are not duplicated and. 116 Management for Filipinos . and functions. gather the necessary information on the following: 1. First.their respective relationships. both positions and functions. and activities of positions and/or departments. the channels of supervision. and the rela­ tive authority of each employee who is in charge of each function. The master chart shows the entire organizational structure. The functional chart shows at a glance the functions and activities of the positions and/or departments. 3. with lines of authority and responsibility and the mutual relationships of all departments or major components. the titles of the positions of the names of persons are indicated. individuals. It shows the principal divisions and lines of formal authority and responsibility. 2. one should observe the following procedures. for each department or for each section of a business. It is a master plan of the principal departments. wasted. formed effectively and efficiently. Personnel Chart. The chart also shows the class titles of all positions in the department together with their locations in the organization. 2. and control of activities. It shows the grouping of departments for easier direction.

It sh o w s th e v ital fu n ctio n s of the to p m a n a g e m e n t a n d th e su b o rd in a te fu n ctio n s in s u c c e s s iv e ly d e­ sc e n d in g p o s itio n s . T h e se co n d step is to d ra w a te m p o ra ry c h a rt a n d c h e c k it fo r a c c u r a c y w ith the m a n a g e rs of th e v a rio u s d e p a rtm e n ts o r sectio n s. functioned relatio n sh ip s b e tw e e n lin e a n d staff p o s itio n s / 6. T h e job titles o r the n a m e s o f the jo b s's h o u ld b e sh o w n cle a rly on th e ch a rt. d e p a rtm e n ts . p o sitio n s a n d job titles. a n d se ctio n s of th e b u sin ess. a n d th e ir in te rre la tio n sh ip s. w h ile th o se a t th e . a u th o rity flo w in g fro m o n e p o sitio n a t th e to p d o w n to the v a rio u s h e a d s o f d iv isio n s. w ith th e few w o rk a t th e to p a n d an in cre a sin g n u m b e r o f w o rk to w a rd th e b a se . d e p a rtm e n ts . it is g e n e ra lly in a p y r a m id sh a p e .4. to m id d le m a n a g e m e n t. 7. a n e n g in e e r m a k e s a b lu e p rin t p la n a s a g u id e in th e co n stru ctio n o f a b u ild in g . th e re b y in d ica tin g a h ie ra rch y of p o sitio n s fro m top m a n a g e m e n t to ra n k a n d file. S taff d e p a rtm e n ts /p e rs o n n e l sh o u ld b e p ro p e rly in d ica te d b y u s in g d o tte d lin es o r b ro k en lin es. d e p a rtm e n ts . a lso k n o w n a s th e flo w o f a u th o rity a n d resp o n sib ility . T h e o rg a n iz a tio n c h a rt sh o u ld b e s u p p o rte d b y w ritte n job d e­ scrip tio n s sta tin g th e d u tie s a n d resp o n sib ilities of e a c h job a n d also a w ritte n job sp ecifica tio n w h ic h in d ica te s th e q u alificatio n re q u ire m e n ts fo r th e job. P o s itio n s /d e p a r tm e n ts o n th e sa m e h o riz o n ta l le v e l o n th e ch a rt in d ica te eq u al resp o n sib ility a n d a u th o rity in the o rg a n iz a tio n . B o x e s o r re c ta n g le s re p re se n tin g v a rio u s p o s itio n s /jo b s in the Organizing 117 . p h y s ic a l lo ca tio n o f e a ch p o s itio n /d e p a rtm e n t. T h q o rg a n iz a tio n c h a rt sh o w s th e w o rk to b e p e rfo rm e d . A s e a c h n e w u n it is cre a te d . W h e n it is d ra w n . sectio n s o r u n its a n d fin ally to e m p lo y e e s a n d w o rk e rs a t th e b a se o f th e p y r a ­ m id . P o sitio n s c a rry in g o u t w o rk a t the top o f th e c h a r t h a v e th e g re a te s t m a n a g e ria l a u th o rity a n d respon sib ility. T h e ch a in o f c o m m a n d sh o u ld b e cle a rly esta b lish e d . th eir d iv isio n s.4): 1. o r b rid g e . Briefly. Sim ilarly. a n o rg a n iz a tio n c h a rt h e lp s m a n a g e m e n t to v is u a liz e the d ifferen t d iv isio n s. lin es o f a u th o rity an d resp o n sib ility fro m top m a n a g e m e n t 5. Fin ally. T h e lin es o f c o m m u n ica tio n . T h e o rg a n iz a tio n c h a rt sh o w s the m a n a g e ­ rial p o sitio n s in th e fo rm o f b o x e s c o n n e cte d b y th e solid lin es th a t in d ica te th e line o f th e c o m m a n d . T h e fo llo w in g ru les sh o u ld b e o b s e rv e d in d ra w in g an o rg a n iz a ­ tio n c h a r t (See Figure 4. th e n u m b e r of p a rts m u ltip lies. facto ry .b o tto m h a v e th e le a st a u th o rity a n d responsibility. th e c h a rt as d ra w n m u s t b e su b m itte d a n d re c o m m e n d e d to to p m a n a g e m e n t fo r a p p ro v a l a n d im p le m e n ta tio n . sh o u ld b e sp ecific a n d clear.

3/8" x 2 1 / 2 ". Each box should have lines indicating its relation to the organizational units above and below it.4 Typical example of an Organization Chart organization should be grouped and placed according to their levels (top management. middle management. It could either be on the right or left side.118 Management for Filipinos . Dotted/broken lines should indicate service in staff relationship. 5.e.. . The boxes indicating the organizational functions on the same level should be of the same sizes. Lines of authority do not pass through a box or rectangle. the box should be drawn to the side of the line organization. 2. top management level. These lines should connect the box at the top center and then either at the bottom center or at the side of the box or rectangle. rank and file) in the organiza­ tion. i. When an assistant to the head of an organizational position acts in the capacity of a staff or technical assistant without exercising managerial authority over the line organization. They should be drawn of the same sizes. Staff and service functions are placed under the office or units served.Figure 4. 4. usually to the right using the dotted lines. 3. Solid/block lines should connect boxes or rectangles to desig­ nate managerial control or line of authority.

a Project Director plans and controls an entire project currently in that phase of development. In one dimension. the structure shows basic functional depart­ ments such as Research and Development. the desire to obtain organization units of manageable size. Sales Department. While the former is functionally oriented. the latter is often project-oriented. etc. In the other dimension.5 Matrix Structure In Figure 4. and Marketing. a Project Director plans and controls an entire project through all the functional areas necessary to its completion by placing personnel from each of the appropriate functional departments. a Project Director plans and controls the efforts for all projects currently in that phase of develop­ ment. The change may range from simple to complex. The Department Head in each of these functional areas plans and controls the dimension. two hierarchal structures intersect one another. Personnel Department. In the other di­ mension. Engineering. D EPA R TM EN TA TIO N ______________________________ Departmentation results from the grouping of work. Figure 4. Manufactur­ ing. Examples of departments are Account­ ing Department. and to utilize managerial ability An organization structure and design are shaped significantly by the departmentation followed.5 the organization is structured along two dimen­ sions. Organizing 119 .R E O R G A N I Z A T I O N Reorganization is the process by which an existing organization undergoes changes in the size and shape of the organization structure. Thus.

p ro c e s s . F ig u re 4 .6 Departmentation by function T h e p rim a ry o r m a jo r fu n c^ o n s u se d in this e x a m p le a re : P ro d u c ­ tion . a n d R e se a rc h a n d D e v e lo p ­ m e n t. Figure 4. e a c h o f th ese s e c o n d a ry fu n ctio n s m a y be fu rth e r s u b d iv id e d in to n a r r o w e r w o rk a reas. L e g a l. A n d it w o u ld a lso se e m th a t th e o rg a n iz in g fu n ctio n o f a man­ a g e r w o u ld in v o lv e g ro u p in g th e fu n ctio n s a n d activ itie s n e c e s s a ry to a t ta i n th e g o a ls o f a n e n te r p r is e . D e p a rtm e n ta tio n b y p ro d ­ u c t in v o lv e s g ro u p in g th e a ctiv itie s a n d fu n ctio n s o n th e b a sis o f p ro d ­ u cts m a n u fa ctu re d b y tfye co m p a n y .fu n ctio n in v o lv e s id en tify in g m a jo r fu n ction s to b e p e rfo rm e d in a ch ie v in g th e g o a ls o f a n o rg a n iz a ­ tion a n d g ro u p in g th e o th e r re la te d fu n ctio n s an d activ itie s a cco rd in g ly . T h is n a rro w d iv isio n of fu n ctio n h e lp s to a ch ie v e th e a d v a n ta g e o f sp e cia liz a tio n b y fu n ctio n . a n e le c tric a l m a n u fa c ­ tu rin g c o m p a n y m a y h a v e th e stru c tu re sh o w n in F ig u re 4 . M a n a g in g D irecto r P ro du ctio n 'M a n a g e r M arketin g M anager F in a n c e M anager P erso nn el M anager L egal A d v is e r R & D D ire c to r Figure 4. the p ro ce ss o f g ro u p in g th e fu n ctio n s a n d a ctiv itie s in an o rg a n iz a tio n is k n o w n as D e p a rtm e n ta tio n .It se e m s q u ite a p p a re n t th a t if the sta te d g o a ls an d o b jectives o f a n o rg a n iz a tio n a re to b e a tta in e d .7 Departmentation by product 120 Management for Filipinos . F in a n ce . P e rso n n e l. A s sta te d a b o v e . A fte r th e p rim a ry fu n ctio n s are id en tified . G ullick sets u p fo u r b a se s fo r d e p a rtm e n ta liz in g a n o rg a n iz a ­ tion . T h e t e r m f o r t h a t p r o c e s s is D e p a rtm e n ta tio n (o r D iv isio n o f O rg a n iz a tio n ). p ro d u c t. M a rk e tin g . T h e y are D e p a rtm e n ta tio n b y fu n ctio n .7 . ce rta in activ itie s h a v e to b e p e r ­ fo rm e d . a n d g e o ­ g ra p h ica l locatio n . D e p a rtm e n ta tio n by.6 sh o w s D e p a rtm e n ta tio n b y fu n ction . It g iv e s a h o riz o n ta l d im e n sio n to a n o rg a ­ n iz a tio n . F o r e x a m p le . th e n e x t ste p is to id en tify s e c o n d a ry fu n ctio n s a n d g ro u p th e m a cco rd in g ly . A t th e n e x t step .

For instance. The figure for departmentation by geographical location is shown in Figure AS. Figure 4. Figure 4. For example. a service organization may structure its work by the service it offers. an industrial engineer. VISAYAS DIVISION. a sales organization may have groupings like: NCR DIVISION. dyeing. separating. packaging and transporting in marketing its prod­ uct The figure for this type of organization is shown in Figure 4. this method of grouping involves duplication of some of the activities and hence for this reason it may be costly. According to Dale. or any of the other methods dis­ cussed above. inspecting.8 Departmentatlon by process Finally. grouping by product or service has the advantage of bringing together and coordinating in one place major activities required to make a particular product. the grouping may be done on the basis of geographical location. weaving.9 Departmentatlon by geographical location Organizing 121 . bleaching. In some organizations the grouping of activities is done on the basis of the nature of work being done. it may be practical to bring together all operations performed in a particular geographical location.Each of these divisions may be further divided into departments based on the components of these products or by functions performed. In this method. In many in­ stances.8. that is by process. a textile manufacturing company may have to go through the process of receiving raw material. the entire service area of the organization is divided into geographical locations or territories. Likewise. and MINDANAO DIVISION. spinning. LUZON DIVI­ SION. Of course.

7. 11. 4. helping develop executive ability. aiding in equitable distribution of work. Responsibility This is the work or duty assigned to a particular position. The elements of delegation are the following: 1. preventing duplication of work. staffing. aiding in measuring a person's performance against his charges and iesponsibilities. 13. 6. permitting'expansion and contraction without seriously disrupt­ ing the structure. establishing closer cooperation and higher morale. organiz­ ing. 12. making growth possible with adequate control and without liter­ ally killing top executives through overwork. 2. The work of the manager can be divided into two categories: First. and. directing. pointing out "dead-end" jobs. the op­ erative functions which include all activities that have to do directly with their specialization. of 122 Management for Filipinos . 8. delineating avenues of promotion. 10. A u th o rity It refers to the power or the right to be obeyed. 14. and aiding in wage and salary administration through forced job analysis and description. and/or person­ nel supervision. 3. second. T H E E L E M E N T S O F D E L E G A T IO N Delegation is the process of entrusting and transferring responsi­ bility and authority by the top management to the lowest level. in times of change. eliminating jurisdictional disputes between individuals. and controlling activities. affording movement in the direction of the "ideal" organization. Re­ sponsibility involves mental and physical activities which must be per­ formed to carry out a task or duty. A good organization would result in the following: establishing responsibility and preventing "buck passing. 5. the management functions which cover planning." providing for easier communication. functions. It is also the sum of the powers and rights entrusted to make possible the performance.RESULTS OF G O O D O R G A N IZ A T IO N 1. This can be delegated. 9. 2.

The superior can only exact responsibility to the extent that standards of performance are defined. It is an art because it is a skill that the manager performs effectively if he practices it. Accountability This is the answerability of the obligation to perform the del­ egated responsibility and to exercise the authority for the proper perfor­ mance of the work.the work delegated. The traditional concept uses Henri Fayol's statement: “Authority is the right to command and the power to make oneself obeyed. They explain authority to be a rela­ tionship between the supervisor and the worker. his immediate boss. and hiring and dismiss­ ing of employees. Organizing 123 . upward instead of downward. The behaviorist or social scientist treats authority differently as opposed to the traditional concept. those arising out of one's nearness to those with line authority. and as long as the group allows itself to be under the authority. The ultimate source of power is the group. Each person can be accountable to only one person. therefore. 3.the tradi­ tional. They believe that au­ thority is given by subordinate to superior. Accountability cannot be delegated. These should be differentiated from delegated authority. Knowledge of these concepts can give us a better view of authority. Authority includes such rights and powers with regard to receipt and disbursement of money. The direction of authority is. Accountability is given to the person who accepts the responsibility and is accountable only to the . The real source of power is the subordinate and not the superior. There are three current concepts of authority ." This view is present among those who claim themselves belonging to the scientific school of management. Other types of authority aside from what has been mentioned are: those that result out of one's knowledge which is called the author­ ity of knowledge." A latter interpretation of the statement is “Authority is the right to give others orders and the power to exact obedience. It is significant that an understanding of our concept of authority is clarified.extent that he is given the authority to perform. It may sometimes be limited only to the power to make. T H E A R T O F DELEG ATIO N Delegation is considered an art and a science. consult. the management can exercise that power. where the worker is seen as a mere tool in the organiza­ tional machine. or give service which is related to the staff function. and the functional. the behaviorist.

h as p o w e r o v e r h e r o w n su b o rd in a te s. P o s itiv e m o tiv a tio n . L astly. T h e su p erior sh ou ld see to it th a t tra in in g is g iv e n to su b o rd i­ n a te s w h en necessary.Delegation should first and foremost be tackled before the estab­ lishment of goals and objectives and a clear definition of responsibility and authority has been made. th e n e x t tim e you delegate the job . T h e e x ce p tio n p rin c ip le sta te s th a t m an ag ers sh o u ld c o n c e n tra te th eir effo rts o n m a tte rs th a t d e v ia te significantly from th e n o rm a l a n d let su b o rd in a te s h a n d le ro u ­ tin e m a tte rs. O rd i­ n a rily th e discussion of B u re a u c ra c y is p la c e d a t th e b e g in n in g o f a n y 124 Management for Filipinos . The idea h e re is th a t m a n a g e rs sh o u ld c o n c e n tra te o n th o se m a tte rs that require th eir abilities a n d n o t b e c o m e b o g g e d d o w n w ith d u tie s that their su b o rd in ates sh o u ld b e d<?ing. T o 'b e effective. T h e technique of u sin g g ro u p p a rtic ip a tio n a n d effectiv e c o m m u ­ n ica tio n can p ro vid e the su b o rd in a te s a sen se o f b e lo n g in g in th e g ro u p . P o sitiv e m o tiv a tio n m a y b e d e ­ scrib ed as p sych ological as w ell a s m o n e ta ry a n d o th e r tan g ib le b e n ­ efits. so there is unity o f c o m m a n d th ro u g h o u t th e h ie ra rch y . an in d iv id u a l reports to o n ly o n e s u p e rio r to a v o id co n fu sio n a n d ro le co n flict. sh e is a ssig n e d a e ra n k in g o f in d iv id u a ls accordin g to th e a m o u n t of ra tio n a l-le g a l a u th o rity th e y c a n e x e rcise w h en they are fulfilling th e resp o n sib ilities of th e ir p o sitio n s. it w ill b e th e s u b o rd in a te 's tu rn to fo r­ g et. T h is con d ition w ou ld in d u ce the p e rs o n to in te g ra te h is o b jectiv e w ith o rg an izatio n objectives. T h e e x ce p tio n p rin ­ cip le c a n b e hard to co m p ly w ith w h e n in c o m p e te n t o r in s e cu re s u b o r­ d in a te s re fe r everyth in g to th e ir s u p e rio rs b e c a u s e th e y a re a fra id to m a k e decisions. in turn. A n im m ed iate s u p e rio r h a s p o w e r o v e r this in d iv id u a l. th e s u p e rio r sh o u ld re fra in fro m m a k in g e v e ry d a y decisions w h ich h a v e b een d e le g a te d to a su b o rd i­ n ate. th a t is. T h e key co n cep t o f B u re a u c ra c y is H ie ra rch y . the m a n a g e r sh o u ld n o t d e le g a te re s p o n ­ sibility a n d then forget a b o u t w h a t h e d e le g a te d . T h e m a n a g e r sh o u ld a lw a y s ch a lle n g e the su b ­ o rd in a te s in the form of p ro v id in g w o rk th a t a re d ifficu lt b u t n o t im p o s ­ sible to attain to rem o ve the effects o f b o re d o m . O n the o th e r h a n d . the m a n a g e r m u s t m o tiv a te th e su b o rd in a te s to w o rk o n the delegated resp o n sib ility a n d au th o rity . T H E E X C E P T IO N P R IN C IP L E T h e excep tion p rin cip le (also k n o w n as m a n a g e m e n t b y e x c e p ­ tio n ) is closely related to the p a rity p rin cip le. W h e n an individual co m es in to the o rg a n iz a tio n . in ste a d o f n egative. tic u la r position. Typically. sh o u ld b e g iv en . th e ability to g iv e c o m m a n d s th a t she m u s t a c c e p t T h is in d i­ v id u a l. If th is h a p p e n s .

or informal system. and control.section treating the design of organizations. an understand­ ing of the major forms of organization will greatly facilitate our compre­ hension of Bureaucracy.arise spontaneously as a result of interactions patterned relationships . relyipg heavily on the work of Max Weber (1947) a German Social Scientist who was a contemporary of Henri Fayol. This system is frequently pictured in the official organization chart. The formal system is composed of the recognized and formalized lines of communication. FO RM A L A N D IN FO R M A L O R G A N IZ A T IO N S Every organization structure has two systems of operation: the formal and informal. However. In this section we turn our attention to this topic. The sec­ ond.10 Contrasting formal and Informal structures FO RM AL IN F O R M A L • have planned structure . is much more subtle and invisible in the orga­ nization chart.not depicted in a chart • usually shown by a chart Organizing 125 . Figure 4. authority.not formally planned • deliberate atl?mpts to create .

showing the functional roles. Often the informal organizations are formed for the purpose of satisfying some social needs. Vari­ ous clubs.11 Organization chart with four informal organizations Indicated by broken lines. Figure 4. . industrial organizations and educational institu­ tions are formal organizations. C E N T R A L IZ E D A N D D E C E N T R A L IZ E D O R G A N IZ A T IO N S One of the most important questions that a company must an­ swer as it grows is whether or not to continue management that is centralized in one person. These organizations may exist within the" formal organizations or may exist and operate independently. teams. the informal organizations lack rigid structure. and similar other groups come under this category.human relations theory stresses informal organization While the formal organizations have a rigid organization struc­ ture. or to decentralize management by delegating some of its authority to subordinates. associates. i 126 Management for Filipinos . All business.• traditional theory advocates formal organization.

accounting. Control by many because men at the top believe that participation will increase efficiency and effectiveness. In a centralized organization. Chain department and grocery stores frequently adopt a central­ ized management scheme.12 The many functions of staff (World Executive Digest) In a centralized management organization. Organizing 127 . marketing. major decisions are made by a few top executives. Even when there are multiple branches. advertising. Don't trust subordinates. subordinates exercise little (if any) ini­ tiate in decision making. A decentralized management organization represents a system­ atic effort to delegate to lower levels all authority. Centralized management in these organiza­ tions assume that the responsibility for buying. Let us look at some characteristics of these two types of organizations. C E N T R A L IZ E D D E C E N T R A L IZ E D Control by few because men at the top believe they are indispensable. On the other hand. except that which can only be exercised at the highest level. in a decentralized organization authority is dispersed throughout and decision making is distributed throughout the organization. authority rests only in a few hands and most of the decisions are made by these few. and other functions will be conducted at one location even though there are many operating branches. and like to build empires within.Figure 4. most decisions are made at the main office rather than at the local branch.

128 Management for Filipinos . and industrial relations. Staff personnel advise and assist the line personnel. there is probably no area of management which causes more difficulties and more loss of time and effectiveness. or most of its members are line personnel. and managers as to what lines and staffs are. Therefore. accounting. and the authority rela­ tionship of members of an organization can also affect their roles in the operation of the business. The drawback may be controlled by many. Nevertheless. T H E NATURE O F LINE A N D STAFF R ELA TIO NSH IP Another way to improve coordination is to distinguish clearly between line and staff positions so that organization members clearly recognize the degree of responsibility associated with each organiza­ tional position. training. Subsequently. a department or a position is called a staff if its objectives are indirectly in line with the company's objectives. There have been conflicting opinions made by educators. decisions are made throughout the organization. personnel. The drawback is potential paralysis of decision making and poor moral. line and staff relation­ ship is important to any kind of organization. As defined previously. a department or a position is called a line if its objectives are directly in line with the company's objectives. personnel. On the other hand. As the organization matures. personnel. we can classify production and sales (and sometimes finance) as line functions. line personnel are those who contribute directly to the accomplishment of organizational objectives. and purchasing. Some common examples of staff employees in large or­ ganizations are those in research. it usually begins to increase its staff personnel because of the complexity of the work.As a result of the above attitude. though. it is simply no longer possible to use only line. authors. As a result of the above attitude. plant mainte­ nance and quality control as staff functions. a vice-president for production or a worker who actually makes the product the firm sells. One accepted concept of the line and staff is that which has direct responsibility for accomplishing the primary objective of the business. Simply speaking. When an organization is small and uncomplicated. For example. all. decisions are made by the top management.

both organizational structures have ten subordi­ nates under a top person.13 Tall structure Figure 4. The “tall" struc­ ture leads to close or tight supervision. As can be seen from the figures. the organization' develops a “flat" structure. the “tall" organization structure involves more organizational layers or levels than the "flat" structure. TheJ'flat" structure has two levels with a span of ten. See Figures 4.Figure 4. narrow spans lead to a “tall" structure. accounting firms. While the “flat"*structure permits general supervision. The “tall" structure has four levels with a span of two.13 and 4. . In the diagram. There is no way of saying that both have certain limitations and advantages. and research laboratories may find the "flat" structure ideal.14 Flat structure “ FLAT” and “TALL” STRUCTURES As the span of supervision or control increases (the namber of subordinates being supervised). Communication is much faslei in an organization with a wide span of control than in an organization with a narrow" span.14. O rganizing i . On the other hand. Organizations such as banks.

Linda Ignacio. manufacturer of men's ready-to-wear (RTW) suits and jackets. Classify organization into different groups and give specific ex­ amples of each. Under w hat condition is each type of departmentation appropri­ ate? 12. emphasizing that teamwork. strongly defended the president. suggested format for case study) "I do not believe in organization charts or position descriptions of any kind in this company. We grew from a small company with PI 00. and what are the implications of your choice? 2. not organization charts. do you think you would prefer a large (more than seven) or small (seven or less) span of management? Why. What is meant by organization structure? 8. What does the organization chart illustrate? 9. "I could not run my department without organization charts and position descriptions. the company comptroller. 7. D escribe each of the four maf^r types of departmentation. As a matter of fact. What is the scalar principle? 3." Mr. What is the exception principle? 4. Define departmentation? 11. "We are a successful and fast-rising company where I want all managers and labor to work as a team." declared Johnny Ramos. We are not San Miguel Corporation with its complex organiza ion charts.000 annual sales to a P5 million enterprise because we pooled our resources. head of manufacturing. Ignacio said. president and founder of the Power Company." Ms. coming up with competitive products at low costs. I have them hidden in my desk where Johnny Ramos never sees them!" R E V IE W Q U E S T IO N S 1. Organization charts and job descriptions make people believe they own a position on a chart and want to keep it. Silang. believed otherwise and declared the president's view "absurd and unprogressive. What is span of control? 130 Management for Filipinos . What factors must be considered in structuring organizations? 10. is the key co success. What is an organization? 6.SH O R T CASE STUDY: O R G A N IZ IN G T H E POW ER C O M PA N Y (See Chapter 12. As a manager. What are line functions? What are staff functions? 5.

" in to d a y 's h ig h ly m e c h a n iz e d a n d efficient so cie ty ? EXPERIENTIAL EXERCISES 1. 3. a . D o y o u th in k th a t d iv isio n o f lab o r h a s b een e m p h a siz e d to o m u ch 5. a n a ly z e h o w i t c a n c o n tr ib u te to t h e a t t a i n m e n t o f t h e c o m p a n y ’s o b je ctiv e . w a y to g ro w a n d k eep th e c o rp o ra te staff s m a ll. Organizing 131 . 4. ) U n iv e r s ity o f t h e P h ilip p in e s D ra w a n o r g a n iz a tio n a l c h a r t sh o w in g th e d iffe re n c e s b e tw e e n c e n tr a liz e d a n d d e c e n tra liz e d ty p e s o f o rg a n iz a tio n . G o rre s . D iscu ss th e re a s o n s fo r o rg a n iz in g .W h a t f a c to r s m u s t b e co n sid e re d in d e te r m in in g t h e s p a n o f 13. th e firm n o lo n g e r h a s to w o rry a b o u t stru c­ 3. 15. E x p la i n . a n d V elayo c . tu r e ." H o w w o u ld y o u re sp o n d to th e follow in g sta te m e n t: "T h e re is n o 4. v io la te s th e u n ity -o f-c o m m a n d p rin cip le? D iscu ss th is sta te m e n t: "W h e n th e a p p ro p ria te o rg a n iz a tio n stru c ­ tu re is d e te rm in e d . E n u m e r a t e t h e v a r io u s d e p a r tm e n ts in th e fo llow in g o r g a n iz a ­ tio n s t h a t m a y be c la s s ifie d a s lin e d e p a r tm e n t o r s t a f f d e p a r t ­ m e n t. c o n tr o l? H ow d oes a n o rg a n iz a tio n w ith a f la t s t r u c tu r e d iffe r fro m a ta ll s tru c tu re ? H o w do f la t s t r u c t u r e s b e co m e ta ll s t r u c tu r e s a n d v ic e v e r s a ? 14. ) P e p s i C o la B o ttlin g C o m p a n y 2. ) S y c ip . I n t e r v i e w o n e e m p l o y e e b e lo n g i n g t o a n i n f o r m a l g r o u p (barkada) a n d d e s c rib e t h e p re d o m in a n t to p ic /s u b je c t in o n e o f t h e i r in f o rm a l c o n v e r s a tio n s . H o w ca n y o u ju stify th e u se o f a m a trix stru c tu re sin ce it cle a rly 2. W h a t is a n a d E x p la i n : (a ) (b) (c ) hoc The The The c o m m itte e ? fu n c tio n a l ty p e lin e ty p e lin e a n d s t a f f ty p e DISCUSSION QUESTIONS 1. b . D r a w t h e o rg a n iz a tio n c h a r t o f y o u r p ro p o se d b u s in e s s s t r u c ­ t u r e a n d c la s s ify t h e ty p e s o f o rg a n iz a tio n a l s t r u c t u r e s u se d .

Cyril. Pura Garcia.M. Garcia Publishing House. 7. 169-185. 2.REFERENCES 1. Management: A Functional Approach. 1991.. New Jersey: Prentice-Hall. New Jersey. S. Business Organization and Management. Management Theory and Practice. Essentials o f Management. pp. 1982. 9. 1998. p. 4. Jeon Eng Chua et al. Damaso. Gutierrez. Gimeno M. Prentice-Hall. Putti... Perfecto S. 5. Manila: Sinagtala Publishers. 1993. Harold and O’Donnel. Lazzaro. Jr. Inc. 101. Sison. George. Inc. Manila: GIC En­ terprises. 3. 1997. 1994. Management o f Business. Personnel and Human Resources Management. pp. Claude. pp.. 6. Singapore: McGrawHill Book Company. 219-290. p. Management for Business and Industry. Victor. Martinez. 132 Mgn%_<rr(ent for Filipinos . Quezon City: R. 1997.. Inc. How to Start Your Own Business. 1993. Singapore: Mc-Graw-Hill Book Company. Inc. New Delhi: Tata-McGraw-Hill Publishing Co. 79. Systems and Procedures. 1997. Quezon City: Rex Printing Company. 7-9. Koontz. 43-45. Joseph. 8. Esdras T.

4 .1 I O R G A N IZIN G . GORRES & VELAYO (SGV) Organization’s Objective: 3. PEPSI COLA BOTTLING COMPANY Organization's Objectives: 2.LINE A N D STAFF N a m e :____________ _________________ Year/Section: Professor: __________________________ Date: ---------- Enumerate the various departments in the following organizations that may be classified as line department or staff department. UNIVERSITY OF THE PHILIPPINES Organization's Objective: Organizing 133 . ORGANIZATION LINE DEPARTMENTS STAFF DEPARTMENTS 1.Worksheet No. SYCIP.

\ S 134 Management for Filipinos .

4.TRALIZED ORGANIZATIONAL CHART DECENTRALIZED ORGANIZATIONAL CHART Organizing 135 .12 O R G A N IZ IN G .Worksheet No. .C E N T R A L IZ E D & D E C E N T R A L IZ E D O R G A N IZ A T IO N N am e: __ ______________________________ Y ear/S ection: ------------------- P r o fe s s o r :_____________________________ Date: ------------------------------------• Draw the typical organization charts showing the differences between centralized and decentralized types of organization.

136 Manag«m«nt for Filipinos .

12 ORGANIZING •INFORMAL ORGANIZATION Name: Year/Section: Professor: Date: ---------- Interview one employee belonging to an informal group (barkada) and describe the predominant topic / subject in one of their informal conversations.Worksheet No. 4 . Analyze how it can contribute to the attainment of the company's objective. COMPANY NAME TOPIC/SUBJECT OF INFORMAL CONVERSATION ANALYZE HOW IT CAN CONTRIBUTE TO THE ATTAINMENT OF THE COMPANY'S OBJECTIVE Organizing 137 .


4 . (Is it centralized or decen­ tralized?) Explain.TYPES OF STRUCTURE Name: _____________________________ Y ear/S ection:----------------- Professor: __________________________ D a te :----------------------------- Draw the organization chart of your proposed business structure and classify the type/s of organization structures used. BUSINESS PROPOSAL PROPOSED ORGANIZATION CHART TYPE OF ORGANIZATION STRUCTURE IS IT CENTRALIZED OR DECENTRALIZED? EXPLAIN Organizing 139 . 12 ORGANIZING .Worksheet No.

■ vK .:' M anagem ent fo r Filipinos .

use your heart. the student is expected to understand the following: • Definition of Staffing •* Nature of Staffing • Recruitment • Selection • Training ■ « • Identifying Training Needs • Types of Training • Human Asset Accounting • Movements of Personnel "To handle yourself." . use your heart. to handle others.The English Digest .Chapter 5 Staffing Learning Objectives: At the end of the chapter.

This function must be considered as part and parcel of the whole system of management. The managerial function of staffing involves manning the organizational structure through proper and effective evaluation. and training of men. The staffing function in­ cludes the determination of manpower needs. and development of people to perform the roles. including the chairman of the board of the company. must handle some phases of staffing. However. The de­ gree of importance given to the staffing function depends upon the size of the organization. their recruitment and employment.D E F IN IT IO N OF STAFFING Q V p TAPPING is the process of recruiting. R E C R U IT M E N T Recruitment is the process of encouraging. selection and training of men within their respective departments and have too often overlooked the essential nature of their responsibility that should not be assigned only to the personnel manager. inducing. Every manager. staffing has developed into a relevant and important part of knowledge and prac­ tice in management. N A TU R E OF STAFFING All business organizations should focus their attention and be concerned about the effectiveness and efficiency of their employees. selection. the actual recruitment and selection . Finally. especially their managers. Whenever there 142 Managem ent for Filipinos .of organization positions include pro­ cedures not usually discussed in the function of organizing. the chairman of the board of the company performs this function. The function of staffing has to do with man­ ning an organization structure so that it can completely operate in the present and the future. even though the personnel department may provide technical help. some educators and authors in management consider staffing as part of organizing. selecting. In small organizations. or influenc­ ing applicants to apply for a certain vacant position. First. the discovery of persons to fill these needs. The second reason is that all managers are responsible in the recruitment. It means putting the right men on the right jobs. This book treats it as a separate managerial function for a number of reasons. their placement and orientation and the rearrangement of team members through pro­ motion and transfers.

