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Principles of Management

Defining Management

Management is the act of engaging with an organization’s human talent and its resources to accomplish
desired goals and objectives.

LEARNING OBJECTIVES

Outline the theoretical scope and basic function that represent managerial responsibilities within a
company

KEY TAKEAWAYS

Key Points

• Management comprises planning, organizing, staffing, leading /directing, and controlling an


organization (a group of one or more people or entities) or effort for the purpose of
accomplishing a goal.

• In for-profit work, the primary function of management is meeting the needs of various
stakeholders of the organization, such as customers, debtors, and owners.

• In the public sector of countries that are representative democracies, voters elect politicians to
public office, who then hire managers and administrators to oversee the everyday
responsibilities that support those elected to office.

• Since an organization can be viewed as a type of system, managers provide the necessary
human action, so the organizational system produces planned outcomes or goals desired by the
various stakeholders.

Key Terms

• stakeholders: Persons or organizations with a legitimate interest in a given situation, action, or


enterprise which are directly affected by the organization’s actions.

• theoretical: Of or relating to the underlying principles or methods of a given technical skill, art,
etc., as opposed to its practice.
• shareholder: Through owning stock, the real owner of a publicly traded business that is run by
management.

Overview

Management is the act of engaging with an organization’s human talent and using the physical
resources at a manager’s disposal to accomplish desired goals and objectives efficiently and effectively.
Management comprises planning, organizing, staffing, leading, directing, and controlling an organization
(a group of one or more people or entities) or effort for the purpose of accomplishing a goal.

One of the most important duties for a manager is effectively using an organization’s resources. This
duty involves deploying and manipulating human resources (or human capital), as well as efficiently
allocating the organization’s financial, technological, and natural resources.

Since organizations can be viewed as systems, management can also be defined as human action, such
as product design, that enables the system to produce useful outcomes. This view suggests that we
must manage ourselves as a prerequisite to attempting to manage others.

Theoretical Scope

At first, management may be considered as a type of function, one which measures financial metrics,
adjusts strategic plans, and meets organizational goals. This applies even in situations where planning
does not take place. From this perspective, Henri Fayol (1841–1925) considers management to consist
of six functions: forecasting, planning, organizing, commanding, coordinating, and controlling. He was
one of the most influential contributors to modern concepts of management.

In another way of thinking, Mary Parker Follett (1868–1933) defined management as “the art of getting
things done through people.” She described management as philosophy. Some people, however, find
this definition useful but far too narrow. The phrase “management is what managers do” occurs widely,
suggesting the difficulty of defining management, the shifting nature of definitions, and the connection
of managerial practices with the existence of a managerial cadre or class.

Another perspective regards management as equivalent to “business administration” and thus excludes
management in places outside commerce, for example in charities and in the public sector. More
realistically, however, every organization must manage its work, people, processes, technology, etc. to
maximize effectiveness and accomplish its goals.
Nature of Managerial Work

In the for-profit environment, management is tasked primarily with meeting the needs of a range of
stakeholders. This typically involves making a profit (for the shareholders ), creating valued products at a
reasonable cost (for customers), and providing rewarding employment opportunities (for employees).
Nonprofit management has the added importance of attracting and retaining donors.

In most models of management/governance, shareholders vote for the board of directors, and the
board then hires senior management. Some organizations have experimented with other methods (such
as employee-voting models) of selecting or reviewing managers, but this occurs only very rarely. In the
public sector of countries that are representative democracies, voters elect politicians to public office.
Such politicians hire managers and administrators.

Several historical shifts in management have occurred throughout the ages. Towards the end of the 20th
century, business management came to consist of six separate branches, namely:

• Human resource management

• Operations management or production management

• Strategic management

• Marketing management

• Financial management

• Information technology management (responsible for the management information systems)

Basic Functions
Mary Parker Follett: Mary Parker Follett defined management as “the art of getting things done through
people.”

Management operates through various functions, such as planning, organizing, staffing,


leading/directing, controlling/monitoring, and motivating.

