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ORGANIZING, DIRECTING AND CONTROLLING THE A decentralized organization is one where authority

SMALL BUSINESS is widely delegated to subordinates.

Organizing- the means which management blends human & Kinds of Formal Organization
material resources thru the design of a formal structure of tasks A formal organization is defined as “the sum of clearly
& authority. The output of this function is the organization which defined relationships, channels of communication, and
indicate who performs which task & who supervises whom. responsibilities resulting from the delegation of authority from
one organization level to another.”
Management’s Concern in the Organizational Structure
1. Identification of activities necessary to reach the goals Kinds of Formal Organizations:
2. Analysis of the jobs to be performed 1. Line Organization
3. Hiring of people with both an interest in and possessing - based on the direct flow of authority from the chief executive
the necessary qualifications of preforming the jobs to subordinates.

Considerations in doing the above-mentioned concerns: 2. Functional Organization

1. Specialization - there are a number of functional specialists supervising the
2. Departmentalization activities of a single subordinate.
3. Delegation of authority
4. Span of management 3. Line and Staff Organization
5. Hierarchy of objectives - line functions directly responsible for the achievement of
6. Degree of centralization organizational objectives and which are indirectly influenced
by staff functions through advice, recommendations,
SPECIALIZATION research, and technical expertise.
The first task of the manager is to determine the total
function of the organization. He, then, divides the total work into 4. Committee Organization
small, specialized tasks & assigns employees to specific tasks. - a formal organizational group usually relatively long-lived,
created to carry out a specific organizational task.” It consists
The purpose of specialization is to make employees of a group of individuals vested with authority and
more efficient. This is possible because if a person is assigned responsibility and performs a specific task which the
a specific task, he masters it after a while. individual manager cannot complete.
2Types of Committee:
A. Ad Hoc B. Standing
When jobs are grouped into working units, the process.
The units are, then called departments, units, groups, or
The Informal Organization
A group of persons “not prescribed by the organization
Departments may be organized according to:
but developed because of proximity, common interest, and
- function - product -territory - customer
individual need satisfaction.”
Ex: a group of nine individuals working in the same
company who meet every Sunday and play tennis.
When an organization grows beyond phase 1 some of
the tasks will have to be delegated to responsible subordinates. Applicability of Organizational Structure to Small Business
This is so because making decisions cannot all be undertaken Many small business ventures will adapt the line structure due
by a single person, no matter how good he is. to the following reasons:
1. Its simplicity is conducive to an immediate start-up in
The small business operator must consider the 2. It is a good launching mechanism for the more sophisticated
number of subordinates who must report to a supervisor. When organizational structures
there are too many subordinates reporting to a single 3. It is adaptable to small-scale operations as all personnel will
supervisor, the efficiency of directing and controlling the be fully occupied with work
subordinates may be sacrificed.
Directing the Small Business
HIERARCHY OF OBJECTIVES Directing is the management function that involves
“Ordering objectives” so that the achievement of all influencing others to engage in the work behaviors necessary to
low-level objectives results in the achievement of higher reach organizational goals.
organizational objectives.
Skills Required in Directing:
DEGREE OF CENTRALIZATION 1. Communicating with subordinates
A centralized organization is characterized by the 2. Counseling
concentration of authority for decision-making in the hands of 3. Motivating
one or a few, usually the chief executive or top management. 4. Disciplining
Centralized decision-making is adapted when the decisions to
be made are risky and when lower level managers are not highly Communicating with Subordinates
skilled in decision-making. Communication is the transfer of information from one
person to another.
Functions of Communication
• Information function – Decision-making requires
information provided by communication.
• Motivational function – Communication is a tool used to
motivate subordinates to contribute to company goals.
• Control function – The clarification provided by the
communication in terms of duties, authority, and
responsibilities lays the ground for effective control.
• Emotive function – Communication provides an outlet for

The Communication Process

• Sender- speaks or dictates the message
• Encoder- transcribes what is spoken or dictated and
prepares it for sending
• Medium- conveys or transmits the message through
written, oral, nonverbal, or electronic means
• Decoder- interprets the message
• Receiver- receives the message.

Counseling with Subordinates

The small business operator must perform the additional role of
counselor so that hindrances in the attainment of company
objectives will be effectively cast aside. This additional task involves
“listening, giving advice, and preventing and solving employees’

Maintaining Discipline
Discipline is defined as “any action directed toward an employee for
failing to know company rules, standards, or policies.” Among the
common reasons for disciplining employees are the following:
1. Loafing
2. Absenteeism
3. Fighting
4. Falsifying records
5. Insubordination

Progressive Discipline
Most progressive discipline procedures include the following:
• Verbal warning
• Verbal reprimand
• Written reprimand
• Suspension
• Discharge

Controlling the organization is very important
management function. It is defined as “the process of assuring
efficient performance to attain the enterprise objectives.”

Controlling involves the following:

• Establishing goals and standards
• Company-measured performance against the established
goals and standards
• Reinforcing successes and correcting shortcomings

Kinds of Control
Control consists of various types and those appropriate to
small business will depend on the stage of growth of the firm.

Stage of growth of the firm:

Early Stage- Appropriate Control Tools
Start-up- Simple accounting records and personal supervision
Early growth- Operational budgets, management by objectives
Late growth- Greater use of budgets, standard cost systems, use of
Resource Maturity- More sophisticated use of control measures
indicated in the late growth stage