P la n s an d p re p a re s w o rk p ro g ram s and en s u re s effective im p le m e n ta ­ 2. Steps in Recruitment Step one . selecting. but they antici­ pate such vacancies and new opening? in the short and long run and thus plan for the future needs. P a rtic ip a te s in th e form ulation o f m a n p o w e r and m a te ria l re so u rces w ith in h e r jurisdiction. control a n d h and lin g o f funds. The results obtained from recruiting. Job specification gives the specific qualifications required for the position. a c c u ra te . p re p a ra tio n o f required reports and costing o f p ro d ­ u cts.are vacancies. training. special abilities and aptitudes. Example of Job Analysis N am e M a rie tta T a m a ra y P osition A ccounting S up erviso r O rg a n iz a tio n R elation sh ip R e p o rts to C h ie f A ccou n tan t S u p e rv is e s B o o k k e e p e r II Bookkeeper I A ccounting R e p re s e n ta tiv e s D e p a rtm e n t O ffic e o f th e C o n troller S e c tio n A ccounting C om pany G o o d M orning C orpo ratio n Job Description S u p e rv is e s an d conducts activities relative to th e m a in te n a n c e o f c o m ­ p le te . placing. Duties and Responsibilities 1. Staffing 143 . depend directly upon the effectiveness of the planning and forecasting phases of employment development. and other requirements. s y s te m o f c ash handling. This approach gives more time to re­ cruiting and also increases its effectiveness. Some organizations do not wait until the vacancy arises. A description of the duties and responsibilities attached to the job enables the employment officer to determine the special quali­ fication which an individual must possess in order to do the job suc­ cessfully. physical qualifications.S tu d y in g the D ifferent Jo b s in the C om pany a n d W riting Jo b D escrip tio n s and Specifications (Job A nalysis) Job description defines the duties and responsibilities of a par­ ticular position. special training. it is necessary to find a person to fill those vacancies. skill and physical demands. age. V e rifie s d aily e ach position reports to e n s u re p ro p e r im p le m e n ta tio n of tion th ereo f. such as the following: amount and type of experience needed to perform the job. developing and motivating em­ ployees. and u p -to -d a te acco un tin g records of tran sactio n s.

indicating the position to be filled. the date when the new em­ ployee will be needed. 144 Management for Filipinos . 10. and other pertinent data.3. effe c ts p ro p e r charging o f acc o u n ts . Step Three . 7. In this maimer the chance of drawing out the most qualified applicants for the position may be more discerning. the required qualifications of the employee. To make the selection truly dis­ criminating there must be several qualified applicants from whom the final choice can be made. b) External . 4. 5. Sources of Labor/Applicants: a) Internal . trains. m o tivates. the job description.employees recruited within the company. conducts investigations of violations th e re o f. C o n d u cts p e rfo rm a n c e e v a lu a tio n o f subord inates and re c o m m e n d a p ­ pro priate personnel action. the line supervisor or the department head concerned should accomplish a formal requisition form. C o o rd in a te s activities o f b usin ess to e n s u re p ro p e r tim e ly p re p a ra tio n s an d subm ission o f re q u ire d reports. Job Specifications • C P A .p ro ced u res. placement agencies. approval by the responsible official of the company. p re fe ra b ly M B A and w ith e x p e rie n c e in co m p u ter o p eratio n • A t le a s t five y e a rs e x p e rie n c e on a D e p a rtm e n t M a n a g e r’s level • F e m a le . references. g uides an d c o un sels s u b ­ o rd in a te s a n d m a in ta in s h arm o n io u s relationships a m o n g th em .Actual Recruitment o f Applicants Recruitment is the process by which prospective applicants are induced to apply in the company in order that their qualifications for present and anticipated vacancies can be evaluated through sound screening and selection procedures. V erifies p etty c ash re s o u rc e s . E n s u re s im p le m e n ta tio n o f th e a d h e re n c e to c o m p a n y policies an d . P e rfo rm s o th e r re la te d functions. a n d re c o m ­ m e n d disciplinary m e a s u re s . C h e c k s an d counts petty c ash fund h a nd led by acco un tin g re p re s e n ­ ta tiv e s and ta k e s n o te o f u n a u th o rize d a n d unliquidated a d v a n c e s . his pay rate. 9. advertisements. and e n s u re s th a t re im b u rs e m e n t o f e x p e n s e s is in a c c o rd a n c e w ith fin a n c e policies an d p ro ced u res. 8.applicants recruited through schools. C o n d u cts studies a n d re c o m m e n d s a m e n d m e n ts o r su gg e s tio n s to s y s te m a tize activities and p ro cedu res. 6. etc. a t le ast 3 5 y e a rs old • R e lia b le and trustw orthy • O f goo d 'm o ral c h a ra c te r Step Two - Requisition of New Employee To inform the personnel department. P re p a re s m onthly s c h e d u le o f accounts re c eivab le.

The first interview is preliminary. S te p T w o — Preliminary Interview The purposes of the interview are: (a) to find out how qualified the applicant is for the vacancy. Some of them are limited by means of "preliminary screen­ ing" or "sight screening.R e c e p tio n o f A p p lic a n t s Not all applicants are allowed to go through the entire process of selection. S te p T h re e - Application Form The application form is used: 1. physical condition. Some companies give more emphasis to the impressions created by the applicant in the interview. and those who should not be consid­ ered at all. No company hires an applicant without conducting an emploj ment interview of some kind. 4. This shows the importance of the interview as a major selection and place­ ment tool. 3. and former employers. and its purpose is to eliminate those applicants who are clearly unqualified. As a guide when interviewing the applicant. employment tests. For matching the qualifications of the applicant with the job requirements as indicated in the job description and job specification. the interviewer uses the applicant's records of previous employment. For checking on the applicants' school records. such as age.S E LE C TIO N Selection is the process of getting the most qualified applican from among different job seekers. etc." whereby the undesirable applicants are quickly eliminated on the basis of rapid appraisal of their apparent characteristics. Screening is the process by which the applicants are being inter­ viewed and classified under two categories . 2. others do not use any other tool in employee selection except the interview.those to be given exami­ nations and further interviews. height. S taffing 145 . As a basis for eliminating applicants with unfavorable per­ sonal data. The written comments and evaluation of the interviewer are helpful in comparing applicants and for future re ferenee. For his guidance. references. (2) to give the applicant the information he needs in order to decide to take the job if offered to him. and (3) to create goodwill for the company. Steps in Selection S t e p o n e . and other background in­ vestigation.

This method gives the line supervisor. The supervisor then interviews the three and makes his final choice among them. As part of the employee's permanent record and for commu­ nicating -vith the employee or his family. S te p Four . however. he decides who should be called in to take the employment tests. are then referred to the supervisor who needs the new employee. Some firms use the "Rule of Three" in the final choice of appli­ cants for the job. Is he really interested in the job and does he want to work for the company? 3. T>.Final Selection by Immediate Supervisor or Department Head Employment involves three decisions: 1. as determined by the employ­ ment officer. Management's decision as to whom among the applicants would best fit the job and should be hired. the three best qualified. prev ent contamtfvrtfon of contagious disease.. the applicant may be referred to a company physician or to a medical consultant for the medical and physical check-up. 146 Management or Filipinos . The applicant's decision as to whether or not the job is the right one for him after the supervisor has discussed the job duties. The supervisor must look into his personality and see if he is able to work well with the members of his team. who will have direct responsibility for the prospective appointee. To. The supervisor must decide if the applicant is the kind of man who can be at work with him in his team. The supervisor or head of the unit making the request for the new employee makes the final choice from among the applicants who have passed screening by the employment office. S te p Five .Physical and Medical Examination The selected applicant is required to pass a physical and medical examination.Employment Test The employment officer goes over the application forms. In small companies. Large companies. The purpose of testing is to measure the applicant's abilities which cannot be gauged through interviews. the final choice from among the applicants certified by the personnel office. 2. On the basis of the information it contains and from the impression the officer gathers at the preliminary interview. In some cases. Step Six .e purposes of physical and medical examination are: .5. usually have their own medical de­ partments or retain the services of hospitals or clinics for the purpose. They also help make an objective comparison among applicants. the new employee is simply asked to present a certification from a private physician as to his health condi­ tion.

Step Seven - H irin g When a candidate has passed all the selection requirements and is chosen. For the growth of the individual and the orga­ nization. rules and regulations. Also during the selection process. The orientation from co-workers is usually unplanned and unofficial. Step Eight - O rie n t a tio n /I n d u c tio n /In d o c t rin a t io n New employees are oriented on company policies. TRAINING Training. working conditions. etc. All employees on a new job undergo a learning pro­ cess whether or not formal training exists. appli­ cants often see other general aspects of an organization and what their duties. year-round task. Changes in these areas can make current skills obsolete in a short time.are carried out continuously in many organiza­ tion. and inducted or briefed about his job by the immediate supervisor or by the training officer.. the new employee's manager has primary re­ sponsibility for training on how to perform the job. social. the q> ' ’ ity of this initial training can greatly influence the employee'. Learning to perform or be more efficient in performing a job is made easier for employees where •there is formal training. he is finally sent to the personnel department for the comple­ tion of the hiring process. sometimes through the organizaition's reputation: how it treats employees and the type of prod­ ucts or services it provides. Job applicants get some orientation to the organization even before they are hired. hospitalization expenses.2. Economic. and pay will be. Staffing 147 . technological. aiutude and productivity. Usually a separate department or unit is set up to look after this responsibility. Generally. according to the Labor Code of the Philippines. It is a day to day. Sometimes this i« delegated to a senior employee in the department.. these act vities. Regardless. and governmen­ tal changes also influence the skills needed in an organization. is the systematic development of the attitude/knowledge/behavior patterns for the adequate performance of a given job or task. An effective orientation program has an immediate and lasting impact on the new employee and can make the difference between a new employee's success or failure. planned organizational changes and expansion can make it necessary for employees to update their skills or apply new ones. To prevent the hiring of liability employees which may result in absenteeism. j. and it can provide the new employee with misleading and inaccurate information. This is one of the reasons that it is important to have an orientation provided by the organization.

Personnel. self-disqualification | EMPLOYMENT TESTS by answers. rate b'eioi expectancy or inon shop Decision that job or com pany is __ unsatisfactory or not worth coming to work for PROBATIONARY FOLLOW -UP * SUBSEQUENT COUNSELING Sense of job faikre inability to ' fit In". Unsatisfactory information about company. No. j qualOei or backgrouv) EMPLOYMENT INTERVIEWS or jcb. 12. Deciding on specific training activities in an organization requires a systematic and accurate analysis of training needs. Not physcaly M for job or com pufty insurance Unfavorable im pression of work area end supervision PREEMPLOYMENT PHYSICAL EXAMINATION Discovery of udtvoraQle dale not considered m poor evaluation Refusal to be examined or to sign waivers COMPLETIO N OF EMPLOYMENT FORMS. Refusal to taka tests. PASSES ORIENTATION TRAJN1NO ANO INTRODUCTION ON JOB F o / e m Imtfal job assign­ m en t or reassignment Discovery of unfavorable consideraions | such'as wages. "JSTaopointment m Tc£7")oo a s s jr* '' personal or ransportaion problems | FINAL EMPLOYMENT Continuation for reversal of prior decision to leave company ejection of company by applcsnt Figure 5. p.S. cioar security 1 of INFORMATION AND SELECTIO N BY EMPLOYMENT OFFIC E WAITIN G LIST-ACTIVE FILE OF INFORMATION APPLIC ANTS OR OFFER O f EMPLOYMENT Refusal o( offer im mediately or when called VISIT TO W O R K AREA ANO FINAL . or reduced operating costs. An organization should only commit its resources to training that can help in achieving it objectives. At any rejection point a formal or informal "exit interview" completes the procedure.1 Showing the Employment Procedure as a series of screenings in which the applicant is either rejected or passed along to the next step until final employment. such as more efficient production methods. SECURITY CHECK (FINGER 7 PRINTING) i f REQUIRED. There are many methods that can be used to determine an organization's training 148' iVlanagement for Filipinos . 0 SELECTIO N BY SUPERVISOR(S). SCHOOL. improved quality product/services. 4. Dislike of interviewer INVEST IOAT:ON O r P E R 3 » L HIS­ TORY ANO W ORK RECORD REFER­ ENCE CHECKS (PERSONAL. Uhrbrock. Vol. 231) ID E N T IF Y IN G T R A IN IN G NEEDS Trainings must be aimed at the accomplishment of some organi­ zational goals. PHOTOS.R afeclon of com pery by «pp*car. HOUSE VISIT p r e l im in a r y e v a lu a t io n Inability to g-va references. The applicant may refuse to go to the next at any point and thus reject the company. WORK). (Based on a shorter chart by R.t RECRUITMENT * PERSUASION TO COME TO EMPLOYMENT OFFIC E -JT71 D isin te re st in c o m p a n y opportunity RECEPTION O f APPLICANTS r'd | I Unfavorable im p rtttio n of company or selfdisquaiification (of a tz e n s only) Unfavorable impresaion of job opportunity PRELIM IN ARY INTERVIEW | Refusal to wait for interview COMPLETION O f APPLIC ATION B O N K AND EVALUATION | Refusal to complete blank or self-disquall- | ficabon because of content or conditions.

How­ ever. it can be collected and examined with minimal effor and interruption of the work flow. ques tionnaires. The trainee is shown how to perform the job and allowed to do it under the trainer's supervision. Staffing 149 . sometimes called crosstraining. Vestibule training has been used for training typists. One method of on-thejob training is job rotation. an employee learns several different jobs within a work unit or depart­ ment and performs each for a specified time period. another can perform the job. mechanics. Interviews with employees. and tailors. procedure and equipment similar to those used in the actual job are set up in a special working area called a vestibule. The apprenticeship period generally lasts from one month to one year. this method is expensive. For ex­ ample. electricians. During this time. The main advantage of this method is that the trainer can stress theory and use of proper technique rather than output. such as carpenters. Apprenticeship Training Apprenticeship training dates back to biblical times. 2. word processor operators. On-the-job Training and Job Rotation On-the-job Training (OJT) is normally given by a senior em­ ployee or supervisor. One positive point of job rotation is that it allows flexibility in the department. when one member of the department is absent. Company reports and records provide clues to internal troubl spots. and group discussions can also be used to locate training needs. Records on absenteeism.needs. the trainee works under the guidance of a skilled worker. and accident rate provide objective evidence of problems. tardiness. bank tellers. Because this type of informa tion already exists. bricklayers. and oth­ ers in similar jobs. C O M M O N TYPES OF T R A IN IN G 1. It is fre­ quently used to train personnel in skilled trades. turnover. Under OJT. The trainee is then taught how to perform the job by a skilled person and is able to learn a job at a comfortable pace without the pressure of production schedules. and the employee still must adjust to the actual production environment. Personal observations of work being performed can also give insight into performance problems that may be corrected through train­ ing. clerks. and the student can learn by actually aoing the job. 3. Vestibule Training In vestibule training.

It is useful for teaching actual material. and managerial employees. and an individualized rate of learning. the trainee moves on to new material. classroom training is used more frequently for technical. and theories. some aspects of apprenticeship training and safety programs are usually presented with some form of classroom instruction. Programmed instruction requires the trainee to read material on a particular subject and then to answer questions about the subject. To be suc­ cessful. principles. Portions of orientation programs. The change of attitudes and the eventual change of personality is a long process. Classroom Training Classroom training is conducted off the job and is probably the most familiar method of training. The development programs must sense this and re-structure their programs to meet new objectives and goals. skills. However. 5. Man­ agement development is concerned with developing the attitudes and skills necessary to become or remain an effective manager. Classroom training is an effec­ tive means of quickly getting information to large groups with lim­ ited or no knowledge of the subject being presented. Programming Instruction The increased availability and lower cost of computers have made the use of programmed instruction more attractive. Management Development Program Management development program is a systematic process of training and growth by which individuals gain and apply knowledge. The increasing complexity of problems. both technological and environmental. There is a change of attitudes to manage work organizations effectively. immediate feedback. 6. Such an approach must be flexible enough to accommodate any environmental change. insights and attitudes to manage work organizations effectively.4. It is normally used to teach factual in­ formation. concepts. The material in programmed instruction is presented either in text form or on computer video displays. If the answers are cor­ rect. a gradual increase in difficulty over a series of steps. program instruction provides active practice. the trainee is required to read the material and answer additional ques­ tions. professional. demands more rigorous skills and talents from managers. Regardless of the type of presentation. systematic process that integrates the organization's response to changing external and internal environments with the aspirations of individuals within. Management development needs to be a planned. If the answers are incorrect. it must have the full support of the organization's top execu­ 150 Management for Filipinos .

tives. Management development should be designed, conducted, and
evaluated on the basis of the goals of the organization, the needs of the
managers involved, and probable changes in the organization's man­
agement team.
Some of the most popular methods of management development
program are the following:

Understudy Assignments
Understudy assignments are generally used to develop an em­
ployee to fill a specific job.

Coaching by experienced managers stresses the responsibility of
all managers for developing subordinates. Experienced managers ad­
vise and guide trainees in solving management problems. Coaching
should allow the trainee to develop individual approaches to manage­
ment with the counsel of a more experienced person.

Development through experience is used in many organizations.
Employees are promoted into management jobs and allowed to learn on
their own, from their daily experiences. The primary advantage lies
with the manager when he tries to perform certain jobs. He may see the
need for development and look for a way to get it.

Job Rotation
Job rotation is designed to give an employee broad experience in
many different areas of organization. In understudy assignments,
coaching, and experience, the trainee generally receives training and

Figure 5.2 Job rotation offers variety
S .jffln g


development for one particular job. In job rotation, the trainee goes from
job to job within the organization, generally remaining in each from six
months to a year. This technique is often used by large organizations for
training recent college graduates.
S p e c ia l P r o je c t s a n d C o m m it t e e A s s ig n m e n t s

Special projects require the employee to learn about a specific
subject. For example, a trainee may be told to develop a training pro­
gram on safety. .This would require learning about the present internal
safety policies and problems and about the safety training done by
other companies. The person must also learn to work and relate to other
employees. However - and this is critical - the special assignment must
provide a developing and learning experience for the trainee and not
just busy work. Committee assignments, similar to special projects, can
be used if the organization has standing or ad hoc committees. An
employee works with the committee on its regular duties; thus, the
person develops skills in working with others and learns through the
activities of the committee.
Lectu res

With lecturing, the trainer has control and can present the mate­
rial as desired. The lecture is useful for presenting facts; however, its
value in changing attitudes and in teaching skills is somewhat limited.
C a s e S t u d ie s

This technique was popularized by the Harvard Business School.
With this method, sample situations are presented to the trainee to ana­
lyze. Ideally, the case study should force the trainee to think through
problems, propose solutions, choose among them, and analyze the con­
sequences of the decision. One primary advantage of the case study
method is that it brings a note of realism to the instruction. However,
case studies often are simpler than the real situations faced by manag­
R o le P la y in g

In the role playing method, trainees are required to act out as­
signed roles in a realistic situation. They learn from playing the roles.
The success of this method depends on the ability of the trainees to act
realistically. Videotaping allows for review and evaluation of the exer­
cise to improve its effectiveness.


Management for Filipinos

In-Basket Technique
This technique stimulates a realistic situation. It requires the
trainee to answer one manager's mail and telephone calls. Important
duties are mixed with routine matters. One call may come from an
important customer who is angry; another from a local civic club re­
questing a donation. The trainee analyzes the situation and suggests
possible actions.

Business Management Games
Business games generally provide a setting of a company and its
environment and requires a team of players to make operating deci­
sions. Business games also normally require the use of computer facili­
ties. Often, several different teams in a business game act as companies
within an industry. This method forces trainees to work not only with
other group members; they also must deal with competition within the
industry. Advantages of business games are: they simulate reality; de­
cisions are made in a competitive environment; feedback is provided
about decisions; and decisions are made with less than complete data.

University and Professional Association Seminars
Many colleges and universities both offer credit and non-credit
courses to help meet the management development needs of various
organizations. These courses range from principles of supervisions of
advanced executive management programs. Professional associations
such as the Philippine Council of Management, also offer a wide variety
of management programs. Many of the classroom techniques discussed
in this chapter are used in these programs.

Human asset (for human resources) accounting attempts to place
a value on an organizatiqn*s human asset. It evaluates costs incurred by
organizations in recruiting; -hiring, training and developing their hu­
man assets. Primarily, the proponents of human asset accounting feel
that the quality of the human resources in an organization should be
shovyn on its balance sheet.
Several methods have been suggested for finding the financial
value of an organisation's human resources,
1. Start up costs - Derive the original cost of hiring and training
personnel as well as the costs of developing working relationships.
2. Replacem ent costs - Estimate the costs of replacing current
employees with others of equivalent talents and experience.


3. Present-value-method - Multiply the present value of the
wage payments for the future five years times the firm's efficiency ratio
(which is a measure of a firm's rate of return in relation to the advan­
tage rate of return for the indusuy).
4. G oodw ill method - Allocates a portion of the company's earn­
ings in excess to the industry average (goodwill) to human resources.

Since transfer and promotion are such important phases of per­
sonnel function, a definite and clearly understood policy regarding
them must be established. A company that does not establish such a
policy risks poor employee morale and high labor turnover.

The term "transfer" refers to the shifting of an employee from
one position to another without increasing his duties, responsibilities,
or pay. Every business finds it necessary to transfer workers to different
positions. There may come a time when older workers must be given
assignments that require lighter work. Or if a worker has been assigned
to a job which was satisfactory, he may be shifted to another. There are
times, too, when the workload in some departments are heavier than in
others, or when it is desirable to rotate workers into and out of danger­
ous positions. Occasionally, transfer is necessary because of personal
differences among employees, or because of personality conflicts be­
tween workers and supervisors. Also employees are often rotated from
position to position as a training device. When a transfer has been
made, management has to double-check to make sure that there are
valid reasons for it, and that the employee will not suffer any setback
as a result of it. And, it is important for management to tell employees
its reason for moving them to make them feel that they are being
treated fairly and are not being shifted merely for the convenience of
someone else. Rules and policies relative to transfer should be clearly
stated and understood by the members of the firm. Management
should also tell people their shifts, whether the transfer is permanent or
temporary, and if it is temporary, how long will they be wo king in the
new job.

The term "promotion" refers to the shifting of an employee to a
new position to which both his status and responsibilities are increased.
Higher pay does not always accompany a promotion, although it usu­

Management for Filipinos

ally does or at least follow soon after. Promotions are advantageous to
the firm as well as to the employee. Management knows that deserving
employees should be taken care of. The workers are situated where
they can produce the most and that the cost of orienting and training
new people has been reduced. When a promotion is made however, it
should be deserved. An employee should not be given a promotion
when he has not earned it or when others are better qualified and more
deserving. Length of service must also be considered. When employees
are equally deserving to be promoted as far as ability and performance
are concerned, promotion usually goes to the person who has seniority.
An advancement in pay that does not involve a move into a new job
classification is called a horizontal promotion. An advancement that
moves an employee into a job with a higher rank or classification is
called a vertical promotion.

Separation from the employment of the company may either be
temporary or permanent, voluntary or involuntary.
1. Lay-off is temporary and involuntary, usually traceable to a
negative business condition. It is customarily assumed that those who
are laid off will be re-employed as soon as business returns to normal.
The usual procedure is first to lay-off those workers with the least se­
2. A discharge is a permanent separation of an employee, at the
will of the employer, a person may be discharged if he is not competent
in his job even after (as often happens, but not always) an honest effort
has been made. Though transfers are done to find a suitable job for him,
a worker guilty of breaking rules may be also be subject to a discharge
if the seriousness of the infraction merits such action, or if the worker
has a history of delinquency, as far as rules are concerned. Insubordina­
tion is also just cause for discharge. When the workers of a company are
members of a union, the conditions that govern discharge are included
in the labor agreement entered into or agreed upon by the company and
the union called Collective Bargaining Agreement (CBA).
3. Resignation is the voluntary and permanent separation of an
employee due to low morale, low salary, etc. In some instances, forced
resignation is used as a good substitute for discharge. This is because
resignation connotes a positive meaning while discharge is negative.
4. Retirement can either be voluntary or involuntary. It is volun­
tary if an employee retires upon reach ;ng the number of years of ser­
vices in the company as provided ior by its policies. It is involuntary if
one retires upon reaching the retirement age of 65. When employees
leave the company of their own free will, management should make a
sincere attempt to find out the reason for their departure, for it can use


this information to improve conditions, and thus, reduce labor turn­
over. The basic reasons why employees leave business to take positions
elsewhere are: inadequate pay (wages below the going rate in the area),
lack of opportunity for advancement, lack of consideration or apprecia­
tion by the employer, internal policies, too much overtime, and favor­
itism shown to certain employees.

(See Chapter 12, suggested format for case study)


The department manager holds a regular staff meeting with her
four section heads confining each meeting to one chief problem. On this
day, the subject was the 'poor' quality of the twenty supervisors report­
ing to the section heads.
"We have a rather poor record in selecting good supervisors,"
she began. "We may have five or six who are outstanding, but there are
too many who are not. What do you people consider when you recom­
mend candidates to me?"
"I think my best technical people make the best supervisors,"
said one section head. "They have the respect of their associates and
subordinates, who rate their technical competence highly. They can
train new staff members very effectively, and pitch in to do the most
demanding jobs themselves."
"Maybe that is just the trouble," said the department manager.
"People like them may never learn to manage because they spend their
time on technical work." Another section head said, "I made my recom­
mendation on the basis of seniority. It has popular appeal because ev­
eryone expects to be along this line."
"Do you think," said the manager, "that age is the only, or most
important criterion for supervision?" Such a practice conveniently ig­
nores everything learned about managing, or it assumes that the candi­
date has the capability to become proficient in management after get­
ting the job. Is this realistic?"
In the course of the meeting, other factors such as getting along
with people, making good impression, having the capability for further
promotion, and being able to exact responsibility were also considered.
The department manager was clearly frustrated and, as she ended the
meeting, she remarked, "No wonder we have a 40% failure rate in
selecting supervisors."


Management for Filipinos

E v a lu a te th e re q u ire m e n ts th a t are av a ila b le fo r the fo llow in g p osition s. a. 4. e n u m e ra te the ste p s to be u se d in y o u r re c ru itm e n t an d selection of e m p lo y e e s. A la b o re r fo r a co n stru ctio n firm c. w o rd s p e r m in u te. C o m m e rc e facu lty m e m b e r o f a u n iv ersity b. 2. 2. W h a t is tran sfe r? A p ro m o tio n ? A se p a ra tio n ? D IS C U S S IO N Q U E S T IO N O n e co m m o n m e th o d o f h a n d lin g p ro b le m e m p lo y e e s is to tra n s­ fer th e m to a n o th e r d e p a rtm e n t of the o rg a n iz a tio n . C o n s u lt the cla ssifie d a d s. D istin g u ish re c ru itm e n t fro m selection . Staffing 157 . 5. d . skills id en tified b elow . A c le rk -se c re ta ry w h o is req u ired to take d ic ta tio n a n d ty p e 70 3. W h a t s t a g e / s of the selectio n p ro ce d u re d o y o u b e lie v e w o u ld req u ire sp ecial a tten tio n ? a. H o w d o e s staffing relate to the o rg a n iz in g fu n ctio n ? W h a t is a job an aly sis? A job d escrip tio n ? A job sp e cifica tio n ? A skill in v e n to ry ? W h a t is selectio n ? D escrib e th e step s in the selectio n p ro ce ss. 5. F o rm u la te a g e n e ra l p a tte rn o f job d e scrip tio n an d job specification . 3. P e rso n n e l M a n a g e r /H u m a n R eso u rces M a n a g e r b. Talk to a train in g m a n a g e r a n d find o u t h o w train in g is v ie w e d in h is o r h e r o rg a n iz a tio n a n d the m e th o d s o f tra in in g n o n -m a n a g e rial a n d m a n a g e ria l p erso n n el. 4.R E V IE W Q U E S T IO N S 1. D iscu ss y o u r feel­ in g s o n th is p ra ctice . A first-lev e l p ro d u c tio n su p e rv is o r M ak e a n a p p o in tm e n t w ith a p e rso n n e l m a n a g e r a n d find o u t the ste p s a n d m e th o d s h e u se s in re cru itin g an d se le ctin g p e o p le for h is o r h e r o rg a n iz a tio n . E X P E R IE N T IA L E X E R C IS E S 1. C o m p u te r P ro g ra m m e r A s s u m e th at y o u are a m a n a g e r fo r the fo llow in g ty p e s of firm s an d h a v e a v a c a n c y th a t req u ires the. In relatio n to y o u r b u sin e ss p ro p o sa l.

Putti. K oo n tz. P resid en tial D e c re e 4 4 2 . p. Q u e z o n City: R e x P ublishing C o m p a n y . Cyrill. H arold and O ’D o n n e l. 2. The Manager and the Organization. Personnel and Human Resources Management. 6. Human Resources Management. E s d ra s T. 1 9 9 8 . 2 4 4 . D a te S . S in g a p o re : M c G ra w - Hill B oo k C om pan y. N e w D elhi: T a ta -M c G ra w -H ill P ublishing C o . 3 0 1 -3 7 3 . B eag h . J o s e p h . . Ltd. Management: A Functional Approach. 2 1 0 . p. Labor Code of the Philippines. S is o n . 1 9 9 1 . Eric. 1 6 2 -1 8 0 ... 1 9 9 1 . 1 9 9 7 . 4. P e rfe c to S . M a rtin e z . 3. M o o m a n . London: P a n B ooks. pp..REFERENCES 1. In c. 158 Management for Filipinos . 5. Essentials of Management. 7. pp..1 997. M a n ila : G IC E n te r­ prises. N e w York: T h e M cM illan C o . Personnel: The Management of People at Work. 1 9 9 7 .

Evaluate the requirements that are available for the following positions. 5.Worksheet No. JOB TITLE: 1) Personnel Manager JOB DESCRIPTIONS: JOB SPECIFICATIONS: Staffing 159 . Formulate a general pattern o f job descriptions and specifications.15 STAFFING ■ RECRUITMENT N a m e : ________________________________________ Y e a r /S e c tio n : P ro fe s s o r: D a t e : ---------------------------------------- ------------------------------------------------------------ ------------------------ Consult the classified ads.

JOB TITLE: 2) Computer programmer JOB DESCRIPTIONS: JOB SPECIFICATIONS: 160 Management for Filipinos .

16 STAFFING .SELECTION N am e: Year/Section: P r o fe s s o r : Date: Assume that you are a manager for the following types of firms and have a vacancy that requires the skills identified below. 5.W orksheet No. What stage/s of the selection procedure do you believe would require special attention? 1) Commerce faculty member of a university 2) A saleman 3) A clerk-secretary who is required to take dictation and type 4) A first-level production supervisor Staffing 161 .

162 Management for Filipinos .

Business Proposal Recruitm ent Procedure Selection Procedure Staffing 163 ._____ Year/Section: ----------------- P r o f e s s o r : ___________________________________ D a t e : __________________________ In relation to your business proposal. enumerate the steps to be used in your recruitment and selection of employees.RECRUITMENT & SELECTION N a m e :_______________________ .I8 STAFFING . S.W orksheet No.

■f 164 Management for Filipinos .






170 Management for Filipinos .

Chapter 6 Directing Learning Objectives: At the end of the chapter. the student is expected to understand the following: • Definition of Directing • The Nature of Directing • Motivation • Theories of Motivation • Communication • Types of Communication • Barriers of Communication • Leadership • Types of Leadership "We rarely think about the other fellow until we become the other fellow .

and executive bonuses. The disadvantage of the money "carrot" approach is that too often everyone gets a carrot regardless of performance. failure of a 172 Management for Filipinos . even though it is somewhat fashionable for writers to say that money is no longer a strong motivator. it should not be forgotten that reward and pun­ ishment are still strong motivators. At the same time. automatic "merit" increases. such as union organiza­ tion. Managers as leaders should understand the motives of people. the use of rewards and penalties in order to influence desired behavior. it is not the only motivating force. and controlling could be done effectively. It is as simple as this: if a person puts a donkey in a pen full of carrots and then stood outside with a carrot.D E F IN IT IO N OF D IR E C T IN G D ir e c t in g is the fourth universal function of management and it refers to the process of motivation. communication. Yet it admittedly is not the best kind. reduction of bonuses. To be sure. poor-quality workmanship. one seldom hears reference to "the carrot and the stick. staffing. Despite all researchers and theories of motivation that have come to fore in recent years. or some other penalty has been and continues to be a strong motivator. Planning. the inducements brought by some kind of carrot are recognized. It deals with the relationship of managers and non-managers.fear of loss of income. would the donkey be encouraged to come out of the pen? The "stick" in the form of fear . in all theories of motivation. through such practices as salary increase and promotion by seniority. even if it is not based on individual manager's performance. organizing. It often gives rise to defensive or retaliatory behavior. and they should maintain or im­ prove the interpersonal relationship in an organization so that people can be satisfied from contributing to the achievement and development of objectives of the enterprise. but it must be supported by an understanding of people's behavior by good communication and an ability to lead. Often this is money in the form of pay or bonuses. This comes from the old story that the best way to make a donkey move is to put a carrot out in front of him or jab him with a stick from behind. executive indifference. but it has been and will continue to be an important one. M O T IV A T IO N In examining the various leading theories of motivation and motivators. demotion." This is of course. and leadership.

perfor­ mance Increases dramatically (B) Source: Andrew Grove. p. and most managers never fully appreciate the power of their positions. It is hardly a wonder that a substantial number of managers have "yes-men" reporting to them and seldom realize it. First. 158).manager to take any risk in decision-making. Usually include are such words as aim. When training Is combined with a high level of motivation. desire. Assume that the training of subordinates Is equal. Second. the power of their position to give or withhold rewards or impose penalties of various kinds give them an ability to control. or even dishonesty. These definitions normally include three com­ mon characteristics of motivation. impulse. Numerous definitions are given for the term. motivation is concerned with what directs this behavior toward a particular goal. motivation is concerned with how this behavior is sustained. H ig h O u tp u t M a n a g e m e n t (New York: Random House. But fear of penalty cannot be overlooked. intention. to a very great extent. only a very small Increase in performance occurs (A). Figure $.1 The Influence of motivation on performance. objective. A manager has two Ways to Improve performance: training and motivation. Directing 173 . and purpose. the economic and social well­ being of their subordinates. 1983. Whether they are first-level supervisors or chief executives. Third. The word motivation comes from the Latin word "movere" which means to move. end. When training Is combined with a tow level of motivation. motivation is concerned with what activates human behavior.