• Planning: Deciding what needs to happen in the future (today, next week, next month, next
year, over the next five years, etc.) and generating plans for action.

• Organizing: Implementing a pattern of relationships among workers and making optimum use of
the resources required to enable the successful carrying out of plans.

• Staffing: Job analysis, recruitment, and hiring of people with the necessary skills for appropriate
jobs. Providing or facilitating ongoing training, if necessary, to keep skills current.

• Leading/directing: Determining what needs to be done in a situation and getting people to do it.

• Controlling/monitoring: Checking current outcomes against forecast plans and making


adjustments when necessary so that goals are achieved.

• Motivating: Motivation is a basic function of management because without motivation,


employees may feel disconnected from their work and the organization, which can lead to
ineffective performance. If managers do not motivate their employees, they may not feel their
work is contributing to the overall goals of the organization (which are usually set by top-level
management).
Fulfilling the Organizing Function

Management organizes by creating patterns of relationships among workers, optimizing use of


resources to accomplish business objectives.

LEARNING OBJECTIVES

Define the organizing function within a business framework, specifically the generation of structure and
authority

KEY TAKEAWAYS

Key Points

• The organizing function typically follows the planning stage. Specific organizing duties involve
the assignment of tasks, the grouping of tasks into departments, the assignment of authority,
and the allocation of resources across the organization.

• Authority is a manager’s formal and legitimate right to make decisions, issue orders, and
allocate resources to achieve organization’s objectives. Types of authority include line,
functional, and staff.

• Organizations will use different structural strategies, which significantly affects the chain of
command and decision-making process within an organization. These structures include
centralized, decentralized, tall, and flat.

• When approaching an organization within a company or institution, it is important to


understand the implications of different structures as they pertain to the strategy and
operations of the company.

Key Terms

• capital expenditure: Funds spent by a company to acquire or upgrade a long-term asset.

• controller: A person who audits and manages the financial affairs of a company or government;
a comptroller.

• delegation: The act of commiting a task to someone, especially a subordinate.


• organizing: To constitute in parts, each having a special function, act, office, or relation.

Management and Organization

Management operates through various functions, often classified as planning, organizing, staffing,
leading/directing, controlling/monitoring, and motivating. The organizing function creates the pattern of
relationships among workers and makes optimal use of resources to enable the accomplishment of
business plans and objectives.

The organizing function typically follows the planning stage. Specific organizing duties involve the
assignment of tasks, the grouping of tasks into departments, and the assignment of authority and
allocation of resources across the organization.

The management process: The management process involves tasks and goals of planning, organizing,
directing, and controlling.

Structure

Structure is the framework in which the organization defines how tasks are divided, resources are
deployed, and departments are coordinated. It is a set of formal tasks assigned to individuals and
departments. Formal reporting relationships include lines of authority, decision responsibility, number
of hierarchical levels, and span of managers’ control. Structure is also the design of systems to ensure
effective coordination of employees across departments.

Authority/Chain of Command

Authority is a manager’s formal and legitimate right to make decisions, issue orders, and allocate
resources to achieve desired outcomes for an organization. Responsibility is an employee’s duty to
perform assigned tasks or activities. Accountability means that those with authority and responsibility
must report and justify task outcomes to those above them in the chain of command.

Through delegation, managers transfer authority and responsibility to their subordinates. Organizations
today tend to encourage delegation from the highest to lowest possible levels. Delegation can improve
flexibility to meet customers’ needs and to adapt to competitive environments. Managers may find
delegation difficult, since control over the task assigned (and eventual outcome) is relinquished.

One critical risk of command chains is micromanagement, where managers fail to delegate effectively
and exercise excessive control over their subordinates’ projects. Micromanagement reduces efficiency
and limits autonomy, thus limiting the adaptability of a given organization. Effective chains of command
must allow for flexibility and efficient delegation.