Lack of sleep (the need) activates the physical changes of fatigue (the motive) which produces sleep (the action. other needs arise which are then satisfied by the same sequence of events. motivation-maintenance theory. a physical need exists when an individual goes without sleep for 48 hours. However. achievement-power-affiliation theory. and reinforcement theory. TH EO R IES OF M O T IV A T IO N The theories of motivation described in this chapter help to pro­ vide a broader understanding of what motivates people. Achievement of the goal satisfies the need and reduces the mo­ tive. Figure 6. For instance. When the goal is reached. Indi­ vidual needs will be explored in much greater depth latter in this chap­ ter. preference-expectancy theory. which can be either physical or psychological. A motive is a stimulus which leads to an action that satisfies the need.Motivation can be analyzed using the following causative s. motive produces actions. need hierarchy theory. Needs are caused by deficiencies. In other words._ quence: Needs or Goals ^ Drives or Motives > Achievement In motivation. They include: traditional theory. A psychological need exists when an individual has no friends or companions. balance is restored. inaction).2 Cash as a Basic Motivator 174 Management for Filipinos . Understanding the motivation sequence in itself offers a manager little help in determining what motivates people. or in this example. needs produce motives which lead to the accom­ plishment of goals.

He stated that human needs in the form of a hierarchy should be satisfied in order. employees could in many cases significantly increase their pay for production above the standard. He felt that when highly productive people discover that they are being compensated basically the same as less productive people. from the lowest to the highest needs. Thus. Maslow. one of the most important theories of motivation is the hierarchy of needs theory postulated by industrial psychologist Abraham W. then the output of highly productive people will decrease. The physiological needs are basically the needs of the human body that must be satisfied in order to sustain life. The Hierarchy of Needs As discussed in Chapter 1. Financial rewards are directly related to performance in the belief that if the reward is great enough. employees will produce more. The traditional theory of motivation is based on the assumption that money is the primary motivator. under Taylor's system. Taylor and the management movement that took place at the turn of this century. Taylor's solution was quite simple. Taylor's ideas were based on his belief that existing reward systems were not designed to reward individuals for high production. He designed a system whereby an employee was compensated according to individual production. These needs include Directing 175 .Traditional Theory The traditional theory of motivation evolved from the work 'Of Frederick W.

shelter. clothing. N E E D H IE R A R C H Y TH E O R Y MOTIVATION M A IN TEN A N C E TH E O R Y Self-actualization Motivational Esteem or ego Status Social Interpersonal relations Superior Subordinates Peers Supervision Maintenance Safety Company policy and administrator Job Security Working conditions Physiological \ Salary Personal life Figure 6. or deprivation. belongingall are concerned with establishing one's position relative to others. threat. safety needs can be critically important. sleep. Gener­ ally categorized at this level are the needs for love. Since all employees have (to some degree) a dependent relationship with the organization.4 Comparison of the Need Hierarchy Theory and Motivation Maintenance Theory 176 Management for Filipinos . Belonging to organizations and identifying with work groups are means of satisfying these needs in organizations. exercise. Safety needs are concerned with protection against danger. This need is satisfied by the development of meaningful personal relations and by acceptance into meaningful groups of individuals. Favorit­ ism. The third level of needs is composed of the social needs. affection. discrimination and arbitrary administration of organizational poli­ cies are all actions which arouse uncertainty and therefore affect the safety needs. and so forth.

One person might be reasonably well satisfied with a level that to an­ other person would be inadequate. The rewards may not only be in terms of economic and social remuneration. while a top executive would be satisfied only with a large well-fur­ nished office. managers should not forget that most people. wants. especially in a developed society. there were questions about the accuracy of the hierarchi­ cal aspect of these five needs.The fourth level of needs is composed of esteem needs. This theory holds that all people have three needs: (1) a need to achieve.Power . there is no doubt that if primary needsphysiological and security are clearly unsatisfied. this means that perceptive managers must take situ­ ational or contingency approach to the application of Maslow's theory. (2) a need for power. In any case. primarily developed by David McClelland. this situation can have a material effect on motivation. The highest-order need is con­ cerned with the need for self-actualization or self-fulfillment that is. and desires of individual. one can always reach one step higher. How much is enough? Take clothing and shelter for example. A first-level supervisor might be very happy with a smaU. The need for self-actualization or self-fulfillment is never completely satisfied. Although the identification of the differ­ ent needs appears to be useful.Affiliation Theory Closely related to the need hierarchy theory is the achievementpower-affiliation theory. simple office. research indicates that even the rank and file employee has needs for self-esteem and selfactualization. the need of people to reach their full potential in applying their abilities and interests to functioning in their environment. Likewise. but also in terms of psycho­ logical remuneration. and the giving and receiving of in­ dications of self-esteem and acceptance. How can Managers Use Maslow’s Theory According to a research made on the realities of Maslow's hierar­ chy of needs. although what might represent status or pride of accom­ plishment to one person would not be at all satisfying to another. One has only to look at the esteem attached to such things as office space. This need is concerned with the will to operate at the optimum and thus receive the rewards that are the result of that attainment. Achievement . have needs that spread over the entire range of Maslow's hierarchy. In the office. These needs influence the development of various kinds of relationships based on adequacy. What needs they appeal will depend on the personality. The need for achieve­ ment is a desire to do something better or more efficiently than it has Directing 17 7 . But even these needs are fairly elastic. and (3) a need for affiliation. independence.

It was found through analysis of the interviewee's statements that different factors were associated with good and bad feelings. The findings fell into two major categories. and smoother working relations. McClelland maintains that most people have a degree of each of these needs that the level of intensity varies. Initially. Those factors that were most frequently mentioned in association with a favorably viewed incident concerned the work itself. the payoff for a study of job attitudes would be increased productivity. This individual's motivation to work will vary greatly from that of another person who has a high need for power and low needs for achievement and affiliation. For example. The theory is referred to by several names: moti­ vation-maintenance be strong and influential. Through self-analysis. They may then want to alter responses to employees to best fit the employee's needs. Accord­ ing to this theory. They were asked to recount specific details about the situation and the effect of the experience over time. These factors 173 Management for Filipinos . In the interviews. researchers used what is called the critical in­ cident establish or maintain friendly relations with others. moderate in the need for power. managers can gain insight as to how they tend to respond to employees. Motivation-Maintenance Theory Frederick Herzberg. it is the responsibility of managers to recognize the dominating needs in both themselves and their employees and to inte­ grate these differences effectively. decreased absenteeism. an employee with a high need for achievement would likely respond positively to responsibility. and low in the need for affiliation. To the individual. or motivation-hygiene theory. The purpose of this work was summa­ rized as follows: To industry. Bernard Mausner. an understanding of the foices that lead to improved morale would bring great happiness and greater self-realiza­ tion. This involve asking subjects to recall work situations in which they had experienced periods of high and low motivation. dual-factor theory. an individual may be high in the need for achievement. An employee with a high need for affiliation would probably respond positively to demonstrations of warmth and support by the manager. the development of the theory involved extensive inter­ views with approximately 200 engineers and accountants from eleven industries in the Pittsburgh area. The need for power is basically a concern for influ­ encing people . and Barbara Syndeman developed a theory of work motivation which has wide acceptance in management circles. The need for affiliation is a need to be liked .been done before.

interpersonal relations with supervisors. But when subjects felt negatively oriented toward a work incident. Fulfillment of these needs can be achieved by giving freedom of action as a responsibility of the indi­ vidual. Theory "X " views human beinf s as inherently lazy and hence must be motivated by force. proper attention to hygiene factors is a necessary but not sufficient condition for motivation. The latter set of factors were called "hygiene" or "maintenance" factors because the researchers felt that they were preventive in nature. McGregor's Theory X & Y McGregor categorizes the assumptions upon which traditional organizations are based into theory "X. recognition. The direction and control comes from outside the individual to motivate him. they do not produce motivation but can prevent moti­ vation from occurring. Besides monetary needs. technical aspects of supervision. company policy and administration. From these we can conclude that satisfiers are as­ sociated with the job itself and dissatisfiers with the context in which the job is performed. they were more likely to mention factors asso­ ciated with the work environment. and aspects of their personal life that were affected by the work situation. The findings of Herzberg and his associates sug­ gest that workers can be motivated best by satisfying the needs of the individuals for the satisfiers. the individual also has self-ego and self-realization needs. salary. job security. advancement. provide true motivation. Both hygiene and maintenance factors must be present in order for true motivation to occur. the motivation-maintenance theory contends that motivation comes from the individual. . peers. and subordinates." and the assumptions consisted with the modem organizations and current research literature into theory "Y. These included status. Thus. On the other hand. In other words. when present in addition to the hygiene factors. At best. work conditions. Directing 179 . proper attention to the hygiene factors keeps an individual from being highly dissatisfied but does not make that individual motivated. and the characteristics of the job. not from the manager. theory "Y " contends that external force or punishment is not the best way of motivating individuals because they are capable of exercising self-direc­ tion and self-control. The researchers contended that these factors.were achievement. responsibility." Some of these assumptions bring out the differences be­ tween traditional and modem approaches to motivation. The individual must be threatened with punisnment in order to make him increase his productivity. In summary.

organizing. In other words. 180 Management for Filipinos . They make a social comparison of inputs (education. Attention must be given to the lower level and higher level needs in creating the proper organization environment. management should pro­ vide. This theory probably deals with sustaining motivation rather than increasing motivation. At the lower level. importance of planning. extrinsic rewards for all contributions to productivity. an individual's ambition to do things better or achieve something is due to a very specific motive or need. Inducements (Provided by management) Contributions (Provided by employees) The equity theory contends that the individual evaluates not only his personal position but that of others as well. Barnard-Simon’s Theory of Equilibrium '’’his theory states that the inducements provided by the organi­ zation must be kept in equilibrium with the contributions made by the employees. on an equitable basis. and Mexican business managers and it was found that those who at­ tended this training proved to be better performers after the training. He has the tendency to get concrete feedback as to how well he is doing. Achievement Theory According to this theory proposed by David McClelland. This need is not something "inborn" but it can be ac­ quired through training and teaching the trainees to think and behave in terms of achievement. staffing. by directing their efforts towards the goals of the organization.McGregor emphasizes that motivation of employees is best achieved when management creates an environment that encourages members involving both intrinsic and extrinsic rewards. At the higher level. not on chance. directing and controlling should be stressed so as to provide as appropriate environment that will permit and encourage employees to seek intrinsic rewards at work. McClelland calls this motive the need for achievement. Indian. efforts. People are motivated not only by what they get but also y what they see or believe others are getting. If the inducements (wages and other benefits) are not kept in balance with contributions of the workers. Such training was given to American. equal wages must be paid for equal work. He depends on his own abilities. then their motivation will be af­ fected. The achievement-oriented person likes situations in which he takes personal responsibility for finding solutions to problems.

first level and second level. Motivation is a result of the actual or per­ ceived rewards available to an individual for accomplishing some goals. recognition. Expectancy is the probability that a specific action will be fol­ lowed by a particular first level outcome. or it may cause him harm which he failed to anticipate.) and rewards (money. in some cases are/rot truly valid. The assign­ ment of values reflect the individual's expectations and order of prefer­ ences among the alternative courses of action and their outcomes. The preference for a particular outcome is based upon the strength (valence) he attaches to that outcome. The preference he attaches depends on his second level outcome.) for themselves and others in the organization. Vroom’s Preference-Expectancy Theory This theory is based on the premise that an individual assigns values to the outcome of each alternative course of action. A subjective probability rang­ ing from 0 to 1 can be assigned to this.5 Vroom’s Preference .1 s t le v e l A ctio n A (e x p e c ta n c y ) V a le n c e A 2 n d le v e l Instrumentality D V a le n c e D E B Individual V a le n c e E > V a le n c e B A ctio n C F (e x p e c ta n c y ) V a le n c e C V a le n c e F Figure 6. Motivation is equal to the summation of valence times expect­ ancy oriented. The expected outcome. etc. work conditions. however. The out­ come may give the person greater satisfaction than he anticipated. These outcomes occur at two levels . The per­ ception of this relationship is known as instrumentality.Expectation Theory time spent. Motivation is a result of the actual or perceived rewards available to an individual for accomplishing some goals. Motivation = E Valence x Expectancy The individual is faced with a set of alternative outcomes. Valence is measured by asking employees to rank important in­ Directing 181 . etc. The choice of outcome is based upon how the choice of first level outcome is re­ lated to second level outcomes.

and the differences in their goals and expectations. and order of prefer­ ences among the alternative courses of action and their outcomes. the more likely it is possible to pre­ dict their behavior accurately. decision autonomy.dividual goals and instrumentality by using a rating scale that deter­ mines the strength of perceived relationship between the first and the second level outcomes. This theory as­ sumes that the results or consequences of an individual's behavior will determine his level of motivation. it recognizes the individual differences. Maturity Theory Chris Argyrie proposed a theory of motivation on maturity-im­ maturity. 3. The more sure the employees are of their estimates of expectancies and instrumentalities. The expected outcome. 2. an employee will get a pay increase. he will tend to strive for high performance because he knows he will be rewarded. Let us say that an employee is asked to rank salary. practitioners as well as researchers find it an unattractive option. however. Performance is conditioned by reward-giving. If the employee perceives this relationship. instead. The preference-expectation theory recog­ nizes that preferences and expectations differ among individuals but it makes no attempt to describe the differences or to categorize individu­ als in any way. when performance is high. Skinner's theory of motivation is known as the reinforcement theory. and security. For example. Response: The behavior level itself. the individuals expectations. Stimulus: The environmental setting in which behavior occurs (performance). According to Skinner. Reinforcement Theory B.F. Because of its complexity. He contends that as people grow (psychologically) and ma­ ture they strive toward the highest level of need in Maslow's need hierarchy: self-actualization. Reinforcement: The reward given for good performance only. This theory does not place the needs of all employees into one basket. the following are the components of motivated behavior: 1. may in certain cases not be truly valid. Immature people are dependent on others and lack self-initiative. The as­ signment of values. Their characteristics are: 182 Management for Filipinos . mature people are independent. ‘ working conditions.

Job Enrichment A modem and a more permanent approach to motivation is through job enrichment. to be responsible for their own machine set-up and repair. that is "to become everything that one is capable of becoming. As a result. Argyrie recommends a psychologically healthy environment in which individu­ als can strive toward self-actualization. These motivators include achievement. CommuDirectlng 183 . communi­ cation is defined as the transfer of information that is meaningful to those involved .IMMATURE Passive Dependent Short term perspective Subordinate position Lack of self-awareness MATURE Active Independent Long term perspective Equal or superordinate position Awareness of self By their rigid and formal structure and practices. In this text. This involves putting meaning into j. In other words. To motivate them. growth. responsibility. they tend to be passive. and to attaih choice of method. C O M M U N IC A T IO N The problem in defining communication is best shown by the fact that one study found over 95 definitions of the term. many organiza­ tions keep their people in a state of immaturity. advancement. Many were supposed to be "the one true" definition. and recognition. and meaning. the transmittal of understanding. it is putting Herzberg's two-factor theory into effect by building motivators into the general." Job Enlargement This involves redesigning of jobs so that related activities are added to those currently being performed. to correct their own mistakes. This method motivates the individual by offering challenge. It is the process of allowing individual workers to determine their own working place (within lim­ its) to serve as their own inspectors by giving them responsibility for quality control. dependent and submissive.obs. interest.

it is particularly important in the function of directing.nication can occur in many forms ranging from face-to-face contact in­ volving facing expressions and body movements. informal communications. there are formal communications. interper­ sonal communications. Communication is an important means of attaining organization goals. Types of Communication Communication has developed to the point where it is regarded as a major function in the coordination and performance of an organi­ zation. Although communication has application to all phases of manag­ ing. In this book. communication is viewed as the transfer of information from one person to another. But the information transferred must be understandable to the receiver. whether or not it gives rise to confidence. upward. Good com­ munication has been defined as the interchange of thought or informa­ tion. downward. It should never be forgotten that nothing can logically be called informa­ tion unless it is understood. the information flows down through the formal channels in the organization. Under this approach. communication between groups. FEED BA CK Figure 6.6 The Communication Process 184 Management for Filipinos D E C O D IN G . lateral communications and so on. E N C O D IN G T R A N M IS S IO N S y m b o ls C o d e s Etc. Formal and downward communication appear to be the more common methods of communication in many organizations. In organizational situations. it brings about mutual understanding and confidence.

Superiors overestimate the amount of information the subordi­ nates receive. re­ quirements. Future growth and efficiency through innovations and the correction of problems are enhanced by upward communications sys­ te m s. annual reports. about 80 percent said it dealt with downward Directing 185 .7 Downward (Formal) Flow of Communication Upward communication is encouraged by some innovative orga­ nizations. Can you think of any other channel used for down­ ward communications? A study conducted by Maier illustrates the efficiencies of a sys­ tem which relies heavily on downward communications. letters and pay inserts. loudspeaker or intercom systems. Information on procedures and practices 4. Subordinates' performance feedback 5.The downward communication is classified into 1. instruc­ tions. The channels used to carry the informa­ tion downward are: posters and bulletin boards. information racks. Likert's study shows that when managers were asked to think of th e most difficult communication problem they had faced during the previous six months. and performance obstacles. The results showed a great difference in their thinking as to what constitutes a subordinates' job. Information on mission-indoctrination of goals The information sent down will be in the form of orders. and so on. company magazines and newspapers. Specific task directives: job instructions 2. such as duties. Downward communication often takes things for granted. employee handbooks and pamphlets. future changes. and routine information. The superior and subordinate were asked independently to describe the subordi­ nates' job with regard to the different job factors. Information regarding understanding of the task and its position in the organization 3. Figure 6.

Not limited to nort-management personnel. the grapevine also operates among managers and professional personnel. Also. completely change the information." The organization grapevine often results from the organizations' informal work groups. any rumor was said to be "from the grape­ vine. of course. exit interviews. 186 Management for Filipinos . Messages sent over these lines were often garbled. It may go from secretary to vice-president or from engineer to clerk. Landsberger found that much goes on in the lateral pattern of communications be­ fore the vertical processes are called upon to mediate a conflict or bring about action and decision. the state of technol­ ogy determines the need for lateral communications. Although generally not sanctioned formally. suggestion system. and other participative techniques. conferences.communication while only 10 percent said it involved upward commu­ nication. the complaint system. it does not follow the organizational hierarchy. Trust is a very important element which facilitates more up­ ward communication. intelligence telegraph lines hung loosely from tree to tree looked similar to a grapevine. the grapevine al­ ways exists. As the name suggests. so the grapevine probably produces mpre misunderstand­ ing than its small percentage of wrong information indicates. According to Simsson. The errors can. Committees. He found lateral communication among foremen because of the mechanized nature of work. the subordinates tend to provide the right kind of information when he knows that the boss can get the correct information from another source. an open-door policy. In normal work situations. This type of communication takes some pressure off the supervisors. Distribution of written communication across departmental lines is also another method for improving lateral communication. survey questionnaires. special meetings. These informal channels are generally referred to as grapevines. group discussions and other ap­ proaches are some ways by which lateral communications can be fos­ tered. thus. Lateral communications or peer-level communications enable members of a particular level in the organization to share information and thus improve their decisions and decision making skills. Grapevines Many informal paths of communication also exist in organiza­ tions. It is unfortunate that some organizations put restrictions on lateral communication. During the civil war. counselling methods. The sub­ ordinates also developed a strong sense of self-confidence under this approach. The upward flow of communication can be facilitated through the grievance procedure. over three-fourths of grapevin infor­ mation is accurate.

Ways to Communicate There are many forms of communication. delays are so frustrating that most alert managers insist on information flowing directly to where it is required. 2. Memoranda 3. Managers' inputs into the grapevines are spread to a greater number of employee-most employees hear grapevine information for the first time from management. Informal talk or "grapevine" communication. Visual Aids Downward and Lateral Information Flow It is understandable. that downward and lateral (that is.The grapevine aids management in efficiency. The grapevine is a permanent part of the formal organiza­ tional structure. for example. enu­ merate? twelve ways to communicate. Letters 6. Conferences/Conventions 8. Indeed. Therefore. These are: 1. Interoffice News 5. This is the most fundamental form of communication usually adopted by an informal organization. 1. Managers should have a knowledge of what the grapevine is communicating and why. adopted the posi­ tive rule that no superior was to receive information concerning a subordinate's area of operation before the subordinate received it. across lines of an organization) information for decision making is im­ portant to subordinate managers in an enterprise. It should be used to facilitate effective communication. Directing 187 . Obviously. Jr. downward flow of information through organization levels is a time consuming process. Telephone calls 4. Exhibits and Displays 11. Bulletin Board Notices 10. all levels of management should be provided with the total and accurate information so that the messages they communicate through the grapevine are accurate. If manages at all levels have to make decisions and to follow up on these decisions. William Exton. 2. Meetings 9. then they should be able to get any needed information as soon as possible. He thus initiated a lateral flow of information so that everyone in the com­ pany would be informed as rapidly as possible about his or her area of information and would have an opportunity to undertake needed cor­ rections. 3. Reports 7. One chief executive. too.

say. while each of the members 188 Management for Filipinos . 2. the outer members had only one-way com­ munication with the member in the center. of which only one color was common to all the members. Communicating with employees' families. at which point it is again summarized for their action and for transmittal to the chief executive for decision purposes. 7. Utilizing employee attitude surveys and exit interview data. For instance. 3. The task assigned was to find the common color. 6. each of the five members of the network received six colored marbles. For example. Second.Upward Flow of Information Information moves upward from the supervisory level and is summarized for the consumption of department managers. They are not dependent solely upon this data flow. Some approaches for improving communication are: 1. who take action within the scope of their authority. to the division manager's level. Providing opportunities for subordinates to make presentations. In the first experiment. and the need for new information may be extremely important. Several research studies have been conducted to deter­ mine the type of communication network that would result in better performance. Encouragement of employee letters. much of the summa­ rized information may not be needed for varying periods. In attempting to find the answers.’ They. but it is not realis­ tic. Participation in social activities which provide an opportunity for information conversation. the approach was the same. 4. One such study was conducted by Alex Bavelas and his associates. but multi-colored marbles were used to complicate the problem. each participant was allowed to communicate only accord­ ing to the channel line established for each network. Each network was first given a simple task to complete and then a more complex task was given. Communication Networks Communication networks refer to the pictorial depictions of in­ formal channels. Availability of counselling and grievance system. Certain rules were laid down for the participants. An attitude of reasonable access and an open mind and ear. move this in­ formation upward one level. In the second experiment. 5. in the case of the wheel network. personal observation is notably important in this regard. First. in turn. looking at information differently. This idea may fit the think­ ing of some systems and computer-oriented people. Suggestion systems that are objective. all managers have other source of information that they bring to support their decisions. 8.

two-way communication network appears to be the best approach. Graham states that the structure of our language leads to misrepresentation of the true nature of events. feelings. The results of this study showed the wheel to be faster for the simple task and the circle for the complex task. Semantics This deals with the language aspect of communication. Directing 189 . The physical distance also makes it difficult for supervisor and subordinate to seek clarifica­ tion. The supervisor must be able to identify and recognize such barriers. there are certain words which have multiple meanings. There are supervisors who are closed-minded. 3. Sometimes the supervisor and sub­ ordinates tend to interpret the information in the light of their own views. Distance The physical distance between the supervisor and his subordi­ nates results in less face-to-face communication. Two-way communication involves feedback and the circle had two-way communication with members on either side. We know that less faceto-face communication may lead to misunderstanding or lack of under­ standing of the message being communicated. Since organizational situations involve. values. it was found that the effective groups involved in complex tasks used decentralized com­ munication patterns. while routine tasks involved centralized commu­ nication patterns. In other research study. 2. Successful supervisory performance re­ quires the ability to recognize these barriers and to deal with them effectively. opinions and background rather than interpreting the message objectively. Distortion This occurs when an individual fails to distinguish actual data from his own views. These barriers are: 1. Carl Rogers contends that the major barrier to communication is the tendency to make value judg­ ments on the statements of others. In the English language and in other lan­ guages. emotions. complex tasks and decisions. etc. BARRIERS TO COMMUNICATION There are several barriers in an organization which reduce the effectiveness of communication.

If a supervisor communicates with his subordinates on his own level of knowledge and ignore the level of the subordinates. There are some supervisors who use subordinates for their own selfish interest. or keep themselves busy with trivial things and therefore are not available to subordinates for consultation. 6. if the subordinate feels that it is not good for him to report bad news to the supervisor. 4. On the other hand. Inaccessibility In some organizations we find supervisors who are often out. Charge an account.•Example: Charge a fee. such as promotion. supervisors tend to use supervisory jargon. either technical or administrative. 7. Sometimes. assigned to the subordinates are not clear. Lack of Trust This barrier has to do with the previous experiences of subordi­ nates' dealings with supervisor. Often we hear people say. Such activi­ ties may change subordinates' trust in the supervisor. Such inacces­ sibility results in communication breakdown. merit increase and good image. then he will not filter bad news or unfavorable information. then he will withhold such information from the supervisor. they find scapegoats or come out with excuses. Based on the past experiences. which simply means the position and the role which are occupied and played by the subordinate are unclear to him. Lack of Clear Responsibilities When the responsibilities. 190 M anagement for Filipinos . "I thought this is what you wanted me to do. there is a difference in the level of knowl­ edge and expertise of a supervisor and subordinate." Lack of clarity in duties and responsi­ bilities result in status and role ambiguities. Charge a battery. For instance. Words with multiple meanings in a message may lead to misin­ terpretation of the message. Charge a horse. This affects the motiva­ tion of subordinates in seeking proper direction from the boss and relies more on trial and error approaches. Lack of Levelling This refers to various differences in the levels of supervisors and subordinates. if he feels that the supervisor is considerate and helpful. The inaccessibility is not necessarily physical. or guidance. discussion. it can be psychological. then communication breaks down." or "I thought this should be done by Robert. 5. which is totally alien to the subordinates.

In some cases. As the orga­ nization grows and expands. Lack of Direction A lack of direction in message content may present a barrier. 12. Failure to Use Proper Media Several types of media are available in the organizational situa­ tion for communication purposes. Such an attitude blocks effective communication. The formal communication networks are built along the authority-responsibility lines of the organization.8. Refusal to Listen There are some supervisors. the ability to lead effectively is one of the keys to being an effective manager." 10. Rather than viewing things ob­ jectively. The effectiveness of communication depends on how a supervisor chooses the proper media for his own situation. the manifest meaning of the message is made so attractive that the real meaning is lost. Personal Incompatibility Often the personality of the supervisor and the subordinate clash and thus create communication blocks. Refusal to listen may be due to a supe­ riority complex feeling of "I know everything. Some supervisors take great pride in sending written memos loaded with jargon to their subordinates who lack reading and compre­ hension skills. refuse to listen to their subordinates. It should also become clear that under­ standing the other essentials of managing and doing the entire mana­ gerial job has an important bearing on assuring that a manager w ill be Directing 191 . 11." or an inferiority com­ plex feeling of "I am no good. 9. Indeed as will be made clear in this book. Some messages have two types of content: the manifest or evident meaning and the latent or real meaning. Communication Gap This refers to the defects or loopholes in the formal network of communication. LEADERSHIP Leadership is an important aspect of managing. this kind of barrier is a common occurrence. who by their careless attitude or arrogant nature. In large and complex organizations. Without much planned effort. Under such circumstances de­ fects start to develop in the communication network. the networks tend to become large and complex. personality factors dominate and issues become personalized.

but it does not provide a solid foundation for continued performance. conduct. the leader must be an exception­ ally strong and wise individual who. Zeal arid confidence reflect experience and technical ability. such a person expects subordinates to perform well or be subject to punishment or replacement. Managers are in a leadership role because they can influence the behavior of members of the formal work group. and proceed. that does not mean the manager is effective . At times this approach apparently is effective in the short run. generates 192 Management for Filipinos .an effective leader Managers must exercise all the elements of their role to combine human and material resources to achieve desired group objectives. TYPES OF LEADERSHIP A large amount of research has been directed toward finding the characteristic type of leaders that are most effective. Leadership is a process of influencing the activities of members of a group in performing their tasks of goal setting and goal achieve­ ment. However. influence results when one person presents informa­ tion in such a way as to convince the other members of the group that their situation will be improved if they behave in a certain way. Different leader­ ship types have been identified and have provided a framework for the manager in selecting the approach to directing. Generally. A leader is the person who takes the central role in this interaction by influencing the behavior of other members of the group. direct. As a boss. The autocratic leader assumes a paternalistic role which forces subordinates to rely on the leader for their satisfaction. We can say that all managers must be good leaders.n the role. This concept can be enlarged to imply not only willingness to work but willingness to work with zeal and confidence. 2. The key in doing this is the existence of a clear role and a degree discretion or authority to support managers' actions. The dictatorial leader accomplishes tasks through fear of penalties. To lead is to guide. and maintains a highly critical and negative attitude in rela­ tions with subordinates. A manager's leadership can be measured by the contribution of the group toward the "Organization's objectives (such as increased profit or service to customers). The styles of leadership have been grouped under four types: 1. all managers should become good leaders. If this type of leadership is to be successful. Thus. but not all leaders could be good managers. The ability. because it does not give lasting satisfaction for those being obtain followers and influence them makes a leader. Leadership is generally defined as the art and science of influenc­ ing people so that they willingly move toward the achievement of the group goals. by force of personality.

or assump­ tions. These attitudes were termed Theory X and Theory Y.respect and allegiance. may easily head in different directions. The laissez-faire leader depends completely on subordinates to establish their own goals and to make their own the right to issue directives and expend resources. This type re­ sults in dependency on the continued presence of the leader. This type of leadership results in a coopera­ tive spirit and the development of managerial abilities on the part of subordinates. Authority has been viewed in the past as a function of position in. The satisfaction of the subordinates to this type of leader depends solely on the goodwill of their superior.the organizational hierarchy. if the subordinate rejects the authority of a superior. members of the group are permitted to act individually and. this authority does not exist. The subordinate has the power either to accept or to reject a superior's command. 3. Bernard viewed disobeying or ignoring a su­ perior as a denial of the latter's authority. and Leadership Power is the ability to command or apply force. Under these conditions. subordi­ nates have little chance to develop leadership qualities. Leaders’ Attitudes Douglas McGregor developed two attitude profiles. Through power. Subordinates are in­ vited to participate in planning. 4. reward. the amount of authority' that a iLianager has relied on the amount of coercive. however. Power. about the basic nature of people. It is necessarily accompanied by authority. people can be influenced by someone to do something that they would not otherwise do. other forms of power as: Authority which exists in the formal organization. Satisfaction is gained through a feeling of group accom­ plishment. and organizing. decision-making. Authority. flowing from the top to the bottom of the organization. and work deteriorates when that person is absent. The use of or desire for power is often viewed negatively in our society because power is often linked with the capacity to punish. There are. Basically. McGregor maintained that many leaders in Directing 193 . therefore. This leader assumes the role of just another member of the group. They tend to venture on their own initiative and to communicate freely with their fellow subordinates. and legitimate power that the manager can exert in a certain position. Because this leader makes decisions without the participation of others. Democratic leader depends not only on their own capabili­ ties but encourage consultation of subordinates.

productiv­ ity is likely to be high. Generally. 2.8 Leadership Styles ■essence subscribe to either Theory X or Theory Y and behave accord­ ingly. The relationship between a leader's expectation and the resulting performance of subordinates has received much attention'. directed. Assumptions about People Theory X 1. A Theory X leader would likely use a much more authoritarian style of leadership than a leader who believes in Theory Y assumptions. productivity is likely to be poor. most people must be corrected. 194 The average human being has an inherent dislike of work and will avoid it.Figure 6. On the other hand. McGregor called this phenom­ enon the self-fulfilling prophecy. Management for Filipinos . The real value of McGregor's work was the idea that a leader's attitude toward human nature has a large influence on how that person behaves as a leader. controlled. if the manager's expectations are low. it has been found that if the manager's expectations are high. or threatened with punishment to get them to put forth adequate effort toward the achievement of organiza­ tional objectives. It has been also Pygmalion in manage­ ment. Because of their dislike of work. if possible.

2. and conceptual . Under the conditions of modem industrial life.which he says are needed by all managers. and wants security above all. The manager must focus his attention on improving his interper­ sonal relations with peers. A manager must possess technical skill. The expenditure of physical and mental effort in work is as natural as play or rest. doctor. has relatively little ambition. External control and the threat of punishment are not the only means for bringing about effort toward organizational objectives. Directing 195 .The average human being prefers to be directed. Once again. Workers will exercise self-direction and self-control. The capacity to exercise a relatively high degree of imagination. not narrowly. subordinates and his own supervisors. Human skill is the ability to work with others by getting along with them. Katz has identified three basic types of skills . 5. ingenuity. An ac­ countant. human. engineer or a musician all have technical skills in their respective fields of specialization. and communicating effectively w'ith oth­ ers. Conceptual skill is the ability to coordinate and integrate the entire organization's interests and activities. the intellectual poten­ tialities of the average human being are only partially utilized. M A N A G E M E N T SKILLS Another approach to examining the management process is in terms of the types of skills required to perform the work. Technical skill is the ability to perform a manager's job. 6. 3. Despite variations in the duties and responsibilities of a manager. distributed in the population. wishes to avoid responsibility. motivating them. there are differences of opinion among scholars and researchers as to what skills are essential for performing various managerial functions.technical. 4. He must be able to see how his department is affected by the decisions of others. Commitment to objectives is a function of the rewards associated with their achievement. under proper conditions. not only to accept but to seek responsibility. and creativity in the solution of organizational problems is widely. The average human being leans. A manager must have the ability to see the organization as a whole and not make decisions from his own departmental point of view. there are several skills that all managers must develop. Theory Y 1.

their relative importance varies according to the level of management.just as itwas with the mana­ gerial functions. They came out with the following characteristics: 1. 2. ac­ cess to information. A role is defined as an organized set of behaviors belonging to an iden­ tifiable job. 3. the presidents of several corporations were asked to list the characteristics they would like their replacements to have. The successful executive has a high tolerance for frustration. He continually questions himself and is willing to examine himself carefully. which he divides into three major groups: interpersonal roles. 4. technical skill is most impor­ tant and it becomes less important as we move up the chain of com­ mand. Formal authority gives the position status. authority. 7.Katz contends that although these skills are necessary for effec­ tive managerial performance. Authority and status together generate certain interpersonal roles for a manager. At the first-line management level. In a survey. the importance of conceptual skill increases as we move up the hierarchy. 6. The manager's position is the starting point for defining his roles. He understands the rules of competitive warfare. Mintzberg further suggests that the management level and the types of work that the manager directs significantly influence the vari1GS Management for Filipinos . On the other hand. He snaps out of defeats without feeling personally shattered and can quickly start thinking of the next goal. But remember that the delineation of managerial working roles is essentially a categorizing process . informational roles. He encourages participation. Finally. He is able to play it cool and doesn't feel distressed if a colleague shows a little fight. M A N A G E M E N T ROLES Henry Mintzberg has proposed another method of examining what managers do by introducing the concept of managerial roles. He expresses hostility tactfully. 5. and deci­ sional roles. and status place the manager at a central point in the organizational decision-making process. Mintzberg identifies ten managerial roles. He accepts both" victories and defeats with controlled emo­ tions. Human relations skill is important at all levels of management. He doesn't blow up when provoked.

Spokesperson: Manager disseminates the organization's informa­ tion into its environment. For example. Interpersonal 1. Directing 197 . Inform ational 1. the chief executive of an organization concentrates more on the roles of figurehead. 3.F IR S T -L IN E MANAGEMENT M ID D L E MANAGEMENT TOP MANAGEMENT C on cep tu al C o n c e p tu a l H um an H um an Technical Technical Figure 6. On the other hand.10 Skills needed at different levels ety of roles that the manager must assume. and negotiator. Disseminator: Manager transmits special information within the organizational unit. 2. 3. Liaison: Manager interacts with peers and other people outside the organizational unit to gain information and favors. Figurehead: Manager represents the organizational unit in all matters of formality. liaison. spokesperson. managers at lower levels of the organization spend more time in the disturbance handler and negotiator roles and less time in the'figurehead role. 2. Leader: Manager provides guidance and motivation to the work group and also defines'the atmosphere in which the work group will work. Monitor: Manager serves as a receiver and collector of informa­ tion.

3. 1973. Entrepreneur: Manager's role is to initiate change. Figure 6. Human relations skills are essential to 198 Management for Filipinos . N egotiator: Role the manager assumes when the organization finds itself in major non-routine negotiations with other organiza­ tions or individuals. However. such as conflicts between subordinates. it is generally agreed that lower-level managers need more technical skills than managers at higher levels. 2. management skills are so closely interrelated that it is difficult to determine where one begins and another ends. F o r m a l a u th o r ity a n d s ta tu s Source: From the Nature of Managerial Work by Henry Mintzberg. the sudden departure of a subordinate. or the loss of an important customer.Decisional 1. Resource allocator: Manager decides where the organization will expand its resources.9 Ten managerial roles In practice. 4. Disturbance handler: the manager must assume when the organi­ zation is threatened.

suppresses conflict.5 leader relies on traditional voting to make Directing 199 . and administrative skills become increasingly important as a person moves up the managerial ladder. motivates subordinates by means of job content factors rather than hygiene factors. and the 9.9 leader tends to abdicate his role as a decision maker. the 1. Under these circumstances the employee's commitment to the organization is limited mainly to social activities. decision-making. The 9. M A N A G E R IA L GRID In line with the Ohio State studies. the 9/1 leader is very considerate but not task-oriented.5 is somewhat task-oriented and somewhat considerate. provides little motivation for subordinates. relies on threats for motivat­ ing subordinates. planning. and candid. For example. the 1.'to motivate subordinates primarily by means of hygiene fac­ tors.9 leader operates in exactly the opposite fashion. such as attending formal functions. 1969) developed a distinctive approach to the study of lead­ ership: the managerial grid. creates a win-lose organizational climate. and provides only negative feedback to the employ­ ees about their performance. For instance. spontaneous. the 1.9 leader is both very task-oriented and very considerate {sec figure 6-11) According to Blake and Mouton.1 leader is neither task-oriented nor consid­ erate. The results are that creativity is stifled and subordinates want only to survive as best they can. They began their analysis by focusing on the two basic aspects of leader behavior . creates an organizational cli­ mate based on trust and acceptance. The 9. The results are that the subordinates be­ come anti-organizational and attempt to beat the system as often as possible. is neutral when conflict occurs. to smooth over difficulties and problems be­ tween individuals and subordinates. Finally.1 leader railroads decisions. the 5. and rarely offers feedback on performance. and provides subor­ dinates with ratings and criticism that are specific. the 5. The leader based his decisions on a consensus among members of the group. and to provide praise as a substitute for a genuine rating of per­ formance. Robert Blake and Jane Mouton (1964. to create a pleasant organizational climate. creates an apathetic organiza­ tional climate.1 leader avoids making decisions. confronts and resolves conflict and problems associated with it.effective management at all levels. Finally.concern for production (task orientation) and concern for people (consideration). Blake and Mouton describe the remaining three styles in terms of the same categories. The results are that the subordinates share in the creative ap­ proaches to problems and integrate their work and goals with those of the leader and the organization. Each of these di­ mensions was measured on a scale that ranges from one (low) to nine (high).

Efficiency in operation results from arranging conditions of work in such a way that human elements interfere to a minimum degree. an d p ro v id e s Superfi­ cia l fe e d b a ck on p e rfo rm a n ce .11 The Managerial Grid d e cisio n s. 5° O z S y4 1. interdependence through a common stake in organization purpose leads to relationship of trust and respect. id en tifies five ty p e s of Filip in o m a n a g e rs. u se s a c a rro t a n d stick a p p ro a c h to m o tiv a tin g su b o rd in a te s. U.1 Improverlshad Management Authority-Obedience Management Exertion of minimum effort to get required work done is appropri­ ate to sustain organization membership. 200 Management for Filipinos .5 Organization Management Ol Adequate organization performance is possible through balancing necessity to get out work with ' maintaining morale of people at a “ satisfactory level.9 9. e d ito r of th e book. F ra n c o . Work accomplishment is from committed people. h as difficu lty m a k in g u p h is m in d a b o u t w h e th e r co n flic t is a cc e p ta b le . 1 LOW 3 LOW 4 5 6 CONCERN FOR PRODUCTION 7 9 HIGH Figure 6. UJ aUJ 6 5. M a n a g e m e n t in th e P h ilip p in e S e ttin g . U n d e r th is le a d e rsh ip the s u b o rd in a te s' cre a tiv ity is lim ited to p ro v id in g id e a s th ro u g h the su g g e stio n b o x a n d is fo cu se d o n m ain ta in in g th e sta tu s quo. M A N A G E M E N T F IL IP IN O S T Y L E S M anagem ent A ’la Pinoy D o y o u m a n a g e "b y kayod" o r " b y lusot"7 S eek in g to c o m p re ­ h e n d the F ilip in o m a n a g e r's v a lu e s a n d in clin atio n s. E rn e s t A .HIGH 9 1. c re a te s a m a n ip u la tiv e o rg a n iz a tio n a l clim a te .1 9.9 Country Club Management Team Management Thoughtful attention to need of people for satisfying relationships leads to a comfortable friendly atmosphere and work tempo.

M anager “ By K ayod” Kayod is a Filip in o w o rd th at m e a n s to g iv e oneself to h a rd w o rk . Figure 6. A fo rm a l a n d se rio u s w o rk er. D ep en d s o n p ra c tic a l e x p e ­ rie n ce to c o m p e n sa te for h is lack o f n o rm a l m a n a g e m e n t e d u c a tio n th e o p p o site o f the "lib ro " m an ag er. M anager “ By L ib ro " Libro is*. T his m a n a g e r w ill a lw a y s find lo o p h o le s to av o id h a rd w o rk o r u tilize an e x cu s e fo r failu re. G iv en to sh o rtcu ts a n d u n co n v e n tio n a l o r e v e n illegal m e a n s to a tta in objec­ tiv es.12 Manager by Libro (World Executive Digest. G en erally a n in tro v e rt. h e w o n 't g iv e in to b rib e ry o r an y a n o m a lo u s d eals. th o ro u g h a n d an aly tical.a S p an ish w o rd fo r " b o o k . T his m a n a g e r is a ctio n -h u n g ry an d c o m m itte d . 1996)Directing 201 . M anager “By L u s o t" Lusot m e a n s av ailin g o n a lo o p h o le. Oct. h e g e n e ra lly h a s a d ­ e q u a te ly fo rm al •training in m a n a g e m e n t. " t o lis te n "). M anager “By O id o " T h is m a n a g e r acq u ires his m a n a g e ria l skills b y p la y in g it b y ear. (O ido c o m e s fro m S p an ish oir. S cientific." T his m a n a g e r literally goes b y th e b oo k . a n d h is m a n n e rs are ra th e r se rio u s an d those o f an in tro v e rt. h e d e a ls w ith p e o p le inform ally.

T h e "Oido" a n d "Libro" m a n a g e rs . m o n th ly m e e tin g a t the m a in office fo r th e to p e x e cu tiv e s . th e y u tilized e v e ry c o m ­ m u n ic a tio n d e v ice o th e r c o m p a n ie s u se : b u lle tin b o a r d s in all the c o m p a n y 's offices a n d p la n ts. a re v ita liz e d h o u s e n e w sle tte r c a rry in g n e w s item s from all co m p a n y p la n ts. TV. its sa le s a p ­ p ro a ch e d P 3 0 0 m illion an n u ally w ith 1 5 . a n d d riv in g fo rce. A gifted re co n cile r of all p h ilo so p h ies a n d beliefs h eld b y th e v a rio u s ty p es o f m a n a g e rs. a c o m p a n y m a n u a l fo r e v e ry e m ­ p lo y e e g iv in g sig n ifica n t in fo rm a tio n a b o u t th e firm . H o w e v e r. SH O R T CASE STUDY: D IR E C TIN G (See Chapter 12.2 0 0 le v e l-m a n a g e rs a n d sp ecial c o m m itte e s to d iscu ss co m p a n y m a tte rs. T h ro u g h o u t th e c o m p a n y 's g ro w th . b ein g p rim a rily in v o lv es w ith h o w to d o a job b est-o ften are im p le m e n to rs an d d o e rs in the co m p an y . "Ugnayan" m a n a g e rs exem p lifies h ig h ly re ­ silien t. T h e p r o ­ ce s s-o rie n te d “Kayod" a n d "Lusot" m a n a g e rs . To so lv e the' co m m u n ica tio n p ro b le m . h e k n ew e v e ry m a n a g e r a n d w o rk e r a n d ca lle d th e m b y th eir first n a m e i. th u s a ffe ctin g th e d e v e lo p m e n t a n d m a rk e tin g of n ew p ro d u cts. h e h ired a d ire cto r o f c o m ­ m u n ic a tio n . h e in te g ra te s v a rio u s sty les d e p e n d in g o n th e c o m p a n ie s ' n e e d s a n d co n d itio n s. B o n g T ad iw an w o rrie d th at it w a s lo sin g its " s m a ll-c o m p a n y " sp irit. m o stly b e co m e th e p la n n e rs a n d th in k ers in an o rg a n iz a tio n . p ro fit-sh a rin g s c h e m e . o n the o th e r h a n d . suggested format for case study) E D S A R A D IO A N D T V C O M P A N Y B o n g T ad iw an fo u n d e d a sm a ll ra d io m a n u fa c tu rin g p la n t in E D S A in 1991. By 1 9 9 9 . W h e n the c o m p a n y g re w fairly larger. c o m p a n y -s p o n s o r e d c o u r s e s o n c o m m u n ic a tio n . P a rtic ip a to ry an d co o rd in a tiv e . T his b u sin ess g re w to b e c o m e o n e o f the n a tio n 's la rg e st ra d io . w h o re p o rte d to h im .iManager “By U gnayan” T h e h y b rid o f the a b o v e m e n tio n e d ty p es. an d ap p lia n ce p ro d u c tio n co m p a n ie s. p e o p le still felt th a t th e y k n ew the fo u n d e r a n d p resid en t. as the co m p a n y p ro sp e re d . a n d this stro n g feelin g of p e rso n a l lo y alty h e lp e d m ak e fo r th e a b sen ce of a c o m p a n y u n ion . In e a rlie r d a y s . the fo u n d e r w a s its a ctiv e . 202 Management for Filipinos . H e a lso w o rrie d th a t'h is p h i­ lo so p h ies a n d objectives w e re n o t u n d e rs to o d b y the e m p lo y e e s an d th at d u p lica tio n s tak e p lace b e ca u s e o f p o o r c o m m u n ica tio n o f c o m ­ p a n y p o licie s a m o n g w o rk e rs . im ag in ativ e . a n d to g eth er. an n u al th re e -d a y m e e tin g s o f 1 . b e in g job co n te n t-o rie n te d . h ig h ly a d ap ta b le m e n of the first order.0 0 0 e m p lo y e e s an d ten m a n u ­ fa ctu rin g p lan ts.

P re fe re n ce -e x p e c ta n cy th eo ry f. Directing 203 . 7. R ein fo rcem en t theo ry W h a t is m o tiv atio n ? W h a t are the co m p o n e n ts of m o tiv a tio n ? W h a t d o es the classical th eo ry o f m o tiv a tio n sa y ? W h a t are the five n e e d s in M a slo w 's h ie ra rch y ? W h a t re le v a n c e do th ey h a v e to the stu d y of m o tiv a tio n ? W h a t d o e s H erzb e rg m e a n b y -hygiene fa cto rs an d m o tiv a to rs ? G iv e so m e e x am p le s of each . 14. Tadiwan was disap­ pointed to find that his problems of lack of communication and the loss of "small-company" feeling still exist. D escrib e so m e w a y s in w h ich the g ra p e v in e ca n be u se d effec­ tively in organ izatio n s. 6. 13. L aissez-faire c. D iscu ss briefly the a p p lica tio n of so m e of the th eo ries o f m o tiv a ­ tion w e h a v e exa m in e d in this ch ap ter. 4. N eed h ierarch y theo ry c. D efine lead ersh ip . A u to c ra tic b. 8. W h a t is co m m u n ica tio n ? W h a t is sem an tics? W h a t is feed b ack . R E V IE W Q U E S T IO N S I. Mr. M o tiv atio n -m a in te n a n ce thed ry e. 10. W h a t are the assu m p tio n s o f m a n a g e rs w h o b eliev e in th e o ry X a n d th eo ry Y styles of lead ersh ip ? 12. In short. E x p lain V ro o m 's p re fe re n ce -e x p e cta tio n theory.After much time. his measures failed sig­ nificantly. effort and expense. 5. 3. cess? D escrib e the follow in g o rg a n iz a tio n a l c o m m u n ica tio n sy ste m s: a. T rad ition al theo ry b. II. b. 9. A ch iev em en t-p o w e r-a ffilia tio n th eo ry d. D em o cratic D escrib e the M an a g e ria l G rid. 2. W h a t is the so u rce of a le a d e r 's a u th o rity ? D escrib e in d etail the follow in g le a d e rsh ip styles: a. D escrib e the follow in g th eo ries of m o tiv atio n : a. D o w n w a rd co m m u n ica tio n sy stem s U p w a rd co m m u n ica tio n sy ste m s D IS C U S S IO N Q U E S T IO N S 1. an d h o w d o e s it affect the co m m u n ic a tio n pro­ 15.

A s tu d e n t w ith p o o r p e rfo rm a n c e (g e ttin g p o o r m a rk s . c.(co lleg e. su ch as m o tiv a tio n a l m o d e l. e tc. y o u m a y h a v e sttid en ts w ith d ifferent p erso n alities. etc. S u p p o se y o u h a v e the fo llo w in g stu d e n ts . w h a t kind of stra te ­ gies w ill y o u e m p lo y in m o tiv a tin g th ese stu d e n ts for b e tte r p e rfo r­ m a n ce ? H o w w ill y o u g o a b o u t im p le m e n tin g these stra te g ie s? a. A n y o th e r a sp e c t m en tiorted in the ch ap ter." Is this a g o o d p ra ctice in o rg a n iz a tio n s ? E xp lain .o r g ra d e s con sisten tly . sch o o l.) * b.2. w h a t kind of lead ersh ip sty le is su ited to y o u r b u sin ess o rg a n iz a tio n ? Ju stify y o u r a n sw e r by citin g its p ro s an d co n s. y o u m a y utilize the in fo rm a ­ tion p ro v id e d in the ch a p te r. B arriers to co m m u n ica tio n M ed ia u sed e. clu b . A s a m a n a g e r/s u p e rv is o r . w rite a m e m o ra n d u m a d d re ss e d to y o u r ran k an d file e m p lo y e e s (clerk . D iscu ss the follow in g sta te m e n t: "M e a n in g s are in p e o p le . ch u rch . n o t w h a t w e sa y . "W a tc h w h a t vye d o . In d esign in g m o tiv a tio n a l stra te g ie s. m essen g er. abilities. A stu d e n t w h o is tro u b le so m e in th e class b u t p e rfo rm s sa tis­ fa cto rily in stu d ies. 5. o r an y o th e r-o rg a n iz a tio n ) in te rm s of: a. P o o r co m m u n ica tio n o f the o rg a n iz a tio n 's g oals is often g iv en as the reason for low p e rfo rm a n ce of the o rg a n iz a tio n . 2. typ ist. n eed s. E x a m in e the ty p e o f co m m u n ica tio n w h ich exists in an o rg a n i­ z a tio n y o u are fam iliar w ith . In a cla ss o f 3 5 stu d e n ts. 5. D o y o u think th at this is u su ally a valid exp la n a tio n ? E X P E R IE N T IA L E X E R C IS E S 1. an d p e rfo r­ m a n ce .). A ssu m e that y o u are a te a ch e r a n d o n e o f y o u r im p o rta n t task s is m o tiv a tin g y o u r stu d e n ts. d. g iv e co n cre te m o tiv a tio n a l situ atio n s for e a ch n eed affectin g the tw o levels of an o r­ g a n iz a tio n (M id d le M a n a g e m e n t an d R an k an d File). th eo ries. By u sin g M a slo w 's h ie ra rch y o f n e e d s m o d e l. 204 Management for Filipinos . C h o o se an y to p ic /s u b je c t. . 4. a p p lica tio n of th eo ries. A stu d e n t w h o p e rfo rm s w ell so m e tim e s an d p e rfo rm s p o o rly so m e tim e s. b. A s a m a n a g e r." 4. T yp es o f co m m u n ica tio n P eo p le in v o lv e d c.3 . E x p lain w h y the fo llo w in g q u estio n is raised freq u en tly b y m a n y m a n a g e rs: "W h y d id n 't y o u d o w h a t I told y o u to d o ? " 3. n o t w o r d s .

In d a y -to -d a y life, w e co m e a cro ss le a d e rs fro m v a rio u s w alk s
o f life su ch as religion , p olitics, m ilitary, in d u stry , e d u c a tio n , scien ce
a n d s p o rts. N o w thin k o f the le a d e r y o u a d m ire m o st. Take a few
m o m e n ts a n d co m e o u t w ith a list o f ch a ra c te ris tics o f th e m a n or
w o m a n y o u a d m ire m o st a s a leader. A n s w e r the fo llo w in g q u estio n s.
a. W h y d o y o u thin k h e o r sh e is a g o o d le a d e r?
b. W h ^ t are h is o r h e r stro n g p o in ts o r ch a ra c te ris tics ?
W h a t are h is o r h e r w e a k p o in ts o r ch a ra c te ris tics ?

D o y o u think the le a d e r y o u h a v e ch o se n w ill be e ffectiv e for

all tim es a n d fo r all situ atio n s?
e. C a n y o u id e n tify so m e le a d e rsh ip c h a ra c te ris tic s y o u m a y
p o sse ss?
(d )

y o u co n sid e r y o u rs e lf as: (ch e ck one)
e m p lo y e e -c e n te re d
p ro d u ctio n -ce n te re d
su p p o rtiv e sty le?
th e o ry X style?

(e) th e o ry Y sty le?


Allen, Louis. Management and Organizationst New York: McGraw-Hill
Book Company, Inc., 1992.


Blake, Robert R. and Mouton, Janet S. The Managerial Grid. Houston,
Texas; Gulf Publishing Company, 1964. p. 10.


Bryans, P. and Cronin. T. Organization Theory. London: Mitchell Beazley
Publishers, 1993. p. 91.


Franco, Ernesto. Pinoy Management. Manila: National Bookstore, Inc.,



Koontz, Harold and O’Donnel, Cyrili. Essentials o f Management. New
Delhi: Tata-McGraw-Hill Publishing Co., 1998. pp. 417-420, 438, 457-458.


Lester, Bittel R. What Every Supervisor Should Know. New York:'
McGraw-Hill Book Co., 2nd Edition, p. 51.


Putti, Joseph. M an ag em en ts Functional Approach. Singapore: McGrawHill Book Company, 1997.




Management for Fillplnoi

Worksheet No. 6.19


N a m e : ________________________________________

Y e a r /S e c tio n :

P r o f e s s o r : ____________________________________

D a t e : ________

By using Maslow’s theory o f needs model, give concrete motivational
situations for each need affecting the two levels of an organization.


R A N K & F IL E

1. P h y sio lo g ica l

2 . S afety

3 . S ocial

4 . S elf-E steem

5 . S elf-Fu lfillm en t






20 8

Management for Filipinos

Worksheet No. 6.20


N a m e :_____________________________

Year/Section: -----------------

Professor: __________________________

D a te :-----------------------------

/4s a manager/supervisor, write a memorandum addressed to your rank
and file employees (clerk, typist, messenger, etc.). Choose any topic/subject.





Management for Filipinos

what kind of leadership style is suited to your business organization? justify your answer by citing its pros and cons. Directing 211 .LEADERSHIP N a m e :_________________________________ Year/S ection: ----------------------P rofessor: _____________________________ D a t e :--------------------------------- As a manager.21 DIRECTING . 6.W orksheet No.

\ ■} I t i t .

the student is expected to understand the following: • Definition of Controlling • The Nature of Controlling • The Control Process • Characteristics of Control • Types of Control • Control Methods and Systems • Accounting Concepts and Techniques as Control Devices "Our greatest glory is not in never failing. but in rising every time we fa ll - Goldsmith .Chapter 7 Controlling Learning Objectives: A t the end o f the chapter.

plan­ ning identifies the things to do for future accomplishment. etc. personnel. directing) are performed perfectly. As stated above. by applying corrective measures so that the activities take place according to plans. The failure of controlling would mean failure of planning. After measuring the plans. to meet the energy crisis. controlling is still inevitable. it is a managerial necessity and a help. Normally. Controlling can be considered as the activity for knowing and correcting important changes in the activities that are planned. a modified or new plan must be formu­ lated. Planning is related to controlling. At top management level.) of an organization. it is important to keep in mind that the objective of controlling is positive to achieve the goal within stated constraints. For instance. staffing. and success of planning means success of controlling. The consequence of controlling these new manage­ ment practices means big savings of millions of pesos in operation. the management trims manufacturing and administrative costs by formulating the company's cost reduction program and using material substitutions (planning). As previously discussed. The work is accomplished at less cost but without sacrificing product qual­ ity. management controls alert the manager to po­ tentially critical problems. Controlling should never be considered negative. NATURE OF C O N TR O L LIN G In a situation where the other fundamental functions of manage­ ment (planning. not an impediment or a hindrance. and knowing that the plans are not realistic. centralizes or downsize structure for its diverse manufacturing operations (organizing). Control­ ling determines what is being tackled by evaluating the performance and. There can only be effective controlling if there are the other four fundamental functions of management. for it is used to further effect some im­ provements. organizing. or by means of the planned activities. However.D E F IN IT IO N OF C O N T R O L LIN G c CONTROLLING is the process of measuring and correcting ac­ tivities (plans. if there is a deviation. organization. a business organization experi­ ences some errors and negative performance so that the function of controlling is necessary. and emphasizes par­ ticipation in decision making and adopts employees' enrichment pro­ grams (directing). a problem occurs 214 Management for Filipinos .

repairs and maintenance. readily solved problems to turn into crises. and pilferage. sup­ plies. Production overhead-variable Training new employees. or other performance indicators. Proper controls can provide the manager with objective information about employee performance. This typically does not include wages and salaries of support or office personnel. research and development. At middle and lower levels. Controllina 215 . payroll taxes. de­ preciation. repairs and maintenance. overtime premium. The manager can use this information to: 1. electricity. vacation and holiday. Production overhead-fixed Travel. real estate taxes. 3. 4. rent. insuran e. it is easy for small. Controls allow the manager to compare what is happening with what was planned. or oil).when the organization's goals are not being met. Problems and services can be stan­ dardized in terms of quantity and quality through the use of good •controls. 2. production standards. Controls can protect assets from inefficiency. These may be departmental objectives. group insurance. retire­ ment funds. Materials Cost of materials which become a tan­ gible part of finished goods and ser­ vices. 5. Update plans. Appraise employee performance. Prevent crises. All forms of management controls are designed to give the manager information regarding progress.-waste. fuel (coal. gas. supervision and clerical. a problem occurs when the objectives for which the manager is responsible are not being met. travel. If a manager does not know what is going on. Budget Costs: The Basis for Cost Control Types o f Cost Componen ts Direct labor Wages and salaries of workers who are tngaged in the direct generation of goods and services. Remember that the final step in the planning process is to control the plan. wa­ ter. safety train­ ing. Protect an organization's asset. Standardization outputs. shift premium.

5. In exercising the control function. 4. Establishing standards. expenses. Establishing standards. Thus. Standards are desired levels of performance and constitute the foundation of the control process. Making sure recommended corrective actions are followed through. This is specially true if the task is complicated. 2.Figure 7.2). money.1 Cost Reduction and Cost Control TH E C O N T R O L PROCESS Most of the definitions of control include the steps or elements of the control process (Figure 7. A more general way of looking at what constitutes good performance is in terms of productivity or output. control involves: 1. Just imagine how we can evaluate any performance without establishing standards which is not an easy task. It would be helpful on the part of the manager to first focus on what he hopes to achieve. These serve as the criteria against which the performance is evaluated by the manager. Comparison of actual performance. materials). 3. a manager measures the performance of an individual. plans. machines. Measuring performance against the established standards. time-consuming and involves many intangible factors. Taking corrective action when and where deviations from the standards occur. methods. I. utilization of basic resources (men. although we usually focus on profits or share of the market. It is difficult to 21 6 Management for Filipinos . or pro­ grams against their predetermined standards and take corrective ac­ tions if there are any deviations. market. long.

motion and time study technique is used in setting up stan­ dards and as a result measurement of actual performance tend to be simple. there is always the question of what cri­ teria to consider. leadership. he must maintain a rejection rate of not more than 3 percent (quality). the manager views performance both in terms of quantitative measures and those aspects that are difficult. Some commonly used standards are: quantity. To overcome this problem. such as 3 to 4 percent rejection rate and so on. The most common means of measurement are personal observations and the use of statistical data and reports. Wherever vague standards exist. Measuring performance against the established standards. both oral and written. One precaution must be taken in determining performance stan­ dards. A participative approach in setting performance standards may be more effective. then measurement of performance becomes easy. This is significant because it provides the real docu­ mented information which is subsequently compared with the estab­ lished standard. Certain unforeseen circumstances may require some changes •or modifications in the established standards. time and cost. For instance. communication..e. a worker must produce a number of units per day or per week (quantity). etc. setting standards is relatively easy. quality. It is not always possible to achieve or maintain the established standards. Such methods and techniques help to achieve objectivity and accuracy.set specific standards to measure the performance of an executive. if not impossible. In general cases. In evaluating the results of the various activities. new methods and techniques were de­ veloped in the area of performance measurement. A cushion effect must be provided in the control process by specifying on acceptable level of degree of variations from the established standards. Such an approach is encouraged under the management by objective method. measurement also becomes hard. the most helpful criteria are: Controlling 217 . The concept of measuring activities would result in what is being accomplished.) If performance standards are clearly established and made known to the performer of a job. For many production type jobs and similar other activities. In recent years. In measuring an entity. and not exceed the stated costs in producing a specified number of units (cost). 2. in some industries. Where it is difficult to establish standards. standards may be in terms of ranges. to quantify (i. the basic procedure is to check the actual level and quality of output. measurements are often equally vague. complete his work within six months of the assign­ ment (time). Whatever the tech­ nique or lnethod is involved. For operative or production types of jobs.

2 The Control Process Quality.D e te rm in e P e r fo r m a n c e S ta n d a r d s M e a s u re m e n t M o n ito r in g S ta g e v o f A c tu a l P e rfo r m a n c e C o m p a r is o n o f R e v ie w in g S ta g e ------. This is parallel to efficiency. The cost of production can be predetermined by using the object tool as a guide to actual production efforts and keep them within desired and expected limits. This can be employed by formulating a timetable for achieving certain goals at certain dates. can be discovered. This can be used as the control tool by finding out the amount or number of the output of the group/department. based on reasonable expectancy for the group/department. corrective action should be applied. The performance for each group/department can be controlled based on the quality of its output. What is produced com­ pared to what should be produced. The results could then be used to judge the efficiency of the group/department. This is parallel to effective­ ness.------------------------- A c tu a l a n d P la n n e d P e rfo r m a n c e C o r re c tin g F o llo w -u p S ta g e ----------------------------------> S ta g e T a k e C o r r c e tiv e A c tio n F o llo w -T h r o u g h A c tio n s Figure 7. Quantity. Cost. If actual performance deviates from the scheduled time. Time. 218 Management for Filipinos .

The responsibility for that corrective action is not over just by making this recommendation. and unexpected bottlenecks. Recommendations or recommending corrective actions also are not sufficient and the manager should not assume that his responsibil­ ity is over. Some even go the extent of identifying the uncontrollable factors and developing alterna­ tive actions for deviations. Comparison of Actual Performance This is the core of the control process. This phase of the control process involves checking to determine whether the actual performance meets the predetermined or planned performance. rush order or project. more staff or equipment) to meet a particular emergency. Controlling 219 . For instance. Managers must con­ stantly seek to answer. the performance evaluation of a subordinate indicates weaknesses in supervisory prac­ tices . Checking return on investment is^a comparison place of control. Follow-Through. overtime. he is performing the comparison aspect of control. Specific pro­ cedures must be established and the responsibility must be clearly as­ signed to carry out the corrective actions. When deviations occur and the procedure regarding corrective actions are given in advance to the performance of job. Often the control process is ineffective or fails because the corrective actions recommended is not followed through. We have already examined two types of controls which specifically apply to cor­ rective action of the control process. "How well are we doing?" When a production supervisor checks the actual output or performance of the department with the production schedule. 4. if the deviations are due to controllable factors. actions can be taken without delay. When a significant discrepancy occurs between the actual output or performance and the planned or predetermined performance stan­ dards. Specific action must be taken to correct the situation.3. When an executive evaluates the performance of his subor­ dinates once in six months or annually. Minor corrections or fine tuning may be necessary to improve results or some major efforts (temporary redesign. 5. Some innoyative people and orga­ nizations have already built-in corrective actions in their control pro­ cess.the superior of this individual recommends a corrective action by which the individual is to undergo some training in supervisory prac­ tices. he is performing the compari­ son aspect of control. The superior must follow through his recommendation to see whether the individual participates and makes progress in the training program and to what extent he relates to his actual work situation whatever he has learned in the training program. Taking corrective action when and where deviations from the standards occur.

written procedures. Controls should permit for unex­ pected changes or. Who or what is causing deviations and vyhat should be done about it is the important aspect of control.C H A RACTERISTICS OF C O N T R O L The function of control is to keep work moving on schedule as planned towards the established objectives and goals. and maintenance activities serves as control mechanisms. vandalism. To achieve this. For instance. Controls used to standardize performance. For instance. forecasts and other forwardlooking devices must be used. The cost of establishing and maintaining controls should not exceed the benefits to be derived from them. • Control should be economical. manufacturing people may require a kind of control which may not be applicable for marketing people.situations. • Control should indicate corrective . A clear understanding of these types of control would enhance a manager's skill in exercising the control function. Control mechanisms used for this purpose are: motion and time studies. Jerome offers a classification of control based on the use to which a given con­ trol is put: 1. • Deviations must be identified quickly. Care should be exer­ cised in selecting these crucial points. Rather than relying on past indicators or historical reports all the time. This helps to increase efficiency and decrease costs. • Control must be strategically oriented. An adequate system of record keeping. Controls should reflect the needs of people using them. focusing on probable prob­ lem areas and thus drawing attention for corrective action improved effectiveness. inspection. • Attuned to the activity.action. Unless people under­ stand their purpose and the operations. Rigidity destroys effectiveness of control. • Control should be flexible. 220 Management for Filipinos . The assets of a company must be protected from theft. control should meet certain characteristics. This involves selecting of the crucial points at which control is applied. TYPES OF C O N TR O L There are many different types of control to be used for differ­ ent purposes. custodial. Controls used to safeguard company assets. and mis­ use. 2. • Control should be easy to understand. they become useless. and production schedules. What is the use of checking the process or parts after they break down? • Control must be forward-looking. wastage.

5. divisional controls. performance appraisals. C O N T R O L M E TH O D S A N D SYSTEMS There are two kinds of control methods: behavior control and output control. Controls used to measure job performance. Hodges and Ziegler point out specific controls used in various areas of the organization. Manuals. Examples include blue­ prints. Special reports. policy and organizations manuals. committee approaches. Thomas Peters and Robert Waterman strongly emphasize the need Controlling 221 . and statistical quality control methods. This type of controls include sales and production forecasts. awards and so on. Controls necessary to allow top management to keep the firm's various plans and programsin balance. and functional controls. Controls used to standardize quality. •Research has shown that these two categories of control are not substitutes for each in the sense that a manager uses one of the other. 4.3. Controls designed to set limits within which delegated authority can be exercised without further top management approval. This comprehensive list includes every aspect of the organization and the control network covering these aspects. procedures. 6. and the use of out­ side consultants come into this category. policy statements and internal audits are some examples of this category. departmental controls. •7. cost standards and standards for work measurement. The evidence suggests that output control occurs in response to a manager's need to provide an accurate measure of performance. and internal audits are typical examples. company wide controls. Controls designed to motivate individuals. Behavior (or personal) control is based on direct. Controls used for planning and programming operations. operational controls. The first-line supervisor who maintains a close per­ sonal watch over subordinates is using behavior control. 8. per­ sonal surveillance. Tracking production records or sales are examples of output controls. Output (or impersonal) control is based on the measurement of outputs. These specific controls are listed under five types of control such as. inspection. Master budgets. Behav­ ior control is exerted when performance requirements are well known and personal surveillance is needed to promote efficiency and motiva­ tion. budgets. output data. These help to main­ tain the specified quality level of products. Such controls would involve methods of recognizing achievement through promo­ tions.