Types of Authority (and Responsibility)

• Line authority: Managers have the formal power to direct and control immediate subordinates
executing specific tasks within a chain of command, usually within a specific department. The
superior issues orders and is responsible for the result; the subordinate obeys and is responsible
only for executing the order according to instructions.

• Functional authority: Managers have formal power over a specific subset of activities that
include outside departments. For instance, a production manager may have the line authority to
decide whether and when a new machine is needed, but a controller with functional authority
requires that a capital expenditure proposal be submitted first, showing that the investment in a
new machine will yield a minimum return. The legal department may also have functional
authority to interfere in any activity that could have legal consequences. For example, a
purchase contract for a new machine cannot be approved without a review of the machine’s
safety standards.
• Staff authority: Staff specialists manage operations in their areas of expertise. Staff authority is
not real authority because a staff manager does not order or instruct but simply advises,
recommends, and counsels in the staff specialists’ area of expertise; the manager is responsible
only for the quality of the advice (in line with the respective professional standards, etc.). Staff
authority represents a communication relationship with management. It has an influence that
derives indirectly from line authority at a higher level.

Organizational Structure and Control/Decision-Making

• Tall structure: A management structure characterized by an overall narrow span of


management, a relatively large number of hierarchical levels, tight control, and reduced
communication overhead. Decision-making can be quite rapid, if it occurs from the top down.

• Flat structure: A management structure characterized by a wide span of control and relatively
few hierarchical levels, loose control, and ease of delegation. Decision-making is often slower, as
it involves a high degree of integration across the company.

• Centralization: The location of decision making authority near top organizational levels. Similar
to a tall structure, this expedites decision-making from the top down.

• Decentralization: The location of decision making authority is relatively evenly dispersed across
the company. This works well when creativity and independent operations create value for the
organization.

As each structure will create a different organizational approach to operations, it is critical to consider
how the selection of a structure will affect the business process. Enabling creativity and minimizing
control often comes at the cost of speed and efficiency, and vice versa.

Fulfilling the Controlling Function

Management control can be defined as a systematic effort to compare performance to predetermined


standards and address deficiencies.

LEARNING OBJECTIVES

Outline the characteristics and elements of the controlling function

KEY TAKEAWAYS
Key Points

• Control is a continuous and forward-looking process designed to objectively benchmark


operations with the projected plan or projections.

• The four basic elements in a control system are: the characteristic or condition to be controlled,
the sensor, the comparator, and the activator.

• Control is a continuous process.

• Control is a continuous and forward-looking process designed to benchmark operations with the
projected plan or projections.

Key Terms

• Systematic: Methodical, regular, and orderly.

• control: Influence or authority over.

• hierarchy: An arrangement of items in which the items are represented as being “above,”
“below,” or “at the same level as” one another.

Control

In 1916, Henri Fayol formulated one of the first definitions of control as it pertains to management:
“Control consists of verifying whether everything occurs in conformity with the plan adopted, the
instructions issued, and principles established. It’s object is to point out weaknesses and errors in order
to rectify [them] and prevent recurrence.”

Management control can be defined as a systematic effort by business management to compare


performance to predetermined standards, plans, or objectives in order to determine whether
performance is in line with these standards. It is also used to determine if any remedial action is
required to ensure that human and other corporate resources are being used in the most effective and
efficient way possible to achieve corporate objectives.

Control can also be defined as “that function of the system that adjusts operations as needed to achieve
the plan, or to maintain variations from system objectives within allowable limits.” The control
subsystem functions in close harmony with the operating system. The degree to which they interact
depends on the nature of the operating system and its objectives. Stability concerns a system’s ability to
maintain a pattern of output without wide fluctuations. Rapidity of response pertains to the speed with
which a system can correct variations and return to expected output.

From these definitions, the close link between planning and controlling can be seen. Planning is a
process by which an organization ‘s objectives and the methods to achieve the objectives are
established, and controlling is a process that measures and directs the actual performance against the
planned goals of the organization. Therefore, goals and objectives are often referred to as the siamese
twins of management: the managerial function of management and the correction of performance in
order to ensure that enterprise objectives and the goals devised to attain them are being accomplished.