The burden of proof is on each manager to justisfy why any money should be spent. A budget is statement of expected results or requirements ex­ pressed in financial or numerical terms. from scratch. Zero-Base Budgeting. a company president's annual visit to all branches. depending on whether it is informational or analytical. The basic idea is to allow material. advertising. each serves different organizational needs. Because the actual level of sales or output is usually not known in advance. Visits and direct observa­ tions can have positive effects when viewed by the workers as a display of the superior's interest. informa­ tional reports only present the facts. labor. a methods study by a staff industrial engineer . each activity un­ der a manager's discretion is identified. and ranked by im­ portance. flexible (variable) budgets are designed to vary with the volume of sales or some other measure of output.or fivestep process. and other related expenses to vary with the volume of output. Although it is time-consuming. flexible bud­ gets are more useful for evaluating what the expense should have been under the circumstances. Preparing a report is a four. they have limited value as planning informa­ tion for the overall budgeting program. flexible budgets are. It re­ quires each manager to justify an entire budget request in detail.for managers at all levels to take a hands-on approach to managing. organizations need to use a mix of output and behavior controls. analytical and infor­ mational.generally limited to expense bud­ gets. they mean regularly mixing with subordinates and visiting them at their workplaces. Thus. In order to overcome many of the shortcomings resulting from inflexibility. By hands-on. personal observation is some­ times the only way to get an accurate picture of what is really happen­ ing. W ritten Reports Written reports can be prepared on a periodic or "as necessary" basis. Also behavior changes when people are being watched or monitored. Another potential inaccuracy lies in the interpretation of the observation. Zero-Base Budgeting is one approach to budgeting that has received attention over the last several years. each year every activity in the budget is on trial for the life and is matched against all the other claimants for an organization's resources. evaluated. 222 Management for Filipinos . There are two basic types of written reports.all of these are examples of control by direct ob­ servation. Under z°ro-base budgeting. Then. Flexible Budgets. Analytical reports interpret the facts they present. Direct Observation A store m anager's daily tour of the facility. Because of their nature. One hazard is that employees may misinterpret a superior's visit and consider such action as meddling.

Most reports are prepared for the benefit of the reader. Break-Even Charts depict graphically the relationship of volume of operations to profits. Another ten­ dency even with necessary reports is to include useless information. Total sales below the BEP results in a loss. It is not required. A break-even chart is useful for showing whether revenue and/ or costs are running as planned. is performed by the organization's own personnel. and (5) writing the report. (2) collecting the facts. They can be conducted by inside staff and can easily result in a biased report. Variable costs vary with output. Time Related Charts and Techniques . and administrative salaries. Management audits attempt to evaluate the overall management practices and policies of the organiza­ tion. (3) organizing the facts. The horizontal axis represents output.. total sales above the BEP results in a profit. Most outside audits do not focus into nonfinancial matters such as management practices. Audits Audits can be conducted either by internal or external personnel. but most break-even charts assume that there are linear relationships and all costs are either fixed or variable. the critical path method (CPM). They include rent. insurance. (4) interpreting the facts (this step is omitted with informational reports). The need for a report should be carefully evaluated. Such unnec­ essary reports are a waste of organizational resources. External audits are normally done by outside accounts and are limited to financial matters. Controlling 223 . When an audit looks at areas other than finances and accounting. These same tools can also be used for controlling once the plans have been put into action. and the program evaluation review technique (PERT) are tools used to plan and sched­ ule. Most are to be done to certify that the organization's accounting methods are fair.The steps are: (1) planning the attack on the problem. Typical variable costs include direct labor and materials. Fixed costs do not vary with output. activities that fall behind schedule can quickly be spotted. By tracking actual progress compared to planned progress. Figure 7. similar to the external audit. at least in the short run. the vertical axis represents expenses and revenues.3 shows a typical break-even chart. consistent. it is known as management audit. The break-even point (BEP) is the point at which sales revenues exactly equal expenses. Gantt charts. not the writer. The purpose of the chart is to show the break-even point and the effects of changes in output. The internal audit. and conform to existing practices. The reader wants useful information not previously available ones.

rather than in a sporadic and piecemeal manner. While not essential. the term management information system (MIS) has become popular. the development of an MBO system is part of the planning function. it is used for control purposes. 22 4 Management for Filipinos . It also can be used for control purposes. The basic idea behind each MIS is to provide information in a system­ atic and integrated manner. A good MIS aids managerial control by giving managers better information on a timely basis.3 Break-Even Chart Management by Objectives Management by objectives (MBO) is an effective means for set­ ting objectives. As with many of the control techniques discussed in this chapter. most management information systems include the use of a computer.c 30 c W £0 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 VOLUME Figure 7. Management Information System In recent y^ars.40 _ QXJ c 03 </) D O . However. once MBO is implemented. The Management Information System is a formal system for providing information to managers.

and to remain solvent in the event of adversities. These include responsibility accounting. liquidity. and ratio analysis. Cost accounting uses standard costs as a measure in its approach. di­ rect costing. asset? . cost accounting. Thus. each manager can see the accounting analysis related to his responsibilities. Cost accounting helps to provide information and control costs. This position of the financial study gauges the project's profit­ ability. Quick or acid-test ratio = Current. re­ sponsibilities for each manager are identified and accounting records are designed to suit these responsibilities. Tests of debt service .These measures are used to determine a firm's ability to meet short-term obligations. there are other accounting and financial con­ cepts and techniques which are used as control devices.inventories Current liabilities c. Analysis through the use of ratios are also utilized by managers as control mechanism. they serve as control devices. Defensive position = Cash + marketable securities. Current ratio = Current asset? Current liabilities b. Liquidity of inventories = — Cost of sajes— Average Inventory d. cash solvency. Charts and other visual devices may be used to present the analysis more effectively. of days 2. Thus. 1. Tests of liquidity . Stan­ dard costs are estimated for each product prior to production and after production they are compared against actual costs. standard cost approach. + receivables Projected operating expenditure/No. Total capitalization = Long-term liabilities __ Long-term liabilities & equities Controlling 225 .These tests are employed to present the project's ability to meet long-term obligations. Direct costing takes only labor and material cost as variable costs. a. and growth over time. It should be noted that the functions elaborated below are meaningful only when compared with other functions of the same typ^ completed in one year intervals. a. This approach deals with detailed analysis of costs and show the cost of providing particular products and operating particular departments.A C C O U N T IN G C O N C E P T S A N D T E C H N IQ U E S A S C O N T R O L D E V IC E S Besides budgets. Debt-to-networth ratio = Total Liabilities Total Equities b. Under responsibility accounting.

4. g. Tests of profitability .Sales---------Total tangible assets Return on assets. Gross profit margin = GrPSS profit Sales d. a. Funds-flow analysis . a.T h e se sh o w the o p e ra tio n a l p e rfo rm a n ce a n d efficien cy o f the p roject.interest & taxes Total tangible assets Asset turnover = ---------. Cash-flo w analysis: 1) Sources o f funds: a) Net decrease in any asset other than cash b) Net increase in any liability c) Proceeds from the sales of stocks a) Funds provided by operations 2) Uses of funds: a) Net increase in any asset other than cash and fixed asset b) Gross increase in fixed asset c) Net decrease in any liability d) A retirement of stock e) Cash dividends b.This technique is employed to determine the major uses and sources of funds. h. f.3. or earning power = — Ngt.income tax rate) 5. R etu rn on fin a n c ie r's in v e stm e n t = e. Operating profit margin = Eiofit before ffitgigstiffid taxes Sales c.ffigQ. N g t in co m e + m tgregt___ Stock equity &c long-term liability Return on owner's investment = Net ingoing Stock Equity Return on net operating profit = Profit before . Net profit margin = Net income after tax Sales tangible assets Test of total debt coverage = Erofit before interest and taxes (interest + principal payments) (1/1 . W orking-capital flow analysis: 1) 226 Sources o f funds: a) Net decrease in any asset other than current assets Management tor Filipinos .

A firm is charged with its fixed costs whether it produces goods or not. donations. light and power. heat and power requirement of produc­ tion machinery." since their classification de­ pends on the company's situation. estate taxes. administrative heat. "fixed" costs are expenses which affect net income despite the fact that they are incurred by the company irrespective of the production volume. general and administrative salaries. fixed assets insurance.These functions indicate how the projects employ assets for which it pays a fixed cost.benefits. a clarification should be made on what "variable" and "fixed" costs are. it is a variable cost to the extent that it is not incurred when no goods are produced. Generally. and office supplies. It should be noted that cost accounts are always predetermined "per se" as either "variable or fixed. and borrowing costs. such as direct materials. equipment.Usually entered under this type of costs are depreciation charges on machinery. etc. engineering costs associated with unit output. a. supplies for manufacturing. indi­ rect materials. Thus. direct labor. the amortization cost of prepaid expenses. is a fixed cost if it is allocated to a manager's office. since office utilities generally do not affect the production rate.variable cost/unit Controlling 227 .b) Net increase in long-term liabilities c) Proceeds from the sale of stock d) Funds provided by operations 2) Uses of funds: a) Net increase in other assets b) Fixed increase on fixed assets c) Net decrease in long-term liabilities d) Retirement of stock e) Cash dividends 6. and intangible assets. maintenance of factory machinery. "variable" costs vary more or less directly with changes in production volume. On the other hand. If water is a main component of a product to be manufactured such as soft drink. research and development. Tests of operating leverage . Before these tests are applied. water supply is either a fixed or a variable cost depend­ ing upon wF ether it varies directly with production volume or not. The same account. wages and fringe. buildings. however. and land improve­ ment. . deferred charges. Break-even-volume analysis Fixed costs BEV --------------------------------------------------Selling price .

Tests of capital investment .These techniques present how a project employs funds which pay a fixed return. Break-even cash analysis Cash fixed costs BEC = Selling price . stocks divided-retained earnings b. color. Break-even-selling-price analysis BESP = Variable costs + fixed costs Unit volume Total cost x Selling price Sales d. Break-even-sales analysis BES = BESP x unit volume Fixed Cost 1 .(Variable cost/net sales) 7. Average rate of return = Average net income --------------------------------Average net investment Initial year cash outflow b. composition of the products. payback period in years Succeeding annual net cash flow c. Dividends per share --------------------------------------------------. and performance. Earnings per share = Net income -----------------shares Net income-pref. size.-------Common share 8.These financial tools evaluate the justification for investing in the project. a. as physical characteristics. weight. and comparing these with actual variable cost/unit c. a. strength. Before mass producing or even during the 228 Management for Filipinos .b. Capital recovery or cash pay off period in years Stock Annual cash dividends Quality Control Quality control deals with setting up of quality standards in ad­ vance in such areas. Test of financial leverage .

Production Control Production control is the backbone of any production system. The products which do not meet the standards are rejected. Production control consists of planning the individual production orders. by that company. a balance must be Controlling 229 . and following them through to completion. the quality of the product must be tested to see whether the standards are met. and by the best and least costly methods. The outer cover can be assembled in 10 days. Inventory Control Inventory control is an essential sequence of a business opera­ tion. The assembly of the engine (the bottom path) is . A basic activity of production control is the supervision of workers while at production. resulting in lost of interest or gain. Sometimes the rejected products can be repro­ cessed and at other times they become scrap. In recent years the EDP (Electronic Data Processing) system or computer and information systems are used in production scheduling and controlling. thereby assisting management control in their execution. The aim of production control is to produce the right product in the proper.the critical path. delays are caused in the production process and as a result products do not reach the market in time and sales are lost. quantity and quality. In order to run an efficient and effective production system. huge sums of money are tied up. Poor quality or prod­ uct with defects may create a poor image of the corporation in the consumer's mind and he will therefore reject all the products produced. Any delay in this assembly may delay the final production. releasing them for production. From these charts. PERT (Program Evaluation Review Technique) is an arrow diagram. With the help of these diagrams. the company has to face several problems. and the engine in 15 days. at the right time. If no method is designed to check the quality of the product and the product reaches the con­ sumer. showing pictorially diagram helps to identify the CPM (Critical Path Method) to achieve goals most effectively. delay can be identified and action can be taken during the process. PERT and others are used in production control. Tools such as the Gantt Chart. CPM. it can be easily seen which depart­ ment or machine is functioning according to schedule and which one is falling behind.'mass production stage. By maintaining an excess inventory. By not maintaining adequate inventory. Gantt chart is a graphical illustration of production scheduling and controlling the work of various production departments and machines.

cost of stockholders and clerical costs in placing orders. An important principle is that this level cannot safety be permitted to drop to zero.Figure 7. minimum and maximum inventory levels must be maintained. For instance. Economic Order Quantity Economic order quantity (EOQ) is issued to determine the most economic level of inventory. obsolescence or deterioration enter into the decision process. Let us say for instance. The cost related to small orders are loss of quantity discounts. Of course. minimum inventory level is maintained where the product is perishable in nature. By comparing inventory cost with cost of sales. The costs associated with large orders are cost of money tied up in inventory and warehouse space. These costs are labelled as: Carrying Cost (cost of main­ taining the inventory) and Ordering Cost.4 PERT Diagram maintained between these two conditions. (cost involved in placing orders). the 23 0 Management for Filipinos . Cost of goods sold Inventory turnover = -----------------------------------Cost of average inventory In order to maintain effective inventory control. Factors such as fluctuations. Where the inventory consists of standardized items. At this level. Inventory control techniques help to strike this balance. Relating this rate to industry standards or with previous turnover rates will give an idea as to the effectiveness of inventory control. reorders are issued. In case of speculative buying. inventory turn­ over rate can be computed. When the inventory reaches this level. the purchase quantity mini­ mizes total cost of purchase by balancing costs associated with small orders. a large quantity of order is placed. it is not that easy to come out with a formula to determine these levels. the maxi­ mum amount to be carried in inventory may be considered a safety stock or minimum reserve stock. main­ taining maximum level may be considered.

Controlling 231 . The inventory is sent to the stockroom. people in the receiving depart­ ment check the number and quality of the inventory and compare it with orders. When inventories are large. inventory cost 10 percent (usually carrying or inventory costs are calcu­ lated as a percentage of the value of the inventory on hand). "the cost of placing an order is P20. The math­ ematical formula used in determining the economical level of inventory where EOQ = S c V i Economic Order Quantity = Sales of the firm = Cost of placing an order = Value of each unit of inventory = Inventory cost Example: If a firm's sales is 6000 units. a letter or group of letters are used. increase in carrying cost.5 \J 160.000 400 units every time the order must be placed for 400 units to arrive at an economic level. because more inventory must be in storage. and the value of each unit is P15 then the Economic Order Quantity is: 2 x 6000 x 20 15 x 0. proper identification such as the following are used: • A lphabetical: Based on same predetermined scheme. Maintenance of Inventory When the inventory is received. Proper arrangement of inventory in stockrooms saves costs and delays. But placing a large order means.10 240000 1.ordering cost is lowered because fewer orders must be placed instead of placing many small orders.

it is pos­ sible to check the inventory level. By referring to stock cards. As part of training. standards and plans occur." remarked Marie Ayala. Under physical inventory it is neces­ sary to correct the errors that occur in the record-keeping system. He has to defend any reports for feedback of information. sales reports are some of them. budgets. These are various types of reports in an organization. If reports are issued without much delay and supply enough information to enable the manager to determine why and where deviations from. As long as I am President. • C o m b in a tio n : The use of &ny two of the above methods. managers learn to write reports of various sorts and interpret them. INC.. A good record-keeping system is essential for an effective inven­ tory control system. If I did. "I heard it in a management conference I attended. suggested format for case study) CHARMIE CONSOLIDATED INDUSTRIES. I will tell my people how much they should spend. But I can't afford it in this company.and section heads develop their own budgets seems sound. performance appraisal. • N u m e ric a l: The use of numbers to identify the item. Profit and loss-statements. a small company whose new pleasure-boat products contributed to the company's growth of P5 million in annual sales since its founding five years ago. Records kept under the perpetual inventory system require the entry of inventory items on records of every receipt and withdrawal of items from stock. Failure to handle the reports would affect their decision making ability because feedback of information provided through the reports serves as input for many supervisory and managerial decisions. • S ig n : The use of symbols or signs to identify the items.• M n e m o n ic : The use of letters in some combination such that they suggest the classification name of the particular item. A great deal of control can be exercised through these reports. SH O R T CASE STUDY: C O N T R O L L IN G (See Chapter 12. project reports. annual reports. these people would spend so much money that we will soon be bankrupt. Inc. president of Charmie Consolidated Industries. "This idea of running a company by allowing department . supervisor or a foreman cannot be everywhere to check everything at all times. Control by Reports A manager. Reports constitute the backbone of control. There will be no blank 232 Management for Filipinos . balance sheets.

Explain the various phases of the control process. 4. 2. It has been said that good inventory management can make the difference between success and failure in certain industries. 4. control should have certain characteristics. In order to accomplish its function. 3. Since quality is a relative concept. how does a manager ever know if the quality level is optimum? What factors should you consider before installing tighter controls? How might you evaluate these factors? If you were implementing a new control system designed to check more closely the expenses of your sales people. quarter. what actions might you take in order to minimize negative reactions? Why are many managers reluctant to take the actions necessary to correct the deviations? Controlling 233 . Name several industries in which this statement is particularly applicable and discuss the reasons for your answer.checks and I will make sure the company comptroller gives the profit I expect. 5. or year?" REVIEW QUESTIONS 1. 5. 7. Discuss the production control problems that can arise when de­ mand is continually changing. I have heard of too many fast-growing companies going red. What is the difference between fixed and variable overhead ex­ penses? What costs affect the economic order quantity? Define quality. 2. 6. This idea of variable budgets is even worse. 3. 6. What are these characteristics? Briefly describe: (a) Behavior control (b) Zero-Base budgeting (c) Liquidity test (d) Inventory control (e) Economic order quantity In what way can budget be used as a control tool? DISCUSSION QUESTIONS 1. What would happen if I let everyone vary his budget every month.

G in sbu rg . K o o n tz. 2 0 0 . 4 8 7 -4 8 9 . 5. Study the forms and procedures used in assessing employees' performance.. M a n a g e m e n t: A F u n c tio n a l A p p ro ach . 3 0 -3 2 . N e w Jersey: D. L a z z a ro . 1993. S in g a p o re : M c G ra w Hill B oo k C om pan y. 1 9 9 5 . N e w Jersey: P re n tic e -H a ll. N e w Delhi: T a ta -M c G ra w -H ill P ublishing C o . Putti. S y s te m s a n d P ro c e d u re s . 3. F u n d a m e n ta ls o f B usiness E n te rp ris e .. V a n N orstran d C o . Organizing c. In c. Victor. Think of the different types of business managers. 2. pp. REFERENCES 1. H a ro ld a n d O ’D o n n e l.EXPERIENTIAL EXERCISES 1. 4.. Planning b. P au l G . 5 4 1 . pp. H astin g s. 1 9 9 7 .. Staffing d. S ig m u n d G . M a n a g e m e n t: A n E x e c u tiv e P e rs p e c tiv e . 234 Management for Filipinos . 3. Texas: R o b e rt D a n e . 1 9 9 4 2. E s s e n tia ls o f M a n a g e m e n t. Inc. Directing Interview a manager or an administrator to discover the method he or she uses to assess the performance' of subordinates in his or her organization. What type of controlling technique do you believe must they have to ensure that they accomplish their plans or objectives? Describe briefly the possible errors and their remedial actions af­ fecting these four managerial functions: a. Cyrill. 1 9 9 8 . J o s e p h . p.

Worksheet No. A) Sari-sari store b) College or university c) Banks d) Restaurant Controlling 235 .2 2 CO NTRO LLING N a m e : ________________________________________ Y e a r /S e c tio n : P ro fe s s o r: D a t e : ________________________ ___________________________________ ------------------------ Think of the following types of business managers. What type of con­ trolling technique do you believe must have to ensure that they accomplish their plans or objectives. 7 .

236 Management for Filipinos .

STAFFING 4. 7.Worksheet No. FUNCTIONS POSSIBLE ERRORS/ DEVIATIONS REMEDIAL ACTIONS 1. ORGANIZING 3. PLANNING 2.23 CO NTRO LLING N a m e : ____________________ ___________________ Y e a r /S e c t io n : P r o fe s s o r : ____________________________________ D a t e : ________ Describe briefly the possible errors and their remedial actions affecting the four managerial functions. DIRECTING Controlling 237 .

238 Management for Filipinos .

then discuss how you can use the management functions (POSD1CON) as a manager o f the organization. 7. Controlling 239 . for example.Worksheet No.24 CO NTRO LLING N a m e : _________________________ _______________ Y e a r /S e c t io n : P r o fe s s o r : ____________________________________ D a t e : ------------- Select a business proposal. putting up a restaurant busi­ ness.

' / ■ i - ■ '! 240 Management for Filipinos .

PA RT^ Applications Chapter 8: Introduction to the Different Areas of Management Chapter 9: Management Information Systems Chapter 10: Social Responsibility Chapter 11: Career Opportuni­ ties in Business Chapter 12: Scientific Analysis of Business Cases Chapter 13: Productivity Technologies in the Philippines .

242 Management for Filipinos .

the student is expected to understand the following: • Marketing Management • Production Management • Materials and Procurement Management • Financial Management • Human Resource Management • Office Management "There is no saturation point to education" - T h o m as J . Sr.Chapter 8 introduction to the Different Areas of Management Learning Objectives: A t the end o f the chapter. W atson. .

It is important be­ cause the market will decide the success or failure of any project that businessmen and managers undertake. Consumers' needs and waists are affected by social. 244 Management far Filipinos . market orientation becomes imperative. A number of people have enough income not only for them to live but also for them to grow.forces of supply and demand leads to the satisfaction of needs and wants which. It must develop and satisfy de­ mand. but everyone should be market-oriented. Every business must adopt a market-oriented approach to cap­ ture a growing share of the market. In big orga­ nizations where division of labor draws a distance between work and marketing. organizing.M A R K E T IN G MANAGEMENT HUMAN RESOURCE M ANAGEM ENT M A R K ETIN G M A N A G E M E N T M J L T J L arketing management is the process of planning. is a primary concern of all business organizations. identify the needs and wants of its potential customers more effectively than its competitors. and economic changes. Consequently. cultural. and controlling the marketing activities. in a free economic enterprise. The operational set-up of marketing may be the responsibility of one department. staffing. the interaction of the . directing. Modem technology has improved the person's purchasing power and offered him a better choice of goods and services for his consump­ tion.

" a trading place where all types of fresh fruits and vegetables are traded.rang­ ing from a state-run monopoly or commune-run. Figure 8. There may be excesses and abuses made by some business enterprises for bigger return on investments. an exchange and an agreed selling price. For example. 1976. p. from central planning in a socialist economy to-personal decision in a free enterprise economy. a market must have a buyer and a seller. To the economist. The Nature and Scope of Marketing Marketing is the performance of business activities that direct the flow of goods and services from producer to consumers or users for the latter's ultimate. such as when the appliance mar­ ket is picking up or the car market is done. but an option to a free but controlled market can sometimes be less wasteful but which at all times is less dynamic. the market for specific economic goods (or services) is the sum of all transactions between buyers apd sellers of goods at any designated time or place. At other times. the term “market" may refer to sales trends or fluctuations in consumer demand. consumption.1 A system approach elements of the Firm’s Marketing System and Environment (Adopted from Kotler. 23) The term “market" connotes many things. It refers to all activities involving the Introduction to the Different Areas of Management 24 5 . All economic systems are part and parcel of a marketing system . less creative and less resourceful.There are some businesses that consider business marketing un­ necessary and wasteful. indicating strong or weak demand. Thus. some cities call it “the farmers' market. a commodity or service. to aggressiveness and proliferation of enterorise-run. the “stock market" refers to the sales of corporation stocks in the stock exchange. Its scope includes a wide range of activities. To many people.

but a business that is market-oriented is broadly concerned with consumers and their needs. pp. Focus Media End Products Selling and promotion Profits through sales volume (a) THE SELLING CONCEPT Customer needs Integrated marketing Profits through customer satisfaction (b) THE MARKETING CONCEPT Figure 8. It covers merchandising.2 The Sales and Marketing Concept Contrasted (Theodore Levitt. strictly defined. Marketing pro­ vides employment ranging from one-fourth to one-third of the labor sector. Thus. selling. but it is more or less synony­ mous with distribution. product packaging. July-August 1995. “Marketing Myopia. 246 Management for Filipinos . marketing is the system of interrelated business activities-of designing. Marketing emphasizes the management function with the idea that the whole scheme of busi­ ness activities should be customer-oriented. Today." Harvard Business Review. 45-46). it refers to the system of interrelated business activities of product development. The emphasis in marketing is no longer focused on things. sale and physical distribution of goods from the time they are produced up to the time they are delivered to their ultimate con­ sumer.processing. As defined here. pricing. transportation. and distributing goods and services to ultimate consumers. depending upon the purpose of the one using it. the marketing function begins even before goods enter the manufacturing process. It presents marketing as coordinated and integrated rather than fragmented. and the use of advertising and credits as the means of sat­ isfying consumer needs and influencing consumer patronage. It also includes marketing research. which are limited in scope. promoting. promotion. The term "market" has varied meanings. each sharing approximately equally the consumer money. and transportation. Marketing and production are the two major areas of business. promoting. designing. and distributing goods and services to satisfy the needs and wants of potential users. pric­ ing. This definition is comprehensive.

Goods and services are distributed and rendered into two different markets: the industrial market and the consumer market. storing. pricing. Industrial Research Industrial research is as old as production. Salaries are commensurate with the individual's ability to perform for the business. The control of marketing practices has been the concern of gov­ ernment for many years. Produc­ tion is thus the operation stage of any business. The purpose of most government legislation is to preserve competition in business and to protect the public. organizing. Products are a blend of raw materials extracted from the earth or the oceans. services. risk-bearing. Today consumers buy almost anything manufactured. or ideas that people want and are willing to pay for. The marketing of goods is attained by the performance of varied activities or functions. staffing. standardizing. Production includes . Buying and selling are considered the primary functions because they influence changes in ownership until the goods are sold to the consumer. and providing market-information. The research industry made its appearance at the turn of the twentieth cen­ tury with a few small research laboratories. directing. Marketing provides a variety of job opportunities for men and women with college preparation. which is the process of making finished goods.manufacturing. Initially. P R O D U C T IO N and OPERATIONS M A N A G E M E N T Production management is the process of planning. With reference to manu­ facture. Subsequently. the develop­ ment of new processes aimed at product improvement was undertaken. there has been a drastic growth and expan­ sion of research development. but this area has not been given the same importance as sales and finance until recently. oceans.The arrangement of the different aspects of marketing into an integrated function is the role of marketing management. addition to the raising of crops and the removal of lumber and minerals . forests. researchers were concerned with solving special problems. All these functions must be tackled even when the goods are sold directly by the producer to the consumer. production is the processing of materials into a new expected form. and controlling the production activities. except fruits and vegetables. Production is the creation of anything of value such as goods. Other essential functions are transporting. For the past two decades. and farms is part of the broader process of production. The process of getting these raw materials from the mines. Introduction to the Different Areas of Manat* >ment 247 .

the finished product of the mine. the air. etc. The term "manufacturing process" refers to the method used to change the form of materials. gold. such as'mining or quarrying.The most important function of research is product improvement. Refining is an analytic process by which petroleum is broken Up into gasoline. modem industry has seen different types of production processes. Research personnel play an important role in supporting management in plan­ ning for the future. analytical. Some minerals. and the ocean. A product can never be perfect. are taken from the ocean. and refineries that extract petroleum products. chlorine. Management seeks the help of research departments for scientific and systematic advice regarding products and processes. and basis for the making of pe­ troleum. Most processes fall into one of the following classes or types: extractive. and fabricat­ ing. coal. research always involves futu-a development. it is refined. its manufac­ turer may discover that other similar products have already dominated the market. is. fuel oil. so to speak. When it is sent to the smelter. Manufacturing Process The process of manufacturing a finished product follows after the raw materials have been procured. Basically. and is processed to produce pure copper as a raw material used in manufacturing fin­ ished products. asphalt. After petroleum is extracted from the earth. manufacture of a more complex product. copper. zinc. such as wire and cooking utensils. For example. in a copper mine the mineral is separated from the earth and rocks that surround it. synthetic. The mineral. in digging out these raw materials. The term "extractive process" means using methods. The evaluation and analysis of the standing of competitors products is a continuing research-testing process. vaseline. and unless it is improved. The Analytical Process An analytical process is one in which a raw material is broken up into its components. tar. The chemical industry is another example of the analytic process whereby raw materials taken 24 8 > M anagem ent fo r FUtpInoi . however. Examples of extracting industries are salt. lubricating oils. such as magnesium. paraffin. and sodium. The Extractive Process The raw materials used in making a new product are taken from the land. A finished product in one industry may be considered a raw material in another industry that uses it in the. In order to manufacture the wide variety of goods that we use in this country. it is regarded as raw material. Nitrogen and oxygen are extracted from the air. sil­ ver.

water. VENDOR SECTION MATERIALS REQUIREMENTS PURCHASE ORDERS CURRENT PRODUCTION REQUIREMENTS LINE CAPACITY LABOR INVENTORY GROSS REQUIREMENTS MATERIAL INVENTORY OPERATIONS PROGRESS NEW OATA NEW HIRES LABOR REQUIREMENTS ASSIGNMENT OF LABOR FORCE \ EQUIPMENT REQUIREMENTS ACTUAL BILLING ACCOUNTS ITS lAI f RECEIVABLE 4 NI EQUIPMENT SCHEDULE SALES 1 PRODUCTION REQUREMEMTS \ \ DEPARTMENT FINISHED GOOOS FORECASTED SALES ON KANO STATISTICS \ \ FINISHEO GOOCO INVENTORY .from the air.3 Integrated Production Management System. are con­ sidered by-products. some of the minor products may be produced only irregularity. The meat packing industry is still another well-known example of the analytic process. but from the standpoint of production time and marketing schedules. and dog food are made. The processing of the main product often is a job big enough to continuously support a full complement of workers. and the hides from which finished leather is derived. chicken food.OPMENT \ JOURNAL ENTRIES PERFORMANCE Y J Figure 8. and the waste from which fertilizers. and this can cause the people employed to be busy only for a certain period of time.WORK FLOW v • INFORMATION FEEDBACK L.'In contrast. soap. Skeleton Flow Chart Introduction to the Different Areas of Management 249 . n V PRODUCTION PRODUCTION SCHEOULE / PERFORMANCE \ STANOAftS i CONTROL \ 0EM3. The main product is dressed meat. One of the problems faced by management in industries that use the analytical process is getting all the products to "come out even. or minerals are refined into a wide assortment of useful products. some other works must be provided for them. so that during the off-periods." not in the sense of equal volume.

drugs. In all fabrication pro­ cesses. Continuous engineering and developmental re­ search is required to perfect the current methods. Manufacturing is characterized by the practices of specializa­ tion. orderly sequence toward the complete product. and mass operations. supports many other closely-related business activities. and in addition. The synthetic process combines raw ma­ terials to form new products. Manufacturing pertains to the coordinated employment of men and machines to produce economic goods from raw materials. Manufacturers must exercise care to ensure that adequate supplies of all needed materials are on hand. for instance) as well as the assembling of many parts into an integrated product. The automobile industry is one of the best-known examples of an industry that utilizes the fabricating process. mechanization. and discover areas where improvement in the manufacturing processes are needed. Other industries utilizing the fab­ ricating process include the manufacturers of stall files and furniture makers who construct metal tables and chairs. scheduling and dispatching. there would be little need for transportation and communication. It is the cornerstone of any business because it employs directly approximately one-fourth of all gainfully employed persons. The performance control standard is obtained by time and motion studies and comparisons of outputs with expected standards. Procedural production control is secured through planning. main­ tain. the work proceeds in a pre-planned. and concrete are examples of products made by the synthetic process. The fab­ ricating process includes the shaping of materials into new forms (stamping an auto fender from sheet metal. The machine is the key to modem industrial processes. Inspection is used to maintain standards. paints. Plastics. routing. and manufactured parts are assembled from many sources and combined into the finished product. The Fabricating Process To fabricate is to put together things to form a whole. machinery and prod­ ucts. The fact that such processes require several different types of raw materials in varying quantities sometimes gives rise to serious shortage problems. 250 Management for Filipinos . manpower is utilized to supervise. identify defective materials and workmanship. fertilizers. An ever-increasing number of production processes and machines are becoming automated in today's factories.The Synthetic Process The synthetic process is exactly the opposite of the 'analytic-to synthesize is to put together.1operate and coordinate mechanized operations. Without manufacturing. and develop new ones. and few goods to merchandise. Tools and dies are employed to stamp out new designs.


as well as other functions of material supervision and management. YO U M U ST S E L L Y O U R P R O D U C T IN T E R M S O F H O W W E L L IT FITS T H E C U S T O M E R 'S SPECIFICATION AT A PRICE. One purchasing officer commented. production may be delayed or interrupted because of lack of materials and supplies. Importance of Procurement Generally. Sales contracts may be cancelled and profits affected: If the procurement function is intelligently and competently performed the entire organization would operate more efficiently. procurement is not as vital as the production and sisles functions of business. Procurement covers production control. When the sales de­ partment gets a big order. and following up to insure effective delivery. identifying the need. YO U AUTOMATICALLY POSITIONED A S A VENDO R. selecting supplies. it is nonetheless important. and thereby. "companies are only aware of the im- IF YO U A R E H ERE. the whole organization feels good. such as in­ ventory control. However.5 Three A p p roach es to the Purchasing Pyram id 252 Management for Filipinos . negotiating prices. it is not so much complimented. incoming inspection. traffic. Figure 8. procurement is a vital func­ tion. If the procurement function is disregarded or not effectively handled. "Procurement" encompasses broader areas and covers the responsibilities performed by purchasing. Every employee feels a sense of pride and satisfaction in his company when a new product is introduced in the market. "purchasing" describes the process of buying. and salvage operations. receiving. Procuring materials and supplies will only involve spending the company's funds.The difference ^between the terms "procurement" and "purchas­ ing" is that. and shipping.