Characteristics of Control

Control has several characteristics. It may be described as being:

• A continuous process.

• A management process.

• Embedded in each level of organizational hierarchy.

• Forward-looking.

• Closely linked with planning.

• A tool for achieving organizational activities.

• An end process.

The Elements of Control

The four basic elements in a control system:

1. The characteristic or condition to be controlled – We select a specific characteristic because a


correlation exists between it and how the system is performing. The characteristic may be the
output of the system during any stage of processing or it may be a condition that is the result of
the system. For example, in an elementary school system, the hours a teacher works or the gain
in knowledge demonstrated by the students on a national examination are examples of
characteristics that may be selected for measurement, or control.
2. The sensor – This is the means for measuring the characteristic or condition. For example, in a
home-heating system, this device would be the thermostat; and in a quality -control system, this
measurement might be performed by a visual inspection of the product.

3. The comparator – This determines the need for correction by comparing what is occurring with
what has been planned. Some deviation from the plan is usual and expected, but when
variations are beyond those considered acceptable, corrective action is required. It involves a
sort of preventative action to indicate that good control is being achieved.

4. The activator – This is the corrective action taken to return the system to expected output. The
actual person, device, or method used to direct corrective inputs into the operating system may
take a variety of forms. It may be a hydraulic controller positioned by a solenoid or electric
motor in response to an electronic error signal, an employee directed to rework the parts that
failed to pass quality inspection, or a school principal who decides to buy additional books to
provide for an increased number of students. As long as a plan is performed within allowable
limits, corrective action is not necessary; however, this seldom occurs in practice.

These occur in the same sequence and maintain a consistent relationship to each other in every system.

Fulfilling the Leading Function

Managers lead their organizations and can vary their style and approach to achieve the desired
outcome.

LEARNING OBJECTIVES

Identify the key characteristics and considerations of the leadership function within the organizational
framework

KEY TAKEAWAYS

Key Points

• Leaders who demonstrate persistence, tenacity, determination, and synergistic communication


skills will bring out the same qualities in their groups.
• Leadership can be viewed as either individualistic or group-based and can be considered
“transactional” (i.e. procedures, rewards, etc.) or “transformational” (i.e. charisma, creativity,
etc. ).

• A leadership style is often determined by context, whereas the degree of control (autocratic or
democratic) may alter based upon the situation or process being managed.

• Positive reinforcement is an example of a leadership technique. This reinforcement occurs when


a positive stimulus is presented in response to a behavior, increasing the likelihood of that
behavior in the future.

Key Terms

• laissez-faire: In business, an environment in which an organization’s employees are free from


excessive oversight or management, with sufficient control only to ensure organizational goals
are met.

Defining Leadership

Over the years the philosophical terms ” management ” and “leadership” have been used both as
synonyms and with clearly differentiated meanings. Debate is fairly common about whether the use of
these terms should be restricted and generally reflects an awareness of the distinction made by Burns
(1978) between “transactional” leadership (characterized by emphasis on procedures, contingent
reward, management by exception) and “transformational” leadership (characterized by charisma,
personal relationships, creativity). Management is often associated with the former and leadership with
the latter.

Leaders who demonstrate persistence, tenacity, determination, and synergistic communication skills will
bring out the same qualities in their groups. Good leaders use their own inner mentors to energize their
team and organizations and lead a team to achieve success.

Group Leadership

In contrast to individual leadership, some organizations have adopted group leadership. In this situation,
more than one person provides direction to the group as a whole. Some organizations have taken this
approach in hopes of increasing creativity, reducing costs, or downsizing. Others may see the traditional
leadership of a boss as costing too much in team performance. In some situations, the team members
best able to handle any given phase of the project become the temporary leaders. Additionally, staff
experiences energy and success when each team member has access to elevated levels of
empowerment.

Leadership Styles

A leadership style is a leader’s approach towards providing direction, implementing plans, and
motivating people. It is the result of the philosophy, personality, and experience of the leader. Rhetoric
specialists have also developed models for understanding leadership (Robert Hariman, Political Style;
Philippe-Joseph Salazar, L’Hyperpolitique. Technologies politiques De La Domination).

Engaging Style of Leadership: Different styles of leadership can achieve the leading function.

Different situations call for different leadership styles. In an emergency, when there is little time to
reach an agreement and where a designated authority has significantly more experience or expertise
than the rest of the team, an autocratic leadership style may be most effective. However, in a highly
motivated and aligned team, with a homogeneous level of expertise, a more democratic or laissez-faire
style may be more effective. The leadership style adopted should be the one that most effectively
achieves the objectives of the group while balancing the interests of its individual members.

Positive Reinforcement

Anyone thinking about managing a team must consider positive reinforcement. B.F. Skinner, the father
of behavior modification, developed this concept. Positive reinforcement occurs when a positive
stimulus is presented in response to a behavior, increasing the likelihood of that behavior in the future.

The following is an example of how positive reinforcement can be used in a business setting. Assume
praise is a positive reinforcement for a particular employee. This employee does not show up to work on
time every day. The manager of this employee decides to praise the employee for showing up on time
when the employee actually does so. As a result, the employee comes to work on time more often
because the employee likes to be praised. In this example, praise (the stimulus) is a positive
reinforcement for this employee because the employee arrives at work on time (the behavior) more
frequently after being praised for it.

The use of positive reinforcement is a successful and growing technique used by leaders to motivate and
attain desired behaviors from subordinates. Organizations, such as Frito-Lay, 3M, Goodrich, Michigan
Bell, and Emery Air Freight, have all used reinforcement to increase productivity. Empirical research
covering the last 20 years suggests that reinforcement theory has a 17% increase in performance.
Additionally, many reinforcement techniques, such as the use of praise, are inexpensive and provide
higher performance and employee satisfaction for lower costs.

Fulfilling the Planning Function

Planning is the process of thinking about and organizing the activities required to achieve strategic
objectives.

LEARNING OBJECTIVES

Illustrate the primary considerations and influencing factors for organizations when pursuing strategic
planning

KEY TAKEAWAYS
Key Points

• Planning involves the maintenance and organizational approach of achieving strategic


objectives.

• To meet objectives, managers may develop plans such as a business plan or a marketing plan.

• Strategic planning is an organization ‘s process of defining its strategy or direction and making
decisions about how to allocate its resources to pursue this strategy.

• When pursuing strategic planning, organizations should ask themselves what they do, for whom
do they do it, and how they can excel (or differentiate from) competitors.

• The execution of the planning function requires a comprehensive understanding (or generation
of) a vision, mission, set of values, and general strategy.

Key Terms

• strategy: A plan of action intended to accomplish a specific goal.

• allocating: The act of distributing a given set of resources according to a plan.

• forecasting: The act of estimating future outcomes.

Planning

Planning is the process of thinking about and organizing the activities required to achieve a desired goal.
Planning involves the creation and maintenance of a given organizational operation. This thought
process is essential to the refinement of objectives and their integration with other plans. Planning
combines forecasting of developments with preparing scenarios for how to react to those
developments. An important, albeit often ignored, aspect of planning is the relationship it holds with
forecasting. Forecasting can be described as predicting what the future will look like, whereas planning
predicts what the future should look like.
Research planning: Planning involves the creation and maintenance of a plan.

Planning is also a management process, concerned with defining goals for a company’s future direction
and determining the missions and resources to achieve those targets. To meet objectives, managers
may develop plans, such as a business plan or a marketing plan. The purpose may be achievement of
certain goals or targets. Planning revolves largely around identifying the resources available for a given
project and utilizing optimally to achieve best scenario outcomes.

Strategic Planning

Strategic planning is an organization’s process of defining its strategy or direction and making decisions
about allocating its resources to pursue this strategy. To determine the direction of the organization, it is
necessary to understand its current position and the possible avenues through which it can pursue a
particular course of action. Generally, strategic planning deals with at least one of three key questions:

• What do we do?
• For whom do we do it?