Capital budget to forecast capital expenditures. F IN A N C IA L M A N A G E M E N T Financial management is the process df planning. capital structuring. 2. Procurement is vital because of the following reasons: 1.portance of purchasing when they have fallen on their job. analysis of financial condition. and supervision of finan­ cial operations. This area is responsible for the liquidity. expenses. directing. and financial control of the business. 1. staffing. but through the maintenance of the advantages of vendor-company relationship." Procurement. and the efficient management of such inventory can contribute to profit. and profits. 2. Those responsible for pur­ chasing may not bring in money to the company's treasury. Introduction to the Different Areas of Management 253 . 5. and service is best when it does not force itself upon another. To perform these functions. It has some commercial aspects. Balance sheet analysis (comparative studies. 6. expenses. Purchased materials and services include the biggest part of expenditure in most companies. Operating margins to identify the components of gross sales and percentage of sales. and profits. costs. and supplies inventory in some companies is essential. It is the management-level responsibility for capital procurement. funds allocation. Operations budget to forecast sales. and profit administration. Operating statements to measure income. Comparative operating statements to compare results for the current period against those earlier periods and the company's results against those of others in the same line of business. but perhaps that is as it should be. 3. they may save the business the expenses involved in operating because of properly-manned purchasing power. This responsibility involves: finan­ cial planning. 3. it is taken for granted. organizing. however. for purchasing is a service function. solvency profitability. and controlling the financial activities. 7. the finance manager uses the follow­ ing tools. Cash budget to forecast short-run cash flows from operations and short-run working capital requirements. 4. ratios). parts. When their job is well done. The proper utilization of money is extremely important to the survival of every individual and company. The investment in raw materials. is more than just a function of assisting production.

Financial Planning The objective of financial planning is to appropriate the needs and cap acities of the business through a projection of the availabilityfunds for a short-term period (working capital cashflow. 2. Participation or voice in management. while short-term require­ ments should be covered through short-term borrowings from commer­ cial banks or the money market. the projection of fund requirements dis­ tinguishes short-term. There are different sources of funds for the different lengths of time the funds are needed. and sources of working capital) and-for a long-range period (in­ vestment cashflow. For short-term financing. trade credit ("accounts payable" liabil­ ity for the buyer) may be resorted to. Acquisition of Funds There are two basic types of funds: (1) personal equity. 3. either secured or unsecured). operating bud­ gets. 254 Management for Filipinos . bills of lading. assignment of receivables. and the obligated party to accept the draft by writing his name across the face of the instruments. surety bonds. Priority of claim or preference on assets. The following are the general rules to consider in the acquisi­ tion of funds: 1. The use of the funds should generate income which is greater than the cost of the funds. Priority of claim or preference on income. 2. medium-term. Projected regular capital requirements should be desired from long-term investors or reliable sources which can ordinarily be de­ pended upon for loan renewals or extensions. or mortgages on real estate or chattel (mov­ able property). warehouse receipts. trust receipts. The maturity of the obligation should be well within the earn­ ing life of the asset or project being financed. and (2) borrowed funds (fixed claims by outsiders). and long-term needs. Since financial management is involved with the use of money over a certain period of item. also promissory notes (one name or several names as co-maker. The development of the money market has made avail­ able to top-level borrowers sufficient amounts of short-term funds at competitive interest rates. and commercial drafts (the recipient of the forthcoming payment entrusts the obligated party to pay on sight or within a speci­ fied time the amount specified. 4. Period of the obligation agreement. Security or collaterals for promissory notes may be in the form of marketable secu­ rities (bonds and shares of stocks). capital and conditions of the capital market). 3. The selection between the two would be based on the following: 1.

The Human Resource department has the main responsibility for personnel activities. Employee attitudes and their needs and wants. It simply means that employeremployee relationship changes as a business grows or diversifies. In fact. employees in a small company usually "know the boss" and may even be acquainted with members of his family. the proprietor dis­ covers that he can no longer be personally acquainted with each em­ ployee. inter­ views. The HRD works closely together with all other departments in the organization. Effective and well-understood grievance procedures are essential for maintaining high levels of morale. Satisfactory working conditions and effective supervision are provided to maintain employee morale and to reduce absenteeism and labor turn-over. The safety and general welfare of the employees is the general responsibility of human resource management. but all managers should perform personnel func­ tions. You will recall that the single proprietor usually goes into busi­ ness on a small scale. and controlling of personnel activities. Special tests. are used to show the employees that his ideas are important to the company and its management. directing. in large organizations with several thousand employees. The small units make it easier for per­ Introduction to the Different Areas of Management T55 . including ad­ equate and equitable compensation programs. there is a need to orga­ nize the large company into smaller units or departments with person­ nel designated to oversee each. the management seldom knows more than a small fraction of the work force. including suggestion plans. Since owners and top managers in large organizations cannot maintain personal contact with each employee. And likewise. orga­ nizing. Participa­ tive management techniques. doing all the work himself or having at best only a few employees to help him. Com­ pany magazines are also utilized to keep workers jnformed. He is familiar with their work and perhaps knows something of their home relationships and personal problems. and their continuing development. their job assignments. and physical examinations are used to ensure that the best work­ ers available are hired. The small businessman is usually closely associated with his helpers.H U M A N RESOURCE M A N A G E M E N T Human Resource management is the process of planning. The scope of control which the Human Resource department ex­ ercises over the total personnel function is determined by the order it receives from top management. But as the business prospers and progresses. are vital concerns of human resource management. It is concerned with selecting new employees. But this does not mean that top management or the owners have no interest in their employees' welfare.

And hardly less important. he works effectively alone as well as with others. as sometimes happens. that concern employees: selecting. Human resource management is not the sole concern either of the HRD or of top management. it also takes into consideration the desire to do a good job. and meet­ ing their needs in a number of respects. for the personnel function is necessary in every operation where people are employed. and strives constantly to improve his performance. the person hired possesses only the minimum qualifications tor doing the job. then management must train him to ensure proficiency. The effective employee is one who has a genuine desire and interest to do the best possible job. 256 Management fo r Filipinos . One of the major concerns of the personnel function is to help provide an environment in which people can function well as members of a group. and a desire to see a business grow and succeed. It is a goal of Human resource management to utilize effectively each employee's talents so that com­ pany objectives are attained efficiently and economically. Human resource management has the responsibility of plan­ ning. organizing. So that in every business. But proficiency takes more than knowledge and skill alone. a spirit of teamwork and cooperation. Indeed. This implies that each employee is able to use his competence. a few basic conditions must first be met. And if. Then. Management must study thoroughly the job required and must define the personal require­ ments for doing it. developing compensating. interests. It should go without saying that the very conscious employee ought to know how to perform knowledgeably and skillfully the tasks for whioh he is responsible. It is part of the job of every manager.sons in management positions to be personally acquainted with their employees and thus ensure that each worker contributes to the efficient functioning 6f the organization. They must have cooperation from those work­ ing with them. the personnel function at­ tempts to build a team of effective employees who have high morale. coordinating. highly-motivated employees are essential to the effi­ cient operation of every business. and controlling all activities . management must scientifically select the person whose qualifications satisfy those job requirements. even the most informed and able worker may perform at a low level if he is not interested in what he is doing. Effective. directing. If a worker is to contribute effectively to the operation of his company. Owners or managers working alone cannot get the job done. and oppor­ tunities to his and the company's benefit.

It is not confined strictly to the activities of the office manager or some official with a similar position. Among the significant challenges are: 1. such as: 1. Development of better means of motivating office employees. will have to perform office management functions. and those that provide auxil­ iary support to the line activities (office work). In general. 3. 5. the supervisor's operational activities may be divided into two groups: those that contribute directly to the creation of his group's production unit (line activities). decisiveness. In a broader sense. nor is it limited to the work performed in the office only. The effective application of the fundamental functions of office management is taught with great difficult. directing. T h e Challenges of O ffice M anagem ent The challenges are numerous for the supervisor performing office work. 6. 3. His involvement in these activities will depend on severa^factors. The size of the business and the organizational level where the supervisor is located. Preparation for the "electronic function'' or electronic office. Most likely.OFFICE M A N A G E M E N T Office management is the process of planning. 2. 2. and controlling office activities and those performing them in order to achieve determined objectives. The kind of operational function and selection in performing line or staff functions. Reduction in the amount of unnecessary paper work per­ formed. it covers managerial efforts over office work anywhere in-the company. wherever he is located in the company. Introduction to the Different Areas of Management 257 . Office management requires ingenuity. the supervisor who is engaged in line activities will have technical and production orientation but little orientation about office work. whether it is manufacturing. staff­ ing. or service. 7. Extent of specialization in individual office jobs. The nature of the business. mer­ chandising. and creativity. Office management is not routinary as some people view it. It is inevitable that the supervisor. 4. organizing. Attracting and acquiring the better graduates from schools to >ffice jobs. Greater delegation of authority by the office manager. Careful analysis and involvement of remedial actions for cop­ ing with mounting office cost.

2. B. 2. S im plificatio n o f office p ra ctice s a n d o p e ra tio n s. involves: 1. Maintaining power balance among the various office activities. 7. Delegating authority. 2. Determining what would be needed for an effective work environment . and purchasing office furniture. 3. 6. 4. Filing records and reports. Apportioning the work among the organizational units. Selecting office methods and procedures. Establishment of more and better office work standards. Coordinating the work of the office with non-office work.adequate lighting. elimination of noise. 7. 3. 9. and proper ven­ tilation. Handling incoming and outgoing mail. t C. Seeing to it that the correspondent or correspondence work stenography and typing . Supplying reception and messengerial services. zational 4. Knowing the individual jobs in the office. Determining the complete course of action to accomplish the work involves: 1. D.8. ma­ chines. supporting. Being informed of latest developments in performing office work. 4. and supplies. location of office furniture and machines. 3. 8. Fixing responsibility among personnel. Establishing definite and known relationships among organi­ units. Giving adequate supervision 258 Management for filipinos . Providing for proper work facilities. 5. The activities in office management performed. 5. Motivating office employees 2. Identifying the organizational units. Selecting the office location. Inspiring the office personnel to do their best. among others. Assigning proper personnel to organizational units. A. Providing an effective office organization includes: 1. 6. 8. the following: 1. Specifying. Arranging the office lay-out.

.. p. England. Vernon A. 1995. 150-151. 1997. Japan: McGraw-Hill Kogakusha. Lawrence.. 36-112. Introduction to M o d e rn New Jersey: Prentice Hall. 4. A n Introduction to B usiness a n d M a n a g e m e n t. Illinois: Richard D. In d u s tria l O rg a n iz a tio n a n d M a n a g e m e n t. Bethel. pp. Ltd. 213-214. 1989. MetroManila: Sinagtala Publishing. Eugene H. and Hughes. 601 2. Wilbur B. p. Inc. Monico. 3... 2. pp. Musselman. Inc. Introduction to the Different Areas of Management 259 . 5. M a n a g e m e n t T h e o ry a n d P ractice. B usiness. 1994. Esdras. Martinez.REFERENCES 1. 1992. Ignacio. Manila: GIC Enter­ prises. P ro c u re m e n t P rin ciples a n d C ases. Irwin. Inc. Inc.

260 Management for Filipinos .

25 AREAS OF M ANAGEM ENT N a m e : __________ _____________________________ P r o fe s s o r : Y 6 a r /S e c tio n : _________ __________________________D a t e : ---------------- Give some activities of your business proposal. 8. ACTIVITIES AREAS OF MANAGEMENTS PRODUCTION MANAGEMENT MARKETING MANAGEMENT • FINANCIAL MANAGEMENT PERSONNEL / HUMAN RESOURCE MANAGEMENT OFFICE MANAGEMENT 261 . affecting the various areas o f management.Worksheet No.

262 Managem ent for Filipinos .

Chapter 9 Management Information System Learning Objectives: At the end of the chapter.Napoleon . the student is expected to understand the following: • Management Information System "Impossible is a word only to be found in the dictionary o f fools” .

Management for Filipinos . electrical systems. and various other types of computer-based systems is with the concept of a system.1 Major Information Systems In Business 264. fuel-monitoring system. biological systems. decision support systems. Figure 9.W H A T IS A SYSTEM? P J L erhaps the best place to begin a chapter that is devoted to dis­ cussing management information systems. There are social systems. economic systems and information systems. political systems. Systems exist in all fields of endeavor.

2 Inform ation System Ingredient and Capability A system is any group of components (functions. Depending on the system. the input could be aluminum. The conceptual boundary includes: 1. and events) that interface with and compliment one another to achieve one of more predefined goals. Management Information System 265 i . data. All components of the system. depend"ing on the system. a system accepts input. A system exists within a defined boundary. Again.Figure 9. information. Various subsystems work in concert to reduce some kind of output. people. the input could be soda cans. and so on. and so on. coal or warm air. Typically. temperature. activi­ ties.

directing. managers. 3. more informed decisions. procedures. The purpose of this chapter is to introduce and give an overview of an information system that can be especially useful to managers and students. organizing. The scope of the field includes ev­ erything from word processing to industrial robots to supercomputers to management information systems.2). people. Scope of Computers and Information Processing The fascinating field of computers and information processing encompasses everything that deals directly or indirectly with the com­ puter-assisted flow of information. and people associated with computers and information processing. procedures. The advent and maturing of electronics computers have greatly altered not only the availability of information but also the manner by which it is identified and acquired.2. The term information system is a generic reference to a computer-based system that provides the following: 1. is commonly used in the business environment as a generic reference to all technologies. That which provides input to the system. and data are combined to create an information system (see Figure 9.' software. 2. Data processing capabilities for a department or perhaps an entire company. staffing. and controlling functions of management requires that managers have adequate information: managers must first identify and'then acquire the necessary information. Successful implementation of the basic planning. Information System Hardware. the term "MIS" is also used to refer to a particular type of computer-based system. Whether MIS is used as a generic referenc*' to the field or to refer to a type of system is usually apparent from the context in which it is used. That which is influenced by output from the system. Besides being a generic reference to the computer and information processing field. Com­ puters are the base technology that enables us to tap the information resource. The management information system or MIS for short. Information that people need to make better. almost never felt that 266 M an ag em en t fo r Filipinos . The key words throughout this chapter and in virtually every conversation about the subject are computers and information. These two have historically been the biggest challenges of managers. the value of which will become vividly apparent as you read this chapter. systems. The Information Explosion Until the past 25 years or so.

Not only was the hardware for the system ex­ pensive but they also required highly paid operations. The decentralization first made possible by minicomputers had been taken even further by the microcomputers or personal computers. information has always been available. Diverse computers and communications tech­ nologies provide a wide array of information at many different levels in the organizations. it took about two days to set up ENIAC to carry out a program. The ENIAC was 8 feet high. Therefore. was developed by the University of Pennsylvania in conjunction with the U. The large computers were followed by the microcomputers of the 1970's. service personnel. synthesize. Management Information System 267 . programmers. Of course.and it occupies more space than a typewriter.they had enough information to make decisions. it is no longer possible to place the infor­ mation function neatly on the organization chart. Army-Ordi­ nance Corps. Other available information sources included the radio. Information overload occurs when managers have so much information that they have trouble distinguishing between the useful and the useless infor­ mation.S. On the average. newspapers and professional meetings and publications. but it was not always so easy to obtain. much of the data. more often than not. but rather from information overload. For just a few hundred pesos. The need to integrate and coordinate information in an organization had led to the develop­ ment of the systems for doing just that.000 watts of power to run. Because of the physical size and cost of these systems. they were almost highly centralized and. The Computer Evolution . Minicomputers ushered in the concept of distributed data processing . and systems specialists. Today's managers are often burdened. Contrast that scenario with today. Organization has control of its own computers to better respond to the needs of the area. would not be current. In the 1960's. 8 feet long.The first electronic computer. In the 1950's a manager could send a term of researchers to the local library. the EN1AC. even then. considered an extension of the accounting function.each operational area of a jar­ gon to use computers. The microcomputers were much smaller in size and cost and they were often programmed to do specific functions for a specific busi­ ness in size and cost and they were often programmed to do specific functions for a specific business activity. not with a lack of information. a manager today can buy a microcom­ puter capable of processing mammoth amount of data . Computer technology improvements have also created some new problems for managers. and required about 174. and analyze. weighted 30 tons. large and very costly mainframe computers (such as the IBM 360 series) were in use by only the largest companies and gov­ ernment organizations.

MIS makes the line managers or end users responsible for articulating their needs so that the computer programmers can design reports tailored to them. Three important concepts are related to one another: electronic data processing (EDP) management information system (MIS). The era of the modern control system can be dated to the creation of the first computer during the 1940's. subsystems. line management was wary about making decisions based on such information. MIS also places the burden of extracting relevant information on the manager or end user. This form of control is very cumbersome. since it requires access to a mainframe computer and usually extensive -knowledge of computer programming and operations. In this section we define them and de­ scribe how they are related to but different from one another. Electronic data processing (EDP) represents the first attempt to control individuals. Modern computers are much more user friendly than those of the past. In this sense. Conse­ quently.The phenomenal improvements in computer hardware have been accompanied by improvements in software and user compatibility. they would approach the EDP depart­ ment. The activities of almost all line managers were not directly af­ fected by EDP. and de­ cision support system (DSS). Management information system (MIS) is the activity of taking the processed data and turning it info meaningful information or reports that managers can use. The manager still does not manipu­ late the data directly. which was and still is considered a staff function. When line manage­ ment wanted such information. but the computer programmers and specialists must tailor their reports and documents to the desires of the line man­ agers who will make decisions based on them. and the total organization or system through the use of computer-gen­ erated data. and its specialists would provide it in the form of computer out­ put and reports. Managers today do not need to know sophisticated computer program­ ming languages. primarily because such information is standardized and can be easily manipulated by computer specialists. It is not necessary to use computers to have effective control. However. EDP is manipulating data or individual trans­ actions at a central computer facility housing a large mainframe com­ puter upon which thousands of pieces of information can be easily stored and manipulated. Specifically. EDP proved to be helpful in such areas as storing accounting and salary information. MIS is a natural extension of EDP. 268 M a n a g e m e n ts Filipinos . Line managers complained bitterly for many years that the EDP specialists provided them with information and reports that were difficult to understand. (computers are enormously helpful in the control process.

is one requirement.tructural decision making. Interactive computer hardware (the computer itself) and software (the program allowing the manager to use the computer). the manager can use a desktop computer -to manipulate the data and make decisions based on the resultant calculations. For such decision making. Software can be purchased off the shelf for most applications. the problem is not sufficient to make a good decision. the problem is too complex or involves too many computations. The actual computer. Many. 3. Denise Eriksen (1987) points out that DSS is most applicable to the area of semis. A database upon which the software programs can be seen to produce the desired tables and figures.MIS is Clearly an improvement on EDP. In addition. These instructions and programs are referred to as software. MIS Components Certain basic components are needed for a successful MIS. This can require anything from a single programmer to several programmers and system analysts. A computer language that is user-friendly so that a line manager can use it after a few hours of training and can begin to ma­ nipulate company or divisional information. DSS is a hands-on ap­ proach to decision making. some organiza­ tions elect to write their own software. DSS is a means to facilitate managerial decision making. 4. on the end prod­ uct or the decision itself. which allows the line manager to partici­ pate actively in the manipulation of the data. Pro­ grammers are the people who write the instructional programs that tell Management Information System 269 . All computers need instructions or programs to run therm. a manager's judgment alone. Hence the need to discuss the proper method of designing an MIS. Rather. 2. it often fails or operates suboptijnally. DSS is not meant to supplant mana­ gerial judgment and decision making. William King has ar­ gued that DSS will become prominent in the area of strategies planning as top corporate and divisional line managers become accustomed to using desktop computers. However. The selection is abundant and continues to expand. is not sufficient to make a good decision. for example. known as hardware. and the manager or her assistant is encour­ aged to manipulate the data on a desktop computer. A decision support system (DSS) focuses not on the data itself (EDP) or the processed information per se but rather. 1. As this discussion implies. if not most managers of the future will need to be able to operate the desktop computer efficiently. Instead. unleiss MIS is set up properly. a software ac­ counting program that allows a manager to evaluate accounting infor­ mation for the entire company. However. Thus. Graphical and other displays.

CTtt Management for Fffipihos . The final necessary component of the system is the management staff and executive leadership. And they must be willing to make the effort needed to improve the information and the MIS itself. It is stored so as to be readily ac­ cessed. R O N A L D M . and at the least cost. PASTRANA I. They must know what information they need and how too use this. System analysts study a potential computer application and determine the type of programs needed.IVideo monitor (output) Central processing unit (processing. but this information must be used by information-oriented manag­ ers. storage. Figure 9. at the right time. If the middle and lower level man­ agers see that top management is really not committed to the MIS. Definition/Background Management Information System (MIS) is the process of provid­ ing managers with the right information.3 MIS Component and Computer Based System the computer what to do. the system will surely fail. M A N A G E M E N T IN F O R M A T IO N SYSTEMS (MIS). A third necessary component is the database. C O M P U TE R IMPACT O N M A N A G ER IA L A C T IV IT IE S I DR. on the right uses. and control) / Information-oriented managers and executives Floppy disk drive (storage) CD ROM drive (storage) Printer (output) Keyboard (Input) Figure 9. System ana­ lysts basically serve as intermediaries between the users and the pro­ grammers. Usually a database has information about the organization's operations. A database in­ cludes the data needed by the user.3 summarizes the necessary compo­ nents of a successful MIS. Information for a database can be very expensive. Top managers or executives must ac­ tively endorse and support the MIS. Other components can produce informa­ tion.

.Due to the complexity of business dperations. Computer Operator .takes charge of the operation/maintenance of the computer facilities 5. It has been traditionally an accounting func­ tion. P la n n in g : EDP technology brought faster awareness of problems and op­ portunities because of the speed and accuracy of information processManagement Information System 271 . MIS/EDP is now a separate functional area in business characterized as a support/services group. 2. Under him are various staff/groups: 1. II. D ata Controller . As a New Functional Area As a new functional area.4 T y p ic a l O rg a n iz a tio n a l C h a rt The EDP Department Manager also participates in management decisions. COBOL 3.checks input/output data 4.g.transcribes data inputs F ig u re 9 . particularly in planning and controlling activities. Data Encoder . MIS has evolved from a mere basic functions of reporting financial statements and sta­ tistical information to sophisticated financial and statistical projections and performance reports. III. BASIC. the MIS/EDP (Electronic Data Process­ ing) Department is headed by an MIS Director for large-scale busi­ nesses or an EDP Manager for medium-small scale operations. but due to the advent of computer technology. Systems Analysts .oversees the design and documentation of business systems design into a specific language. Impact On Managerial Functions I. Programmer . e.

The main strength of computers is the accuracy. 2. how might this information be used as part of an MIS? 272 M anagem ent fo r Filipinos . etc. it must be treated as an invest­ ment wherein the return is in the form of management efficiency." However. Distinguish between data. Measurement of performance is facilitated by storing prede­ termined standards in all areas: (1) production (2) sales (3) finance. MIS/EDP is considered as a cost cutter. c. R E VIE W QUESTIONS 1. rf'also affords a lot of alternatives open to every management problem. Lastly. W hat is a management information system (MIS)? W hat is a decision support system (DSS)? W hat is electronic data processing (EDP)? D IS C U S S IO N QUESTIONS 1. the last objective of “least economical cost. 3. 2. W hen you go into a Jast-food store and the salesperson keys your order into the cash register. b. Controlling: The great impact of computers on managerial control processes are summarized as follows: a. reliability. How would you respond to the following statement: "Learning about management information system s should be reserved for com puter specialists. 4.Economic variables are better processed with standards as inputs. Control decisions are facilitated giving better opportunities for the internal audit group to check and further safeguard assets of the company. d. especially in the areas of budgeting and forecasting. Comparative analysis is done through a comparison of actual funds versus budget with variances automatically provided in video or print form. .ing enabling managers to concentrate on other management activities." 2. and information. and speed of providing quantitative data for management decisions.

Lecturer. Manila. Thailand Managem ent Inform a tion System 273 .REFERENCE 1.La Consolacion College. Ronald M. Pastrana. MBA (Ateneo de Manila University). Dean . University of Assum ption at Bangkok.

27 4 Management for Filipinos .

Chapter 10 Social Responsibility of Businessmen Learning Objectives: At the end of the chapter. the student is expected to understand the following: • Definition of Social Responsibility • Major Arguments for and Against Social Responsibility • Business Ethics • A Code of Ethics for Business “Law is merely the expression o f the will o f the strongest fo r the time bein g " .B roo k e A dam s .

The public seems to feel that managers and business 276 Management for Filipinos . what ethical standards should be applied? The purpose of this chapter is to examine the social responsibility of organizations and the importance of ethics in manage­ ment. Social responsibility is concerned with low individuals and orga­ nizations deal with current social issues. re business organizations expected to be involved with social issues that are broader than their concern for producing and selling goods and services? If they are.COMMUNITY Figure 10. what specific issues should be ad­ dressed? Should managers be expected to apply ethical standards in their day-to-day business decisions? If they are.1 Social Responsibility of Businessmen D E F IN IN G SO C IA L RESPONSIBILITY A JL -k. Social responsibility is the mpral and ethical content of manage­ rial and corporate decisions over and above the pragmatic requirements imposed by legal principle and the market economy. The general public has a rather • broad and all-inclusive definition of the social responsibility of business organizations.

because price of goods will have to go up to pay for social programs. 3. It will improve the price of stock in the long run. It increases the viability of the business system. 4. 7. Presently. 12. 6. 8. Business is considered. It is the ethical thing to do. It violates profit maximization. Major Arguments Against Social Responsibility 1. Major Arguments For Social Responsibility 1 2. 3. 10. Business plus government equals monolith. Society can amend or take away its charter. to be the institution with the financial and human resources to solve social problems. It is in the stockholder's best interest. 2. It improves the public image of the firm. wiping out poverty. 6. business must assume responsibility to maintain an orderly legal society. It would weaken the government's balance of payments. because the stock market will view the com­ pany as less risky and open to public attack and therefore award it a higher price-earnings ratio. Social actions cannot be measured. 4. Cost of social responsibility is loo great and would increase prices too much. 8. Thus. Business lacks social skills to solve societal problems. This is the "iron law of responsibility. Managers at work show what some organizations are and are not doing in social responsibility decisions. 9." It is necessary to avoid government regulation. Laws cannot be passed for all circumstances. Socio-cultural norms require it. It might be illegal. It is_in the best interest of the business to promote and improve the communities where it does business. It would dilute business's primary purpose. by some groups.organizations should provide leadership in rebuilding cities. Social Responsibility of Businessmen 277 . Business exists because it gives society benefits. In Short. 5. controlling crime. Prevention of problems is better than cure . no universally accepted definition exist for the term. 7. Social actions can be let business solve problems before they become too great. and cutting government red tape. Society should give business a chance to solve social problems that government has failed to solve. 11. social responsibility has come to mean participation in a multitude of issues and problems. 5.

th e tic v a lu e s . Joseph W. C o n t r i b u t o r ’s i n t e r e s t 2 . That g o v ern m en t is best w h ic h g o v e r n s l e a s t . p a r tic ip a tio n .9. a n d o th e r to th e m anage­ t r ib u to r s . b u t so im p o r ta n t. S e lf -in te r e s t 1. N. B u sin ess lack s'a cc o u n ta b ility to the p u b lic. co n ­ of m anage­ m e n t i s to t h e o w n e r s . Prentice-Hall. n ip u la te th e e n v iro n m e n t. “The Social Attitudes to Management". T h u s. A e s th e tic v a lu e s v a lu e s ? W hat th e y ? are m u st p reserv e our o u r p a r t. to e a r ly 1 9 6 0 a ) 1960s 1. Management for Filipinos aes­ w e w i ll d o . p. a s y o u a n d I a r e . e m p lo y e e s . C o n t r i b u t o r ’s i n t e r e s t 3 . S u ch in v o lv e m e n t w o u ld m a k e b u sin ess too. HISTORICAL PHASES OF ATTITUDES OF MANAGERS TOWARD SOCIAL RESPONSIBILITY PH A SE 1 PH A 3E 3 PH A SE 2 P R O F IT -M A X IM IZ IN G T R U S T E E S H IP M AN AGE­ Q U A L IT Y -O F -L IF E M AN A G EM EN T M EN T M A N A G E M E N T (la te A T T IT U D E S ( 1 8 0 0 to 1 9 2 0 a ) (lit* to p r e s e n t) O r ie n ta tio n R a w s e lf-in te r e s t 1 9 2 0 . E n v ir o n m e n ta l v a lu e s : T h e n a tu r a l e n v iro n m e n t c o n ­ P e o p le t r o l s t h e d e s t i n y o f p e o p le .J. b u t re c o g n iz e th e v a lu e I o f g ro u p G r o u p p a r t i c i p a t i o n is fu n d a m e n ta l to o u r s u c c e s s n e s s a s 1 p le a s e . b u t We n o t fo r u s .. E m p lo y e e p erson al p r o b le m s m u st b e le ft a t ho m e T e c h n o lo g y is im p o r ta n t b u t P e o p le are m o re im p o r ta n t s o a r e p e o p le . 1974). I am and P o litic a l v a lu e s: a rugged in d iv id u a lis t. sn d g oo d fo r o u r c o m p a n y .. a n d th e ir p e o p le . B u sin ess a lre a d y h a s to o m u c h p o w e r. im p o r ta n t. I w ill m a n a g e m y b u s i­ I am an in d iv id u a lis t. S o c i e t y ’s i n t e r e s t E c o n o m ic v a lu e s : W h a t ’s g o o d f o r m e is g o o d fo r W h a t ’s g o o d fo r o r g a n i z a t i o n s W hat m y co u n try . a r e p e o p le . M i n o r i t y g r o u p a r e I n f e r i o r to M in o r ity g ro u p s have th e ir M in o r ity g ro u p w h ite s . a n d can c o n tro l and m a­ We m u st p re se rv e th e e n v i­ i t y li v e s . B u s in e s s m u st and m em b ers a re g o v ern m en t c o o p e ra te to s o lv e s o c i e t y ’s p r o b l e m . Ed. b u t. P r o fit s a tis f ie r P r o f it m a x im iz e r M oney and w e a lth are m o st M oney is P r o f it is n e c e s s a r y . L e t th e b u y e r b e w a re (c a v e a t L e t u s n o t c h e a t th e c u s to m e r A c c o u n ta b ility a re m o re im p o r ta n t th a n m oney. r o n m e n t in o r d e r to l e a d q u a l ­ A e s th e tic A e s th e tic v a lu e s a r e o key . . 616. 10. p la c e is i n f e r i o r to m in e . a c c o r d in g ly . S u ch b u sin ess in v o lv e m e n t lack s b ro a d p u b lic su p p o rt. 11. e m p to r) Labor P e o p le L e t th e s e lle r b e w a re (c a v e a t ven d ] to r) is a c o m m o d it y to be Labor has c e r ta in r ig h ts E m p lo y e e d ig n ity has to be b o u g h t a n d to b e s o l d w h ic h m o s t b e r e c o g n iz e d . S o u rc e s : 278 R. T h e y ro u s t b e tr e a t e d p la c e s o c ie ty . m a n a g e m e n t i s g o o d fo r is good fo r s o c ie ty is o u r co u n try . t h a n te c h n o lo g y W e r e c o g n iz e t h a t e m p lo y e e s W e h ir e th e w h o le p e r s o n h a v e n e e d s bey o n d th e ir e c o ­ n o m ic n e e d s . a n d s o c ie ty . McGuire (Englewood Ciiffs. s a tis fie d A c c o u n ta b ility A c c o u n ta b ility o f m anage­ A c c o u n ta b ility of m ent o w n ers. c o n tr ib u to r s . is to th e to m e r s . T e c h n o lo g ic a l v a lu e a : S o c ia l v a lu e s: T e c h n o lo g y i s v e r y i m p o r t a n t . in Contem­ porary Management: Issues and Viewpoints. E n lig h te n e d s e if -in t e r e s t 2 . cu s­ m e n t is o w n ers. the p u b lic w o u ld h a v e n o co n tro l o v e r its so cia l in v o lv e m e n t. in -G o v e rn m en t is a n ecessary e v il . Joseph Monsen Jr.

VI. h o w e v e r. an d th a t all the re so u rce s of th e e a rth h a v e b een cre a te d fo r h is g ro w th an d d e v e lo p m e n t. Social Responsibility of Businessmen 279 . E th ics are g e n e ra lly c o n ­ c e rn e d w ith q u estio n s o f rig h t an d w ro n g o r w ith m o ra l d u ties.0 sin fof ^ % brother's keeper. v Thou Shalt keep thine ' eyas wide open lx . Thou shall not have "}as. A C O D E OF ETHICS FOR BUSINESS Preamble T h is C o d e of E th ics h a s b een fo rm u la te d im p elled b y the belief th a t m a n h as a d ig n ity th at m u st b e re sp e cte d . Vl ?in no1’ nor help thy brother .9rs ' thy boss find thyself. a g ro u p of in d iv id u a ls.Honor thy fath9r an(J auditors.BUSINESS ETHICS S ocial resp on sib ility d e a ls w ith' h o w in d iv id u als an d o rg a n iz a ­ tion s h a n d le cu rre n t so cial issues. B u sin ess eth ics a re c o n c e rn e d w ith th e d a y -to -d a y b e h a v io r sta n d a rd s of in d iv id u als a n d o rg a n iz a tio n s. O rg a n iz a tio n a l eth ics.lproflt> f 3 '1US8 n° ' S99k 19 Profit U iby of * employer's confidences. as su ch . L a w s are eth ics fo rm a liz e d b y a so ciety . Obey the real Ten Commandments. is o p e n to fu rth e r im p ro v e m e n t. E th ics a re s ta n d a rd s o r p rin cip les o f co n d u ct u se d to g o v e rn the b e h a v ­ io r o f a n in d iv id u a l o r g ro u p o f in d iv id u als. this C o d e is co n sid e re d a m a jo r step in th e o n ­ g o in g a n d ch a n g in g p ro ce ss of u n d e rsta n d in g the g ro w in g ro le o f b u si­ n ess a ctiv ity in the d e v e lo p m e n t o f m a n . VII.and ^ % X. o r society. THE TEN COMMANDMENTS FOR MORAL EXECUTIVES . E th ica l sta n d a rd s ca n b e d ev e lo p e d b y an in d iv id u al. he'may°nof want to hear It. th e y a re u su a lly co n ­ ce rn e d w ith p rin cip le s of co n d u ct. g e n ­ erally d e a l m o re w ith th e b e h a v io r o f in d iv id u als o r g ro u p s o f indi­ v id u a ls n o t c o v e re d by the law. A s h e re p resen te d . 'V In °thy ne'igSror when he is doing something wrong. Thou shait not bear false Witness in the books and records of thy employerThou Shalt not play games with num bers.