• How do we excel?

The key components of strategic planning include an understanding of the firm’s vision, mission, values,
and strategies. (Often a “vision statement” and a ” mission statement ” may encapsulate the vision and
mission. )

1. Vision: This outlines what the organization wants to be or how it wants the world in which it
operates to be (an “idealized” view of the world). It is a long-term view and concentrates on the
future. It can be emotive and is a source of inspiration. For example, a charity working with the
poor might have a vision statement that reads “A World without Poverty.”

2. Mission: It defines the fundamental purpose of an organization or an enterprise, succinctly


describing why it exists and what it does to achieve its vision. For example, the charity above
might have a mission statement as “providing jobs for the homeless and unemployed.”

3. Values: These are beliefs that are shared among the stakeholders of an organization. Values
drive an organization’s culture and priorities and provide a framework in which decisions are
made. For example, “knowledge and skills are the keys to success,” or “give a man bread and
feed him for a day, but teach him to farm and feed him for life.” These example values place the
priorities of self-sufficiency over shelter.

4. Strategy: Strategy, narrowly defined, means “the art of the general”—a combination of the ends
(goals) for which the firm is striving and the means (policies) by which it is seeking to get there.
A strategy is sometimes called a roadmap, which is the path chosen to move towards the end
vision. The most important part of implementing the strategy is ensuring the company is going
in the right direction, which is towards the end vision.

Tools and Approaches

There are many approaches to strategic planning, but typically one of the following is used:

• Situation-Target-Proposal: Situation – Evaluate the current situation and how it came about.
Target – Define goals and/or objectives (sometimes called ideal state). Path/Proposal – Map a
possible route to the goals/objectives.
• Draw-See-Think-Plan: Draw – What is the ideal image or the desired end state? See – What is
today’s situation? What is the gap from ideal and why? Think – What specific actions must be
taken to close the gap between today’s situation and the ideal state? Plan – What resources are
required to execute the activities?

Among the most useful tools for strategic planning is a SWOT analysis (Strengths, Weaknesses,
Opportunities, and Threats). The main objective of this tool is to analyze internal strategic factors
(strengths and weaknesses attributed to the organization) and external factors beyond control of the
organization (such as opportunities and threats).

1. DIRECTING • In directing, managers determine direction; state a clear vision for employees to
follow and help employees understand the role they play in attaining goals. • The outcome of
directing function is a high level of motivation and commitment from employees to the
organization. • In Subway, one of the reasons of success is because of healthy supervisor-worker
relationships. Mc Donald’s and KFC in comparison has a very low turnover ratio implying that
the workers are provided with healthy working conditions, incentives, motivation and efficient
communication.

2. CONTROLLING • In controlling, the manager evaluates how well the organization is achieving its
goals and takes corrective action to improve performance. • The outcome of controlling
function is the accurate measurement of performance and regulation of efficiency and
effectiveness. • In Subway, the increasing sales and consistent demand shows that in the
organization activities are performed as per the plans, also the organizations resources are
being used effectively and efficiently.

Directing

The fourth function is known as directing, sometimes also referred to as the influencing or the leading
function of management. Directing is about the actuation of the methods to work efficiently to achieve
the set organizational objectives. The function goes beyond organizing the employees to their specific
roles and involves ensuring they are able to perform the tasks through a variety of means. Directing in
essence is looking after productivity and ensuring productivity is going up instead of decreasing.
The function delves deeper inside human interaction, making the manager motivate, communicate and
inspire his or her personnel. At this stage, you are meeting and connecting with your employees to find
out how the tasks are going. You would talk to them about the new marketing program, get their
feedback on the project and spend time inspiring them with new ideas. The directing function is all
about the day-to-day interaction between the management and the staff.

The function of directing has strong links to things such as leadership. A good manager will be able to
inspire the workforce to work towards the goals not because they have to do it, but because they are
driven to achieve these objectives. The manager’s role is not just about ensuring the workplace has the
right resources and employees know what they are doing; it’s also important to create an environment
of friendship. The manager wants to be someone who can encourage and motivate the personnel and
not fear them into submission. With proper directing, you are able to set in motion the processes you’ve
prepared with the above three functions.

Why is directing essential?

Directing has an important role in an organization as it helps strengthen the operational capability of the
organization. It does so by ensuring the different parts of the organization are working better. Directing
is a bridge between the operational needs and the human requirements of its employees. You
essentially create a link between the necessity of turning in a profit, with the need of keeping employees
motivated and interested. Since directing aims to improve productivity, you are strengthening how well
the organisation succeeds.

Research has pointed out how important human-focused management is in today’s organization. When
objectives are approached from a human perspective that aims to ensure people’s opinions are listened
to, the goals are met faster than in task-oriented environments. The management’s ability to listen to
the workforce, support and inspire them will boost the productivity and profitability of the organization.

If you listen to your team’s concerns and perhaps provide them inspiration with quotes, films or the
occasional days out of the office, you can refresh their resolve to achieve the goal. If you just throw a
blank paper in front of them and tell them to write a story, they are less likely to remain interested.

How to direct?

You can direct and lead your team by utilizing four key methods based on the findings of human
behavioral studies. These are:
• Supervision – You need to oversee the work your employees are doing. The method requires
watching and monitoring the performance, but also supporting and guiding the employees
when things are not going as planned. You could use evaluation reports, examine the quality of
work, and be present during certain parts, such as team meetings or when the person is talking
to clients. In terms of support, you want to discuss the work and how it’s moving along. You also
want to provide materials that can help the employee perform better.

• Communication – Directing is built around effective communication. As a manager, you need to


create an environment that supports different communication methods from passing
information to exchanging opinions. The important thing is to ensure these different
communication channels are not just between manager and subordinate, but also between
employees and different management levels.

• Motivation – As mentioned above, big part of directing is about inspiring and motivating your
employees. You need them to get behind the objectives to ensure there is enthusiasm to
achieve the goals. Motivating as a manager includes positive and negative feedback, provision of
ideas and the opportunities to develop skills further. Directing might also have an element of
monetary or non-monetary incentives, such as the introduction of bonuses.

• Leadership – Managers must essentially act more like leaders when directing the workforce.
This means that you need to occasionally motivate and inspire by setting an example, instead of
simply telling the subordinates what they need to do. You want to get hands on with the work
and be part of the process of achieving the objectives. Although managers and leaders tend to
differ, leadership skills are something a good manager should keep in mind.

The function might seem rather complex and getting it right might be harder than any of the other
functions of management. You should watch the video of Jim White, professor emeritus at North Lake
College, explaining directing as a function and giving his take on what he thinks are the three key
elements of directing: leading, motivating and communicating.

Controlling

The final function of management is controlling. The function ensures the other four functions are
followed correctly and the flow of work is moving the organization towards the objectives it has set
itself. As Theo Haimann has put it, controlling is
“the process of checking whether or not proper progress is being made towards the objectives and goals
and acting if necessary, to correct any deviation“.

In our example of having the objective to increase sales in a particular month, controlling would be the
function that measures whether the sales are increasing and helps to correct the situation if the
specified target is not getting closer. As a manager, you would examine the processes you set forward
and take note whether they are enhancing your sales records. The marketing campaign’s
effectiveness would be evaluated and measured. If you find the price reductions being inefficient during
the process, you might consider swapping the products on sale, reduce the reduction, or abort the
discount campaign altogether as inefficient.

Controlling requires you to examine the objectives in a measurable manner. You essentially need to set
standards, which guarantee you know exactly what you want to achieve and what counts as success or
failure. But controlling is also a function that due to the set of standards will ensure you have the ability
to correct behaviors when they deviate from the standards. In essence, controlling is about quality
monitoring. You are looking at the processes and ensuring they achieve the right things for the
organization.