T h is C o d e seek s to e x p re s s s y s te m a tic a lly a n d co h e re n tly the p rin cip le s of b u sin ess p ra c tic e s a cc e p te d a n d p ro fe sse d b y P h ilip p in e b u sin ess a n d its b est. th erefo re. te ch n o lo g ica l an d h u m a n . w ill b e u n w illin g to in c u r the sa n ctio n o f a d v e rse p u b lic o p in io n th ro u g h failu re to live u p to th e co d e . a n d seek s to a p p ly th ese to c u rre n t a n d ch a n g in g n eed s. T h e Co ncep ts B u sin ess. th e w o rk fo rce . is n o t a n a c ­ cid e n ta l h u m a n a ctiv ity b u t a n in te g ra l e le m e n t o f th e so cia l o rd er. a n d th a t in d iv id u a l en tities w ill e x p a n d a n d a d o p t it to th e sp ecific n e e d s o f th e ir o w n o rg a n iz a tio n s. H is co n trib u tio n to th e su c ce s s o f the e n te rp ris e 280 Management for Filipinos . a n d g o v e rn m e n t co n trib u te to th e p e r­ fo rm a n c e of the b u sin e ss e n te rp rise . Finally. T h e in te re s t o f all th o se m e m b e rs of s o c ie ty m u s t be ta k e n in to a c c o u n t in fo rm u la tin g b u sin e ss p olicy. w ith th o se w h o s u p p ly it w ith m a te ria ls a n d serv ice s. fo rm u la te d o n the p re m ise th a t th e m o d e m m a n a g e r m u st b e a stra te g is t fo r h u m a n d e v e lo p m e n t. It is h o p e d th a t in d iv id u a l en tities w ill co n scio u sly a d o p t a n d e m b ra ce it a s a sta te m e n t of p rin cip les a n d . h a v in g d o n e so . w ill a t tim e s b e co n flictin g . b u t a lso w ith th o se w h o o w n an d p ro v id e fin ancial re s o u rc e s. T h e h u m a n re s o u rc e s h a v e a u n iq u e q u ality a n d sh o u ld b e e m p lo y e d in a m a n n e r c o n siste n t w ith p e rso n a l dignity. W h ile co n flict a n d ten sio n ca n o f th e m se lv e s b e co n stru ctiv e . • T h e o w n e rs . It is h o p ed th a t th is C o d e w ill se rv e a s a g e n e ra l s tim u lu s to re n e w a n d d e v e lo p o r a m e n d e x istin g sta n d a rd s . an d w ith th e w id e r p u b lic w h o se liv es are af­ fe cte d b y th e b u sin e ss activity. w ith th o se w h o b u y its p ro d u c ts o r se rv ice s. th e su p p lie rs a n d su b c o n tra c to rs . • T h e re so u rc e s e m p lo y e d b y a b u sin e ss e n te rp ris e a re fin an cial. a n d th a t th e ra tio n a le o f b u sin ess is to b u ild a n e n te rp ris e o rie n te d in the d e v e lo p m e n t of m a n . th e cu s to m e rs . re co g n iz e th e fo llo w in g b a sic co n ce p ts: B u sin ess is essen tially an e x p re s s io n o f h u m a n re la tio n sh ip s. w ith the g o v e rn m e n t. in th e m se lv e s le g itim a te . a n d a re th e re fo re e n title d to re c e iv e th e p ro p e r w o rth o f th eir co n trib u tio n s. It is a g en eral co d e in te n d e d to b e influ en tial ra th e r th an co e rciv e . w h ich e m b ra c e s c o m m e rc e a n d in d u stry . T h e in d iv id u a l sh o u ld b e g iv e n o p p o rtu n ity to u se a n d d e v e lo p h is facu lties in h is w o rk . th e 'a im of b u sin e ss m u s t alw a y s b e to re c o n cile o p p o s in g in te re sts in a b a la n c e o f ju stice a n d m u tu a l co n ce rn . Its p rim a ry p u rp o s e is to m e e t s o c ie ty 's h u m a n n e e d s b y p ro v id in g g o o d s a n d s e r v ic e s as e fficie n tly a s p o s s ib le T h o s e e n g a g e d in b u s in e s s sh o u ld . it is a co d e fo r all p e o p le . T h e se in te re sts. m a n a g e m e n t. n o t o n ly w ith th o se w h o w o rk in th e e n te rp ris e .

P ro fit in a sy ste m o f free e n te rp ris e is re c o g n iz e d as a fu n d a m e n ta l in cen tiv e. se x . irre sp e c tiv e of ra ce . an d cre e d . w a g e s an d sa la ry p o licy sh o u ld be b a se d on th e rig h t o f the e m p lo y e e s to a fair an d im p ro v in g sta n d a rd of liv in g . a n d fo r o p p o rtu n itie s for • frin ge ben efits. w ith a v ie w to p ro v id in g therein a sen se of p u rp o s e an d a ch ie v e m e n t. a n d fo r p a rticip a tiv e e lem en t so th a t the k n o w le d g e . fo r a fair recru itm e n t p ra ctice th a t affo rd s e q u a l o p p o rtu n ity • to all q ualified job -seek ers. co rre sp o n d in g d u tie s. ag e. a n d p e rfo rm a n ce . • C o m p e titio n a n d in v e n tiv e n e ss are essen tial fo r th e m a in te ­ n a n ce a n d co n tin u in g im p ro v e m e n t o f th e q u ality o f g o o d s a n d se r­ v ice s. fo r a safe a n d h ealth y a tm o s p h e re in the w o rk e n v iro n m e n t co n d u civ e to th e p h y sica l a n d m o ra l w ell-b ein g a n d g ro w th • • of th e em p lo y e e s. respo n sib ilities. a n d is n e c e s s a ry fo r th e m a in te n a n c e a n d g ro w th o f th e en terp rise . e x p e rie n c e a n d cre a tiv ity o f all w h o w o rk in the e n te rp rise m a y co n trib ­ u te to the d e cisio n -m a k in g p ro cess. e co n o m ic an d legal p re ss u re s. • In b u sin ess. fo r g ro w th an d fo r tech n o lo g ical p ro g re ss. • B u sin ess en te rp rise h a s a p u b lic resp o n sib ility to u se all its re s o u rc e s efficiently. Social Responsibility of Businessmen 281 . a co n siste n t sta n d a rd o f b u sin e ss b e h a v io r m u st b e estab lish ed a n d o b se rv e d . a n d is ju s­ tified by. So m e Principles For T h e Co nd uct of Business Tow ards th e Em ployees T h o se resp o n sib le fo r b u sin e ss p o licy sh o u ld co n sid e r n o t only th e in te re st of th e o w n e rs of the b u sin ess. a d e q u a te c o m p e n s a tio n fo r e m p lo y e e s in ca se s o f sep a ra tio n a n d re tire m e n t. a n d fo r h e lp in g m e e t th e b ro a d e r n eed s of society. fo r ra isin g the q u ality o f life. as in a n y o th e r in stitu tion s of society. a lth o u g h ra te s of p a y m a y o ften b e d e te r­ m in ed b y u n io n . to g u a rd a g a in st u n fa ir fo rm s o f co m p e titio n . b u t also the in terests o f the i affected b y th e activities of the b u sin ess. fo r job secu rity .sh o u ld b e p ro p e rly re co g n iz e d a n d re w a rd e d . fo r co n d itio n s in w h ich h u m a n p o te n tia ls a n d re la tio n sh ip s ca n b e d e v e lo p e d a t all levels of the w o rk fo rce. a n d p ro v id e : • • fo r re co g n itio n th at. H o w e v e r. B u sin ess sh all re c o g n iz e the u n iq u e p o sitio n of em p lo y e e s as in d iv id u a ls w ith a v ita l stak e in th eir w o rk a n d a t th e sa m e tim e w ith in h eren t o b ligatio n s to th eir o w n fam i­ lies. a n y rig h t o r a u th o rity en jo y ed b y o r e n tru ste d to b u sin ess p re su p p o se s.

if n o sp ecific tim e is a g re e d u p o n . a n d a v o id the creatio n o f artificial sh o rta g e s . b u sin e ss shall: • d eliv er th e p ro d u c t o r se rv ice in th e quality. as q u ick ly a s m a y be re a so n a b le . In its m a rk e tin g a rra n g e m e n ts . a n d a t a reaso n ab le p rice . • a v o id an y th in g th a t w o u ld b e d e trim e n ta l to th e h e a lth . q u an tity .Towards the Customers B u sin ess sh all. an d m a n ife st re s p e c t for h u m a n dignity. • en su re th a t all m a s s m e d ia . an d p a ck a g in g c o m ­ m u n ica tio n s b e in fo rm a tiv e a n d tru e . th ereb y b en efitin g c u s to m e r s /u s e r s a n d in creasin g th eir n u m b er. p a y m e n t sh o u ld al­ w a y s be m a d e p ro m p tly at the a g re e d tim e or. th at a b u se of e c o n o m ic p o w e r in d e a lin g w ith a sm a lle r c o n ­ cern be a v o id e d . an d tak e in to a c c o u n t the p re ce p ts o f m o ra lity a n d th e so u n d cu ltu ra l v a lu e s o f the co m m u n ity . te rm s o f p a y m e n t be strictly a n d fully o b s e rv e d . Tow ards th e S up p liers B u sin ess sh all en su re: • • • 282 th at the te rm s of all c o n tra c ts be cle a rly s ta te d a n d u n a m b ig u ­ ou s. Management f o r Filipinos . g iv en th e circ u m s ta n c e s .. p rice m a n ip u la tio n a n d like p ra ctice s. an d tim e a g re e d u p o n . • estab lish a n a fte r-sa le s a n d co m p la in ts se rv ice c o m m e n s u ra te w ith th e kind of p ro d u c t o r se rv ice su p p lied a n d the p rice p a id . In g e n e ra l. an d th a t. a n d • seek to a p p ly o r m a k e u se of the d is co v e rie s a n d in v en tio n s of scien ce w ith a d a p ta tio n s th a t w ill im p ro v e th eir p ro d u c ts o r serv ices. in th e p ro d u c tio n o f g o o d s a n d se rv ice s: • striv e afte r a q u a lity th a t w ill en ab le th e m to s e rv e th eir p u r­ p o se efficien tly a n d effectiv ely . an d h o n o re d in full u n less te rm in a te d o r m o d ified by m u tu a l co n se n t. safety o r g ro w th o f th e p ro p e r u s e r o r b e n e ficia ry o f s u c h g o o d s an d se rv ice s. p ro m o tio n a l. in all ca se s. an d th at n o su p p lie r b e e n c o u ra g e d to c o m m it h is re s o u rc e s for a p p a re n tly lo n g -te rm p u rp o s e s u n less th ere a re re a so n a b le g u a ra n te e s th a t th e o rd e rs h e re ce iv e d fro m the b u sin e ss e n ­ terp rise w ill n o t b e te rm in a te d a rb itra rily .

reg io n al. n a tio n a l an d • in tern atio n al in terests. d o th eir b est to e n su re th a t the w a y th ey d e p lo y th e ir re­ so u rce s b en efits so ciety in g e n e ra l a n d d o e s n o t co n flict w ith th e n e e d s a n d reaso n ab le a sp ira tio n o f the co m m u n itie s in the a re a s w h e re th ey o p e ra te . an d p u rsu e the sp ecific objectives o f th e o w n e rs a n d o th e r p ro v id ­ e rs of cap ital. b u si­ n ess shall: • • • p ro v id e a n a d e q u a te ra te o f re tu rn to th o se co n trib u tin g ca p i­ tal to the en te rp rise . p ro v id e d th ese d o n o t ru n c o n tr a ry to a n y of the p rin cip les sta te d herein. Social Responsibility of Businessmen 283 - . Tow ards th e L o c a l G o v e rn m e n t a n d N a tio n a l A lth o u g h it is the respo n sib ility of g o v e rn m e n t to e n a c t legisla­ tion an d fo rm u la te im p le m e n tin g p olicies an d p ro g ra m s . an d to p ro p o se so u n d p olicies in the u se of h u m a n a n d m a te ria l reso u rces. w ith sp e cia l a tte n tio n to the d u ty of ren e w in g re so u rce s w h e re p ossib le a n d m in im iz in g w a s te a n d p ollu tio n . p a y p ro p e r re g a rd to th e e n v iro n m e n ta l a n d s o cia l c o n s e ­ q u en ces of th eir b u sin ess activity . shall: * tak e re g u la r sto ck of their resp o n se to the b a sic n e e d s o f so ci­ e ty a n d th u s e n su re th a t th ese n e e d s are tak en in to a c c o u n t in * * all p o licy -m a k in g d ecisio n s. it is th e d u ty of b u sin ess: • to p a rticip a te in the d iscu ssio n o f p ro p o se d leg islatio n a n d / o r its im p lem en ta tio n affectin g se cto ra l. an d n o t sacrifice sa fe ty o r efficien cy in th e in terest o f s h o rt-te rm p ro fitab ility . u se th eir fin ancial re s o u rc e s to p ro v id e g o o d s a n d se rv ice s resp o n sib ly an d efficiently. fu rn ish the o w n e rs a n d o th e r p ro v id e rs of c a p ita l w ith su ch in fo rm atio n as th ey m a y reaso n ab ly req u ire. Tow ards S o c ie ty In G e n e ra l B u sin essm en shall re c o g n iz e in th eir d ecisio n m a k in g th e in terest of th e g en era l p u b lic a n d . realizin g th at th ey a re u tilizin g to an im p o rta n t d e g re e the n a tio n 's re s o u rc e s. an d e n su re th e se c u rity o f th e ir invest^ m e n t.Towards the Owners and O ther Providers o f Capital In the in terest o f th e o w n e rs an d o th e r p ro v id e rs o f ca p ita l. p ro v id e d th a t it d o e s n o t a d v e rse ly affect the se c u rity o f efficien cy of th e b u si­ • n ess.

• a s c o rp o ra te c itiz e n s m a k e su c h co n trib u tio n s as th e ir r e ­ so u rce s w ill allow . • . the la w o r to h is co n scie n ce . re c o g n iz e th a t h is s u b o rd in a te s h a v e a rig h t to in fo rm a tio n on m a tte rs affectin g th e m . In p articu la r. to co n trib u te to the p u b lic an d c o m m u n ity se rv ice d u rin g th e w o rk tim e. a n d m a k e p ro v isio n fo r its p ro m p t co m m u n ic a tio n u n less su c h co m m u n ica tio n is likely to u n d e r­ m in e the s e c u rity a n d efficien cy o f the b u sin e ss. a n d d ecisio n m a k e rs sh o u ld b e on th e ir g u a rd a g a in st allo w in g p e rso n a l co n sid e ra tio n to d isto rt th eir ju d g m e n t. to re s e a rch . an d • n o t to lera te an y fo rm of illegal d a ta -g a th e rin g o r a n y fo rm of in d u c e m e n t th a t te n d s to d is to rt n o rm a l co m m e rc ia l ju d g ­ m e n t. • • 284 fu lly e v a lu a te the lik ely effects o n e m p lo y e e s a n d the c o m m u ­ n ity of the b u sin e ss p la n s fo r the fu tu re b efo re tak in g a final d e cisio n . a d v a n ­ ta g e o r p re stig e . • co n sid e r the h u m a n a n d so cia l co sts o f m e c h a n iz a tio n an d te ch n o lo g y . So m e Ethical Principles For the Professional Manager T h e co n ce p ts a n d p rin cip le s fo r the c o n d u c t of b u sin e ss o u t­ lin ed in th is d o c u m e n t a re co m m e n d e d to the m a n a g e rs of b u sin e ss e n te rp rise s. tre a t th e m fairly an d b y e x a m p le . a ss u rin g to all the rig h t of rea so n a b le a cc e ss a n d a p p e a l to s u p e rio rs. a m a n a g e r sh o u ld : • • • a ck n o w le d g e th a t h is ro le is to se rv e the b u sin e ss e n te rp rise a n d th e co m m u n ity . d e v e lo p m e n t. Management for Filipinos . le a d th e m effectively. w ith in re a so n a b le lim ­ its. a v o id all ab u se of e x e c u tiv e p o w e r fo r p e rso n a l g a in . an d c o o p e ra te w ith his c o lle a g u e s a n d n o t a tte m p t to se c u re p e r­ so n a l a d v a n ta g e s a t th e ir e x p e n se . a n d a p p lica tio n . T h u s. ► estab lish a p o licy re g a rd in g co n flicts of in terest b a se d o n the p rin cip le th a t d e cisio n s sh o u ld b e m a d e in th e b est in te re st of th e b u sin ess e n te rp ris e . re v e a l the facts to h is su p e rio rs w h e n e v e r his p e rso n a l b u si­ n e ss o r fin an cial in te re sts b e co m e in v o lv e d w ith th o se o f the co m p a n y . • b e a ctiv e ly c o n c e rn e d w ith the d ifficu lties a n d p ro b le m s of su b o rd in a te s.of in d igen o u s tech n o lo g y . a n d to the fin an cin g of so cia l d e v e l­ o p m e n t p ro je cts. h e c a n n o t b e e x p e c te d to a ct in a m a n n e r th at is c o n tr a ry to. • ' estab lish a p o licy allo w in g e m p lo y e e s. a lth o u g h the m a n a g e r is e x p e c te d to a ct in the b est in terests o f the b u sin ess.

o n ly th ro u g h a th o ro u g h u n d e rsta n d in g of its p rin cip les. T h is b o o k co v e rs th e essen tial p rin cip les to g u id e the p o licy m a k e rs in d e v e lo p in g h u ­ m a n re so u rce s fo r m a x im u m effectiv en ess an d g ro w th . fairn ess an d a re sp e ct a n d c o n ce rn fo r its em p lo y e e s. ca n th is co d e b e o f an y real v a lu e to a b u sin ess e n terp rise. h ig h e r sta n d a rd s o f c o n d u c t a n d ju stice will ch a ra c te riz e all d ealin gs in b u sin ess. T h ese step s w o u ld h o ld tru e fo r an y b u sin ess e n te rp rise re g a rd le ss of size. integrity. th en the co d e w o u ld be a d o p te d officially. tim e an d a g a in . A s the co d e d eals w ith b asic p rin cip les an d ca n n o t c o v e r e v e ry co n ceiv ab le situ ation n o r is it su fficien tly ex p licit to g u id e an in d iv id u al in e v e ry in stan ce. in tu rn . h u m a n d e v e lo p m e n t w ill p ro sp e r in o u r so ciety an d w ith it g re a te r e co n o m ic g ro w th an d p ro sp e rity fo r the p eo p le w ill b e attain ed . u n d e rsta n d in g an d a cc e p ta n c e of the co d e b y the p o licy m a k e rs. it is h o p e d th a t a h igh d eg ree of p ro fessio n alism . A cco rd in g ly . It h a s b een p ro v e n . it is su g g e ste d to th o se e n g a g e d in b u sin ess th at m a x im u m b en efit ca n b e d e riv e d b y three sim p le step s. an d th e p u b lic it se rv e s. the n e x t step w o u ld b e fo r the p olicy m a k e rs to d e ­ v e lo p d e ta ile d g u id elin es a n d p o licies fo r u se by th eir e m p lo y e e at th ro u g h the a p p licatio n of its p rin cip les. T h is en tire p ro ce ss w ill tak e tim e b u t as the c o d e is assim ilated a n d p ra ctice d an d as its u se b e co m e s w id e s p re a d . T h e first step w o u ld in v o lv e e x a m in a tio n . the c o m ­ m u n ity in w h ich it o p e ra te s. a s is o r w ith su itab le m o d i­ ficatio n s. T h is. T his co u ld b e estab lish ed as an an n u al p ro ce d u re an d se rv e to en su re a d h e re n ce to the co d e as w ell as to ap p ra ise the p e rfo rm a n ce of the e n te rp rise a n d its em p lo y ees. W o rk sh o p s co u ld be o rg an ized w h ich in terested officials of the b u sin ess e n terp rise w o u ld b e free to atten d a n d p a rticip a te w ith the objective of fo rm u la tin g sp ecific guidelines. Social Responsibility of Businessmen 285 . a s b ein g a fu n d a m e n ta l p a rt of the ru n n in g of th e b u sin ess e n te rp rise an d its p rin cip les w o u ld be d isse m in a te d to its e m p lo y ees.T H E W A Y T O USE T H E C O D E T h e fo u n d a tio n o f a n y b u sin ess en te rp rise is its p e o p le a n d the c h a ra c te r of its p eo p le. A s w ith an y co d e . a n d d a y -to -d a y u se of p o licies an d p ro ce d u re s ste m m in g fro m these p rin cip les. T h e th ird step w o u ld b e n ecessarily an e v a lu a tio n an d reg u lar au d it of the im p lem en tatio n of the co d e an d its p olicies an d g u id elin es. th a t a b u si­ n ess su c ce e d s a n d g ro w s o v e r the lon g te rm w h en the p o licy m a k e rs in cu lcate a tra d itio n of so u n d m a n a g e m e n t p olicies b a se d on h on esty. w h e th e r p riv a te o r p u b lic. u n d o u b te d ly w ill co n trib u te to w a rd the b asic p re m ise of the co d e . A s su m in g a cce p ta n ce . w h e th e r a p artn e rsh ip o r a sole p ro p rie to rsh ip .

1979. 286 Management for Filipinos . O c to b e r 2 3 . 3. G iv e so m e re a s o n s w h y a c o d e o f eth ics is n e e d e d in o rg a n iz a ­ tio n s.R E V IE W Q U E S T IO N S 1. REFEREN CES B is h o p s -B u s in e s s m e n 's C o n fe re n c e fo r H u m a n D e v e lo p m e n t. W h a t is so cia l resp o n sib ility ? "O u tlin e th ree m a jo r a rg u m e n ts fo r so cia l responsibility. 2.

C o m p u te r and S e c re ta ria l G ra d u a te s "More men fa il through lack o f purpose than through lack o f talent" . the student is expected to understand the following: • C a r e e r O p p o rtu n itie s • C a r e e r M an agem ent fo r F ir s t T im e Job Se e ke rs • E m p lo y m e n t O p p o rtu n itie s fo r B usiness.Chapter 11 Career Opportunities in Business L e a rn in g O b je ctiv e s: At the end of the chapter.A nonym ous .

in n o v a tiv e p ro d u c ts . A ca re e r is a p ro fe ssio n o r ca llin g d e m a n d in g sp e cia l p re p a ra tio n . an d fo rm a l stu d ies. S im ilar to all p ro fessio n s. T h e sch o o l also d e v e lo p s p ro p e r v a lu e s an d d esired c h a ra c te r in form atio n . T h ese d e v e lo p m e n ts a re all d ire cte d to the e n h a n ce m e n t of m o d e m life a n d th e sa tisfa ctio n o f h u m a n n eed s. b y th e b a sic p rin cip les o f b u sin ess a n d m a n a g e m e n t.C A R E E R O P P O R T U N IT IE S IN B U S IN E S S M a n y o f u s ch e rish the a m b itio n o f m o ld in g o u rse lv e s fo r a su cce ssfu l ca re e r in b u sin ess. u n d e rta k e n w ith a real co m m itm e n t to se rv e the p e o p le . c o m p u te riz e d sy s ­ te m s a n d p ro ce d u re s . The Need For Preparation M a n a g e m e n t is classified as a ca re e r. W e n o w live in an a g e c h a ra c te riz e d b y m o d e m m e a n s of tra n s­ p o rta tio n a n d co m m u n ica tio n . 288 Management for Filipinos . in te g rity a n d co m m itm e n t to ju stice an d p ro g re s s. a n d c o m ­ p le x b u sin ess o rg a n iz a tio n s. e x iste n ce o f m u ltin a tio n a l c o rp o ra tio n s . W h ile th ere h a s b een e x p a n sio n a n d in n o v a tio n in the b u sin ess. T h e field o f m o d e m b u sin e ss m a n a g e ­ m e n t is e x p a n d in g a n d g ro w in g . T h e p re p a ra tio n for a b u sin ess m a n a g e m e n t ca re e r m a y co n sist la rg e ly o f fo rm al e d u ca tio n w h ich . B u t a m u c h g re a te r m e a s u re o f p re p a ra tio n is n e ce s sa ry b e fo re th e y p e rfo rm th eir ch o se n ca re e r a n d a ch ie v e su cce ss thereafter. T h is b asic k n o w le d g e sh o rte n s the p e rio d o f a p p re n tice s h ip . a n d the rig h t k in d of attitu d e . e x p e rie n ce . p o sitiv e m e n ta l a ttitu d e is a b asic re q u ire m e n t in th e p re p a ra tio n o f a su cce ssfu l ca re e r in this field. A p ro fessio n calls fo r th e b e st th a t the q u alified p ra c titio n e r c a n g iv e. T h e re is n o ro o m fo r th ose w h o h a v e n e g a tiv e attitu d e s. T h e in d iv id u a l w h o d o e s n o t p o sse ss th ese req u isites w ill n o t rise a b o v e m e d io c rity as an e m p lo y e e . P o sitiv e m e n ta l a ttitu d e m e a n s th e re a liz a tio n o f o n e 's u n d e rta k ­ in g th ro u g h the u se of th e co n scio u s m in d (b ased o n th e five sen ses) a n d th e su b -co n scio u s m in d (b ased o n th e six th se n se o r im a g in a tio n ). p ro v id e s a g o o d fo u n d a tio n fo r a career. B u sin ess m a n a g e rs a re all b o m w ith th eir o w n m e a s u re o f talen ts a n d a ttitu d e s w h ich th e y d e v e lo p th ro u g h o b se rv a tio n . o r e v e n a b o v e the d a y -to -d a y u n ce rta in tie s as a b u sin e ss en trep ren eu r. M o d e m b u sin ess g iv es a p re m iu m o n talen t. a n d b ro a d e n s the in d iv id u a l's o u tlo o k so a s to e n h a n ce g re a tly his ch a n ce s o f b e co m in g a v a lu a b le m a n a g e r o r g o o d en trep ren eu r. th e ch a lle n g e is n o w o p e n to all th o se w h o d e sire to su c ce e d b y u sin g the req u ired skills a n d a ttitu d e . m in im iz e s the n u m ­ b e r o f a b e g in n e r's m ista k e s. h a rd w o rk .

P la y to y o u r ev il se c re lle a g u e s. o th e rs are h a p p ie r in sm a ll tow n s. O th e r p eo p le . the rest is u p to h im . If y o u r n e w job d o e s n 't w o rk o u t. You d o n 't h a v e to a c c e p t th eir a n sw e r o r b a n the w o rd " s h o u ld " fro m y o u r job search . Career Opportunities in Business Management 289 . D ifferen t p eo p le a re im p re sse d b y d ifferen t th in g s . b e ca u s e the q u est is e n liv en in g an d the re c o rd s are g ratify in g . 4. T h e g re a te r e ffo rt lies a h ead a fter on e h a s o p e n e d the d oor. D o n 't sell-buy. W ith th e k ey to a b u sin ess career. O n ce the fo rm u la is in h is h a n d . a n d p a ssiv e e x p e c ­ tatio n s are th e m a rk o f the m e d io cre. the a d v ice w ill be a lo t m o re 7. W h a t d o y o u w a n t to be a d m ire d for? Ancl b y w h o m ? T h e k ey s to w h a t y o u really w a n t are the th in g s y o u d o n 't like to a d m it. F o r the stru g g le is n o t o v e r u p o n w in n in g the fo rm u la . th e s tu d e n t m u st be d e te rm in e d to d o h is b est in all his u n d e rta k in g s. CA REER M ANAGEM ENT F O R F I R S T T IM E J O B S E E K E R S A fte r y e a rs of h e a rin g H a rv a rd B u sin ess S ch o ol stu d e n ts a g o ­ n iz e o v e r th e ir q u est fo r the p e rfe c t job . S o m e p e o p le are b ig city ty p e s. a ss o c ia te p ro fe s s o r D a v id M a iste r d e cid e d to co m p ile a sim p le set o f ru les. a n d to av ail h im self o f e v e ry o p p o rtu n ity fo r p e rso n a l im p ro v e m e n t an d a d v a n c e ­ m e n t. in tellect a n d so on. s u p p re s s th em . b u t I really w a n t to b e r ic h . 1. m o n ey . b u t to a n y b o d y c o n sid e rin g a ch a n g e o f c o m p a n y o r a n e w co v er. T h in k it th ro u g h b efo re loo k in g for a job. You ca n e ith e r b u y y o u rse lf a job o r be b o u g h t by o n e. sp o u se s . job u n til y o u 're cle a r a b o u t w h a t y o u w a n t fro m life. p a re n ts. D o n 't b e afraid to ask a b o u t the job .w ill tell y o u w h at y o u sh o u ld w a n t fro m life." Fin e. to m a k e w ise u se o f h is tim e a n d effort. this c a n be g u a ra n te e d fu rth e r th ro u g h p o sitiv e p e rfo rm a n ce . d o n 't 5. Y ou c a n 't d e cid e w h a t y o u w a n t fro m at. g o o u t a n d m a k e lots of m oney. S o m e p e o p le h a v e b een to o b u sy " s u c c e e d in g " to figu re o u t w h a t su cce ss really m e a n s to them . p ain fu l for y o u th an fo r y o u r e m p lo y e rs. W h ic h a re y o u ? Y o u 're a lot less flexible th an y o u think. 6. H is b lu n t a d v ic e a p ­ p lies n o t o n ly to the first tim e job seek er. 3. W h e n stu d y in g . It is silly for a p e rso n to e x p e c t o p p o rtu n itie s to c o m e h is w a y .F o rm a l e d u c a tio n is ju st a b e g in n in g of in d iv id u a l e n d e a v o r. "I d o n 't like to a d m it it. H e sh o u ld se a rch fo r an d cre a te h is o p p o rtu n itie a ra c te r.n o th in g im p re sse s an in ter­ v ie w e r m o re th a n so m e o n e w h o k n o w s w h a t w e want> a n d why. 2.

" Savvy Woman.all o th e r g o a ls cure m erely w a y s o f m a k in g y o u h a p p y an d a re w o rth ­ less g o a ls in th em selv es. If the job tu rn s y o u o n . 9.. m a y m a k e y o u h a p p y to m o rro w . C O M P U T E R & S E C R E T A R IA L G R A D U A T E S COMPUTER MARKETING T ech n ician D a ta E n co d e r M a rk e t R e se a rch e r P ro g ra m m e r S y ste m s A n aly st ED P M anager E n tre p re n e u r r o lleg e T each er MANAG EM ENT T rain in g O fficer P e rso n n e l M a n a g e r A c c o u n t E x e cu tiv e M a rk e t D ealer S ales M a n a g e r M e rch a n d ise r P u rch a sin g O fficer > B ra n d M a n a g e r P ro d u c t M a n a g e r M a rk e tin g M a n a g e r R ecep tio n ist A c c o u n t E x e cu tiv e C re d it A n aly st C o n su lta n t M a rk e tin g C o n s u lta n t P u b lic R elatio n s O fficer E n tre p re n e u r C o lle g e T each er P u b lic R elation s O fficer E x e c u tiv e S ecre ta ry B o o k k eep er B an k Teller C re d it In v e stig a to r L o a n O fficer C h ie f E x e cu tiv e O fficer P re s id e n t/G e n e ra l M a n a g e r E n tre p re n e u r C o lle g e T each er BANKING & FINANCE S ecu rities A n a ly s t T ru st M a n a g e r S to ck b ro k er F o re ig n E x ch a n g e D ealer F in an cial A d v is e r E co n o m ist F in a n cia l A n a ly s t 290 Management for Filipinos . 10. y o u 'll b e g o o d en o u g h . D o n 't w o rry a b o u t w h e th e r y o u 'll b e g o o d a t so m e th in g . y o u 'll be a d ifferen t p e rs o n w h o w a n ts d ifferen t th in g s fro m life! Take a job b e ca u s e it w ill m a k e y o u h a p p y n ow . P e o p le d o n 't c a re a b o u t h o w m u c h y o u k n o w u n til th e y k n o w h o w m u ch y o u ca re . June 1984. In five to te n y e a rs fro m n ow . n o t b e ca u s e it 11. Sources: David Malster. 3 Park Avenue. E M P L O Y M E N T O P P O R T U N IT IE S F O R B U S IN E S S . Life is m e a n t to be en jo y ed . Inc. D o n 't p lan to o fa r a h ead . New York. E n th u sia s m a n d th e h a rd w o rk it in sp ires w e n t fa r m o re th a n e x tra ability. N Y 10016.8. "Take this Job and Love It. Savvy Publications.

T exas. for example. Ig n a c io .. Inc. 1 9 9 4 . then discuss how you can use the management functions (POSDICON) as a manager of the organization. but not limited to. Have a list of prepared questions including. R u s s e l.Bank Teller Corporate Treasurer Budget Manager Finance Consultant Underwriter Financial Controller Entrepreneur College Teacher A C C O U N TA N C Y Certified Public Accountant Bookkeeper -Financial Analyst Entrepreneur College Teacher Budget Officer Project Consultant SECRETARIAL Clerk/Typist Executive Secretary Entrepreneur College Teacher COMPUTER SECRETARIAL Data Encoder Executive Secretary Entrepreneur College Teacher EXPERIENTIAL EXERCISES 1. N e w York: P itm an P ublish in g C o. G in s b u rg . R o b e rt D a n e . M a n ila : S in a g ta la P ublishing. L a w re n c e A B C o f In terview in g . 1996. M o n ic o H .. 2. putting up a restau­ rant business. M a n a g e m e n t: A n E x e c u tiv e P e rs p e c tiv e . Select a business proposal. 1 9 9 0 . Career Opportunities in Business Management 291 . 3. Interview a manager from any type of business organization. the following: a) How did you become a manager? b) Describe your major functions as a manager.. c) What skills are necessary to be a successful manager? d) What advice would you give to a person who is interested in a career in management? e) Can one learn to be a better manager? Justify your answer. A n In tro d u c tio n to B u s in e s s M a n a g e m e n t. 2. In c. REFERENCES 1. S ig m u n d G .


c) What skills are necessary to be a successful manager? Career Opportunities in Business Management 293 .256 CAREER M ANAGEM ENT Name: Year/Section: Professor: Date: Interview a manager from any type of business organization.Worksheet No. 11. Have a list o f prepared questions including. the following: a) How did you become a manager? b) Describe your major functions as a manager. but not limited to.

d) What advice would you give to a person who is interested in a career in management? e) Can one leam to be a better manager? Justify your answer. f) Others 294 Manaaement for Filioinos .

• Scientific Analysis of Business Cases “The whole fun o f living is trying to do this better'' . the student is expected to understand the concept of.Chapter 12 Scientific Analysis of Business Cases Learning Objective: At the end of the chapter.Charles F. Kettering .

and what the outlook for the future would be. This should be followed by a third reading where the student pauses after every paragraph to give it careful thought while at the same time doing a careful study of all tabulated data or statistical presentations. what could have been done better and why. a broad "exposure" to different situations is "experienced" by the student. The case analyst projects himself into the situ­ ation and visualizes it as though he is personally involved. If the case involves two or more persons. providing opportunities for applying principles learned. and allow role-identification. and the need for collective action for collective benefits. Each case in its entirety should be given an initial cursory read­ ing by the student. arrive at valid conclusions. decide on courses of action. to visualize the situation. The problem-solving process calls for the determination of all possible courses of action in solving problems. thereby promoting the development of latent executive ability and self-confidence.what others are doing and how they are faring. to business situations encountered in actuality. the case analyst will now reduce the likely impact any decision one party Would have on the others. As more cases are studied. the case analyst assumes in sequence the role of each person. Relevant data are carefully analyzed not only to determine whether there is a problem but also to find out the company's position in the industry . The case analyst follows the narrated developments by identify­ ing and evaluating the more important factors and information needed for valid judgments. At this point. the evaluation of each option in the light of objectives. so that he may have an idea of the situation. and visualize consequences and results. This will enable the case analyst to identify what the prob­ lems are. Accordingly. This is done not only for better understanding of the human relations aspect but also to learn whether each person acts in the better manner while the situation was developing.S C IE N T IFIC ANALYSIS OF BUSINESS CASES T JL h e case study approach has developed into a very effective method in improving an individual's ability to analyze a situation. and to think out the best ways to solve them. Then the case is read slowly to grasp the relevant information. establish premises. a full analysis of the situation is made to determine what was done well. A case usually narrates the development of a situation over an extended period of time. the prevailing situation. They are exercises in the management process and in executive action. and available 29 6 Management for Filipinos .

This will move the case study closer to the desired solution. When the tentative so­ lution stage has been reached the student may confer with others who could possibly help him gain further insights. on whether it is a major or minor problem. situations. must deal with internal problems. discern­ ing. determine what is good and what is detrimental. and present his conclusions effectively. The case analyst must. a policy strategy for the future.resources. The student may have to revise his preliminary ideas until he is satisfied that he has found the most advisable if not the best conclusions. or to determine the existence of a problem. decide what should be done to improve the situation. articulate. If the case analyst has first-hand information or personal insight which can be useful for particular case study. the case analyst becomes more observant. or to a further study of the problenruntil a better solution is arrived at which can be rational­ ized as the best. as a complete statement of what is intended to be achieved. and the critical appraisal of the solution tentatively chosen as the best for the situation. This critique of the tentative solution may lead to the adoption of the said solution as the best. and constructive. but also situa­ tions in the industry as a whole. visualizes the situation as he finds it. provide relevant background information. or criti­ cize the premises or conclusions arrived at by the student. and how it will likely be after the proposed decisions are . . and the time frames for its accomplishment. A case study is best started individually. A case is also very informative because it presents much infor­ mation peculiar to business practices and conditions. The case may call. The solution must also foresee the new problems which may arise and how these emerging problems are to be resolved. In actuality. The student then proceeds to a written presentation of the case and prepares himself for an open discussion of his case with his group Scientific Analysis of Business Cases 297. The solution may involve several correlated courses of action and is presented. At times. therefore. how this is to be achieved. In this book the cases color not only individuals. He mu'st gather and arrange relevant facts in the order of their importance.implemented. critical. Case study is most useful as an exercise in analysis and decision making. after all. the case analyst should identify the areas in need of more data. business enterprises. The solution to a problem is valid only if the new problems Which it causes are lesser in magnitude or more manageable than those of the initial problems. it may be good to put the problems aside for a while and c&me back to it with a fresh mind of with new ideas. for problem-solving actions. If the case does not give enough information. Management. Thus. he should bring this to bear upon the case. time and cost constraints seldom allow the gathering of complete data to aid the student in making decisions.

but it should not be said. He learns that others will come forward with different viewpoints and different solutions. The manner and quantity of the pre­ sentation depends upon the nature of the case. the demands for detail and supporting evidence. Read the assigned case thoroughly and completely. and persuasion. Lawyers call this "briefing" a case. the difficulties of in­ ducing the reader to read the entire report multiply at a greater rate than the increase in the quantity of the report. viewed in the light of their knowledge and experience. you would wish to make notes or sum­ maries of pertinent information before proceeding with your analysis. If possible. nor is there any one way to present the solution. 4. and the major purpose of the particular case. 298 Management for Filipinos . and to persuade others to view things in the same light as he. If the case is lengthy. Without prior instructions the governing principle is brevity. The written report and the group discussion are in them­ selves exercises in communication. and why some kind of action must be taken at this particular time. These are hypotheses which require investigation. A principal difficulty at this stage is to sort out the impor­ tant information from the "red herrings" or data of little significance. These are the crucial questions which are the heart of your analysis. but at the same time highly interesting and challenging. not a descriptive one. that different solutions can be argued. Formulate in writing a precise statement of the problem. categorically. raise the question which de­ mand an answer. 2. to defend his position. Different managers will render different decisions depending on their individual valuation of the relevant factors. This is an analytical step. 5. The stu­ dent improves his ability to present his ideas effectively. Try to state the problem in such a way to show that individual or individuals must take some sort of action. put the case aside for a period of time. that more is superfluous. It does not help much to write down a rehashed version of problem-type statements lifted from the case data. Concerning these hypotheses. Select the several alternative decisions or courses of action which can be taken. The following suggestions are offered to help in the study and preparation of case analysis: 1.or classmates. 3. that there is no single "correct answer" as in an arithmetical problem. However. There is no one way to study and prepare a case. This makes the decision making exercise difficult. The procedure may be necessary in preparing management cases if the information has been thoroughly assimilated. Try to get an accurate picture in your mind as to what is really going on in that particular situation. does. A one-page report will often suffice. discussion. Then carefully re-read the case once or twice or even thrice.

Tentatively weigh the evidences and select the hypothesis which can best be supported. Be sparing in the use of descriptive ad­ jectives. 2. G U ID E LIN E S IN A N A LY ZIN G BUSINESS CASES O bjectives of the Case Method 1. Note: Students commit the serious error of organizing their case analy­ sis around concepts instead of using the concept as a tool in the analysis of the case. requires the fol­ lowing ideas to be considered: 1. Putting your analysis into writing. To develop his skill in interacting. 4. Objectives IV. and to handle new situations if he has little or no experience. The above suggestions also apply to either written or oral case analysis. Viewpoint II. The solution must be highly creative and have the makings of being practical and workable under the given circumstances. Organize the evidences so as to substantiate your case. To make the student become more efficient and accurate in finding the cause and effect of business problems. There is good understanding and identification of the central problem. Scientific Analysis of Business Cases 299 . To train the student become more imaginative in formulating efficient and effective solutions.6. To help the student apply his own special experience. however. 2. cooperating and fostering closer working relations with his group members. Statement of the Problem III. 2. 3. 4. Be sure to state your conclusions clearly. It is based on particular situational facts. The student's position must be supported and defensible. Suggested O u tlin e in Solving Business Cases Time Context I. 3. Use short sentences. 7. Basic C h a racte ristics of a G ood C ase Analysis 1. Must Objectives/Short-Range Want Objectives/Long-Range Areas of Consideration/Analysis V. Clarity and simplicity of written statements are essential.

It is always based on the manager's viewpoint. IV. III. S ta t e m e n t o f th e Problem . and extent. which requires the necessity of an action. a' business problem requiring an action that is different from the action to be taken during a period of stable prices. Specify the time context (month and year) if the case fact is ex­ plicit about it. The time context should tell us when the problem was observed. loQation. Given a business problem. Conclusion/Detailed Action or Implementation Plan O u tlin e D etails /. This imbalance is caused by a change of one kind or another. V ie w p o in t In solving business problems. A business problem requiring an action in pre-martial law days' will have a different action if it were to be tackled today. A problem is a deviation or an imbalance between what should be and what is actually happening. These are statements or functions to be per­ formed or undertaken by the courses of action. from the trivial to the significant. Specify what the problem is by describing it very accurately in terms of four dimensions: identity. II. from the irrelevant to the relevant. the president of a company will most likely have a different approach or solution from those of other company officers. Objectives are specifications by which alternative courses of ac­ tion are to be developed. the student must specify the view­ point he is taking. In short. These objectives will help the manager recognize the screen out the impossible and 300 Management for Filipinos . This objective sets the limits that cannot be violated by any alternative course of action. a business problem will have different solutions under different political and eco­ nomic environments. Likewise. time. Recommendation VIII. Alternative Courses of Action VII. Must or Short-Range Objective. The student should focus his attention on the key or central prob­ lem. T im e co n te x t. A problem could be answered by the question .what is wrong that needs correcting? A business case may contain a variety of issues or problems. The elimination of the central problem will eventually result in the elimination of other peripheral problems.VI. O b je ctiv e s. as in 1987.

This objective does not have absolute limits but expresses relative desirability. V II. If prospective serjpus areas could not be pre­ vented. R e c o m m e n d a tio n . he must proceed to organize the facts around the possible causes of the central problem. This requires the separation of the significant areas from the unimpor­ tant ones. Significantly. an alternative must be able to stand alone. Initially. Discard the alternative that does not meet what a must objective requires. In some cases. in others. Want or Long-Range Objective. InaJtion or a status quo posi­ Scientific Analysis*of Business Cases 301 . V. These objectives are of absolute importance to the success of the decision and the survival of the orga­ nization. This is the final decision or recommended course of action. Alternatives are col­ lections of what appear to be at the moment the best means of meeting the individual objectives. Assess the possible adverse consequences of the alternative deci­ sion or recommendation. The analysis of each area must* come from the personal opinion of the analyst and not from the case factsVI. Appraise the remaining alternatives and weigh their individual strengths and weaknesses. review other alternatives for final/ action.seems best to him. the student must make a tentative choice of the alternative which seems best to him. and the relevant to the irrelevant. Alternatives must be mutually exclusive." The student must not remain content with pre-determined alter­ natives.poorer alternatives right at the outset. The student must be decisive. He must not avoid making a final choice Of fha alternative which . A lte n ra tiv e Courses o f A c tio n . These objectives should be attained beyond a one-year period. Alternatives that satisfy all must objec­ tives should then be evaluated further against the want objectives. Look for potential areas where trouble may occur if the recommendation or decision is implemented. A re a s o f C on s id e ra tlo n lA n a ly s Is When the student has determined what he considers to be the central problems and has defined his objective. the student must formulate alternatives appropriate to the prob­ lem at hand. These objectives should be attained within a year. He must strive for new and better solutions. For each pro­ spective critical area. the student must evolve.corresponding preventive and contingency actions. They are of relative importance to the success of the decision but are less than absolute. the alternatives are clear. Take each alternative and measure it individually against each of the must and want objectives. There are possible solutions to the problem.

T h e re a re m a n y re ­ so u rce s o f fa ct-g a th e rin g . c. A n u n realistic p lan ca u s e s fru stra tio n a n d is self-d efeatin g . B asically fo cu s o n th e a u d ie n c e 's in terest. T h is g iv es y o u a ta rg e t a t w h ich to d ire ct y o u r p re se n ta tio n tim e an d effo rts. T his step b e co m e s sim p le r o n ce y o u set d o w n a n tic ip a te d q u e stio n s. T h e p la n m u st b e ca p a b le o f b e in g c a rrie d o u t. o n ly o n e b e st al­ te rn a tiv e sh o u ld b e re c o m m e n d e d . VIII. F o r e a c h p ro sp e ctiv e se rio u s tro u b le a re a . P la n n in g a ca s e p resen tatio n in v o lv e s fo u r b a sic step s: a. d.tio n m e a n s in d ecisio n . n o t y o u rs . S et th e a cc o m p lish m e n t d o w n a n d k eep y o u r m in d to it a t all tim es. Gathering facts to answer anticipated questions. a n d q u a lity p resen ta tio n s a re the only kind y o u a n d y o u r a u d ie n c e are in te re ste d in. P lan s o f a ctio n sh o u ld b e p ro p e rly e n u m e ra te d fro m th e first p lan to the la s t p lan . R esearch w o rk is p a ra m o u n t. B e su re th e en tire p re se n ta tio n is a u d ie n ce -o rie n te d . Anticipating questions you may be asked after the presenta­ tion. • It is flexible. H a v e y o u r a n s w e rs ready. If p ro sp e ctiv e serio u s trou b le a re a s co u ld n o t b e p re v e n te d . A g o o d p la n sh o u ld b e flexib le e n o u g h to b e ch a n g e d w h e n ch a n g e is ca lle d for. Determining what you expect to accomplish. Concluslon/Detalled Action Plan M ak e a d etailed a ctio n p la n to e n su re th e su c ce s s o f th e d e cisio n o r re co m m e n d a tio n . b. th e s tu ­ d e n t sh o u ld set u p co rre s p o n d in g p re v e n tiv e a n d c o n tin g e n c y a ctio n . Elements of an Effective Case Presentation I. y o u r to ta l p re se n ta tio n w ill su ffer a n d co lla p se . F ailu re to p la n m a y ca u s e y o u to b e in effectiv e a n d m a y re su lt in y o u r p rese n ta tio n b e in g less th a n to p quality. re v ie w o th e r a lte rn a tiv e s for final action . an d o n ly p la n n in g a ss u re s quality. Planning the Presentation T h e reaso n s fo r p la n n in g p re se n ta tio n s are: T h e o cca sio n itself ca lls fo r it. Considering means to secure audience interest. 302 Management for Filipinos . • It is realistic. If y o u are ca u g h t o ff-g u a rd . A m o n g th e g iv e n a lte rn a tiv e s. T h e ch a ra cte ris tics o f a g o o d a ctio n p la n are: • It is sy stem a tic. T h ere w ill b e m an y.

Roberto C. Follow these rules when answer­ ing questions: . and drama­ tization is a strong aid in convincing your audience.Listen intently and do not interrupt. He will often re­ state it in a different way which is helpful. Case Analysis-Guidelines. Use forceful. Give your audi­ ence the red carpet treatment.Use facts to answer the question. f. Cover the business case completely. Fremont A. Harvard Business Review (September. .Listen attentively. . 1992. Questions must always be laid to rest. Gordon & Howell. . 1993. Avoid scratching. Atmosfera. Always begin your presentation with the attitude that you are presenting to a very important audience. Graduate School of Business. Seven basic steps in making the presentation: a. University of Indi­ ana. They dramatize the presentation. Shull. b. e. Watch your verbal language. or slumping. g. Answer the audiencels questions satisfactorily. 4. your physical atti­ tude. REFERENCES 1.2. Making the Actual Presentation and the Defense. Assistant Professor of Management. Use words that suggest action. Words are your main communi­ cation. 1995). Use visual aids. your gestures can often do more to help you convince persuasively than words. Scientific Analysis of Business Cases 303 . d. c. Watch your body language. Manila: Philippine Christian University. State: Columbia Uni­ versity Press. simple and specific words. Get your audience's attention (and hold it throughout). Your posture. Higher Education for Business. Seek eye contact with your audience.Ask the person to restate the question. yawning. 2.Ask for an explanation of the question. not generalistic. Pay attention to eu­ phony. . 3.

304 Management for Filipinos .

It is based on the b elief that one can do things better todav than yesterday and better tomorrow than today.Center Development Academe of the Philippines . an attitude o f mindIt seeks to continually improve what already exists. the student is expected to understand the following basic co nce pts: • Productivity Improvement Program • An Introduction to 5S • Quality Circles (QCs) • Total Productive Maintenance (TPM) • Just-in-Time (JIT) •Total Quality Management (TQ M ) • Kaizen • Benchmarking “Productivity is above all." - Productivity and Development.Chapter 13 Productivity Technologies in the Philippines Learning Objectives: At the end of the chapter.

local and foreign organizations. Productivity and Developm ent Center (PDC) is the im plem ent­ ing arm of the National Productivity Organization (NPO). A PIP is basically one of the basic and advanced productivity technologies which is recommended by the Productivity and Develop­ ment Center of the Developm ent Academy of the Philippines. The pro­ ductivity improvement program or a PIP has not yet gone very far beyond certain circles. but it also has a translation in English: • SEIRI or to S O R T unnecessary items and dispose them ac­ cordingly. 30t fiflanagement fo r Filipinos . PDC implements various productivity improvement programs. Con­ sidering that this is the most basic approach to productivity improve­ m ent. In line with this vision.P R O D U C T IV IT Y T E C H N O L O G IE S IN T H E PHILIPPINES T J L h e pursuit of higher productivity is the key to the success of every organization. Total Quality Control (TRC) and Benchmarking. Total Quality M anagem ent (TQM). strategies and system s have been developed for productivity improvement. installing. many of the technologies which include the PIP's are derived from the Japanese and American M anagem ent principles and practices. 5S stands for five Japanese words. It is a Japanese derived approach which aims to m ake discipline and orderliness a way of life for or a habit of everyone in a company. 5S can serve as a foundation and primer for more advanced technologies like. The most basic and fundam ental approach for improving pro­ ductivity in all types of business and recommended by PDC is the 5S. PDC has continuously studied and promoted these technolo­ gies in order to suit the working and management styles of the Filipi­ nos. but it has definitely started to revolutionize the way som e Filipino companies expedite their operations. Just-in-Time (JIT). • SEIKETSU or to S A N IT IZ E and m aintain high standards of housekeeping. Together with industry associations. m any approaches. Although. and institution­ alizing PIP's in the public and private sectors. • SEISO or to S W E E P and clean the workplace. adapting. • SEITO N or to S Y S T E M A T IZ E and arrange item s in good order for use. PDC has been at the forefront of developing.

PDC was able to install the QC or PIC program or orient em ployees in com panies like Ram itex. A distinct approach that has m ade tremendous impact among Philippine industries is Quality Circles (QCs). on the other hand. Just-in-Time or JIT. Benchmarking and TQM in some business organizations in the Philippines. Mabuhay Vinyl. semiconductors and lighting fixtures' (Philips). but in a simplified definition. and poor machine maintenance. RAMCAR. PDC has been instrumental in introducing the concept of TPM. Philip­ pine Fuji Xerox. Likewise. Fujitsu. Armco-Marsteel Alley Corporation. and for their self/mutual devel­ opment. among others. PhilaCor. improvement of safety through housekeeping with the active participation of all the company employees. PDC has successfully installed the circles program. Primarily. Productivity and Development Center (PDC) is instrumental in installing the 5S program in such various fields as telecommunications (Philippine Long Distance Telephone Company). PDC asked the assistance of a Japa­ nese expert through the Asian Productivity Organization (APO). cost reduction. in its effort to develop the circles concept to suit the Philippine industry environment. JIT. Quality Circle is a small group of workers (3 to 10 workers) from the same department/division/section who m eet regularly to identify and solve problems in their work area. 5S is a basic productivity improvement tool which covers quality improvement. SCJohnson. which it re­ named as the Productivity Improvem ent Circles (PICs). shortening of delivery time.• SH ITSU K E or S E L F . Goodyear Tire and Rubber Company. 5S goes beyond simply m aintaining a clean work­ place but also includes making the company operations more produc­ tive through the elimination of loss and waste. and many others. Total Productive Maintenance (TPM) aims to "m axim ize the effective use of the manmachine system at the minimum life-cycle cost. con­ sumer health care (Johnson and Johnson). Nestle Philippines. TPM is really all about removing or eliminating losses caused by m isoperation of machines. textiles and yam s (Kewalran Philippines).D I S C IP L IN E or doing the necessary things without being told. machine breakdowns. in many orga­ nizations and is now joined by several private organizations in promot­ ing the program within different sectors. an Miguel Corporation. garments (Dasmarihas Garments Corporation). As a productivity im provem ent approach. Even­ tually. C alifornia M anufacturing." These are technical words. includes the reduction or elimination of obstacles to the rapid flow of materials from invoice in to Productivity Technologies iri the Philippines 307 .

and working life.ce-out of the final products. The main philosophy behind the JIT system is the production of oruy the necessary units in the required quantities of the desired quality at the time they are needed. Total Quality Management (TQM) is an approach which is cen­ tered on quality. a Japanese m anagem ent consultant is KAIZEN. Moreover. middle m anagem ent and rankand-file). and develop and strengthen institutional structures vital to productivity improvement. quality is anything that can be improved. Benchmarking is the continuous process of comparing an organization's functions. PDC will continue to discover new direc­ tions. and which aims at long term success through customer satis­ faction and the provisions of benefits to the m em bers of the organiza­ tion and the society to which the organization belongs. W hen applied to the workplace "k aizen " means continuing improvement involving everyone . With the support of the Asian Productivity Organization (APO) experts. effect actual productivity increases at the firm level. Although. According to Imai.managers and workers alike. products or processes with those of best or leader in an industry. the^e are two w ays to achieve im provem ent in bu sin ess. it means continuing improvement in personal life.invoi. it has introduced and developed many of the country's lead­ ing productivity technologies. "K a iz en " m eans improvement. WTiile Japanese managers tend to favor "k aizen" western managers tend to prefer innovation. Another relatively new measurem ent tool developed by PDC is benchm arking. based on the participation or involvem ent of all m em ­ bers of a company (top management. He relates quality to "k aizen " by stating that in its broad­ est sense. social life. Another signifi­ cant TQM concept which was introduced by M asaaki Imai. The Productivity and Developm ent Center has been in existence for twenty seven years and PDC has directed its effort to accomplish its objective of promoting productivity accross a wide range of sectors. It is intended to help em ployees learn how such organizations achieved excellence and then set out to match or exceed them. PHILACOR and DOLE Philippines. PDC laid the groundwork for the installation of TQM in com­ panies such as San Miguel Corporation RAMCAR. unnecessary inventories will be­ come a thing of the past and warehouses and storage areas m ay even be eliminated. 308 Management for Filipinos . home life. It identifies and assesses the "b e st" that in occuring else­ where to aid a firm in developing its own strategies or tactical plans and processes to reach that level. O ne is "K aizen " and the other is innovation. venture into new areas arid build its past gains to ensure "a better tom orrow " for everyone through productivity. If this kind of manufacturing system is applied. Benchmarking may be used to assess virtually any aspect of an organization.

1996. Productivity Technologies in th e P hilip pin es 309 . Kaizen. The key to Japan's Competitive Success. Hellriegel. Masaaki. 1996. Development Academy of the Philippines. Management. 3. 2.REFERENCES 1. Productivity and Development Center. Don and Slocum. Imai. John W. Boston: Southwest­ ern College Publishing. 1997.

T $ . 310 Management for Filipinos .

“The greatest freedom man has is the freedom to discipline him self." .Bernard M.A PP EN D IX Final Review Questions **. Baruch .

The risk of starting a business. _______________________________ 1________ 314 Answer the following statements. The chain of command from the top management to the lower level. _____________________________________ 7.L _________ 12. 12. The first organization created during the pre-colonial. and services so as to meet the economic needs of the customers and eventually get a profit.-----. __________________ _______________ 11. The process by which unnecessary elements should be eliminated from the activities of the b u sin e ss. ________________________________ 3. The place where the first advanced management program was held in the Philippines. The right to com m and and the power to m ake oneself obeyed. IDENTIFY. __________ 4. The m ost basic of m anagem ent functions. The interest of one em ployee or group of employees should not prevail over the interest of business.14. Management for Filipinos . A system of m anagem ent by which major decisions are made by the top m anagement only. ev a lu a tio n III. (A ) p o s itiv e (B ) n eg a tiv e (C ) b o th (D ) n o n e o f ------------. A system of m anagem ent developed by Frederick W. Any activity involved in the production.--------------------------------------------- 9.period." 5. Taylor. Each subordinate is accountable to one superior only. This type of motivation is given in the form of discipline and criticism w hich is a challenge to greater achievement. 1. An organization of people controlled by feelings. 13. senti­ ments and attitudes is (A ) fo r m a l (B ) lin e a n d s t a f f (C ) lin e -----.15. A principle in m anagem ent which explains "in union there is strength. th e a b o v e. ______________________ 2.13. ___________________________ 8. The (A ) tine (B ) lin e a n d s t a ff (C ) fu n c tio n a l (D ) co m m ittee type utilizes the assistance of experts. 10. . jo b ------------. A written report delineating the minimum qualification requirem ents necessary to perform a job is (A) job analysis (B ) jo b sp ec ifica tio n (C ) jo b d esc rip tio n (D). (D ) in fo r m a l (E ) co m m ittee. distribution. _________________________________ 6.

Laym an's term for "rule of thumb m eth o d . 3Q. This business is concerned with the creation of goods. directing. 22. staffing. organizing. ________________________ 28._____________________________________ 19. An artificial being created by operation of law. Final Review Questions 315 .1 21. -------------------------------------------------------. A type of organization where there is a direct flow' of authority from the top position to the immediate subordinates' level.___ _________________ — — 31. He is considered the father of scientific management.------------------- 25. and controlling of office work.14. attributes. 16. promote and retire subordinates. _______________________________________ '----24.------------------- 27. and properties expressly authorized by law or incident to its existence. An area of management which deals with planning. It is a business organization which is oWned by the people it serves. Organization created from an official pattern of group assignments and distribution of authority and responsibility.-------------------------------------------- 20. Passing authority and responsibility to lower le v e ls. . The most fundamental function of co m m u n ica tio n . The company policy m a k e r s . The right to command and the power to make oneself obeyed.-------------------------------. __ :____________________________ 29. A system of m anagement in which m ajor decisions are made at high levels of m a n a g em en t. train. ---------------------- 18. having the rights of succession and the powers. 17. --------------------------- 23. A type of training which refers to a company group training con­ ducted in classroom s or training rooms."_________ 15. The excess of revenues over ex p e n se s. The father of modern management th eo ry . The process by which managers select. The extent to which a subordinate may be held by his superiors to be directly responsible for results.. 26.

An individual reports to only one superior in order to avoid con­ fusion and role conflict. m eth­ ods. An industry involved in the changing of raw materials or second­ ary products into a more useful form. materials. ___________________________ 39. and machines to accom plish the desired purpose. _________ ______________________ _ 34. markets. and regu lations. M ovem ent of an employee on the same le v e l. The scientific utilization of men. A system of precisely . G ro uping o f activities and functions or tasks in an organization. 33.__________________ 40. O R G A N IZA TIO N STRUCTURE.what is to be done (or not to be done) in the same vvay everytim e with no permitted deviation. money. ________________________________ 37. __________________________ 36. Refers to the num ber of subordinates that an executive can effec­ tively and directly control. 35.32. Separation of an employee initiated by the employer due to viola­ tion of company rules. IV. Identify the type o f organization structure on the line provided for at the top o f the chart Place the following positions in their proper places: Chairman of the Board Executive Committee VP for Administration VP for Marketing President 316 Management for Filipinos Stockholders VP for Manufacturing VP for Employee Relations Assistant to the President .________________________ 38. The process of redesigning structures to fit the present organiza­ tion structure.

b e em p loy ed . B la m in g o th e r s f o r c o m m o n F. tasks. d e v e l­ o p m en t a n d u tiliz a tio n o f the m a n p o w e r reso u rces o f o r g a ­ n iza tion .) □ □ □ □ □ □ □ □ □ □ 1. A sy stem a tic stu d y o f th e d u ­ t ie s a n d q u a l i f i c a t i o n s f o r v a r io u s jo b s w ith in a c o m ­ 2. (Use capital letters. Final Review Questions 317 . fa ilu r e . Principle of Simplicity 3. Entrepreneur 6. Grapevine E. Job Analysis C. pan y.V. g o o d s a n d serv ices. E lim in a te s g u e s s w o r k a n d w a ste o f tim e a n d m on ey. U n n ecessa ry elem en ts sh o u ld be elim in a ted fr o m a ll a c tiv i­ ties as1w ell as fr o m th e p ro cess esta b lish ed f o r c a rry in g them . Controlling 10. D. Program G. a n d reso u rces to 9. A rea o f m a n a g em en t w h ich is c o n c e r n e d w ith th e e ffe c t iv e rec ru itm en t. Commerce A. 7. H. procedu res. H ero o f C a p italism I. M ATC H IN G TYPE. Production Management 4. ru les. 5. selec tio n . 8. p o lic ie s. A co m p lex o f g o a ls . Human Resource B a sica lly c o n c e rn ed w ith the tra n sfer o r e x ch a n g e o f g o o d s. B. Match the word(s) on the left-hand column with the answer on the right-hand column. a s s ig n m e n ts . Planning A rea o f m an ag em en t c o n ­ c e r n e d w i t h •th e c r e a t io n o f J. In fo rm a l sy stem o f tr a n s m it­ tin g in form atio n .

reward 16 Important. CROSSWORD PUZZLE.'M's. transpor­ tation. part of fixed assets 13 Same as 12 across 15 Basic parts 16 Oral as in communication 17 Object of attack as in sales and market 20 Project evaluation review technique . ACROSS 1 Movement of an employee on the same level 7 Choose 8 Highest level in the manage­ ment hierarchy 9 Tells a subordinate what to do and what not to do 12 Way or procedure for doing a task 14 To give or pay. indirect operations and delays 4 Plan stated in financial terms 5 Norms or means of measure 6 Division of management hierar­ chy 10 Goods or services which satisfy wants 11 Time required between place­ ment of an order up to the time the order is received 12 One of the .VI. necessary like the functions 18 Share responsibilities with subordinates 19 Superior of a department or a division 20 Precedes all other managerial functions 21 Systematic way of stating principles involved 318 Management for Filipinos DOWN 1 A concept developed by Frank and Lilian Gilbreth to emphasize the ideal motions required to perform a job 2 Form of leadership in which the leader believes he can decide on what is best for the group 3 Kind of chart which shows the production operations.

Ltd.. 1982. Monico H. Kotler. Englewood. Buffa. Manila. Manila: Philippine Christian University.. Damaso. Beach. New York: The McMillan Co. 1993. Fred. 1998.. Modern Production Management. Ginsburg. New York: McGraw-Hill Book Com­ pany. Harold and O’Donnel. Quezon City: Katha Publishing Co. 1991. Inc. Inc. Sinagtala Publishers. Dale. Edwin B. New York: Me Graw-Hill Book Company. An Introduction to Business Management. Van Norstrand Co. Bethel.. Philip Marketing Management. How to Start Your Own Business. Management for Business and Industry. and Isidro: Jose C. Ltd. New Jersey: Prentice-hall.the Philippines.E. Beazley. How to Develop Project Feasibility Studies. New Delhi: Tata-McGraw-Hill Publishing Co. Inc.. 1991. 1990. 1992. Case Analysis-Guidelines. Principles o f Management. 1998. S. George H. Manila: National Bookstore.. Paul G. 1997. Allen.'President Decree 442. Fundamentals of Business Enterprise. 1993. Flippo. Franklin S. Pacita A. New York: Harper and Brothers Publishers. Texas: Robert Dane... Manila: Sinagtala Pub­ lishers. Englewood Cliffer. Louis. Management and Organization.. Drucker. 1992. The Executive at Work.. Koontz. Essentials of Management. 1993. Manila: Sinagtala Publisher. Pinoy Management. Inc. 1994. and Stackman. Atmosfera. Development Academy of . Franco. 1997. Dearmond. Inc. Claude. Roberto C. George. Graduate School of Business. Inc.. Inc... New Jersey: Prentice-Hall. Smith. Jimeno M. Ernest: Management Theory and Practice.SELECTED BIBLIO GRAPHY Abasolo. Singapore: McMillan-Hill Book Company. New Jer­ sey: D. 1992. New York: John Wiley and Sons. Ignacio. Peter F. Cyril. The Practice o f Management. Ernesto. Organization Theory. Hastings... Personnel: The Management o f People at Work.' Selected Bibliography 319 . Management: An Executive Perspective. New Jersey: Prentice Hall. New York: Mc-Graw-Hill Book Company. Date S. 1994. Victor. 1998. Sigmund G. New Jersey: Prentice-Hall. Harvey A. Lazzaro. London: Mitchell Beazley Publishers. Jr. Japan: Mc-GrawHill Kogakusha. Inc. 1995. Personnel Management. 1916. Lawrence L. Inc. Inc. Inc.. Elwood S. Industrial Organizational and Management. 1998. Princeton. Inc. Systems and Procedures. Labor Code of the Philippines. Management o f Business. Mitchell.. 1995. 1989 Joon Eng Chua et al. Atwater.