Why is controlling essential?

Controlling’s most important function is the risk-reduction ability. Since you are essentially monitoring
the performance of the team and comparing it against the objectives you’ve set, you can react to
problems more easily. Instead of realizing at the end of the month that you’ve missed your sales target
by a huge margin, you can keep on eye on the situation during the process.

If you notice the marketing campaign, for example, is not producing any new customers or leading to
increased sales, you can re-tweak it to better attract customers. With the re-tweak, you might be able to
change the campaign’s attractiveness and recover the situation. This could end up guaranteeing you
meet the sales target at the end of the month.

Even if you miss the target, you might not miss it by as much and you’ve at least had the chance of
correcting the situation. With controlling, you are reducing the risk of failure and the impact of failing to
meet your objectives. As mentioned, even if you happen to fail, you’re prepared for it and you can start
analyzing the reasons behind it immediately.
In the business world, measuring performance can be the difference between the successful and the
failing companies. Think about a start-up. If the management doesn’t have a set of standards to
measure its performance against, they don’t have any idea what success or failure looks like. Even when
they have a set of objectives and they know whether they met them or not, they don’t have anymore
information to go by.

Let’s say they want to earn $100,000 in the first three months. Without standards and proper control,
after three months all they know is whether they earned it or not. They won’t know the why. Was the
success down to the product? Did the marketing help? How much did their social media strategy push
sales? Was it all about the saving mechanisms they put in place? In the end, understanding the reasons
behind success or failure will help the business perform better.

How to control?

For controlling to be effective, you need to take the four steps of this specific function of management:

• Establish standards of performance – You first need to establish the standards of performance
you are aiming for. These must be set with the organizational objectives in mind. You look at the
objectives and the plan you have set, creating a set of measurements that would tell you are on
the right path. For example, let’s say you want the manufacturing team to make 10 more shoes
every day to boost productivity. Your first measurement would be the team creating 10 shoes,
but you could include other factors to the set of standards. You might look to reduce the
downtime by ensuring problems are fixed within 30 minutes and add a new person in the chain
to fasten the process by 10 minutes.

• Measure the actual performance – Once you’ve set the standards and you’ve set the new
processes in motion, you can start monitoring the actual performance. The monitoring process
will depend on your standards and the ease of measurement. Part of the process can be
performance reviews, actual quantifiable data and so on. The key is to start collecting the
information from the start.

• Compare the actual performance with the expected standards – As you receive performance
data, you can start comparing it with the standards you’ve set. The comparison helps you to
identify the problem areas or notice patterns that are actually working more efficiently.
• Take corrective action – With the data you’ve collected and the information you have about
performance, you can take any necessary corrective action. If the recovery team is not repairing
the machinery quick enough, you can look deeper into it and find ways to boost the
performance. On the other hand, you might notice the team is producing more shoes than you
expected, which could help you revise your objectives.

3.) Leading

A leading function in management doesn’t only entail motivating team members in achieving business
goals. Leaders must be able to project a strong sense of direction & leadership throughout the process.
However, this should be in accordance with the values and objective of the company.

For example, an organisation values everyone being heard. As a leader, you need to open yourself to
ideas from others – regardless of their roles. Directing them is not limited to being followed at all times.
Give them the free will to create wise decisions as it is what the organisation holds for.

4.) Controlling

Controlling determines if actions are followed according to plan. Leaders and/or those who are in
management roles must check the team’s progress. Begin with these simple questions:

 Are your KPIs met?

 Does everyone provide quality work?


 Are team members efficient when carrying out tasks?

 Is there a need to make adjustments to the current process?

Start asking questions with a yes-or-no answer. It makes pitfalls easier to identify. It also saves time and
you can allot more to finding ways how to resolve them.

The controlling process involves:

 Establishing standards to measure performance and/or quality of work

 Measuring actual performance

 Comparing performance with the organisational standards

 Taking corrective actions when necessary

Always keep in mind that without measurement, there’s no effective control. Controls need to focus on
results and outputs.